YOUNGEVITY INTERNATIONAL, INC. SHARE PURCHASE AGREEMENT
Exhibit 10.2
This
Share Purchase Agreement (this “Agaareement”) is dated as
of
August
, 2018, among Youngevity International, Inc., a Delaware
corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and
collectively the “Purchasers”).
RECITALS
A. The
Company and each Purchaser is executing and delivering this
Agreement in reliance upon the exemption from securities
registration afforded by Section 4(a)(2) of the Securities Act, and
Rule 506 of Regulation D (“Regulation D”) as
promulgated by the United States Securities and Exchange Commission
(the “Commission”) under the
Securities Act.
B. Each
Purchaser, severally and not jointly, wishes to purchase, and the
Company wishes to sell, upon the terms and conditions stated in
this Agreement, that aggregate number of shares of Preferred Stock
set forth below such Purchaser’s name on the signature page
of this Agreement as provided herein.
C. Contemporaneously
with the execution and delivery of this Agreement, the parties
hereto are executing and delivering the Registration Rights
Agreement, pursuant to which, among other things, the Company will
agree to provide certain registration rights with respect to the
Shares under the Securities Act and the rules and regulations
promulgated thereunder and applicable state securities
laws.
AGREEMENT
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 agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the
terms defined elsewhere in this Agreement, for all purposes of this
Agreement, the following terms have the meanings set forth in this
Section 1.1:
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under
Rule 144 under the Securities Act. With respect to a Purchaser, any
investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such
Purchaser will be deemed to be an Affiliate of such
Purchaser.
“Business Day” means any
day except Saturday, Sunday, any day which shall be a federal legal
holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“Certificate of
Designation” means the Certificate of Designation to
be filed prior to the Closing by the Company with the Secretary of
State of Delaware in the form of Exhibit A
attached hereto.
“Closing”
means the closing of the purchase and sale of the Shares pursuant
to Section
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2.1.
“Closing Date” means the
date and time of the Closing.
“Commission” means the
Securities and Exchange Commission.
“Common Stock” means the
Common Stock of the Company, par value $0.001 per share, and any
other class of securities into which such securities may hereafter
be reclassified or changed into.
“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 exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
“Company Counsel” means
Gracin & Xxxxxx, LLP, with offices located at the Chrysler
Building, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
00000.
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.
“GAAP” shall have the
meaning ascribed to such term in Section 3.1(e).
“Incentive Warrants” shall
have the meaning ascribed to such term in Section 4.6.
“Intellectual Property”
shall have the meaning ascribed to such term in Section
3.1(o).
“Liens”
means a lien, charge, security interest, encumbrance, right of
first refusal, preemptive right or other restriction.
“Material Adverse Effect”
shall have the meaning assigned to such term in Section
3.1(a).
“Per Share Purchase Price”
equals $9.50.
“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.
“Preferred Stock” means
the shares of Company Series C Convertible Preferred Stock to be
issued to the Purchasers.
“Proceeding” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
“Purchaser Party” shall
have the meaning ascribed to such term in Section 4.5.
“Registration Rights
Agreement” means the Registration Rights Agreement,
dated the date hereof, among the Company and the Purchasers, in the
form of Exhibit B
attached hereto.
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“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 Underlying Shares.
“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially
the same effect as such Rule.
“SEC Documents” shall have
the meaning ascribed to such term in Section 3.1(e).
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Shares” means the shares
of Preferred Stock issued or issuable to each Purchaser pursuant to
this Agreement.
“Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for
the Shares purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement and
next to the heading “Subscription Amount,” in United
States dollars and in immediately available funds.
“Subsidiary”
means any subsidiary of the Company as set forth in the SEC
Documents.
“Trading Day” means a day
on which the Common Stock is traded on a Trading
Market.
“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 NYSE American
LLC, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange or the OTC
Bulletin Board.
“Transaction Documents”
means this Agreement, the Registration Rights Agreement and any
other documents or agreements executed in connection with the
transactions contemplated hereunder.
“Transfer Agent” means
Pacific Stock Transfer, and any successor transfer agent of the
Company.
“Underlying Shares” means
the shares of Common Stock issued and issuable upon conversion of
the Preferred Stock.
ARTICLE II
PURCHASE AND SALE
2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions
set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company
agrees to sell, and each Purchaser agrees to purchase, the number
of Shares of Preferred Stock set forth on the signature page hereto
executed by such Purchaser. The aggregate number of Shares of
Preferred Stock sold hereunder shall be no more than 315,790
Shares. Each Purchaser shall deliver to the Company, via wire
transfer immediately available funds equal to the Subscription
Amount as set forth on the signature page hereto executed by such
Purchaser and the Company shall deliver to such Purchaser the
number of Shares of Preferred Stock set forth on the signature page
hereto executed by such Purchaser, and the Company and such
Purchaser shall deliver the other items set forth in Section 2.2.
