Exhibit 4.14
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of
January __, 2006, among Synova Healthcare Group, Inc., a Nevada corporation (the
"Company"), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a "Purchaser" and collectively the
"Purchasers").
BACKGROUND
Subject to the terms and conditions set forth in this Agreement, and
pursuant to Section 4(2) of the Securities Act (as defined below), Rule 506
promulgated thereunder, and/or Regulation S (defined below), the Company desires
to issue and sell to each Purchaser, and each Purchaser, severally and not
jointly, desires to purchase from the Company, in the aggregate, up to one
hundred forty (140) units (the "Units") at a price of $50,000 per Unit. Each
Unit consists of (i) 25,000 shares of Common Stock and (ii) a Warrant to
purchase 12,500 shares of Common Stock for $3.00 per share.
The offers and sales of Units hereunder are being effected by the
Company in connection with a concurrent offering of Units under Regulation S
(defined below), which Regulation S offering shall terminate as of February 15,
2006. Where the context otherwise requires, all references to the offering of
Units represented by this Agreement, or the amount of financing to be received
by the Company pursuant to sales of Units hereunder, shall be deemed to include
all Units sold and consideration received therefor by the Company pursuant to
such Regulation S offering.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows with the intent to be legally bound:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"Action" shall have the meaning ascribed to such term in
Section 3.1(h).
"Affiliate" means, with respect to any Person, any Person
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person as such terms are used
in and construed under Rule 144. With respect to a Purchaser, any investment
fund or managed account that is managed on a discretionary basis by the same
investment manager as such Purchaser will be deemed to be an Affiliate of such
Purchaser.
"Closing" means the consummation of the purchase and sale of
the Units pursuant to Section 2.1.
"Closing Date" means the Trading Day when all of the
Transaction Documents have been executed and delivered by the applicable parties
thereto, and all conditions precedent to (i) the Purchasers' obligations to pay
the Subscription Amount and (ii) the Company's obligations to deliver the
Securities have been satisfied or waived; provided, however, that (x) with
respect to a Purchaser that acquires Securities purchased hereunder in a
transaction or transactions exempt pursuant to Regulation S, the Closing Date
shall occur no later than February 15, 2006, and (y) with respect to all other
Purchasers, the Closing Date shall occur no later than January 17, 2006.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, par
value $.001 per share, and any securities into which such common stock may
hereafter be reclassified.
"Common Stock Equivalents" means any securities of the Company
or the Subsidiaries which would entitle the holder thereof to acquire at any
time Common Stock, including without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible
into or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.
"Disclosure Schedules" means the Disclosure Schedules of the
Company attached hereto as Exhibit A.
"Effective Date" means the date that the Registration
Statement is first declared effective by the Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exempt Issuance" means the issuance of (a) shares of Common
Stock or Common Stock Equivalents to employees, officers or directors of the
Company pursuant to any equity incentive plan in effect on the date hereof or
duly adopted by a majority of the non-employee members of the Board of Directors
of the Company or a majority of the members of a committee of non-employee
directors established for such purpose, (b) securities upon the exercise or
conversion of any securities issued hereunder or convertible securities, options
or warrants issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to
increase the number of such securities, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by the Board of Directors of the
Company.
"Intellectual Property Rights" shall have the meaning ascribed
to such term in Section 3.1(m).
"Liens" means a lien, charge, security interest, encumbrance,
right of first refusal, preemptive right or other similar restriction.
"Material Adverse Effect" shall have the meaning ascribed to
such term in Section 3.1(b).
"Material Permits" shall have the meaning ascribed to such
term in Section 3.1(k).
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"Person" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind.
"Placement Agents" means Oceana Partners LLC and G. M. Capital
Partners, Ltd.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition).
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and each
Purchaser, in substantially the form of Exhibit B hereto.
"Registration Statement" means a registration statement
meeting the requirements set forth in the Registration Rights Agreement and
covering the resale by the Purchasers of the Shares and the Warrant Shares.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Required Approvals" shall have the meaning ascribed to such
term in Section 3.1(e).
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities" means the Shares, the Warrants and the Warrant
Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock issued or issuable
to each Purchaser pursuant to this Agreement.
"Subscription Amount" means, as to each Purchaser, the amounts
set forth below such Purchaser's signature block on the signature page hereto,
in United States dollars and in immediately available funds.
"Subsidiary" shall mean each of the subsidiaries of the
Company set forth on Schedule 3.1(a).
"Trading Day" means a day on which the Common Stock is traded
on a Trading Market. If the Common Stock is not listed or quoted for trading on
any Trading Market on the date in question, then Trading Day shall mean business
day.
