SUBSCRIPTION AGREEMENT
Exhibit 10.40
This
Subscription Agreement (this "Agreement") is dated as of _______,
2020 (the “Effective Date”), by and among Iota
Communications, 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 of 1933, as amended (the
“Securities Act”), and Rule 506 of Regulation D
(“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “Commission”)
under the SecuritiesAct.
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, the units (“Units”) set forth below such
Purchaser’s name on the signature page of this Agreement.
Each Unit shall consist of (i) one share of common stock, par value
$0.0001 per share of the Company (the “Common Stock”)
(collectively referred to herein as the “Shares”) and
(ii) one warrant, in substantially the form attached hereto as
Exhibit A (the “Warrant”), to acquire up to that number
of additional shares of Common Stock equal to one-hundred percent
(100%) of the number of Shares purchased by such Purchaser) (the
shares of Common Stock issuable upon exercise of or otherwise
pursuant to the Warrants collectively are referred to herein as the
“Warrant Shares”).
C. The Units, Shares,
Warrants, and the Warrant Shares collectively are referred to
herein as the “Securities” and the offering of the
Securities pursuant to this Agreement is referred to as the
“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 hereby agree as follows:
ARTICLE
I.
DEFINITIONS
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms shall have the
meanings indicated in this Section 1.1:
“Acquiring
Person” has the meaning set forth in Section 4.6.
“Action”
means any action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or
investigation pending or, to the Company’s Knowledge,
threatened in writing against the Company, any Subsidiary or any of
their respective properties or any officer, director or employee of
the Company or any Subsidiary acting in his or her capacity as an
officer, director or employee before or by any federal, state,
county, local or foreign court, arbitrator, governmental or
administrative agency, regulatory authority, stock market, stock
exchange or trading facility.
“Affiliate”
means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is
controlled by or is under common control with such Person, as such
terms are used in and construed under Rule 405 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.
“Agreement”
has the meaning set forth in the Preamble.
“Board of
Directors” means the board of directors of the
Company.
“Business
Day” means any day except Saturday, Sunday, any day which is
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.
“Buy-In”
has the meaning set forth in Section 4.1(f).
“Buy-In
Price” has the meaning set forth in Section 4.1(f).
“Closing”
means the closing of the purchase and sale of the Units pursuant to
this Agreement. The purchase and sale of the Units shall take place
in one or more closings (each of which is referred to in this
Agreement as a “Closing”).
“Closing Bid
Price” means, for any security as of any date, (a) the last
reported closing bid price per share of Common Stock for such
security on the Principal Trading Market, as reported by Bloomberg
Financial Markets, or, (b) if the Principal Trading Market begins
to operate on an extended hours basis and does not designate the
closing bid price then the last bid price of such security prior to
4:00 P.M., New York City time, as reported by Bloomberg Financial
Markets, or (c) if the foregoing do not apply, the last closing
price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by
Bloomberg Financial Markets, or (d) if no closing bid price is
reported for such security by Bloomberg Financial Markets, the
average of the bid prices of any market makers for such security as
reported in the “pink sheets” by Pink Sheets LLC. If
the Closing Bid Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Bid
Price of such security on such date shall be the fair market value
as mutually determined by the Company and the holder of such
security. All such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination or other
similar transaction during the applicable calculation
period.
“Closing
Date” means the Trading Day when all the Transaction
Documents have been executed and delivered by the applicable
parties thereto, and all the conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied or
waived, as the case may be, or such other date as the parties may
agree.
“Commission”
has the meaning set forth in the Recitals.
“Common
Stock” has the meaning set forth in the Recitals, and also
includes any other class of securities into which the Common Stock
may hereafter be reclassified or changed into.
“Common Stock
Equivalents” means any securities of the Company or any
Subsidiary which would entitle the holder thereof to acquire at any
time Common Stock, including, without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that
is at any time convertible into or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or
indirectly, Common Stock.
“Company”
has the meaning set forth in the Preamble.
“Company
Deliverables” has the meaning set forth in Section 2.2(a).
“Company’s
Knowledge” means with respect to any statement made to the
Company’s Knowledge, that the statement is based upon the
actual knowledge of the executive officers of the Company having
responsibility for the matter or matters that are the subject of
the statement.
“Control”
(including the terms “controlling”, “controlled
by” or “under common control with”) means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
“Deadline
Date” has the meaning set forth in Section 4.1(f).
“Disclosure
Materials” means the SEC Reports, together with the
Disclosure Schedules. “Disclosure Schedules” has the
meaning set forth in Section 3.1.
“DTC”
has the meaning set forth in Section 4.1(d).
“Environmental
Laws” has the meaning set forth in Section 3.1(z).
“ERISA”
has the meaning set forth in Section 3.1(ii).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended,
or any successor statute, and the rules and regulations promulgated
thereunder.
“GAAP”
means U.S. generally accepted accounting principles, as applied by
the Company. “Intellectual Property Rights” has the
meaning set forth in Section 3.1(n).
“Investor
Questionnaire” means the Investor Questionnaire set forth as
Exhibit B-1
hereto.
“Irrevocable
Transfer Agent Instructions” means, with respect to the
Company, the Irrevocable Transfer Agent Instructions, in the form
of Exhibit C,
executed by the Company and delivered to and acknowledged in
writing by the Transfer Agent.
“Legend
Removal Date” has the meaning set forth in Section 4.1(d).
“Lien”
means any lien, charge, claim, encumbrance, security interest,
right of first refusal, preemptive right, or other restrictions of
any kind.
“Material
Adverse Effect” means a material adverse effect on the
results of operations, assets, prospects, business or financial
condition of the Company and the Subsidiaries, taken as a whole,
except that any of the following, either alone or in combination,
shall not be deemed a Material Adverse Effect: (i) effects caused
by changes or circumstances affecting general market conditions in
the U.S. economy or which are generally applicable to the industry
in which the Company operates, provided that such effects are not
borne disproportionately by the Company,
(ii)
effects resulting from or relating to the announcement or
disclosure of the sale of the Securities or other transactions
contemplated by this Agreement, or (iii) effects caused by any
event, occurrence or condition resulting from or relating to the
taking of any action in accordance with this
Agreement.
“Material
Contract” means any contract of the Company that has been
filed or was required to have been filed as an exhibit to the SEC
Reports pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation
S- K.
“Material
Permits” has the meaning set forth in Section 3.1(l).
“New York
Courts” means the state and federal courts sitting in the
City of New York, Borough of
Manhattan.
“OFAC”
has the meaning set forth in Section 3.1(hh).
“Outside
Date” means the fifth (5th) Business Day
following the date of this Agreement. “Person” means an
individual, corporation, partnership, limited liability company,
trust, business trust, association, joint stock company, joint
venture, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not specifically
listed herein.
“Press
Release” has the meaning set forth in Section 4.5.
“Principal
Trading Market” means the Trading Market on which the Common
Stock is primarily listed on and quoted for trading, which, as of
the date of this Agreement and the Closing Date, shall be the
OTCQB.
“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.
“Purchase
Price” means $0.12 per Unit.
“Purchaser”
or “Purchasers” has the meaning set forth in the
Recitals.
“Purchaser
Deliverables” has the meaning set forth in Section 2.2(b).
“Purchaser Party” has the meaning set forth in
Section
4.9.
“Registrable
Securities” means all of (i) the Shares, (ii) the Warrant
Shares and (iii) any securities issued or issuable upon any stock
split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing, provided, that the Purchaser
has completed and delivered to the Company a Selling Stockholder
Questionnaire to be provided by the Company; and provided, further,
that with respect to a particular Purchaser, such Purchaser’s
Shares and Warrant Shares shall cease to be Registrable Securities
upon the earliest to occur of the following: (A) a sale pursuant to
a Registration Statement or Rule 144 under the Securities Act (in
which case, only such security sold by the Purchaser shall cease to
be a Registrable Security); (B) becoming eligible for resale by the
Purchaser under Rule 144 without the requirement for the Company to
be in compliance with the current public information required
thereunder and without volume or manner-of- sale restrictions,
pursuant to a written opinion letter to such effect, addressed,
delivered and acceptable to the Transfer Agent; or (C) the date on
which the Company’s shares of common stock are deregistered
under the Exchange Act pursuant to a shareholder approved
transaction providing for such deregistration.
“Registration
Statement” means a registration statement covering the resale
by the Purchasers of the Registrable Securities as contemplated by
Section
4.13.
“Regulation
D” has the meaning set forth in the Recitals. “Required
Approvals” has the meaning set forth 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.
“SEC
Reports” means all of the reports, schedules, forms,
statements and other documents filed by the Company under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof
(including the exhibits thereto and documents incorporated by
reference therein).
“Secretary’s
Certificate” has the meaning set forth in Section 2.2(a)(v).
“Securities”
has the meaning set forth in the Recitals. “Securities
Act” has the meaning set forth in the Recitals.
“Shares” has the meaning set forth in the
Recitals.
“Short
Sales” include, without limitation, (i) all “short
sales” as defined in Rule 200 promulgated under Regulation
SHO under the Exchange Act, whether or not against the box, and all
types of direct and indirect stock pledges, forward sale contracts,
options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a- 1(h) under the Exchange
Act) and similar arrangements (including on a total return basis),
and (ii) sales and other transactions through non-U.S. broker
dealers or foreign regulated brokers (but shall not be deemed to
include the location and/or reservation of borrowable shares of
CommonStock).
“Stock
Certificates” has the meaning set forth in Section
2.2(a)(ii).
“Subscription
Amount” means, with respect to each Purchaser, the aggregate
amount to be paid for the Units purchased hereunder as indicated on
such Purchaser’s signature page to this Agreement next to the
heading “Aggregate Purchase Price (Subscription
Amount)” in United States dollars and in immediately
available funds.
“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall,
where applicable, include any subsidiary of the Company formed or
acquired after the date hereof.
“Trading
Affiliate” has the meaning set forth in Section 3.2(l).
“Trading
Day” means (i) a day on which the Common Stock is traded on
either a national securities exchange or the OTCQB, as reported by
OTC Markets Group Inc., or (ii) if the Common Stock is not traded
on a national securities exchange or quoted on the OTCQB, a day on
which the Common Stock is quoted in the over-the- counter market as
reported by OTC Markets Group Inc. (or any similar organization or
agency succeeding to its functions of reporting prices); provided,
that in the event that the Common Stock is not listed or quoted as
set forth in
(i) and
(ii) hereof, then Trading Day shall mean a Business
Day.