Upon satisfaction of the covenants and conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of
Company Counsel or such other location as the parties shall
mutually agree.
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2.2 Deliveries.
(a) On
or prior to 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) an
irrevocable letter of instruction to the transfer agent to either
issue a certificate evidencing a number of Shares of Preferred
Stock equal to such Purchaser’s Shares of Preferred Stock as
set forth on the signature page hereto executed by such Purchaser
and registered in the name of such Purchaser or provide evidence of
book entry of the number of Shares of Preferred Stock equal to such
Purchaser’s Shares of Preferred Stock as set forth on the
signature page hereto executed by such Purchaser and evidence of
the filing and acceptance of the Certificate of Designation from
the Secretary of State of Delaware; and
(iii) the
Registration Rights Agreement duly executed by the
Company.
(b) On
or prior to 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) the
Subscription Amount as set forth on the signature page hereto
executed by such Purchaser by wire transfer to the account
specified by the Company; and
(iii) the
Registration Rights Agreement duly executed by such
Purchaser.
2.3
Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing
are subject to the following conditions being met or waived by the
Company:
(i) the accuracy in all
material respects when made and on the Closing Date of the
representations and warranties of the Purchasers contained herein
(except with respect to representations and warranties which relate
to a specific date, in which case such representations and
warranties shall continue to be materially accurate as of such
date);
(ii) all
obligations, covenants and agreements of the Purchasers required to
be performed at or prior to the Closing Date shall have been
performed;
(iii) the
delivery by the Purchasers of the items set forth in Section 2.2(b)
of this Agreement;
(iv) no
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the
transactions contemplated by the Transaction Documents;
and
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(v) the Company shall
have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary for consummation of
the purchase and sale of the Shares, all of which shall be and
remain so long as necessary in full force and effect.
(b)
The respective
obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met or waived
by each Purchaser as to itself:
(i) the accuracy in all
material respects on the Closing Date of the representations and
warranties of the Company contained herein (except with respect to
representations and warranties which relate to a specific date, in
which case such representations and warranties shall continue to be
materially accurate as of such date);
(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 by the Company of the items set forth in Section 2.2(a) of
this Agreement and a certificate, dated as of the Closing Date and
signed by its Chief Executive Officer or its Chief Financial
Officer, certifying to the fulfillment of the conditions specified
in Sections 2.3(b)(i) and (ii);
(iv) on
the Closing Date, trading in the Common Stock shall not have been
suspended by the Commission or the Company’s principal
Trading Market (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be
terminated prior to the Closing Date), and, at any time prior to
the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades
are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States
or New York State authorities;
(v) no statute, rule,
regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the
Transaction Documents; and
(vi) the
Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary
for consummation of the purchase and sale of the Shares, all of
which shall be and remain so long as necessary in full force and
effect.
ARTICLE
III
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company. Except as set forth in the
SEC Documents which qualify any representation or otherwise made
herein to the extent of the disclosure contained in the SEC
Documents, the Company hereby makes the following representations
and warranties to each Purchaser as of the Closing
Date:
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(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 Delaware 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 and as described in the
reports filed by the Company with the Commission pursuant to the
reporting requirements of the Exchange Act, since the end of its
most recently completed fiscal year through the date hereof,
including, without limitation, its most recent report on Form 10-Q.
The Company does not have any material subsidiaries other than
those set forth on Exhibit 21 to the Annual Report on Form 10-K for
the year ended December 31, 2017. The Company is qualified to do
business as a foreign corporation 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.
For the purposes of this Agreement, “Material Adverse Effect” means any
effect on the business, operations, properties or financial
condition of the Company that is material and adverse to the
Company, taken as a whole, and any condition, circumstance or
situation that would prohibit the Company from entering into and
performing any of its obligations hereunder.
(b) Authorization; Enforcement. The
Company has the requisite corporate power and authority to enter
into and perform the Transaction Documents and to issue the Shares
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 have
been duly and validly authorized by all necessary corporate action,
and no further consent or authorization of the Company, its board
of directors or stockholders is required. When executed and
delivered by the Company, the Transaction Documents shall
constitute 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, 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) Issuance of Shares. The Shares
to be issued and sold hereunder have been duly authorized by all
necessary corporate action and, when issued in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable.
In addition, the Shares will be free and clear of all liens,
claims, charges, security interests or agreements, pledges,
assignments, covenants, restrictions or other encumbrances created
by, or imposed by, the Company (collectively, “Encumbrances”) and rights
of refusal of any kind imposed by the Company (other than
restrictions on transfer under applicable securities laws) and the
holder of such Shares shall be entitled to all rights accorded to a
holder of Common Stock.