"Trading Market" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
the Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock
Exchange, the Nasdaq National Market or the OTC Bulletin Board.
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"Transaction Documents" means this Agreement, the Warrants,
the Registration Rights Agreement and any other documents or agreements executed
in connection with the transactions contemplated hereunder.
"Warrants" means the Common Stock Purchase Warrants described
in Section 2.2(a)(iii) and in substantially the form attached hereto as
Exhibit C.
"Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrants.
ARTICLE II
PURCHASE AND SALE
2.1 Closing. On the Closing Date, each Purchaser shall purchase from
the Company, severally and not jointly with the other Purchasers, and the
Company shall issue and sell to each Purchaser, the Units set forth under each
Purchaser's name on the signature pages hereto. The aggregate Subscription
Amounts for Units sold hereunder shall be up to $7,000,000. Promptly (but no
later than five (5) Trading Days) after satisfaction of the conditions set forth
in Section 2.2 and 2.3, the Closing shall occur at such location as the parties
shall mutually agree.
2.2 Deliveries.
(a) On the Closing Date, the Company shall deliver or cause to
be delivered to each Purchaser the following:
(i) this Agreement duly executed by the Company;
(ii) a certificate evidencing 25,000 Shares of Common
Stock registered in the name of such Purchaser for each Unit purchased by such
Purchaser;
(iii) a Warrant, registered in the name of such
Purchaser, exercisable immediately upon issuance for a term of 5 years after
issuance, pursuant to which such Purchaser shall have the right to acquire, for
each Unit purchased by such Purchaser, 12,500 shares of Common Stock at an
exercise price of three dollars ($3.00) per share, subject to adjustment as
provided therein; and
(iv) the Registration Rights Agreement duly executed
by the Company.
(b) On the Closing Date, each Purchaser shall deliver, or
cause to be delivered, to the Company the following:
(i) this Agreement duly executed by such Purchaser;
(ii) such Purchaser's Subscription Amount by wire
transfer to the account of the Company; and
(iii) the Registration Rights Agreement duly executed
by such Purchaser.
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2.3 Closing Conditions.
(a) The obligations of the Company hereunder in connection
with the Closing are subject to the following conditions being met:
(i) the accuracy in all material respects when made
and on the Closing Date of the representations and warranties of the Purchasers
contained herein;
(ii) all obligations, covenants and agreements of the
Purchasers required to be performed at or prior to the Closing Date shall have
been performed; and
(iii) the delivery by the Purchasers of the items set
forth in Section 2.2(b) of this Agreement.
(b) The respective obligations of the Purchasers hereunder in
connection with the Closing are subject to the following conditions being met:
(i) the accuracy in all material respects on the
Closing Date of the representations and warranties of the Company contained
herein;
(ii) all obligations, covenants and agreements of the
Company required to be performed at or prior to the Closing Date shall have been
performed;
(iii) the delivery of a customary legal opinion from
Blank Rome LLP, counsel to the Company, in substantially the form attached
hereto as Exhibit D; and
(iv) the delivery by the Company of the items set
forth in Section 2.2(a) of this Agreement.
2.4 Irrevocable Commitments. Prior to the Closing Date, the Purchasers
will be delivering (i) executed signature pages to this Agreement and the other
Transaction Documents to the Placement Agents (who will deliver such signature
pages to the Company) and (ii) their respective Subscription Amounts, by wire
transfer to the account provided below, to the Company. Each Purchaser
acknowledges and agrees that, subject to applicable law, their commitments to
purchase Units hereunder will be irrevocable upon delivery of their Subscription
Amounts (and signature pages to the Transaction Documents) as provided above.
All Subscription Amounts should be delivered by the Purchasers to the Company by
wire transfer to the following account:
Wachovia Bank, N.A.
ABA#: 000000000
SWIFT #: XXXXXX00
Credit: Synova Healthcare, Inc.
Account: #2000012967304
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the Disclosure Schedules, which Disclosure
Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to each Purchaser.
(a) Subsidiaries. All of the direct and indirect subsidiaries
of the Company are set forth on Schedule 3.1(a). The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, and all the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities.