“Trading
Market” means whichever of the New York Stock Exchange, the
NYSE American, the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market or the OTC Bulletin Board on
which the Common Stock is listed or quoted for trading on the date
in question.
“Transaction
Documents” means this Agreement (including the schedules and
exhibits attached hereto), the Warrants, the Irrevocable Transfer
Agent Instructions and any other documents or agreements explicitly
contemplated hereunder.
“Transfer
Agent” means VStock Transfer, LLC, or any successor transfer
agent for the Company. “Unit” has the meaning set forth
in the Recitals.
“Warrants”
has the meaning set forth in the Recitals to this Agreement.
“Warrant Shares” has the meaning set forth in the
Recitals.
ARTICLE
II.
PURCHASE AND
SALE
2.1.
Closing.
(a) Amount. Subject to
the terms and conditions set forth in this Agreement, at the
Closing, the Company shall issue and sell to each Purchaser, and
each Purchaser shall, severally and not jointly, purchase from the
Company, such number of Units equal to the quotient resulting from
dividing (i) the Subscription Amount for such Purchaser as
indicated below such Purchaser’s name on its signature page
to this Agreement by (ii) the Purchase Price. The Warrants shall
have a per Warrant Share exercise price equal to
$0.12.
(b) Closing. The
initial Closing, of the purchase and sale of the Units shall take
place on the Closing Date at the offices of Xxxx Xxxxx LLP, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, or at such other
locations or remotely by facsimile transmission or other electronic
means as the parties may mutually agree. Each Purchaser agrees and
acknowledges that there may be one or more Closing Dates that occur
from time to time until the Company issues and sells up to an
aggregate of $15 million of Units (which may be increased by an
additional $5 million of Units, for aggregate Offering proceeds of
up to $20 million, upon consent of the Company) and all such
Closings shall be deemed part of the same offering of Units. The
initial Closing and any subsequent Closing, shall be referred to as
the “Closing.” The initial Closing Date, and any
subsequent Closing Dates, shall be referred to as the
“Closing Date.”
(c) Form of Payment. Except as may otherwise be
agreed to among the Company and one or more of the Purchasers, on
or prior to the Business Day immediately prior to the Closing Date,
each Purchaser shall wire its Subscription Amount, in United States
dollars and in immediately available funds, to the Company as set
forth on Exhibit F hereto. Within three (3) Trading Days after the
Closing, the Company shall (a) irrevocably instruct the Transfer
Agent to deliver to each Purchaser one or more stock certificates,
free and clear of all restrictive and other legends (except as
expressly provided in Section 4.1(b) hereof), evidencing the number
of Shares such Purchaser is purchasing as is set forth on such
Purchaser’s signature page to this Agreement next to the
heading “Number of Shares to be Acquired,” and (b)
deliver to each Purchaser one or more Warrants, free and clear of
all restrictive and other legends (except as expressly provided in
Section 4.1(b) hereof), evidencing the number of Warrants such
Purchaser is purchasing as is set forth on such Purchaser’s
signature page to this Agreement next to the heading
“Underlying Shares Subject to
Warrant.”
2.2. Closing
Deliveries. (a) On or prior to the Closing, the Company shall
issue,deliver or cause to be delivered to each Purchaser the
following (the “Company Deliverables”):
(i)
this Agreement,
duly executed by the Company;
(ii) facsimile
copies of one or more stock certificates, free and clear of all
restrictive and other legends (except as provided in Section 4.1(b)
hereof), evidencing the Shares subscribed for by such Purchaser
hereunder, registered in the name of such Purchaser as set forth on
the Stock Certificate Questionnaire included as Exhibit B-2 hereto
(the “Stock Certificate”), with the original Stock
Certificates delivered within three (3) Trading Days of Closing;
provided, however, that in lieu of the issuance of stock
certificates evidencing Shares, the Company may use a book entry
system in which a computerized or manual entry is made in the
records of the Company to evidence the issuance and ownership of
suchShares;
(iii) facsimile
copies of one or more Warrants, executed by the Company and
registered in the name of such Purchaser as set forth on the Stock
Certificate Questionnaire included as Exhibit B-2 hereto, pursuant
to which such Purchaser shall have the right to acquire such number
of Warrant Shares equal to one-hundred percent (100%) of the number
of Shares issuable to such Purchaser pursuant to Section
2.2(a)(ii), on the terms set forth therein, with the original
Warrants delivered within three (3) Trading Days of
Closing;
(iv) duly
executed Irrevocable Transfer Agent Instructions acknowledged in
writing by the Transfer Agent instructing the Transfer Agent to
deliver, on an expedited basis, a certificate evidencing a number
of Shares equal to such Purchaser’s Subscription Amount
divided by the Purchase Price, registered in the name of such
Purchaser;
(v) a certificate of
the Secretary of the Company (the “Secretary’s
Certificate”), dated as of the Closing Date, (a) certifying
the resolutions adopted by the Board of Directors of the Company or
a duly authorized committee thereof approving the transactions
contemplated by this Agreement and the other Transaction Documents
and the issuance of the Securities, (b) certifying the current
versions of the certificate or articles of incorporation, as
amended, and by-laws of the Company and (c) certifying as to the
signatures and authority of persons signing the Transaction
Documents and related documents on behalf of the
Company, in the
form attached hereto as Exhibit D;
(b) On or prior to the
Closing, each Purchaser shall deliver or cause to be delivered to
the Company the following (the “Purchaser
Deliverables”):
(i)
this Agreement,
duly executed by such Purchaser;
(ii) its
Subscription Amount, in United States dollars and in immediately
available funds, in the amount set forth as the “Purchase
Price” indicated below such Purchaser’s name on the
applicable signature page hereto under the heading “Aggregate
Purchase Price (Subscription Amount)” by wire transfer to the
Company, as set forth on Exhibit F attached hereto;
(iii) a
fully completed and duly executed Investor Questionnaire,
satisfactory to the Company and Stock Certificate Questionnaire, in
the forms attached hereto as Exhibits B-1, and B-2,
respectively.
ARTICLE
III.
REPRESENTATIONS AND
WARRANTIES
3.1. Representations
and Warranties of the Company. Except as set forth in the schedules
delivered herewith (the “Disclosure Schedules”), which
Disclosure Schedules shall be deemed a part hereof and shall
qualify any representation made herein to the extent of the
disclosure contained in the corresponding section of the Disclosure
Schedules or in any other section of the Disclosure Schedules to
the extent that it is reasonably apparent on the face of such
disclosure that such disclosure is applicable, the Company hereby
represents and warrants as of the date hereof and the Closing Date
(except for the representations and warranties that speak as of a
specific date, which shall be made as of such date), to each of the
Purchasers:
(a) Subsidiaries. The
Company has no direct or indirect Subsidiaries other than those
listed in Schedule 3.1(a) hereto. Except as disclosed in Schedule
3.1(a) hereto, the Company owns, directly or indirectly, all of the
capital stock or comparable equity interests of each Subsidiary
free and clear of any and all Liens, and all the issued and
outstanding shares of capital stock or comparable equity interest
of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b) Organization and
Qualification. The Company and each of its 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
corporate power and authority to own or lease and use its
properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or
charter documents. The Company and each of its Subsidiaries are
duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes
such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not have
or reasonably be expected to result in a Material Adverse Effect,
and no Proceeding has been instituted, is pending, or, to the
Company’s Knowledge, has been threatened in writing in any
such jurisdiction revoking, limiting or curtailing or seeking to
revoke, limit or curtail such power and authority or
qualification.
(c) Authorization;
Enforcement; Validity. The Company has the requisite corporate
power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents to
which it is a party and otherwise to carry out its obligations
hereunder and thereunder. The Company’s execution and
delivery of each of the Transaction Documents to which it is a
party and the consummation by it of the transactions contemplated
hereby and thereby (including, but not limited to, the sale and
delivery of the Units and the reservation for issuance and the
subsequent issuance of the Warrant Shares upon exercise of the
Warrants) have been duly authorized by all necessary corporate
action on the part of the Company, and no further corporate action
is required by the Company, its Board of Directors or its
stockholders
in
connection therewith other than in connection with the Required
Approvals. Each of the Transaction Documents to which it is a party
has been (or upon delivery will have been) duly executed by the
Company and is, or when delivered in accordance with the terms
hereof, will constitute the legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its
terms, except (i) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the
enforcement of, creditors’ rights and remedies or by other
equitable principles of general application, (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.
(d) No Conflicts. The
execution, delivery and performance by the Company of the
Transaction Documents to which it is a party and the consummation
by the Company of the transactions contemplated hereby or thereby
(including, without limitation, the issuance of the Units and the
reservation for issuance and issuance of the Warrant Shares) do not
and will not (i) conflict with or violate any provisions of the
Company’s or any Subsidiary’s certificate or articles
of incorporation, bylaws or otherwise result in a violation of the
organizational documents of the Company, (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time
or both would result in a default) under, result in the creation of
any Lien upon any of the properties or assets of the Company or any
Subsidiary or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time
or both) of, any Material Contract, 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 (including federal and state
securities laws and regulations and the rules and regulations,
assuming the correctness of the representations and warranties made
by the Purchasers herein, of any self-regulatory organization to
which the Company or its securities are subject, including all
applicable Trading Markets), or by which any property or asset of
the Company or a Subsidiary is bound or affected, except in the
case of clauses (ii) and (iii) such as would not, individually or
in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect.
(e) Filings, Consents
and Approvals. Neither the Company nor any of its Subsidiaries is
required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any
court or other federal, state, local or other governmental
authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction
Documents (including the issuance of the Securities), other than
(i) filings required by applicable state securities laws, (ii) the
filing of a Notice of Sale of Securities on Form D with the
Commission under Regulation D of the Securities Act, (iii) the
filing of any requisite notices and/or application(s) to the
Principal Trading Market for the issuance and sale of the
Securities and the listing of the Shares and Warrant Shares for
trading or quotation, as the case may be, thereon in the time and
manner required thereby, (iv) the filings required in accordance
with Section 4.5 of this Agreement, and (v)
those that have been made or obtained prior to the date of this
Agreement (collectively, the “Required
Approvals”).