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(d) No Conflicts; Governmental
Approvals. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby do not and will
not: (i) violate any provision of the Company’s Certificate
of Incorporation or Bylaws, each as amended to date; (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 the Company’s
properties or assets are bound; or (iii) 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 by which any
property or asset of the Company is bound or affected, except for
such conflicts, defaults, terminations, amendments, acceleration,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. Except for approval of
the NASDAQ Capital Market of the issuance of the Underlying Shares,
which such approval has been obtained by the Company on or before
the date hereof, the Company is not required under federal, state,
foreign 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
issue and sell the Shares in accordance with the terms hereof
(other than any filings, consents and approvals which may be
required to be made by the Company under applicable state and
federal securities laws, rules or regulations prior to or
subsequent to the Closing).
(e) SEC Documents, Financial
Statements. The Common Stock of the Company is registered
pursuant to Section 12(b) of the Exchange Act. During the year
preceding this Agreement, 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 (the foregoing materials,
including the exhibits thereto and documents incorporated by
reference therein being collectively referred to as the
“SEC
Documents”). At the times of their respective filing,
all such reports, schedules, forms, statements and other documents
complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission
promulgated thereunder. At the times of their respective filings,
such reports, schedules, forms, statements and other documents did
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. As of their respective
dates, the financial statements of the Company included in the SEC
Documents complied 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 applied on a consistent basis (“GAAP”) 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 consolidated financial
position of the Company 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).
(f) Accountants. Xxxxx Xxxxxxx XxXxxx P.C. whose report on
the financial statements of the Company is filed with the
Commission in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2017, were, at the time such report was
issued, independent registered public accountants as required by
the Securities Act.
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(g) Internal Controls. The Company
has established and maintains a system of internal accounting
controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles in the
United States and to maintain accountability for assets; (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 existing assets
at reasonable intervals and appropriate action is taken with
respect to any differences.
(h) Disclosure Controls. The
Company has established and maintains disclosure controls and
procedures (as such term is defined in Rules 13a-15 and 15d-15
under the Exchange Act). Since the date of the most recent
evaluation of such disclosure controls and procedures, there have
been no significant changes in internal controls or in other
factors that could significantly affect internal controls,
including any corrective actions with regard to significant
deficiencies and material weaknesses. The Company is in compliance
in all material respects with all provisions currently in effect
and applicable to the Company of the Xxxxxxxx-Xxxxx Act of 2002,
and all rules and regulations promulgated thereunder or
implementing the provisions thereof.
(i) No Material Adverse Change.
Except as disclosed in the SEC Documents, since March 31, 2018, the
Company has not (i) experienced or suffered any Material Adverse
Effect; (ii) incurred any material 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
business; or (iii) declared, made or paid any dividend or
distribution of any kind on its capital stock.
(j) No Undisclosed Events or
Circumstances. Except as disclosed in the SEC Documents, and
except for the consummation of the transactions contemplated
herein, since
March
31, 2018, to the Company’s knowledge, no event or
circumstance has occurred or exists with respect to the Company or
its 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.
(k) Litigation. No action, suit,
proceeding or investigation is currently pending or, to the
knowledge of the Company, has been threatened in writing against
the Company that: (i) concerns or questions the validity of this
Agreement; (ii) concerns or questions the right of the Company to
enter into this Agreement; or (iii) is reasonably likely to have a
Material Adverse Effect. The Company is neither a party to nor
subject to the provisions of any material order, writ, injunction,
judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or that the Company
intends to initiate that would have a Material Adverse
Effect.
(l) Compliance. Except for defaults
or violations which are not reasonably likely to have a Material
Adverse Effect, the Company is not (i) in default under or in
violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a
default by the Company under), nor has the Company received notice
of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has
been waived); (ii) is in violation of any order of any court,
arbitrator or governmental body; or (iii) is or has been in
violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state
and local laws, applicable to its business.
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(m) Intellectual
Property.
(i) To the best of its
knowledge, the Company has entered into agreements with each of its
current and former officers, employees and consultants involved in
research and development work, including development of the
Company’s products and technology providing the Company, to
the extent permitted by law, with title and ownership to patents,
patent applications, trade secrets and inventions conceived,
developed, reduced to practice by such person, solely or jointly
with other of such persons, during the period of employment by the
Company except where the failure to have entered into such an
agreement would not have a Material Adverse Effect. The Company is
not aware that any of its employees or consultants is in material
violation thereof.