(b) Organization and Qualification. Each of the Company and
the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct its business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not reasonably be expected to result in (i)
a material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business or financial condition of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company's ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
"Material Adverse Effect"), and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further corporate authorization is required by the
Company in connection therewith, other than in connection with the Required
Approvals. Each Transaction Document has been (or upon delivery will have been)
duly executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
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(d) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company, the issuance and sale of the Units and
the consummation by the Company of the other transactions contemplated thereby
do not and will not (i) conflict with or violate any provision of the Company's
or any Subsidiary's certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any material agreement, credit facility, debt or other instrument (evidencing a
Company or Subsidiary debt or otherwise) or other agreement to which the Company
or any Subsidiary is a party or by which any material property or material asset
of the Company or any Subsidiary is bound, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject, or by
which any material property or material asset of the Company or a Subsidiary is
bound, except, in each case, as could not reasonably be expected to result in a
Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than (i) the filing with the Commission of the Registration
Statement (and any documents related thereto) and any other filings with the
Commission required by applicable law, or any rule, regulation or interpretation
of the Commission or any division thereof with respect thereto, (ii)
application(s) to each applicable Trading Market for the listing of the Shares
and Warrant Shares for trading thereon in the time and manner required by the
Registration Rights Agreement, and (iii) the filing of Form D with the
Commission and such filings as are required to be made under applicable state
securities laws (collectively, the "Required Approvals").
(f) Issuance of the Securities. The Shares and Warrants are
duly authorized and, when issued and paid for in accordance with the Transaction
Documents, will be validly issued, fully paid and nonassessable, free and clear
of all Liens, other than restrictions provided for in the Transaction Documents
and applicable securities laws. The Warrant Shares, when issued in accordance
with the terms of the Transaction Documents, will be validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the Company other than
restrictions provided for in the Transaction Documents and applicable securities
laws. The Company has reserved from its duly authorized capital stock the
maximum number of shares of Common Stock issuable pursuant to this Agreement and
the Warrants.
(g) Capitalization. Except as a result of the purchase and
sale of the Securities under this Agreement, no Person has any right of first
refusal, preemptive right, right of participation, or any similar right granted
by the Company to participate in the transactions contemplated by the
Transaction Documents. Except as (i) set forth on Schedule 3.1(g), (ii)
contemplated by the Transaction Documents, or (iii) a result of the purchase and
sale of the Securities, the Company has not issued any options, warrants, script
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
7
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. The issue and sale of the Securities
will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers and their designees) and
will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under any agreement with the
Company with respect to such securities. There are no stockholders agreements,
voting agreements or other similar agreements with respect to the Company's
capital stock to which the Company is a party.
(h) Litigation. Except as set forth on Schedule 3.1(h), there
is no action, suit, notice of violation, proceeding or investigation pending or,
to the knowledge of the Company, threatened against the Company, any Subsidiary
or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state,
county or foreign) (collectively, an "Action") which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the Securities or (ii) would, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse Effect.
(i) Labor Relations. No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of the employees
of the Company that could reasonably be expected to result in a Material Adverse
Effect.
(j) Compliance. To the Company's knowledge, neither the
Company nor any Subsidiary (i) is in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company or any Subsidiary under), nor
has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any material indenture, loan or
credit agreement or any other material agreement or instrument to which it is a
party or by which it or any of its properties is bound, (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is in
violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal and state laws applicable to
its business, except, in each case as would not have a Material Adverse Effect.
(k) Regulatory Permits. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities (including but not
limited to the FDA) necessary to conduct their respective businesses, except
where the failure to possess such permits would not have, or reasonably be
expected to result in, a Material Adverse Effect ("Material Permits"), and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(l) Title to Assets. The Company and the Subsidiaries have
good title in fee simple to all real property owned by them that is material to
the business of the Company and the Subsidiaries and good title in all personal
property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as
do not materially affect the value of such property and do not materially
interfere with the use made of such property by the Company and the Subsidiaries
and (ii) Liens for the payment of
8
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties. The Company and the Subsidiaries are in substantial
compliance with all leases covering real property or facilities leased by them.
(m) Patents and Trademarks. The Company and the Subsidiaries
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights necessary for use in connection with their respective
businesses and which the failure to so have would have a Material Adverse Effect
(collectively, the "Intellectual Property Rights"). Neither the Company nor any
Subsidiary has received a written notice that the Intellectual Property Rights
used by the Company or any Subsidiary violates or infringes upon the rights of
any Person. To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights of the Company.
(n) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.
(o) Transactions With Affiliates and Employees. Except as set
forth on Schedule 3.1(o), none of the officers or directors of the Company is
presently a party to any transaction with the Company or any Subsidiary (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer or director or, to the knowledge of
the Company, any entity in which any officer or director has a substantial
interest or is an officer, director, trustee or partner, in each case in excess
of $60,000 other than (i) for payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of the Company or
any Subsidiary and (iii) for other employee benefits, including stock option
agreements under any stock option plan of the Company or a Subsidiary.
(p) Certain Fees. Except to the Persons set forth on Schedule
3.1(p), no brokerage or finder's fees or commissions are or will be payable by
the Company to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no direct obligation
with respect to any fees or with respect to any claims made by or on behalf of
other Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement.