(f) Issuance of the
Securities. The Shares have been duly authorized and, when issued
and paid for in accordance with the terms of the Transaction
Documents, will be duly and validly issued, fully paid and
nonassessable and free and clear of all Liens, other than
restrictions on transfer provided for in the Transaction Documents
or imposed by applicable securities laws, and shall not be subject
to preemptive or similar rights. The Warrants have been duly
authorized and, when issued and paid for in accordance with the
terms of the Transaction Documents, will be duly and validly
issued, free and clear of all Liens, other than restrictions on
transfer provided for in the Transaction Documents or imposed by
applicable securities laws, and shall not be subject to preemptive
or similar rights of stockholders. The Warrant Shares issuable upon
exercise of the Warrants have been duly authorized and, when issued
and paid for in accordance with the terms of the Transaction
Documents and the Warrants will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens, other than
restrictions on transfer provided for in the Transaction Documents
or imposed by applicable securities laws, and shall not be subject
to preemptive or similar rights of stockholders. Assuming the
accuracy of the representations and warranties of the Purchasers in
this Agreement, the Securities will be issued in compliance with
all applicable federal and state securities laws. As of the Closing
Date, the Company shall have reserved from its duly authorized
capital stock the number of Warrant Shares (without
taking
into account any limitations on the exercise of the Warrants set
forth in the Warrants). The Company shall, so long as any of the
Warrants are outstanding, take all action necessary to reserve and
keep available out of its authorized and unissued capital stock,
solely for the purpose of effecting the exercise of the Warrants,
the number of Warrant Shares (without taking into account any
limitations on the exercise of the Warrants set forth in the
Warrants).
(g) Capitalization. The
number of shares and type of all authorized, issued and outstanding
capital stock, options and other securities of the Company (whether
or not presently convertible into or exercisable or exchangeable
for shares of capital stock of the Company) is as set forth on
Schedule 3.1(g). No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction
Documents that have not been effectively waived as of the Closing
Date. Except as set forth on Schedule 3.1(g) or as a result of the
purchase and sale of the Units, there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire any shares
of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common
Stock Equivalents. The issuance and sale of the Units will not
obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not
result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under any of such
securities other than as described in Schedule 3.1(g). All of the
outstanding shares of capital stock of the Company are validly
issued, fully paid and nonassessable, and none of such outstanding
shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder, the Board of Directors or
others is required for the issuance and sale of the 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 or, to the
Company’s Knowledge, between or among any of the
Company’s stockholders.
(h) Material Changes.
Except as set forth in the SEC Reports or on Schedule 3.1(h), since
the date of the latest audited financial statements included within
the SEC Reports, except as specifically disclosed in a subsequent
SEC Report filed prior to the date hereof, (i) there have been no
events, occurrences or developments that have had or would
reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect,
(ii)
the Company has not incurred any material liabilities (contingent
or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the
Company's financial statements pursuant to GAAP or disclosed in
filings made with the Commission, (iii) the Company has not altered
materially its method of accounting or the manner in which it keeps
its accounting books and records, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to
its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock (other than in
connection with repurchases of unvested stock issued to employees
of the Company), and (v) the Company has
not issued any equity securities to any officer, director or
Affiliate, except Common Stock issued in the ordinary course as
dividends on outstanding preferred stock or issued pursuant to
existing Company stock option or stock purchase plans or executive
and director compensation arrangements disclosed in the SEC
Reports. Except for the issuance of the Shares and Warrants
underlying the Units contemplated by this Agreement and except as
set forth on Schedule 3.1(h), no event, liability or development
has occurred or exists with respect to the Company or its
Subsidiaries or their respective business, properties, operations
or financial condition, that would be required to be disclosed by
the Company under applicable securities laws at the time this
representation is made that has not been publicly disclosed at
least one (1) Trading Day prior to the date that this
representation is made.
(i) Litigation. Except
as set forth in the SEC Reports or on Schedule 3.1(i), there is no
Action which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or
the Securities or (ii) except as specifically disclosed in the SEC
Reports, would, if there were an unfavorable decision, individually
or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any Subsidiary,
nor to the Company’s Knowledge any director or officer
thereof, is or has been the subject of any Action involving a claim
of violation of or liability under federal or state securities laws
or a claim of breach of fiduciary duty. There has not been, and to
the Company’s Knowledge there is not pending or contemplated,
any investigation by the Commission involving the Company or any
current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the
Company or any of its Subsidiaries under the Exchange Act or the
Securities Act.
(j) Employment Matters.
No material labor dispute exists or, to the Company’s
Knowledge, is imminent with respect to any of the employees of the
Company that would have or reasonably be expected to result in a
Material Adverse Effect. None of the Company’s or any
Subsidiary’s employees is a member of a union that relates to
such employee’s relationship with the Company, and neither
the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and each Subsidiary believe
that their relationships with their employees are good. No
executive officer of the Company (as defined in Rule 501(f) of the
Securities Act) has notified the Company or any such Subsidiary
that such officer intends to leave the Company or any such
Subsidiary in the foreseeable future or otherwise terminate such
officer's employment with the Company or any such Subsidiary. To
the Company’s Knowledge, no executive officer, is, or is now
expected to be, in violation of any term of any material term of
any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant in favor of a
third party, and to the Company’s Knowledge, the continued
employment of each such executive officer does not subject the
Company or any Subsidiary to any liability with respect to any of
the foregoing matters. The Company and its Subsidiaries are in
compliance with all U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms
and conditions of employment and wages and hours, except where the
failure to be in compliance would not, individually or in the
aggregate, have or reasonably be expected to result in a Material
Adverse Effect.
(k) Compliance. Except
as set forth in the SEC Reports or on Schedule 3.1(k), neither the
Company nor any of its Subsidiaries (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 of its Subsidiaries under), nor has
the Company or any of its Subsidiaries received written notice of a
claim that it is in default under or that it is in violation of,
any Material Contract (whether or not such default or violation has
been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body having jurisdiction over the
Company or its properties or assets, or (iii) is in violation of,
or in receipt of written notice that it is in violation of, any
statute, rule or regulation of any governmental authority
applicable to the Company, except in each case as would not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.
(l) Regulatory Permits.
The Company and each of its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct
its respective business as currently conducted and as described in
the SEC Reports, except where the failure to possess such permits,
individually or in the aggregate, has not and would not have or
reasonably be expected to result in a Material Adverse Effect
(“Material Permits”), and neither the Company nor any
of its Subsidiaries has received any notice of Proceedings relating
to the revocation or modification of any such Material
Permits.
(m) Title to Assets.
The Company and its Subsidiaries have good and marketable title in
fee simple to all real property owned by them. Except for the Liens
held by the Persons described in the SEC Reports or set forth in
Schedule 3.1(m) hereto, the Company and its Subsidiaries have good
and marketable title to all tangible personal property owned by
them that is material to the business of the Company and its
Subsidiaries, taken as whole, in each case free and clear of all
Liens, except such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be
made of such property by the Company and any of its Subsidiaries.
Any real property and facilities held under lease by the Company
and any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
Subsidiaries.
(n) Intellectual
Property. The Company and the Subsidiaries own, possess, license or
have other rights to use, all patents, patent applications, trade
and service marks, trade and service xxxx applications and
registrations, trade names, trade secrets, inventions, copyrights,
licenses, technology, know- how and other intellectual property
rights and similar rights described in the SEC Reports as necessary
or material for use in connection with their respective businesses
and which the failure to so have would have or reasonably be
expected to result in a Material Adverse Effect (collectively, the
“Intellectual Property Rights”). Neither the Company
nor any Subsidiary has received a written notice that any of the
Intellectual Property Rights used by the Company or any Subsidiary
violates or infringes upon the rights of any Person. There is no
pending or, to the Company’s Knowledge, threatened, action,
suit, proceeding or claim by any Person that the Company’s
business as now conducted infringes or otherwise violates any
patent, trademark, copyright, trade secret or other proprietary
rights of another. To the Company’s Knowledge, there is no
existing infringement by another Person of any of the Intellectual
Property Rights that would have or would reasonably be expected to
have a Material Adverse Effect. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property
Rights, except
where
failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse
Effect.
(o) Insurance. The
Company and each of the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as the Company believes to be prudent and
customary in the businesses and locations in which the Company and
the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance coverage. Neither the Company nor
any of its Subsidiaries has received any notice of cancellation of
any such insurance, nor, to the Company’s Knowledge, will it
or any Subsidiary be unable to renew their respective 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.
(p) Transactions With
Affiliates and Employees. Except as set forth in the SEC Reports or
on Schedule 3.1(p), none of the officers or directors of the
Company and, to the Company’s Knowledge, none of the
employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as
employees, officers and directors), that would be required to be
disclosed pursuant to Item 404 of Regulation S-K promulgated under
the Securities Act.
(q) Certain Fees. No
person or entity will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or a Purchaser for any commission, fee
or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company. The
Purchasers shall have no 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 paragraph (u) that may be
due in connection with the transactions contemplated by the
Transaction Documents. The Company shall indemnify, pay, and hold
each Purchaser harmless against, any liability, loss, or expense
(including, without limitation, attorneys’ fees, and
out-of-pocket expenses) arising in connection with any such right,
interest or claim.
(r) No Registration.
Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2 of this Agreement and the
accuracy of the information disclosed in the Investor
Questionnaires provided by the Purchasers, no registration under
the Securities Act is required for the offer and sale of the
Securities by the Company to the Purchasers under the Transaction
Documents. The issuance and sale of the Securities hereunder
complies in all material respects with and does not contravene the
rules and regulations of the Trading Market.
(s) Investment Company.
The Company is not, and immediately after receipt of payment for
the Units, will not be an “investment company” within
the meaning of the Investment Company Act of 1940, as amended. The
Company shall conduct its business in a manner so that it will not
become subject to the Investment Company Act of 1940, as
amended.
(t) Registration
Rights. Other than each of the Purchasers as described in Section
4.13 or as described in the SEC Reports or set forth in Schedule
3.1(t) hereto and as disclosed in the SEC Reports, no Person has
any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company other than those
securities that are currently registered on an effective
registration statement on file with the Commission.
(u) Listing and
Maintenance Requirements. The Company has not, in the twelve (12)
months preceding the date hereof, received written notice from any
Trading Market on which the Common Stock is listed or quoted to the
effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market.
(v) Application of
Takeover Protections; Rights Agreements. The Company and the Board
of Directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the
Company's charter documents or the laws of its state of
incorporation that is or could reasonably be expected to become
applicable to any of the Purchasers as a result of the Purchasers
and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including, without
limitation, the Company's issuance of the Securities and the
Purchasers' ownership of the Securities.
(w) Disclosure. The
Company confirms that it has not provided, and to the
Company’s Knowledge, none of its officers or directors nor
any other Person acting on its or their behalf has provided any
Purchaser or its respective agents or counsel with any information
that it believes constitutes material, non- public information
except insofar as the existence, provisions and terms of the
Transaction Documents and the proposed transactions hereunder may
constitute such information, all of which will be disclosed by the
Company in the Press Release as contemplated by Section 4.5 hereof.