(ii) To
the Company’s knowledge, the Company owns or possesses
adequate rights to use all trademarks, service marks, trade names,
domain names, copyrights, patents, patent applications, inventions,
know how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), and other intellectual property rights
(“Intellectual
Property”) as are necessary for the conduct of its
business as described in the SEC Documents. Except as described in
the SEC Documents: (1) to the knowledge of the Company, there is no
infringement, misappropriation or violation by third parties of any
such Intellectual Property; (2) there is no pending or, to the
knowledge of the Company, threatened action, suit, proceeding by
others against the Company challenging the Company’s rights
in or to any such Intellectual Property and the Company has not
received any written notice of a claim by others against the
Company challenging the Company’s rights in or to any such
Intellectual Property; (3) the Intellectual Property owned by the
Company and, to the knowledge of the Company, the Intellectual
Property licensed to the Company has not been adjudged invalid or
unenforceable by a court of competent jurisdiction or applicable
government agency, in whole or in part, and there is no pending or,
to the knowledge of the Company, threatened action, suit,
proceeding by others challenging the validity or scope of any such
Intellectual Property and Company has not received any written
notice of a claim by others challenging the validity or scope of
any such Intellectual Property; (4) there is no pending or, to the
knowledge of the Company, threatened action, suit, proceeding or
claim by others against the Company that the Company infringes,
misappropriates or otherwise violates any Intellectual Property or
other proprietary rights of others, and the Company has not
received any written notice of such claim; and (5) to the
Company’s knowledge, no employee of the Company is the
subject of any claim or proceeding involving a violation of any
term of any employment contract, patent disclosure agreement,
invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement or any
restrictive covenant to or with a former employer where the basis
of such violation relates to such employee’s employment with
the Company or actions undertaken by the employee while employed
with the Company, in each of (1) through (5), for any instances
which would not, individually or in the aggregate, result in a
Material Adverse Effect.
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(n) Listing and Maintenance
Requirements. The Company is in compliance with the
requirements of the Trading Market for continued trading of the
Common Stock pursuant thereto. The issuance and sale of the Shares
hereunder does not contravene the rules and regulations of the
Trading Market.
(o) Private Placement. Neither the
Company nor its Affiliates, nor any Person acting on its or their
behalf: (i) 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 the Shares
hereunder, (ii) has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security,
under any circumstances that would require registration of the sale
and issuance by the Company of the Shares under the Securities Act;
or (iii) has issued any shares of Common Stock or shares of any
series of preferred stock or other securities or instruments
convertible into, exchangeable for or otherwise entitling the
holder thereof to acquire shares of Common Stock which would be
integrated with the sale of the Shares to Purchasers for purposes
of the Securities Act or of any applicable stockholder approval
provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated, nor
will the Company or any of its subsidiaries or affiliates take any
action or steps that would require registration of any of the
Shares under the Securities Act or cause the offering of the Shares
to be integrated with other offerings. Assuming the accuracy of the
representations and warranties of Purchasers, the offer and
issuance of the Shares by the Company to Purchasers pursuant to
this Agreement will be exempt from the registration requirements of
the Securities Act.
3.2 Representations
and Warranties of the Purchasers. Each Purchaser, for itself
and for no other Purchaser, hereby represents and warrants to the
Company as follows (as of the Closing Date, unless otherwise noted
below):
(a) Authority.
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 it is a party
has been duly executed by such Purchaser, and when delivered by
such Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Purchaser,
enforceable against it 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; (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable
remedies; and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
(b) Own
Account. Such Purchaser understands that the Shares are
“restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and
is acquiring the Shares as principal for its own account and not
with a view to or for distributing or reselling such Shares or any
part thereof in violation of the Securities Act or any applicable
state securities law, has no present intention of distributing any
of such Shares in violation of the Securities Act or any applicable
state securities law and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding
the distribution of such Shares (this representation and warranty
not limiting such Purchaser’s right to sell the Shares
pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws) in violation of
the Securities Act or any applicable state securities law. Such
Purchaser is acquiring the Shares hereunder in the ordinary course
of its business. Such Purchaser understands that it may not be able
to sell any of the Shares without prior registration under the
Securities Act or the existence of an exemption from such
registration requirement.
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(c) No Conflicts. The execution,
delivery and performance by such Purchaser of the Transaction
Documents and the consummation by such Purchaser of the
transactions contemplated hereby and thereby will not (i) result in
a violation of the organizational documents of such Purchaser; (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 to which
such Purchaser is a party; or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including federal
and state securities laws) applicable to such Purchaser, except in
the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a material adverse
effect on the ability of such Purchaser to perform its obligations
hereunder.
(d) Purchaser Status. At the time
such Purchaser was offered the Shares, it was, and at the date
hereof is, an “accredited investor” as defined in Rule
501 under the Securities Act. Investor is not a registered broker
dealer registered under Section 15(a) of the Exchange Act, or a
member of the Financial Industry Regulatory Authority Inc.