(q) Private Placement. Assuming the accuracy of the Purchasers
representations and warranties set forth in Section 3.2, no registration under
Section 5 of the Securities Act is required for the offer and sale of the
Securities by the Company to the Purchasers as contemplated hereby.
9
(r) Registration Rights. Except as provided on Schedule 3.1(r)
and in the Registration Rights Agreement, no Person has any right to cause the
Company to effect the registration under the Securities Act of any securities of
the Company.
(s) Disclosure. All disclosure provided to the Purchasers
regarding the Company, its business and the transactions contemplated hereby,
including the Disclosure Schedules to this Agreement, furnished by or on behalf
of the Company with respect to the representations and warranties made herein
are true and correct with respect to such representations and warranties and do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The Company
acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 3.2 hereof.
(t) Taxes. Except for matters (i) set forth on Schedule
3.1(t), or (ii) that would not, individually or in the aggregate, have, or
reasonably be expected to result in, a Material Adverse Effect, the Company and
each Subsidiary has filed all necessary federal, state and foreign income tax
returns and has paid or accrued all taxes shown as due thereon, and the Company
has no knowledge of a tax deficiency which has been asserted or threatened
against the Company or any Subsidiary.
3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:
(a) Organization; Authority. Such Purchaser, if not a natural
person, is an entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization with full right, corporate or
partnership power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by such
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate or similar action on the part of such
Purchaser. Each Transaction Document to which a Purchaser is a party has been
duly executed by such Purchaser, and, subject to Section 2.4, when delivered by
such Purchaser in accordance with the terms hereof, will constitute the valid
and legally binding obligation of such Purchaser, enforceable against such
Purchaser in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
(b) Purchaser Representation. Such Purchaser understands that
the Securities are "restricted securities" and have not been registered under
the Securities Act or any applicable state securities law and is acquiring the
Securities as an investment as principal for its own account and not with a view
to or for distributing or reselling such Securities or any part thereof, has no
present intention of distributing any of such Securities and has no arrangement
or understanding with any other Persons regarding the distribution of such
Securities (this representation and warranty not limiting such Purchaser's right
to sell the Securities pursuant to the Registration Statement or otherwise in
compliance with applicable federal and state securities
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laws). Such Purchaser is acquiring the Securities hereunder in the ordinary
course of its business. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.
(c) Purchaser Status. At the time such Purchaser was offered
the Securities, it was, and at the date hereof it is, and on each date on which
it exercises any Warrants, it will be either: (i) an "accredited investor" as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act, or (ii) a "qualified institutional buyer" as defined in Rule 144A(a) under
the Securities Act. Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act. Each Person who is
purchasing pursuant to Regulation S promulgated by the Commission under the
Securities Act represents that he, she or it is not a "U.S. Person" as that term
is defined in Regulation S and agrees to be bound by all of the terms and
conditions of Regulation S.
(d) Experience of Such Purchaser. Such Purchaser, either alone
or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
(e) General Solicitation. Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
(f) Relationship to Company; Access to Information. The
Purchaser either has a preexisting personal or business relationship with the
Company or its officers, directors or controlling persons, or, by reason of
Purchaser's business or financial experience, the Purchaser has the capacity and
has taken all steps necessary to protect the Purchaser's own interests in
connection with an investment in the Securities. The Purchaser has received and
read or reviewed with his Purchaser Representative, if any, and represents that
he is familiar with this Agreement, the other Transaction Documents, the
Disclosure Schedules and the other documents delivered to the Purchaser as part
of the offering of the Securities. The Company has made available to the
Purchaser such information and documents regarding the Company as Purchaser
deems necessary to enable him to make an informed decision concerning the
purchase of the Securities and the Company has provided answers to all of
Purchaser's questions relating to this investment in the Securities. The
Purchaser acknowledges that no federal or state agency has made any finding or
determination as to the fairness of the offering for investment or any
recommendation or endorsement of the Securities.
(g) Purchaser's Liquidity. The Purchaser has adequate means of
providing for the Purchaser's current needs and personal contingencies and has
no need for liquidity in connection with the investment in the Securities. The
Purchaser acknowledges that the Purchaser must bear the economic risk of
investment in the Securities for an indefinite period of time, and that the
Purchaser could sustain a loss of the Purchaser's entire investment in the
Securities without materially impairing the Purchaser's financial wherewithal.
The Purchaser's overall commitment to investments which are not readily
marketable is not disproportionate
11
to the net worth of the Purchaser, and the Purchaser's investment in the
Securities will not cause such overall commitment to become excessive.