The Company understands and confirms that the Purchasers will rely
on the foregoing representations in effecting transactions in
securities of the Company. All written materials provided to the
Purchasers regarding the Company and its Subsidiaries, their
businesses and the transactions contemplated hereby, including the
schedules to this Agreement, furnished by the Company is true and
correct in all material respects and does 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 the
light of the circumstances under which they were made, not
misleading. Each press release issued by the Company or any of its
Subsidiaries during the twelve (12) months preceding the date of
this Agreement did not at the time of release 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 the light of the circumstances under which
they are made, not misleading. Except as set forth in the SEC
Reports or on Schedule 3.1(w), no event or circumstance has
occurred or information exists with respect to the Company or any
of its Subsidiaries or its or their business, properties,
liabilities, prospects, operations (including results thereof) or
conditions (financial or otherwise), which, under applicable law,
rule or regulation, requires public disclosure at or before the
date hereof or announcement by the Company but which has not been
so publicly disclosed.
(x) No Integrated
Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, none of
the Company, its Subsidiaries nor, to the Company’s
Knowledge, any of its Affiliates or any Person acting on its behalf
has, directly or indirectly, at any time within the past six (6)
months, made any offers or sales of any Company security or
solicited any offers to buy any security under circumstances that
would
(i)
eliminate the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer
and sale by the Company of the Securities as contemplated hereby or
(ii) cause the Offering to be integrated with prior offerings by
the Company for purposes of any applicable law, regulation or
stockholder approval provisions, including, without limitation,
under the rules and regulations of any Trading Market on which any
of the securities of the Company are listed or
designated.
(y) Tax Matters. Except
as set forth in the SEC Reports or on Schedule 3.1(y), the Company
and each of its Subsidiaries (i) has accurately and timely prepared
and filed all foreign, federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to
which it is subject, (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due
on such
returns, reports and declarations, except those being contested in
good faith, with respect to which adequate reserves have been set
aside on the books of the Company and (iii) has set aside on its
books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns,
reports or declarations apply, except, in the case of clauses (i)
and (ii) above, where the failure to so pay or file any such tax,
assessment, charge or return would not have or reasonably be
expected to result in a Material Adverse Effect. There are no
unpaid taxes in any material amount claimed to be due by the
Company or any of its Subsidiaries by the taxing authority of any
jurisdiction.
(z) Environmental
Matters. To the Company’s Knowledge, neither the Company nor
any of its Subsidiaries (i) is in violation of any statute, rule,
regulation, decision or order of any governmental agency or body or
any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, “Environmental
Laws”), (ii) owns or operates any real property contaminated
with any substance that is in violation of any Environmental Laws,
(iii) is liable for any off-site disposal or contamination pursuant
to any Environmental Laws, or (iv) is subject to any claim relating
to any Environmental Laws; which violation, contamination,
liability or claim has had or would have, individually or in the
aggregate, a Material Adverse Effect; and, to the Company’s
knowledge there is no pending investigation or investigation
threatened in writing that might lead to such a claim.
(aa) No General Solicitation.
Neither the Company nor, to the Company’s Knowledge, any
person acting on behalf of the Company has offered or sold any of
the Securities by any form of general solicitation or general
advertising.
(bb) No Disqualification Events.
With respect to the Securities to be offered and sold hereunder in
reliance on Rule 506 under the Securities Act, none of the Company,
any of its predecessors, any affiliated issuer, any director,
executive officer, other officer of the Company participating in
the Offering hereunder, any beneficial owner of 20% or more of the
Company’s outstanding voting equity securities, calculated on
the basis of voting power, nor any promoter (as that term is
defined in Rule 405 under the Securities Act) connected with the
Company in any capacity at the time of sale (each, an “Issuer
Covered Person”) is subject to any of the “Bad
Actor” disqualifications described in Rule 506(d)(1)(i) to
(viii) under the Securities Act (a “Disqualification
Event”), except for a Disqualification Event covered by Rule
506(d)(2) or (d)(3). The Company has exercised reasonable care to
determine whether any Issuer Covered Person is subject to a
Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and
has furnished to the Purchasers a copy of any disclosures provided
thereunder. The Company will notify the Purchasers in writing,
prior to the Closing Date of (i) any Disqualification Event
relating to any Issuer Covered Person and (ii) any event that
would, with the passage of time, reasonably be expected to become a
Disqualification Event relating to any Issuer Covered Person, in
each case of which it is aware.
(cc) Foreign Corrupt Practices.
Neither the Company, nor to the Company’s Knowledge, any
agent or other person acting on behalf of the Company, has: (i)
directly or indirectly, used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign
or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate
funds, (iii) failed to disclose fully any contribution made by the
Company (or made by any Person acting on its behalf with the
Company’s knowledge) which is in violation of law or (iv)
violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
(dd) Off Balance Sheet Arrangements.
There is no transaction, arrangement, or other relationship between
the Company (or any Subsidiary) and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the
Company in SEC Reports and is not so disclosed and would have or
reasonably be expected to result in a Material Adverse
Effect.
(ee) Acknowledgment Regarding
Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length
purchaser with
respect to the Transaction Documents and the transactions
contemplated hereby and thereby. Based on the representations made
herein by the Purchasers, and other than with respect to such
Purchasers that currently have a representative serving on the
Company’s Board of Directors, the Company further
acknowledges that no Purchaser is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect
to the Transaction Documents and the transactions contemplated
thereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with the
Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the
Securities. The Company further represents to each Purchaser that
the Company’s decision to enter into this Agreement and the other Transaction
Documents has been based solely on the independent evaluation of
the transactions contemplated hereby by the Company and its
representatives.
(ff) Regulation M Compliance. The
Company has not, and to the Company’s Knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale
or resale of any of the Securities, (ii) sold, bid for, purchased,
or paid any compensation for soliciting purchases of, any of the
securities of the Company or (iii) paid or
agreed to pay to any Person any compensation for soliciting another
to purchase any other securities of the Company.
(gg) PFIC. Neither the Company nor
any Subsidiary is or intends to become a “passive foreign
investment company” within the meaning of Section 1297 of the
U.S. Internal Revenue Code of 1986, as amended.
(hh) OFAC. Neither the Company nor
any Subsidiary nor, to the Company’s Knowledge, any director,
officer, agent, employee, Affiliate or Person acting on behalf of
the Company or any Subsidiary is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department (“OFAC”); and the Company
will not directly or indirectly use the proceeds of the sale of the
Securities, or lend, contribute or otherwise make available such
proceeds to any Subsidiary, joint venture partner or other Person
or entity, towards any sales or operations in Cuba, Iran, Syria,
Sudan, Myanmar or any other country sanctioned by OFAC or for the
purpose of financing the activities of any Person currently subject
to any U.S. sanctions administered by OFAC.
(ii)
Employee Benefits.
Each employee benefit plan is in compliance with all applicable
law, except for such noncompliance that would not be reasonably
likely to have a Material Adverse Effect. The Company does not have
any liabilities, contingent or otherwise, including without
limitation, liabilities for retiree health, retiree life, severance
or retirement benefits, which are not fully reflected, to the
extent required by GAAP, on its most recent balance sheet contained
in the SEC Reports or fully funded. The term
“liabilities” used in the preceding sentence shall be
calculated in accordance with reasonable actuarial assumptions. The
Company has not (i) terminated any “employee pension benefit
plan” as defined in Section 3(2) of ERISA (as defined below)
under circumstances that present a material risk of the Company or
any of its Subsidiaries incurring any liability or obligation that
would be reasonably likely to have a Material Adverse Effect, or
(ii) incurred or expects to incur any outstanding liability under
Title IV of the Employee Retirement Income Security Act of 1974, as
amended and all rules and regulations promulgated thereunder
(“ERISA”).
(jj)
No Additional
Agreements. The Company does not have any agreement or
understanding with any Purchaser with respect to the transactions
contemplated by the Transaction Documents other than as specified
in the Transaction Documents.
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. If such Purchaser is an entity, such Purchaser is duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with the requisite corporate
or partnership power and authority to enter into and to consummate
the transactions contemplated by the applicable Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by such
Purchaser and performance by such Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all
necessary corporate or, if such Purchaser is not a corporation,
such partnership, limited liability company or other applicable
like action, on the part of such Purchaser. Each 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 as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting
generally the enforcement of, creditors’ rights and remedies
or by other equitable principles of general
application.
(b) No Conflicts. The
execution, delivery and performance by such Purchaser of the
Transaction Documents to which such Purchaser is a party 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.
(c) Investment Intent.
Such Purchaser understands that the Securities are
“restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and
is acquiring the Units and, upon exercise of the Warrants, will
acquire the Warrant Shares issuable upon exercise thereof as
principal for its own account and not with a view to, or for
distributing or reselling such Securities or any part thereof in
violation of the Securities Act or any applicable state securities
laws, provided, however, that by making the representations herein,
such Purchaser reserves the right, subject to the provisions of
this Agreement, at all times to sell or otherwise dispose of all or
any part of such Securities pursuant to an effective registration
statement under the Securities Act or under an exemption from such
registration and in compliance with applicable federal and state
securities laws. Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business. Such Purchaser
does not presently have any agreement, plan or understanding,
directly or indirectly, with any Person to distribute or effect any
distribution of any of the Securities (or any securities which are
derivatives thereof) to or through any person or entity; such
Purchaser is not a registered broker-dealer under Section 15 of the
Exchange Act or an entity engaged in a business that would require
it to be so registered as a broker-dealer.
(d) Accredited Investor
Status. The Purchaser is an “accredited investor” as
defined in Rule 501(a) of Regulation D promulgated under the
Securities Act that the Investor Questionnaire in the form of
Exhibit B-1 attached hereto delivered by the Purchaser in
connection with this Agreement is complete and accurate in all
respects as of the date of this Agreement and will be correct as of
the Closing Date and the effective date of the Registration
Statement; provided, that the Purchaser shall be entitled to update
such information by providing written notice thereof to the
Company.
(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 advertisement.
(f) 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. Moreover, such Purchaser
is aware that (i) the acquisition of the Units involves a high
degree of risk and may result in a loss of the entire Purchase
Price; (ii) the Company has limited working capital and limited
sources
of
financing available as of the date of this Agreement; (iii) there
is no assurance that the Company’s operations will be
profitable or cash flow positive at any time in the
future.