(“FINRA”), or an entity
engaged in the business of being a broker-dealer. The Purchaser is
not subject to a bad actor disqualification under Rule 506(d) of
the Securities Act.
(e) Experience of Such Purchaser.
Such Purchaser, either alone or together with its representatives,
has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Shares, 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 Shares
and, at the present time, is able to afford a complete loss of such
investment. Such Purchaser acknowledges that it has not received
any legal or tax advice from the Company or any of its
representatives with respect the transactions contemplated
hereby.
(f) Access to Information. Such
Purchaser acknowledges that it has had the opportunity to review
any Company information and business updates requested by Purchaser
and has been afforded (i) the opportunity to ask such questions as
it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions
of the offering of the Shares and the merits and risks of investing
in the Shares and; (ii) access to information about the Company and
its financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment. Such
Purchaser has sought such accounting, legal and tax advice as it
has considered necessary to make an informed decision with respect
to its acquisition of the Shares.
(g) Brokers and Finders. Except for
Corinthian L.L.C., no Person will have, as a result of the
transactions contemplated by this Agreement, any valid right,
interest or claim against or upon the Company or any Purchaser for
any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on
behalf of the Purchaser.
(h) Independent Investment
Decision. Such Purchaser has independently evaluated the
merits of its decision to purchase Shares pursuant to the
Transaction Documents, and such Purchaser confirms that it has not
relied on the advice of any other Purchaser’s business and/or
legal counsel in making such decision. Such Purchaser understands
that nothing in this Agreement or any other materials presented by
or on behalf of the Company to the Purchaser in connection with the
purchase of the Shares constitutes legal, tax or investment advice.
Such Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the
Shares.
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(i) No Governmental Review. Such
Purchaser understands that no United States federal or state agency
or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Shares or the
fairness or suitability of the investment in the Shares nor have
such authorities passed upon or endorsed the merits of the offering
of the Shares.
(j) Residency. Such
Purchaser’s residence (if an individual) or office in which
its investment decision with respect to the Shares was made (if an
entity) are located at the address immediately below such
Purchaser’s name on its signature page hereto.
(k) Acknowledgment. Each Purchaser
acknowledges and agrees that such Purchaser has reviewed and
considered prior to entering this Agreement the more detailed
information about the Company and the risk factors that may affect
the realization of forward-looking statements set forth in the
Company’s filings with the SEC, including its Annual Report
on Form 10-K and its Quarterly Reports on Form 10-Q filed with the
Commission.
The
Company and each of the Purchasers acknowledge and agree that no
party to this Agreement has made or makes any representations or
warranties with respect to the transactions contemplated hereby
other than those specifically set forth in this Article III and the
Transaction Documents.
ARTICLE
IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The Shares may only
be disposed of in compliance with state and federal securities
laws, including the requirement not to trade in the Shares while in
possession of material non-public information. In connection with
any transfer of Shares other than pursuant to an effective
registration statement, to the Company or to an Affiliate of a
Purchaser or in connection with a pledge as contemplated in Section
4.1(c), 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 Shares under the Securities Act. As a condition of
transfer, any such transferee shall agree in writing to be bound by
the terms of this Agreement and shall have the rights of a
Purchaser under this Agreement and the Registration Rights
Agreement.
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(b) The Purchasers
agree to the imprinting, so long as is required by this Section
4.1, of a legend on any of the Shares in the following
form:
THIS
SECURITY HAS 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.
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR”
AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
(c) The Company
acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the
Shares to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act
and who agrees to be bound by the provisions of this Agreement and
the Registration Rights Agreement and, if required under the terms
of such arrangement, such Purchaser may transfer pledged or secured
Shares to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of
Shares may reasonably request in connection with a pledge or
transfer of the Shares, including, if the Underlying Shares are
subject to registration pursuant to the Registration Rights
Agreement, the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) under the Securities Act or other
applicable provision of the Securities Act to appropriately amend
the list of Selling Stockholders thereunder.
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(d) Certificates
evidencing the Underlying Shares shall not contain any legend
(including the legend set forth in Section 4.1(b)), (i) while a
registration statement (including the Registration Statement)
covering the resale of such Underlying Shares is effective under
the Securities Act, or (ii) following any sale of such Underlying
Shares pursuant to Rule 144, or (iii) if such Underlying Shares are
eligible for sale under Rule 144, without the requirement for the
Company to be in compliance with the current public information
required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) as
to such securities and without volume or manner of sale
restrictions, or (iv) 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). The Company shall cause its counsel to issue a legal
opinion to the Transfer Agent promptly after the effective date of
the Registration Statement if required by the Transfer Agent to
effect the removal of the legend hereunder. Certificates for
Underlying Shares subject to legend removal hereunder shall be
transmitted by the Transfer Agent to the Purchasers by crediting
the account of the Purchaser’s prime broker with the
Depository Trust Company System, if the Transfer Agent is a
participant in the DWAC system, and otherwise by physical delivery
of certificates as directed by the Purchaser.