(h) Short Sales. Without limiting anything in Article IV, each
Purchaser represents that from the date it was notified of the transactions
contemplated hereby until the Closing, neither it nor any Person over which the
Purchaser has direct control, have made, or will make, any net short sales of,
or granted, or will grant, any option for the purchase of, or entered into any
hedging or similar transaction with the same economic effect as a net short sale
in the Common Stock. Each Purchaser, severally and not jointly with the other
Purchasers, understands and acknowledges that the Commission currently takes the
position that coverage of short sales of shares of the Common Stock "against the
box" with the Securities purchased hereunder prior to the Effective Date is a
violation of Section 5 of the Securities Act. Accordingly, each Purchaser hereby
agrees not to use any of the Securities to cover any short sales prior to the
Effective Date. Additionally, each Purchaser, severally and not jointly with the
other Purchasers, agrees to comply in all respects with Regulation M under the
federal securities laws.
(i) Special Representations for Regulation S Purchasers. Each
Purchaser who is purchasing Securities hereunder pursuant to Regulation S
promulgated by the Commission under the Securities Act hereby makes the
following additional representations and warranties to the Company:
(i) It understands and acknowledges that the
Securities have not been registered under the Securities Act or any other
applicable securities laws, and the Securities may not be sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities law or pursuant to an
exemption therefrom and in each case in compliance with the conditions for
transfer set forth in (iii) below.
(ii) It is a person that, at the time the buy order
for the Securities was originated, was outside the United States and was not a
U.S. person (and was not purchasing for the account or benefit of a U.S. person)
within the meaning of Regulation S.
(iii) It acknowledges that it will offer, sell or
otherwise transfer the Securities, prior to the date which is two years after
the later of the original issue date hereof and the last date on which the
Company or any affiliate of the Company was the owner of any of the Securities
(or any predecessor of the Securities), only (A) to the Company, (B) pursuant to
a registration statement that has been declared effective under the Securities
Act, (C) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act in a transaction
meeting the Requirements of Rule 904 under the Securities Act, or (D) pursuant
to another available exemption from the registration requirements of the
Securities Act, subject to the Company's right prior to any offer, sale or
transfer pursuant to clause (C) or (D) to require the delivery of an opinion of
counsel, certificates and/or other information reasonably satisfactory to the
Company.
(iv) It agrees that it will not engage in hedging
transactions involving the Securities unless such transactions are in compliance
with the Securities Act.
12
(v) If it is a "dealer" or a person "receiving a
selling concession fee or other remuneration" within the meaning of Regulation S
under the Securities Act, it acknowledges that until the expiration of the
one-year "restricted period" within the meaning of Rule 903 of Regulation S
under the Securities Act, any offer or sale of the Securities shall not be made
by it to a U.S. person or for the account or benefit of a U.S. person within the
meaning of Rule 902(k) of the Securities Act.
(vi) It acknowledges that the Company and others will
rely upon the truth and accuracy of the foregoing representations, warranties
and agreements and agrees that, if any of the representations, warranties and
agreements made by Purchaser of the Securities are no longer accurate, it shall
promptly notify the Company.
(j) Indemnification Representations of Purchaser. Each
Purchaser represents and warrants that none of the representations or warranties
made by the Purchaser herein ("Purchaser Statements") contain any false or
misleading statement or omit to state a material fact. The Purchaser shall
indemnify the Company to the extent the Company incurs or suffers any damage,
expenses, loss, claim, judgment or liability resulting from the Company's
reliance upon any Purchaser Statement that is false or misleading.
(k) Additional Representations and Warranties of Purchasers.
Each Purchaser represents and warrants that:
(i) Purchaser has received, has carefully read and
understands the Risk Factors attached hereto as Exhibit E;
(ii) Purchaser has been furnished with all additional
documents and information which Purchaser has requested;
(iii) Purchaser has had the opportunity to ask
questions of, and received answers from, the Company concerning the Company and
the Securities and to obtain any additional information necessary to verify the
accuracy of the information furnished;
(iv) Purchaser has relied only on the foregoing
information and documents in determining to make an investment in the
Securities;
(v) The documents and information furnished by the
Company to the Purchasers in connection with the offering of the Securities do
not constitute investment, accounting, legal or tax advice, and Purchaser is
relying on its own professional advisers for such advice;
(vi) All documents, records and books pertaining to
Purchaser's investment have been made available for inspection by Purchaser and
by Purchaser's attorney, and/or Purchaser's accountant and/or Purchaser's
purchaser representative;
(vii) Purchaser understands, acknowledges and agrees
that the Company is relying solely upon the representations and warranties of
the Purchasers made herein in determining to sell Purchaser the Securities;
13
(viii) The Purchaser has not paid or given any
commission or other remuneration in connection with the purchase of the
Securities;
(ix) The Purchaser understands the meaning and legal
consequences of the foregoing representations and warranties. The Purchaser
certifies that each of the foregoing representations and warranties is true and
correct as of the date hereof and shall survive the execution hereof and the
purchase of the Securities;
(x) The Purchaser has not traded in securities of the
Company in violation of Rule 10b-5 under the Exchange Act or any other federal
or state xxxxxxx xxxxxxx or anti-fraud securities law.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Purchasers acknowledge and agree that the Securities
may only be disposed of in compliance with state and federal securities laws. In
connection with any transfer of Securities, the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor and reasonably acceptable to the Company, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities
under the Securities Act.