(g) Access to
Information. Such Purchaser acknowledges that it has had the
opportunity to review the Disclosure Materials and has been
afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive satisfactory answers from,
representatives of the Company concerning the terms and conditions
of the Offering and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the
Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense
that is necessary to make an informed investment decision with
respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its
representatives or counsel shall modify, amend or affect such
Purchaser's right to rely on the truth, accuracy and completeness
of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents. 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 Securities.
(h) SEC Reports and
Financial Statements. The Purchaser acknowledges that the Company
has not filed with the Commission all of the SEC Reports required
to be filed by it under Section 13(a) or 15(d) of the Exchange Act,
including the Quarterly Report on Form 10-Q for the period ended
February 29, 2020 (which will include the unaudited interim
condensed consolidated financial statements for such period), the
Annual Report on Form 10-K for the period ended May 31, 2020 (which
will include the audited annual condensed consolidated financial
statements for such period), and the Quarterly Report on Form 10-Q
for the period ended August 31, 2020 (which will include the
unaudited interim condensed consolidated financial statements for
such period), and that the Company is unable to confirm when such
delinquent SEC Reports and corresponding financial statements will
be filed with the Commission.
(i) Internal Accounting
Controls. The Purchaser acknowledges that, as disclosed in SEC
Reports, the Company’s management previously determined that
the Company’s internal control over financial reporting as of
November 30, 2019 was not effective due to a number of material
weaknesses and that the Company is, therefore, unable to represent
that it maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
and to maintain asset and liability accountability, (iii) access to
assets or incurrence of liabilities is permitted only in accordance
with management's general or specific authorization, and (iv) the
recorded accountability for assets and liabilities is compared with
the existing assets and liabilities at reasonable intervals and
appropriate action is taken with respect to any differences. The
Purchaser acknowledges that despite management’s efforts to
implement measures designed to remediate the material weaknesses
and internal control deficiencies, there can be no assurance that
the Company will be able to do so.
(j) Xxxxxxxx-Xxxxx;
Disclosure Controls. The Purchaser acknowledges that, as disclosed
in SEC Reports, the Company’s management previously
determined that as of November 30, 2019 the Company’s
disclosure controls and procedures (as such term is defined in Rule
13a-15(e) and 15d-15(e)) are ineffective and that the Company is,
therefore, unable to represent that its disclosure controls and
procedures are sufficient to ensure that information required to be
disclosed by the Company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Commission’s rules
and forms. The Purchaser acknowledges that despite
management’s efforts to implement measures designed to
remediate the disclosure control deficiencies, there can be no
assurance that the Company will be able to do so.
(k) Certain Trading
Activities. Other than with respect to the transactions
contemplated herein, since the time that such Purchaser was first
contacted by the Company regarding the transactions contemplated
hereby, neither the Purchaser nor any Affiliate of such Purchaser
which (x) had knowledge of the transactions contemplated hereby,
(y) has or shares discretion relating to such Purchaser’s
investments or trading or information concerning such
Purchaser’s investments, including in respect of the
Securities, and (z) is subject to such Purchaser’s review or
input concerning such Affiliate’s investments or trading
(collectively, “Trading Affiliates”) has directly or
indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Purchaser or Trading Affiliate,
effected or
agreed
to effect any purchases or sales of the securities of the Company
(including, without limitation, any Short Sales involving the
Company’s securities). Notwithstanding the foregoing, in the
case of a Purchaser and/or Trading Affiliate that is, individually
or collectively, a multi-managed investment bank or vehicle whereby
separate portfolio managers manage separate portions of such
Purchaser's or Trading Affiliate’s assets and the portfolio
managers have no direct knowledge of the investment decisions made
by the portfolio managers managing other portions of such
Purchaser's or Trading Affiliate’s assets, the representation
set forth above shall apply only with respect to the portion of
assets managed by the portfolio managers that have knowledge about
the financing transaction contemplated by this Agreement. Other
than to other Persons party to this Agreement, such Purchaser has
maintained the confidentiality of all disclosures made to it in
connection with this transaction (including the existence and terms
of this transaction).
Notwithstanding the
foregoing, for avoidance of doubt, nothing contained herein shall
constitute a representation or warranty, or preclude any actions,
with respect to the identification of the availability of, or
securing of, available shares to borrow in order to effect short
sales or similar transactions in the future in compliance with the
Securities Act and the rules and regulations promulgated
thereunder.
(l) Brokers and
Finders. No Person will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or any Purchaser for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the
Purchaser.
(m) Independent
Investment Decision. Such Purchaser has independently evaluated the
merits of its decision to purchase Securities pursuant to the
Transaction Documents, and such Purchaser confirms that it has not
relied on the advice of any other Purchaser’s business and/or
legal counsel in making such decision. Such Purchaser understands
that nothing in this Agreement or any other materials presented by
or on behalf of the Company to the Purchaser in connection with the
purchase of the Securities constitutes legal, tax or investment
advice. Such Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Securities. Such
Purchaser has not authorized any person or institution to act as
its “purchaser representative” (as such term is defined
in Rule 501 of Regulation D promulgated under the Securities Act)
in connection with such Purchaser’s acquisition of the
Units.
(n) Reliance on
Exemptions. Such Purchaser understands that the Securities are
being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and
state securities laws and that the Company is relying upon the
truth and accuracy of, and such Purchaser’s compliance with,
the representations, warranties, agreements, acknowledgements and
understandings of such Purchaser set forth herein as part of its
determination as to the availability of such exemptions and the
eligibility of such Purchaser to acquire the
Securities.
(o) 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
Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the
merits of the Offering.
(p) Regulation M. Such
Purchaser is aware that the anti-manipulation rules of Regulation M
under the Exchange Act may apply to sales of Common Stock and other
activities with respect to the Common Stock by the Purchasers and
agrees to comply with such rules.
(q) Beneficial
Ownership. The purchase by such Purchaser of the Units issuable to
it at the Closing will not result in such Purchaser (individually
or together with any other Person with whom such Purchaser has
identified, or will have identified, itself as part of a
“group” in a public filing made with the Commission
involving the Company’s securities) acquiring, or obtaining
the right to acquire, in excess of 19.999% of the outstanding
shares of Common Stock or the voting power of the Company on a post
transaction basis that assumes that such Closing shall have
occurred. Such Purchaser does not presently intend to, alone or
together with others, make a public filing with the Commission to
disclose that it has (or that it together with such other Persons
have) acquired, or obtained the right to acquire, as a result of
such Closing (when added to any other securities of the Company
that it or they then own or have the right to acquire), in excess
of 19.999% of the outstanding shares of Common Stock or the voting
power of the Company on a post transaction basis that assumes that
each Closing shall have occurred.
(r)
Residency. Such
Purchaser’s residence (if an individual) or offices in which
its investment
decision with
respect to the Securities was made (if an entity) are located at
the address immediately below such Purchaser’s name on its
signature page hereto.
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) Compliance with
Laws. Notwithstanding any other provision of this Article IV, each
Purchaser covenants that the Securities may be disposed of only
pursuant to an effective registration statement under, and in
compliance with the requirements of, the Securities Act, or
pursuant to an available exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act,
and in compliance with any applicable state and federal securities
laws. In connection with any transfer of the Securities other than
(i) pursuant to an effective registration statement, (ii) to the
Company, (iii) pursuant to Rule 144 (provided that the Purchaser
provides the Company with reasonable assurances (in the form of
seller and, if applicable, broker representation letters) that the
securities may be sold pursuant to such rule), or (iv) in
connection with a bona fide 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 Securities 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 with respect to such transferred
Securities.
(b) Legends.
Certificates evidencing the Securities shall bear any legend as
required by the “blue sky” laws of any state and a
restrictive legend in substantially the following form, until such
time as they are not required under Section 4.1(d):
NEITHER
THESE SECURITIES NOR ANY SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS
AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY AND ITS TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT
TO RULE 144 UNDER THE SECURITIES ACT.
NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.
(c) The Company
acknowledges and agrees that a Purchaser may from time to time
pledge, and/or grant a security interest in, some or all of the
legended Securities in connection with applicable securities laws,
pursuant to a bona fide margin agreement in compliance with a bona
fide margin loan. Such a pledge would not be subject to approval or
consent of the Company and no legal opinion of legal counsel to the
pledgee, secured party or pledgor shall be required in connection
with the pledge, but such legal opinion shall be required in
connection with a subsequent transfer or foreclosure following
default by the Purchaser transferee of the pledge. No notice shall
be required of such pledge, but Purchaser’s transferee shall
promptly notify the Company of any such subsequent transfer or
foreclosure. Each Purchaser acknowledges that the Company shall not
be responsible for any pledges relating to, or the grant of any
security interest in, any of the Securities or for any agreement,
understanding or arrangement between any Purchaser and its pledgee
or secured party. At the appropriate Purchaser’s expense, the
Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Securities may reasonably request in
connection with a pledge or transfer of the Securities, including
the preparation and filing of any required prospectus supplement
under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of
Selling Stockholders thereunder. Each Purchaser acknowledges and
agrees that, except as otherwise provided in Section 4.1(d), any
Securities subject to a pledge or security interest as contemplated
by this Section 4.1(c) shall continue to bear the legend set forth
in Section 4.1(b) and be subject to the restrictions on transfer
set forth in Section 4.1(a)
(d) Removal of Legends.
The legend set forth in Section 4.1(b) above shall be removed and
the Company shall issue a certificate without such legend or any
other legend to the holder of the applicable Securities upon which
it is stamped or issue to such holder by electronic delivery at the
applicable balance account at the Depository Trust Company
(“DTC”), if (i) such Securities are registered for
resale under the Securities Act (provided that, if the Purchaser is selling pursuant
to the Registration Statement, the Purchaser agrees to only sell
such Securities during such time that such Registration Statement
is effective and current and not withdrawn or suspended, and only
as permitted by such Registration Statement), (ii) such Securities
are sold or transferred pursuant to Rule 144 (if the transferor is
not an Affiliate of the Company), or (iii) such Securities 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 as to such securities and without volume or
manner-of-sale restrictions. Following the earlier of (i) the
effective date of the Registration Statement or (ii) Rule 144
becoming available for the resale of Securities, without the
requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such securities
and without volume or manner-of-sale restrictions, the Company
shall cause Company Counsel to issue to the Transfer Agent the
legal opinion referred to in the Irrevocable Transfer Agent
Instructions. Any fees (with respect to the Transfer Agent, Company
Counsel or otherwise) associated with the issuance of such opinion
or the removal of such legend shall be borne by the Company.