(e) Each Purchaser,
severally and not jointly with the other Purchasers, agrees that
the removal of the restrictive legend from certificates
representing Shares as set forth in this Section 4.1 is predicated
upon the Company’s reliance that the Purchaser will sell any
Shares pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Shares are
sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth
therein.
4.1 Furnishing of Information. For
a period of one year after the date of this Agreement, 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. During this one-year period, 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 such information as is required for the
Purchasers to sell the Shares under Rule 144. The Company further
covenants that it will take such further action as any holder of
Shares may reasonably request, to the extent required from time to
time to enable such Person to sell such Shares without registration
under the Securities Act within the requirements of the exemption
provided by Rule 144.
4.2 Integration. The Company shall
not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that could reasonably be expected to be
integrated with the offer or sale of the Shares in a manner that
would require the registration under the Securities Act of the sale
of the Shares to the Purchasers or that would be integrated with
the offer or sale of the Shares for purposes of the rules and
regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of such
subsequent transaction.
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4.3 Indemnification of
Purchasers.
(a) In addition to the
indemnity provided in the Registration Rights Agreement, the
Company will indemnify and hold each Purchaser and its directors,
officers, stockholders, members, partners, employees and agents
(and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or
any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or employees (and any other Persons with
a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such
controlling person (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation that any such
Purchaser Party may suffer or incur (i) as a result of any breach
of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction
Documents or (ii) arising out of, in connection with, or as a
result of the execution or delivery of this Agreement, any other
Transaction Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder or the consummation
of the transactions contemplated hereby or thereby. The Company
will not be liable to any Purchaser Party under this Agreement to
the extent, but only to the extent that a loss, claim, damage or
liability is attributable to any Purchaser Party’s breach of
any of the representations, warranties, covenants or agreements
made by such Purchaser Party in this Agreement or in the other
Transaction Documents.
(b) Promptly after
receipt by any Person (the “Indemnified Person”) of
notice of any demand, claim or circumstances which would or might
give rise to a claim or the commencement of any action, proceeding
or investigation in respect of which indemnity may be sought
pursuant to Section 4.5(a), such Indemnified Person shall promptly
notify the Company in writing and the Company shall assume the
defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall assume the
payment of all fees and expenses; provided, however, that the
failure of any Indemnified Person so to notify the Company shall
not relieve the Company of its obligations hereunder except to the
extent that the Company is actually and materially and adversely
prejudiced by such failure to notify. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel,
but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless: (i) the Company and the
Indemnified Person shall have mutually agreed to the retention of
such counsel; (ii) the Company shall have failed promptly to assume
the defense of such proceeding and to employ counsel reasonably
satisfactory to such Indemnified Person in such proceeding; or
(iii) in the reasonable judgment of counsel to such Indemnified
Person, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. The Company shall not be liable for any settlement of
any proceeding effected without its written consent, which consent
shall not be unreasonably withheld, delayed or conditioned. Without
the prior written consent of the Indemnified Person, which consent
shall not be unreasonably withheld, delayed or conditioned, the
Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Person from
all liability arising out of such proceeding, does not admit
liability on the part of or attribute fault to any Indemnified
Person and contains a provision requiring confidentiality with
respect to the facts and circumstances of the dispute and of the
existence and amount of the settlement.
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4.5 Reservation of Preferred Stock.
As of the date hereof, the Company has reserved and the Company
shall continue to reserve and keep available at all times, a
sufficient number of shares of Preferred Stock for the purpose of
enabling the Company to issue Shares pursuant to this
Agreement.
4.6 Issuance of Incentive Warrants.
The Company covenants and agrees that upon a Purchaser’s
voluntary conversion of the Preferred Stock in accordance with its
terms, which is effected prior to the two-year anniversary of its
respective original issuance date, it will issue to the holder of
such Shares a two-year warrant (herein, the “Incentive Warrants”),
exercisable at $4.75 per share, to purchase a number of shares the
Company’s Common Stock as is equal to the number of
Underlying Shares issued upon the conversion.