(b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of a legend on any of the Securities in
substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY.
(c) Certificates evidencing the Shares and Warrant Shares
shall not contain any legend (including the legend set forth in Section 4.1(b)),
(i) following any sale of such Shares or Warrant Shares pursuant to Rule 144,
(ii) if such Shares or Warrant Shares are eligible
14
for sale under Rule 144(k), (iii) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the Commission) and
(iv) in the case of (i) and (ii) above, if the registered owner of such
certificate delivers an appropriate representation letter to the Company and its
counsel. The Company agrees that at such time as such legend is no longer
required under this Section 4.1(c), it will, no later than three Trading Days
following the delivery by a Purchaser to the Company or the Company's transfer
agent of a certificate representing Shares or Warrant Shares, as the case may
be, issued with a restrictive legend, deliver or cause to be delivered to such
Purchaser a replacement certificate representing such Securities that is free
from such legends.
(d) Each Purchaser, severally and not jointly with the other
Purchasers, agrees that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the
Company's reliance that the Purchaser will sell any Securities pursuant to the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom.
(e) Notwithstanding anything contained herein to the contrary,
and in addition to any other legends required by law or hereunder, Securities
purchased hereunder in reliance on Regulation S promulgated by the Commission
under the Securities Act shall be imprinted with a legend in substantially the
following form:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND ARE BEING OFFERED AND SOLD ONLY PURSUANT
TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT.
THESE SECURITIES MAY NOT BE RE-OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE WHICH
IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF
AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, OR (D) PURSUANT TO
15
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO
ANY OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C) OR (D) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATES
AND/OR OTHER INFORMATION REASONABLY SATISFACTORY TO THE
COMPANY. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
FURTHER AGREES NOT TO ENGAGE IN HEDGING TRANSACTIONS INVOLVING
THESE SECURITIES UNLESS SUCH TRANSACTIONS MEET THE
REQUIREMENTS AND COMPLY WITH THE SECURITIES ACT.
Notwithstanding anything contained herein to the contrary, the Company
will not, and is not permitted to, register the transfer of any Securities sold
hereunder on the Company's books or records, unless such Securities have been
transferred in accordance with or pursuant to (A) the provisions of Regulation
S, (B) a registration statement declared effective by the Commission or (C)
another available exemption from registration under the Securities Act.
4.2 Furnishing of Information. From and after the Effective Date of the
Registration Statement, as long as any Purchaser owns Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. As long as any
Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell such Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
4.3 Securities Laws Disclosure; Publicity. The Company shall, by 8:30
a.m. Eastern time on or before the second Trading Day following the Closing
Date, issue a press release reasonably acceptable to the Placement Agents (on
behalf of the Purchasers) disclosing the material terms of the transactions
contemplated hereby. Except as required by applicable law, the Company and the
Placement Agents (on behalf of the Purchasers) shall consult with each other in
issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor the Placement Agents or any Purchaser shall
issue any such press release or otherwise make any such public statement without
the prior consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of the Placement Agents (on behalf of
the Purchasers), with respect to any press release of the Company, which consent
shall not unreasonably be withheld, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication. The Company will
copy________________________ on all correspondence delivered by the Company to
the Placement Agents under this Section.