Following the effective date of the Registration Statement, or at
such earlier time as a legend is no longer required for certain
Securities, the Company will no later than three (3) Trading Days
following the delivery by a Purchaser to the Company (with notice
to the Company) of (i) a legended certificate representing Shares
or Warrant Shares (endorsed or with stock powers attached,
signatures guaranteed, and otherwise in form necessary to affect
the reissuance and/or transfer) or (ii) an Exercise Notice in the
manner stated in the Warrants to effect the exercise of such
Warrant in accordance with its terms, and an opinion of counsel to
the extent required by Section 4.1(a) (such third (3rd) Trading Day, the
“Legend Removal Date”), deliver or cause to be
delivered to such Purchaser a certificate representing such
Securities that is free from all restrictive and other legends
other than any restrictions on transfer imposed by Purchaser in
connection with a pledge of such Securities. The Company may not
make any notation on its records or give instructions to the
Transfer Agent that enlarge the restrictions on transfer set forth
in this Section 4.1(d). Certificates for Shares or Warrant Shares
subject to legend removal hereunder may be transmitted by the
Transfer Agent to the Purchasers by crediting the account of the
Purchaser’s prime broker with DTC as directed by such
Purchaser.
(e) Irrevocable
Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer
agent, in the form of Exhibit C attached hereto (the
“Irrevocable Transfer Agent Instructions”). The Company
represents and warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section
4.1(e) (or instructions that are consistent therewith) will be
given by the Company to its transfer agent in connection with this
Agreement, and that the Securities shall otherwise be freely
transferable on the books and records of the Company as and to the
extent provided in this Agreement and the other Transaction
Documents and applicable law. The Company acknowledges that a
breach by it of its obligations under this
Section
4.1(e) will cause irreparable harm to a Purchaser. Accordingly, the
Company acknowledges that the remedy at law for a breach of its
obligations under this Section 4.1(e) will be inadequate and
agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 4.1(e), that a Purchaser
shall be entitled, in addition to all other available remedies, to
an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being
required.
(f) Buy-In. If the
Company shall fail for any reason or for no reason to issue to a
Purchaser unlegended certificates within three (3) Trading Days of
receipt of all documents necessary for the removal of the legend
set forth above (the “Deadline Date”), then, in
addition to all other remedies available to such Purchaser, if on
or after the Trading Day immediately following such three (3)
Trading Day period, such Purchaser purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the holder of shares of Common Stock that
such Purchaser anticipated receiving from the Company without any
restrictive legend (a “Buy- In”), then the Company
shall, within three (3) Trading Days after such Purchaser’s
request and in such Purchaser’s sole discretion, either (i)
pay cash to the Purchaser in an amount equal to such
Purchaser’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
(the “Buy-In Price”), at which point the
Company’s obligation to deliver such certificate (and to
issue such shares of Common Stock) shall terminate, or (ii)
promptly honor its obligation to deliver to such Purchaser a
certificate or certificates representing such shares of Common
Stock and pay cash to the Purchaser in an amount equal to the
excess (if any) of the Buy-In Price over the product
of
(a)
such number of shares of Common Stock, times (b) the Closing Bid
Price on the Deadline Date.
4.2. Reservation
of Common Stock. The Company shall take all action necessary to at
all times have authorized, and reserved for the purpose of issuance
from and after the Closing Date, the number of Warrant Shares
issuable upon exercise of the Warrants issued at the Closing
(without taking into account any limitations on exercise of the
Warrants set forth in the Warrants).
4.3. Furnishing
of Information. In order to enable the Purchasers to sell the
Securities under Rule 144, for a period of twelve (12) months from
the Closing, the Company shall use its commercially reasonably best
efforts to (i) become current with respect to all reports required
to be filed by the Company prior to the Effective Date pursuant to
the Exchange Act and (ii) file all reports required to be filed by
the Company after the Effective Date pursuant to Exchange Act by
their respective deadline or as soon thereafter as is reasonably
practicable. During such twelve (12) month 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(c) such information as is
required for the Purchasers to sell the Securities under Rule
144.
4.4. Integration.
The Company shall not, and shall use its commercially reasonable
efforts to ensure that no Affiliate of the Company shall, sell,
offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Securities
Act) that will be integrated with the offer or sale of the
Securities in a manner that would require the registration under
the Securities Act of the sale of the Securities to the Purchasers,
or that will be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of any Trading Market
such that it would require stockholder approval prior to the
closing of such other transaction unless stockholder approval is
obtained before the closing of such subsequent
transaction.
4.5. Securities
Laws Disclosure; Publicity. By 9:00 A.M., New York City time, on
the Trading Day immediately following the date hereof, the Company
shall issue a press release (the “Press Release”)
disclosing all material terms of the transactions contemplated
hereby. On or before 9:00 A.M., New York City time, on
the
second (2nd) Trading Day
immediately following the execution of this Agreement, the Company
will file a Current Report on Form 8-K with the Commission
describing the terms of the Transaction Documents (and including as
exhibits to such Current Report on Form 8-K the material
Transaction Documents (including, without limitation, this
Agreement and the form of Warrant). Notwithstanding the foregoing,
the Company shall not publicly disclose the name of any Purchaser
or an Affiliate of any Purchaser, or include the name of any
Purchaser or an Affiliate of any Purchaser in any press release or
filing with the Commission (other than the Registration Statement)
or any regulatory agency or Trading Market, without the prior
written consent of such Purchaser, except (i) as required by
federal securities law in connection with (A) any Registration
Statement contemplated by Section 4.13 of this Agreement
and (B) the filing of final Transaction Documents (including
signature pages thereto) with the Commission and (ii) to the extent
such disclosure is required by law, request of the Staff of the
Commission or Trading Market regulations, in which case the Company
shall provide the Purchasers with prior written notice of such
disclosure permitted under this subclause (ii). From and after the
issuance of the Press Release, no Purchaser shall be in possession
of any material, non-public information received from the Company,
any Subsidiary or any of their respective officers, directors,
employees or agents, that is not disclosed in the Press Release
unless a Purchaser shall have executed a written agreement after
the issuance of the Press Release regarding the confidentiality and
use of such information. Each Purchaser, severally and not jointly
with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are required to be
publicly disclosed by the Company as described in this Section 4.5, such Purchaser
will maintain the confidentiality of all disclosures made to it in
connection with this transaction (including the existence and terms
of this transaction) and will not trade in the Company’s
securities.
4.6. Shareholder
Rights Plan. No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect as of the date of this Agreement or
the Closing Date or that any Purchaser could be deemed to trigger
the provisions of any such plan or arrangement, solely by virtue of
receiving Securities under the Transaction Documents; provided,
however, that no such Purchaser owns any equity in the Company
prior to its purchase of the Securities hereunder.
4.7. Non-Public
Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction
Documents, including this Agreement, or as expressly required by
any applicable securities law, the Company covenants and agrees
that neither it, nor any other Person acting on its behalf, will
provide any Purchaser or its agents or counsel with any information
regarding the Company that the Company believes constitutes
material non-public information without the express written consent
of such Purchaser, unless prior thereto such Purchaser shall have
executed a written agreement regarding the confidentiality and use
of such information. The Company understands and confirms that each
Purchaser shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.
4.8. Use
of Proceeds. The Company shall use the net proceeds from the sale
of the Units hereunder for working capital and other general
corporate purposes and shall not use such proceeds for the
redemption of any Common Stock or Common Stock
Equivalents.
4.9. Indemnification
of Purchasers. Subject to the provisions of this Section 4.9, the
Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, 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, shareholders,
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 persons (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, courtcosts 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 in the other Transaction Documents or
(b) any action instituted against a Purchaser in any capacity, or
any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of such 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 representations, 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). 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 this
Section 4.9, such
Indemnified Person shall promptly notify the Company in writing and
the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses;
provided, however, that the failure of any Indemnified Person so to
notify the Company shall not relieve the Company of its obligations
hereunder except to the extent that the Company is actually and
materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Person unless: (i) the Company
and the Indemnified Person shall have mutually agreed to the
retention of such counsel; (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
(ii) in
the reasonable judgment of counsel to such Indemnified Person,
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. The Company shall not be liable for any settlement of
any proceeding effected without its written consent, which consent
shall not be unreasonably withheld, delayed, or 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.
4.10. Form
D; Blue Sky. The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D and to
provide a copy thereof, promptly upon the written request of any
Purchaser. The Company, on or before the Closing Date, shall take
such action as the Company shall reasonably determine is necessary
in order to obtain an exemption for or to qualify the Securities
for sale to the Purchasers under applicable securities or
“Blue Sky” laws of the states of the United States (or
to obtain an exemption from such qualification) and shall provide
evidence of such actions promptly upon the written request of any
Purchaser.
4.11. Delivery
of Units After Closing. The Company shall deliver, or cause to be
delivered, the respective Shares and Warrants purchased by each
Purchaser to such Purchaser within three (3) TradingDays of the
Closing Date, unless the Company uses a book entry system in which
a computerized or manual entry is made in the records of the
Company to evidence the issuance and ownership of such Shares, in
which case the Shares need not be delivered.
4.12. Short
Sales and Confidentiality After the Date Hereof. Each Purchaser
shall not, and shall cause its Trading Affiliates not to, engage,
directly or indirectly, in any purchases and sales of the
Company’s securities (including, without limitation, any
Short Sales involving the Company’s securities) during the
period from the date hereof until the earlier of such time as (i)
the transactions contemplated by this Agreement are first publicly
announced as required by and described in Section 4.5 or (ii) this
Agreement is terminated in full pursuant to Section 6.18. Each
Purchaser, severally and not jointly with the other Purchasers,
covenants that until such time as the transactions contemplated by
this Agreement are publicly disclosed by the Company as described
in Section 4.5, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information
included in the Transaction Documents and Disclosure Schedules.
Notwithstanding the foregoing, no Purchaser makes any
representation, warranty, or covenant hereby that it will not
engage in Short Sales in the securities of the Company after the
time that the transactions contemplated
by this
Agreement are first publicly announced as described in Section 4.5.
4.13. Piggyback
Registration Rights. If the Company at any time determines to file
a registration statement under the Securities Act to register the
offer and sale, by the Company, of Common Stock (other than (x) on
Form S-4 or Form S-8 under the Securities Act or any successor
forms thereto, (y) an at-the-market offering, or (z) a registration
of securities solely relating to an offering and sale to employees
or directors of the Company pursuant to any employee stock plan or
other employee benefit plan arrangement), the Company shall, as
soon as reasonably practicable, give written notice to the
Purchasers of its intention to so register the offer and sale of
Common Stock and, upon the written request, given within five (5)
Business Days after delivery of any such notice by the Company, of
the Purchaser to include in such registration the Purchaser’s
Registrable Securities (which request shall specify the number of
Registrable Securities proposed to be included in such
registration), the Company shall cause all such Registrable
Securities to be included in such registration statement (the
“Registration Statement”) on the same terms and
conditions as the Common Stock otherwise being sold pursuant to
such registered offering.