4.7 Listing or Quotation of Common
Stock. The Company’s common stock is currently quoted
on the NASDAQ Capital Market and is not currently eligible for
listing or quotation on any other Trading Market. The Company
hereby agrees to use best efforts to maintain the listing or
quotation of the Common Stock on a Trading Market, and prior to the
Closing to list all of the Underlying Shares on such Trading
Market, as may be applicable. The Company further agrees, if the
Company applies to have the Common Stock traded on any other
Trading Market, it will include in such application all of the
Underlying Shares, and will take such other action as is necessary
to cause all of the Underlying Shares to be listed on such other
Trading Market as promptly as possible. The Company will take all
action reasonably necessary to continue the listing and trading of
its Common Stock on a Trading Market and will comply in all
respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading
Market.
4.8 Equal Treatment of Purchasers.
No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered
to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right
granted to each Purchaser by the Company and negotiated separately
by each Purchaser, and is intended for the Company to treat 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.
4.9 Confidentiality After The Date
Hereof. Each Purchaser, severally and not jointly with the
other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement and such other material
non-public information related to the Company in possession of the
Purchaser are publicly disclosed by the Company as described in
Section 4.4, such Purchaser will maintain the confidentiality of
all non-public information disclosed to it in connection with the
transactions contemplated hereby (including the existence and terms
of such transactions).
4.10 Delivery
of Shares After Closing. The Company shall deliver, or cause
to be delivered, the respective Shares purchased by each Purchaser
to such Purchaser within three Trading Days of the Closing Date
(unless such Purchaser has specified to the Company at the time of
execution of this Agreement that it shall settle “delivery
versus payment” in which case such Shares shall be delivered
on or prior to the Closing Date).
4.11 Form
D; Blue Sky Filings. The Company agrees to timely file a
Form D with respect to the Shares as required under Regulation D
and to provide a copy thereof, promptly upon request of any
Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption
for, or to qualify the Shares for, sale to the Purchasers at the
Closing under applicable securities or “Blue Sky” laws of the
states of the United States, and shall provide evidence of such
actions promptly upon request of any Purchaser.
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4.11
Use of Proceeds.
The Company intends to use the net proceeds of this offering after
payment of the expenses of the offering for general corporate
purposes and shall not use such proceeds for the satisfaction of
any portion of the Company’s debt (other than trade payables
in the ordinary course of the Company’s business and prior
practices), or to redeem any Common Stock or Common Stock
Equivalents.
4.12
Termination.
Notwithstanding anything herein to the contrary, this Agreement may
be terminated at any time by any Purchaser (with respect to the
obligations of such Purchaser) or the Company, upon written notice
to the other party, if the Closing shall not have occurred on or
before [August 1, 2018] (the “Outside Date”); provided,
however, that the right to terminate this Agreement under this
Section 4.13 shall not be available to any party whose (i) breach
of any provision of this Agreement, (ii) failure to comply with
their obligations under this Agreement or (iii) actions not taken
in good faith, shall have been the cause of, or shall have resulted
in, the failure of the Closing to occur on or prior to the Outside
Date or the failure of a condition in Section 2.3 to be satisfied
at such time.
ARTICLE V
MISCELLANEOUS
5.1 Fees and Expenses. Except as
expressly set forth in the Transaction Documents to the contrary,
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 Transfer Agent fees, stamp taxes and
other taxes and duties levied in connection with the delivery of
the Shares to the Purchasers.
5.2 Entire Agreement. The
Transaction Documents, together with the exhibits and schedules
thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to
such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules. At or after the Closing,
and without further consideration, the Company and the Purchasers
will execute and deliver to the other such further documents as may
be reasonably requested in order to give practical effect to the
intention of the parties under the Transaction
Documents.
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 email to the e-mail
address set forth on the signature pages attached hereto prior to
5:30 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 email to the e-mail address set
forth on the signature pages attached hereto on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any
Trading Day; (c) the 2nd 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, in the case of an amendment, by the
Company and each Purchaser. 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.
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5.5 Headings and Construction. The
headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of
the provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against any party. This Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction
Documents.
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 (other than by
merger). Any Purchaser may assign any or all of its rights under
this Agreement to any Person to whom such Purchaser assigns or
transfers any Shares, provided such transferee agrees in writing to
be bound, with respect to the transferred Shares, by the provisions
of the Transaction Documents that apply to the “Purchasers.”
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.
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 New
York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts
sitting in the City of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for
the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is improper or is an
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 other
manner permitted by law.
5.9 Survival. The representations
and warranties contained herein shall survive the Closing and the
delivery of the Shares.
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 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
or by e-mail delivery of a “.pdf” format data file,
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 or
“.pdf” signature page were an original
thereof.
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5.11 Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.
5.12 Rescission
and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions
of) any of the other Transaction Documents, whenever any Purchaser
exercises a right, election, demand or option under a Transaction
Document and the Company does not timely and materially perform its
related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time
to time upon written notice to the Company, any relevant notice,
demand or election in whole or in part without prejudice to its
future actions and rights.