16
4.4 Indemnification of Purchasers. Subject to the provisions of this
Section 4.4, the Company will indemnify and hold the Purchasers and their
directors, officers, shareholders, partners, employees and agents (each, a
"Purchaser Party") harmless from any and all losses, liabilities, obligations,
claims, damages, costs and expenses, including all judgments, amounts paid in
settlements (subject to the provisions below), court costs and reasonable
attorneys' fees and costs of investigation that any such Purchaser Party may
suffer or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or (b) any action instituted against a Purchaser, or any of their
respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser or any other Purchaser, with respect to any of the
transactions contemplated by the Transaction Documents (unless such action is
based upon a breach of such Purchaser's representation, warranties or covenants
under the Transaction Documents or any agreements or understandings such
Purchaser may have with any such stockholder or any violations by the Purchaser
of state or federal securities laws or any conduct by such Purchaser which
constitutes fraud, gross negligence, willful misconduct or malfeasance). If any
action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing. Any Purchaser Party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Purchaser Party except to the extent that (i)
the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel (assuming an obligation to so assume the
defense) or (iii) in such action there is, in the reasonable opinion of such
separate counsel, a material conflict on any material issue between the position
of the Company and the position of such Purchaser Party. The Company will not be
liable to any Purchaser Party under this Agreement (i) for any settlement by an
Purchaser Party effected without the Company's prior written consent, which
shall not be unreasonably withheld or delayed, or (ii) to the extent, but only
to the extent that a loss, claim, damage, judgment or liability is attributable
to any Purchaser Party's breach of any of the representations, warranties,
covenants or agreements made by the Purchasers in this Agreement or in the other
Transaction Documents.
4.5 Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants.
4.6 Listing of Common Stock. The Company hereby agrees to use
reasonable commercial efforts as soon as reasonably practicable following the
Effective Date to list all of the Shares and Warrant Shares on the OTC Bulletin
Board. After the Company's Common Stock is accepted for listing and/or trading
on the OTC Bulletin Board, and for at least a period of two years thereafter,
the Company will use reasonable commercial efforts to continue the listing and
trading of its Common Stock on the OTC Bulletin Board or other Trading Market.
4.7 Equal Treatment of Purchasers. No consideration shall be offered or
paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the
17
Transaction Documents. For clarification purposes, this provision constitutes a
separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser, and is intended to treat the Company and the
Purchasers as a class and shall not in any way be construed as the Purchasers
acting in concert or as a group with respect to the purchase, disposition or
voting of Securities or otherwise.
4.8 Participation in Future Financing. From the Closing Date until six
(6) months after the Effective Date, upon any equity financing by the Company of
its Common Stock or Common Stock Equivalents (a "Subsequent Financing"), each
Purchaser shall have the right to participate, on a pro rata basis, in up to 50%
of such Subsequent Financing (the "Participation Maximum"). At least five (5)
Trading Days prior to the closing of the Subsequent Financing, the Company shall
deliver to each Purchaser, subject to the Purchaser's agreement to keep such
information confidential, a written notice of its intention to effect a
Subsequent Financing (a "Subsequent Financing Notice"), which Subsequent
Financing Notice shall provide a summary of the details of such financing,
including, the amount of proceeds intended to be raised thereunder and a general
description of the Person(s) with whom such Subsequent Financing is proposed to
be effected. If a Purchaser desires to exercise its rights under this section
and to participate in such Subsequent Financing, it shall deliver notice to such
effect to the Company within three (3) Trading Days after the date the
Subsequent Financing Notice is delivered. If by 6:30 p.m. (New York City time)
on the third Trading Day after delivery of the Subsequent Financing Notice to
each of the Purchasers, notifications by the Purchasers of their willingness to
participate in the Subsequent Financing is, in the aggregate, less than the
Participation Maximum, then the Company may effect the remaining portion of such
Participation Maximum (as well as the remaining portion of the Subsequent
Financing) on the terms and to the Persons set forth in the Subsequent Financing
Notice. If the Company receives no notice from a Purchaser as of such third
Trading Day, such Purchaser shall be deemed to have notified the Company that it
does not elect to participate. The Company must provide the Purchasers with a
second Subsequent Financing Notice, and the Purchasers will again have the right
of participation set forth above in this Section 4.8, if the Subsequent
Financing subject to the initial Subsequent Financing Notice is not consummated
for any reason on the terms set forth in such Subsequent Financing Notice within
90 Trading Days after the date of the initial Subsequent Financing Notice.
Notwithstanding the foregoing, this Section 4.8 shall not apply in respect of an
Exempt Issuance.
4.9 Subsequent Equity Sales.
(a) Anti-Dilution. If at any time that a Purchaser is still
holding shares of Common Stock purchased hereunder, the Company shall issue
(other than Exempt Issuances) any Common Stock or Common Stock Equivalents to
any other person or entity at a price per share less than $2.00 (taking into
account both the initial price and any exercise price in the case of a
convertible security), without the consent of each Purchaser then holding Common
Stock purchased hereunder, then the Company shall issue, for each such occasion,
additional shares of Common Stock to each Purchaser then-holding shares of
Common Stock purchased hereunder so that the weighted average per share purchase
price of the shares of Common Stock issued to the Purchaser hereunder (of only
the Common Stock purchased hereunder and still owned by the Purchaser) is equal
to such other lower price per share, but not less than the par value of the
Common Stock. The delivery to the Purchaser of the additional shares of Common
Stock pursuant to this Section shall be promptly after the closing date of the
transaction giving rise to
18
the requirement to issue additional shares of Common Stock under this Section.