ARTICLE
V.
CONDITIONS
PRECEDENT TO CLOSING
5.1. Conditions
Precedent to the Obligations of the Purchasers to Purchase
Securities. The obligation of each Purchaser to acquire the Units
at the Closing is subject to the fulfillment to such
Purchaser’s satisfaction, on or prior to the Closing Date, of
each of the following conditions, any of which may be waived by
such Purchaser (as to itself only):
(a) Representations and
Warranties. The representations and warranties of the Company
contained herein shall be true and correct in all material respects
(except for those representations and warranties which are
qualified as to materiality, in which case such representations and
warranties shall be true and correct in all respects) as of the
date when made and as of the Closing Date, as though made on and as
of such date, except for such representations and warranties that
speak as of a specific date.
(b) Performance. The
Company shall have performed, satisfied, and complied in all
material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or
complied with by it at or prior to the Closing.
(c) No Injunction. No
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the
transactions contemplated by the Transaction
Documents.
(d) Consents. The
Company shall have obtained in a timely fashion any and
allconsents, permits, approvals, registrations and waivers
necessary for consummation of the purchase and sale of the
Securities (including all Required Approvals), all of which shall
be and remain so long as necessary in full force and
effect.
(e) Adverse Changes.
Since the date of execution of this Agreement, no event or series
of events shall have occurred that has had or would reasonably be
expected to have a Material Adverse Effect.
(f) No Suspensions of
Trading in Common Stock. The Common Stock shall not have been
suspended, as of the Closing Date, by the Commission or the
Principal Trading Market from trading on the Principal Trading
Market nor shall suspension by the Commission or the Principal
Trading Market have been threatened, as of the Closing Date, either
(A) in writing by the Commission or the Principal Trading Market or
(B) by falling below the minimum listing maintenance requirements
of the Principal Trading Market.
(g) Company
Deliverables. The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a).
(h) Termination. This
Agreement shall not have been terminated as to such Purchaser in
accordance with Section 6.18 herein.
5.2. Conditions
Precedent to the Obligations of the Company to sell Securities. The
Company's obligation to sell and issue the Units at the Closing to
the Purchasers is subject to the fulfillment to the satisfaction of
the Company on or prior to the Closing Date of the following
conditions, any of which may be waived by the Company:
(a) Representations and
Warranties. The representations and warranties made by the
Purchasers in Section 3.2 hereof shall be true and correct in all
material respects (except for those representations and warranties
which are qualified as to materiality, in which case such
representations and warranties shall be true and correct in all
respects) as of the date when made, and as of the Closing Date as
though made on and as of such date, except for representations and
warranties that speak as of a specific date.
(b) Performance. Such
Purchaser shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or
complied with by such Purchaser at or prior to the Closing
Date.
(c) No Injunction. No
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the
transactions contemplated by the Transaction
Documents.
(d) Consents. The
Company shall have obtained in a timely fashion any and
allconsents, permits, approvals, registrations and waivers
necessary for consummation of the purchase and sale of the
Securities, all of which shall be and remain so long as necessary
in full force and effect.
(e) Purchasers
Deliverables. Such Purchaser shall have delivered its Purchaser
Deliverables in accordance with Section 2.2(b).
(f) Termination. This
Agreement shall not have been terminated as to such Purchaser in
accordance with Section 6.18 herein.
ARTICLE
VI.
MISCELLANEOUS
6.1. Fees
and Expenses. The Company and the Purchasers shall each pay the
fees and expenses of their respective advisers, counsel,
accountants and other experts, if any, and all other expenses
incurred by such party in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees, stamp taxes and
other taxes and duties levied in connection with the sale and
issuance of the Securities to the Purchasers.
6.2. Entire
Agreement. The Transaction Documents, together with the exhibits
and schedules thereto, contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all
prior agreements, understandings, discussions and representations,
oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further
consideration, the Company and the Purchasers will execute and
deliver to the other such further documents as may be reasonably
requested in order to give practical effect to the intention of the
parties under the Transaction Documents.
6.3. Notices.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via
facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number
specified in this Section
6.3. prior
to 5:00 P.M., New York City time, on a Trading Day, (b) the next
Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number
specified in this Section 6.3 on a day that is not a Trading Day or
later than 5:00 P.M., New York City time, on any Trading Day, (c)
the Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service with next day
delivery specified, or (d) upon actual receipt by the party to whom
such notice is required to be given. The address for such notices
and communications shall be as follows:
If to the
Company:
000 Xxxxxxxx
Xxxxxx, Xxxxx 0000 Xxxxxxxxx, XX 00000
Attention:Xxxxxxxx
XxXxxxxx
With a copy
to:
Xxxx Xxxxx
LLP
(which shall
not
000 Xxxxxxxxx
Xxxxxx xxxxxxxxxx xxxxxx)Xxx Xxxx, XX 00000
Attention: Xxxxxxx
Xxxxxx
If to a
Purchaser:
To the address set
forth under such Purchaser’s name on the signature page
hereof; or such other address as may be designated in writing
hereafter, in the same manner, by such Person.
6.4. Amendments;
Waivers; No Additional Consideration. No provision of this
Agreement may be waived, modified, supplemented or amended except
in a written instrument signed, in the case of an amendment, by the
Company and the Purchasers of at least 66 2/3% of the Securities
still held by Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder
in any manner impair the exercise of any such right. No
consideration shall be offered or paid to any Purchaser to amend or
consent to a waiver or modification of any provision of this
Agreement unless the same consideration is also offered to all
Purchasers who then hold Securities.
6.5. Construction.
The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement
will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be
applied against any party. This Agreement shall be construed as if
drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provisions of this Agreement or any of the
Transaction Documents.
6.6. Successors
and Assigns. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and
permitted assigns. This Agreement, or any rights or obligations
hereunder, may not be assigned by the Company without the prior
written consent of each Purchaser. Any Purchaser may assign its
rights hereunder in whole or in part to any Person to whom such
Purchaser assigns or transfers any Securities in compliance with
the Transaction Documents and applicable law, provided such
transferee shall agree in writing to be bound, with respect to the
transferred Securities, by the terms and conditions of this
Agreement that apply to the “Purchasers”.
6.7. No
Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and
permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except each
Purchaser Party as an intended third party beneficiary of Section
4.9.
6.8. Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or
its respective Affiliates, employees or agents) shall be commenced
exclusively in the New York Courts. Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York
Courts for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any
of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such New York Court,
or that such Proceeding has been commenced in an improper or
inconvenient forum. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in
any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
6.9. Survival.
Subject to applicable statute of limitations, the representations,
warranties, agreements, and covenants contained herein shall
survive the Closing and the delivery of theSecurities.
6.10. Execution.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile
transmission, 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 signature page were an original thereof.
6.11. Severability.
If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Agreement shall not in
any way be affected or impaired thereby and the parties will
attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this
Agreement.
6.12. Rescission
and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right,
election, demand or option under a Transaction Document and the
Company does not timely perform its related obligations within the
periods therein provided, then such Purchaser may rescind or
withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and
rights.
6.13. Replacement
of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for
and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company 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 Securities. If a replacement certificate or
instrument evidencing any Securities is requested due to a
mutilation thereof, the Company may
require
delivery of such mutilated certificate or instrument as a condition
precedent to any issuance of a replacement.
6.14. Remedies.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific
performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the
foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in
connection with any action for a temporary restraining order) the
defense that a remedy at law would be adequate.
6.15. Payment
Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a
Purchaser enforces or exercises its rights thereunder, and such
payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
6.16. Adjustments
in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common
Stock (or other securities or rights convertible into, or entitling
the holder thereof to receive directly or indirectly shares of
Common Stock), combination or other similar recapitalization or
event occurring after the date hereof and prior to the Closing,
each reference in any Transaction Document to a number of shares or
a price per share shall be deemed to be amended to appropriately
account for such event.
6.17. Independent
Nature of Purchasers' Obligations and Rights. The obligations of
each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser
shall be responsible in any way for the performance of the
obligations of any other Purchaser under any Transaction Document.
The decision of each Purchaser to purchase Securities pursuant to
the Transaction Documents has been made by such Purchaser
independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business,
affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the
Company or any Subsidiary which may have been made or given by any
other Purchaser or by any agent or employee of any other Purchaser,
and no Purchaser and any of its agents or employees shall have any
liability to any other Purchaser (or any other Person) relating to
or arising from any such information, materials, statement or
opinions. Nothing contained herein or in any Transaction Document,
and no action taken by any Purchaser pursuant thereto, shall be
deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create
a presumption that the Purchasers are in any way acting in concert
or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Purchaser
acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and
that no Purchaser will be acting as agent of such Purchaser in
connection with monitoring its investment in the Securities or
enforcing its rights under the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of
this Agreement or out of the other Transaction Documents, and it
shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in its
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 any
Purchaser.
6.18. Termination.
This Agreement may be terminated, and the sale and purchase of the
Units abandoned at any time prior to the Closing by either the
Company or any Purchaser (with respect to itself only)
upon
written notice to the other, if the Closing has not been
consummated on or prior to 5:00 P.M., New York City time, on the
Outside Date; provided, however, that the right to terminate this
Agreement under this Section
6.18 shall not be available to
any Person whose failure to comply with its obligations under this
Agreement has been the cause of or resulted in the failure of the
Closing to occur on or before such time. Nothing in this
Section 6.18 shall
be deemed to release any party from any liability for any breach by
such party of the terms and provisions of this Agreement or the
other Transaction Documents or to impair the right of any party to
compel specific performance by any other party of its obligations
under this Agreement or the other Transaction Documents. In the
event of a termination pursuant to this Section 6.18, the Company shall
promptly notify all non-terminating Purchasers. Upon a termination
in accordance with this Section 6.18, the Company and
the terminating Purchaser(s) shall not have any further obligation
or liability (including arising from such termination) to the
other, and no Purchaser will have any liability to any other
Purchaser under the Transaction Documents as a result
therefrom.