5.13 Replacement
of Shares. If any certificate or instrument evidencing any
Shares 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 and the Transfer Agent of
such loss, theft or destruction and the execution by the holder
thereof of a customary lost certificate affidavit of that fact and
an agreement to indemnify and hold harmless the Company and the
Transfer Agent for any losses in connection therewith or, if
required by the Transfer Agent, a bond in such form and amount as
is required by the Transfer Agent. 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 Shares. If a replacement certificate or instrument
evidencing any Shares is requested due to a mutilation thereof, the
Company may require delivery of such mutilated certificate or
instrument as a condition precedent to any issuance of a
replacement.
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 contained in the
Transaction Documents and hereby agrees to waive and not to assert
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.
-19-
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 or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein
or in any other Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser 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. The Company 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.
5.17 Construction.
The parties agree that each of them and/or their respective counsel
has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments hereto.
5.18 Exculpation
Among Purchasers. Each Purchaser acknowledges that it is not
relying upon any person, firm or corporation (including without
limitation any other Purchaser), other than the Company and its
officers and directors (acting in their capacity as representatives
of the Company), in deciding to invest and in making its investment
in the Company. Each Purchaser agrees that no other Purchaser nor
the respective controlling persons, officers, directors, partners,
agents or employees of any other Purchaser shall be liable to such
Purchaser for any losses incurred by such Purchaser in connection
with its investment in the Company.
5.19
Exercise Limit.
Notwithstanding anything to the contrary set forth in this
Agreement, the Company shall not be obligated to issue any shares
of Common Stock upon exercise of the Preferred Stock if the
issuance of such shares of Common Stock would exceed the aggregate
number of shares of Common Stock which the Company may issue upon
conversion of the Preferred Stock to remain in compliance with the
Company's obligations under the rules or regulations of the Trading
Market, which rules and regulations limit the amount of shares of
Common Stock that the Company may issue upon conversion of the
Preferred Stock to no more than an aggregate of 19.99% of the
number of shares outstanding on the Closing Date (the
“Exchange Cap”), except that such limitation shall not
apply in the event that the Company (A) obtains the approval of its
stockholders as required by the applicable rules of the Trading
Market for issuances of Common Stock in excess of such amount, or
(B) obtains a written opinion from outside counsel to the Company
that such approval is not required, which opinion shall be
reasonably satisfactory to majority stockholders. In the event that
the Company is not obligated, as a result of the operation of the
immediately preceding sentence, to issue any shares of Common Stock
that it would have otherwise be required to issue upon conversion
of Preferred Stock, then the Company shall issue the number of
shares of Common Stock that it is obligated issue after giving
effect to the immediately preceding sentence and, in addition, on
the date of such issuance, shall pay to the holder exercising
conversion of Preferred Stock an amount in cash equal to the
product of (a) the difference between (x) the number of shares of
Common Stock that the Company is obligated issue before giving
effect to the immediately preceding sentence, minus (y) the number
of shares of Common Stock that the Company is obligated issue after
giving effect to the immediately preceding sentence, multiplied by
(b) the closing price of the Common Stock on the Trading Market on
the Trading Day immediately preceding the date on which the notice
of conversion is delivered to the Company by such
holder.
5.20
Market-Standoff.
Each Purchaser hereby agrees not to sell or otherwise transfer,
make any short sale of, grant any option for the purchase of, or
enter into any hedging or similar transaction with the same
economic effect as a sale, any Shares of Preferred Stock and/or
Underlying Shares held by the Purchaser during the 180-day period
following the Closing Date. The Company may impose stop-transfer
instructions and may stamp each certificate with a legend subject
to the foregoing restriction until the end of such 180-day (or
other) period.
(Signature
Pages Follow)
-20-
IN WITNESS WHEREOF, the undersigned has
caused this Share Purchase Agreement to be duly executed by its
authorized signatory as of the date first indicated
above.
|
By
Name:
Xxxxxxx Xxxxxxx
Title:
Chief Executive Officer
|
|
Address
for Notice:
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
-21-
IN WITNESS WHEREOF, the undersigned has
caused this Share Purchase Agreement to be duly executed by its
authorized signatory as of the date first indicated
above.
Name of
Purchaser:
Signature of Authorized Signatory of
Purchaser: __ ___________
Name of
Authorized Signatory:
Title
of Authorized Signatory:
Email
Address of Purchaser:
Address
for Notice of Purchaser:
Address
for Delivery of Shares for Purchaser (if not same as
above):
|
Subscription
Amount:
|
|
|
|
Shares
of Preferred Stock:
|
|
|
|
|
-22-
Exhibit
A
Certificate
of Designation
A-1
Exhibit
B
Registration
Rights Agreement
B-1