For purposes of the issuance and adjustment described in this paragraph, the
issuance of any Common Stock Equivalents shall result in the issuance of the
additional shares of Common Stock upon the issuance of such Common Stock
Equivalents. If the Company issues additional shares of Common Stock to a
Purchaser under this Section, such Purchaser shall be entitled to "piggy-back"
registration rights with respect to such shares of Common Stock pursuant to, and
in accordance with, Section 6(e) of the Registration Rights Agreement; provided,
however, that such "piggy-back" registration rights shall not apply with respect
to the Registration Statement. Notwithstanding anything contained herein to the
contrary, this Section only applies to issuances made by the Company during the
six (6) month period following the Effective Date. The rights of the Purchasers
set forth in this Section are in addition to any other rights the Purchasers
have pursuant to this Agreement and any other agreement referred to or entered
into in connection herewith.
(b) No Variable Rate Transactions. In addition to the
limitations set forth herein, from the Closing Date until one (1) year after the
Effective Date, the Company shall be prohibited from effecting or enter into an
agreement to effect any Subsequent Financing involving a "Variable Rate
Transaction" (as defined below). The term "Variable Rate Transaction" shall mean
a transaction in which the Company issues or sells any debt or equity securities
that are convertible into, exchangeable or exercisable for, or include the right
to receive additional shares of Common Stock at a conversion, exercise or
exchange rate or other price that is based upon and/or varies with the trading
prices of or quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities.
(c) Subsequent Financing Block. If the Purchasers invest an
aggregate of at least $5,000,000 in connection with their Unit purchases
hereunder, then from the Closing Date until the date that is six (6) months
after the Effective Date, without the consent of Purchasers who hold in the
aggregate more than fifty (50%) percent of Shares purchased under this Agreement
and then outstanding, the Company shall not issue shares of Common Stock or
Common Stock Equivalents, other than Exempt Issuances; provided however, the six
(6) months period shall be extended for the number of Trading Days during such
period in which (a) trading in the Common Stock is suspended by any Trading
Market, or (b) following the Effective Date, the Registration Statement is not
effective or the prospectus included in the Registration Statement may not be
used by the Purchasers for the resale of the Shares and Warrant Shares.
ARTICLE V
MISCELLANEOUS
5.1 Fees and Expenses. Except as otherwise set forth in this Agreement,
each party shall pay the fees and expenses of its advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of
this Agreement. The Company shall pay all stamp and other taxes and duties
levied in connection with the sale of the Securities.
5.2 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with
19
respect to such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules.
5.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto or email (if provided by the
Purchaser) to the email address set forth on the signature pages hereto, in each
case, prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next
Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number set forth on the signature pages
attached hereto or email (if provided by the Purchaser) to the email address set
forth on the signature pages hereto, in each case, on a day that is not a
Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c)
the second Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached hereto.
5.4 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed by the Company and Purchasers
holding a majority of the Shares purchased hereunder and then outstanding. No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right.
5.5 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
5.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser.
5.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.9.
5.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the State of Delaware for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction
20
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys' fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
5.9 Survival. The representations and warranties of the Company herein
shall survive for a period of eighteen (18) months after the Closing.
5.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement, and subject to Section 2.4, shall become effective when
counterparts have been signed by each party and delivered to the other party, it
being understood that both parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.
5.11 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.12 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
timely written notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and rights.
5.13 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested by the Company. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities.
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5.14 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.15 Payment Set Aside. To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
5.16 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents.
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Address for Notice:
SYNOVA HEALTHCARE GROUP, INC. SYNOVA HEALTHCARE GROUP, INC.
Rose Tree Corporate Center
0000 X. Xxxxxxxxxx Xxxx
By:_________________________________ Suite 6010, Building II
Name: Xxxxxxx X. Xxxx Media, PA 19063
Title: Chief Executive Officer
With a copy to (which shall not constitute notice)
BLANK ROME LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esquire
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
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[PURCHASER SIGNATURE PAGES TO
SYNOVA SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Name of Investing Entity:______________________________________________________
Signature of Authorized Signatory of Investing Entity:_________________________
Name of Authorized Signatory:__________________________________________________
Title of Authorized Signatory:_________________________________________________
Email Address of Authorized Entity:____________________________________________
Address for Notice of Investing Entity:
Address for Delivery of Securities for Investing Entity (if not same as above):
Subscription Amount:
Units:
EIN Number:
[SIGNATURE PAGES CONTINUE]
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