[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have caused this Subscription
Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
By:
Name: Xxxxxxxx XxXxxxxx
Title: Chief
Executive Officer
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
|
|
NAME OF PURCHASER:
By:
Name:
Title:
Aggregate Purchase
Price (Subscription Amount): $
Number of Units to
be Acquired:
Number of Shares to be Acquired:
Underlying Shares
Subject to
Warrant:
(100% of the number
of Shares to be acquired)
Tax ID
No.:
Address for
Notice:
Telephone
No.:
Facsimile
No.:
E-mail
Address:
|
Delivery
Instructions: (if different than above)
c/o
Street:
City/State/Zip:
Attention:
Telephone No.:
SCHEDULES:
Schedule
3.1(a)
Subsidiaries
Schedule
3.1(g)
Capitalization
Schedule
3.1(h)
Material
Changes
Schedule
3.1(i)
Litigation
Schedule
3.1(k)
Compliance
Schedule
3.1(m)
Liens
Schedule
3.1(p)
Transactions with
Affiliates and Employees Schedule 3.1(t) Registration
Rights
Schedule
3.1(w)
Disclosure
Schedule
3.1(y)
Tax
Matters
EXHIBITS:
A:
Form of
Warrant
B-1:
Investor
Questionnaire
B-2:
Stock Certificate
Questionnaire
C:
Form of Irrevocable
Transfer Agent Instructions D:Form of Secretary’s
Certificate
E:
Wire
Instructions
SCHEDULE 3.1(A)
SUBSIDIARIES
Iota
Networks, LLC
Iota
Commercial Solutions, LLC Iota Spectrum Holdings, LLC Arkados,
Inc.
SCHEDULE 3.1(G) CAPITALIZATION
|
Common
Stock
|
|
Prefered
Stock
|
|
Warrants
|
|
Options
|
||||||||||||
|
#
Shares Authorized
|
|
#
Shares Issued
|
|
#
Shares Outstanding
|
|
#
Shares Authorized
|
|
#
Shares Issued
|
|
#
Shares Outstanding
|
|
#
Outstanding
|
|
Wtd.
Avg. Exercise Price
|
|
#
Outstanding
|
|
Wtd.
Avg. Exercise Price
|
|
600,000,000
|
|
293,720,970
|
|
293,720,970
|
|
5,000,000
|
|
-
|
|
-
|
|
21,184,682
|
|
0.39
|
|
23,625,000
|
|
0.46
|
SCHEDULE 3.1(H) MATERIAL
CHANGES
On
October 27, 2020, Iota Networks, Syscom, and Xxxxx entered into an
“Amendment No. 2 to Master Utilization Rights Agreement and
Settlement Agreement and Mutual Release”, outlining new terms
for leasing at least 200 billboards by December 31, 2021. Past due
sums of $363,876.95 are to be settled in the amount of $351,000
paid over 4 monthly payments ($57,000 due at signing, then 2
payments of $57,000 and two payments of $90,000). Payment of the
settlement amount will cure any past breaches of the Master
Utilization Rights Agreement.
SCHEDULE 3.1(I) LITIGATION
On
April 17, 2019, Ladenburg Tharman & Co. Inc.
(“Ladenburg”) filed a complaint in The Circuit Court of
the 11th Judicial Circuit in and for Miami-Dade County, Florida,
Case No. 2019-011385-CA-01, against the Company claiming fees that
are owed under an investment banking agreement with M2M Spectrum
Networks, LLC. Ladenburg sought
$758,891 based upon
a transaction fee of $737,000, out-of-pocket expenses of $1,391,
and four monthly retainers of
$5,000
each totaling $20,000. Ladenburg claimed an amendment to the
contract with M2M Spectrum Networks, LLC, nearly doubling the
transaction fee, was a valid and binding amendment. On October 22,
2020, the parties settled the litigation at a mediation conference.
Iota agreed to pay $500,000 to Ladenburg, as follows: (a) $50,000
on November 30, 2020; (b) monthly installments of $20,000 from
December 2020 through April 2021; and (c) a lump sum payment
of
$350,000 on June 1,
2021.
On
September 10, 2020, Iota Networks, LLC was served with a complaint
in the U.S. Bankruptcy Court, District of Arizona. The complaint
alleges fraudulent conveyances with respect to the debtors,
Smartcomm, LLC and Smartcomm License Services, LLC, relating to a
promissory note made by Iota in favor of the debtors. The balance
due on the note is alleged to be approximately $900,000. We believe
the lawsuit is an attempt to circumvent the note’s favorable
repayment terms and accelerate repayment. A motion to dismiss most
of the claims has been filed.
SCHEDULE 3.1(K) COMPLIANCE
None.
SCHEDULE 3.1(M)
LIENS
None.
SCHEDULE 3.1(P)
TRANSACTIONS WITH AFFILIATES AND EMPLOYEES
None.
SCHEDULE 3.1(T) REGISTRATION
RIGHTS
None.
SCHEDULE 3.1(W) DISCLOSURE
None.
SCHEDULE 3.1(Y) TAX MATTERS
None.
EXHIBIT A FORM OF
WARRANT
(See
attached)
No. IOTA –
IOTA
COMMUNICATIONS, INC. COMMON STOCK PURCHASE WARRANT
THE
WARRANT REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), AND IS SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. THIS WARRANT MAY
NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION
OF COUNSEL, REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO
THE EFFECT THAT THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE
EFFECTUATED WITHOUT REGISTRATION UNDER THE ACT.
WARRANT
CERTIFICATE
Original Issue
Date:
THIS
WARRANT CERTIFICATE (the “Warrant Certificate”)
certifies that for value received,
(the “Holder”),
is the owner of this warrant (the “Warrant”), which
entitles the Holder to purchase at any time on or before the
Expiration Date (as defined below)shares(the “Warrant
Shares”) of fully paid non-assessable shares of the common
stock (the “Common Stock”) of IOTA COMMUNICATIONS,
INC., a Delaware corporation (the “Company”), at a
purchase price per Warrant Share of $0.12 (the “Purchase
Price”), in lawful money of the United States of America by
bank or certified check, subject to adjustment as hereinafter
provided. This Warrant is issued for services rendered by Holder to
Company.
This
Warrant is one of a series of warrants (collectively, the
“Financing Warrants”) of like tenor that have been
issued in connection with the offering of the securities of the
Company, which consisted of Common Stock and the
Warrants.
1.
WARRANT;
PURCHASE PRICE.
This
Warrant shall entitle the Holder to purchase the Warrant Shares at
the Purchase Price. The Purchase Price and the number of Warrant
Shares evidenced by this Warrant Certificate are subject to
adjustment as provided in Article 6.
2.
EXERCISE;
EXPIRATION DATE.
(a) This
Warrant is exercisable, at the option of the Holder, at any time
after the date of issuance and on or before the Expiration Date (as
defined below) by delivering to the Company written notice of
exercise (the “Exercise Notice”), stating the number of
Warrant Shares to be purchased thereby, accompanied by bank or
certified check payable to the order of the Company for the Warrant
Shares being purchased. Within ten (10) business days of the
Company’s receipt of the Exercise Notice accompanied by the
consideration for the Warrant Shares being purchased, the Company
shall instruct its transfer agent to issue and deliver to the
Holder a certificate representing the Warrant Shares being
purchased. In the case of exercise for less than all of the Warrant
Shares represented by this Warrant Certificate, the Company shall
cancel this Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate for the balance
of such Warrant Shares.
(b)
Expiration.
The term “Expiration Date” shall mean 5:00 p.m., New
York time, on
the
fifth (5th) anniversary of the Issue Date set forth above, or if
such date in the State of New York shall be a holiday or a day on
which banks are authorized to close, then 5:00 p.m., New York time,
the next following day which in the State of New York is not a
holiday or a day on which banks are authorized to
close.
3.
RESTRICTIONS
ON TRANSFER.
(a) Restrictions.
This Warrant, and the Warrant Shares or any other security issuable
upon exercise of this Warrant may not be assigned, transferred,
sold, or otherwise disposed of unless (i) there is in effect a
registration statement under the Act covering such sale, transfer,
or other disposition or
(ii)
the Holder furnishes to the Company an opinion of counsel,
reasonably acceptable to counsel for the Company, to the effect
that the proposed sale, transfer, or other disposition may be
effected without registration under the Act, as well as such other
documentation incident to such sale, transfer, or other disposition
as the Company’s counsel shall reasonably
request.
(b) Legend.
Any Warrant Shares issued upon the exercise of this Warrant shall
bear substantially the following legend:
“THE SHARES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AND WITH RESPECT TO THE SHARES OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT THAT IS THEN APPLICABLE TO
THE SHARES, AS TO WHICH A PRIOR OPINION OF COUNSEL ACCEPTABLE TO
THE ISSUER OR TRANSFER AGENT MAY BE REQUIRED.”
4.
RESERVATION
OF SHARES.
The
Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the
purpose of issuance upon exercise of this Warrant, such number of
shares of Common Stock as shall then be issuable upon the exercise
of this Warrant. The Company covenants that all shares of Common
Stock which shall be issuable upon exercise of this Warrant shall
be duly and validly issued and fully paid and non- assessable and
free from all taxes, liens, and charges with respect to the issue
thereof.
5.
LOSS
OR MUTILATION.
If the
Holder loses this Warrant, or if this Warrant is stolen, destroyed
or mutilated, the Company shall issue an identical replacement
Warrant upon the Holder’s delivery to the Company of a
customary agreement to indemnify the Company for any losses
resulting from the issuance of the replacement
Warrant.
6.
PROVISIONS
REGARDING ADJUSTMENTS TO STOCK.
(a)
Stock
Dividends, Subdivisions and Combinations. If at any time the
Company
shall:
(i)
take
a record of the holders of its Common Stock for the purpose of
A-2
entitling them to
receive a dividend payable in, or other distribution of, additional
shares of Common Stock,
(ii)
subdivide
its outstanding shares of Common Stock into a larger number of
shares of Common Stock,
or
(iii)
combine
its outstanding shares of Common Stock into a smaller number of
shares of Common
Stock,
then
(A) the number of shares of Common Stock for which this Warrant is
exercisable into immediately after the occurrence of any such event
shall be adjusted to equal the number of shares of Common Stock
which a record holder of the same number of shares of Common Stock
for which this Warrant is exercisable into immediately prior to the
occurrence of such event would own or be entitled to receive after
the happening of such event, and (B) the Purchase Price shall be
adjusted to equal (x) the current Purchase Price immediately prior
to the adjustment multiplied by the number of shares of Common
Stock for which this Warrant is exercisable into immediately prior
to the adjustment divided by (y) the number of shares of Common
Stock for which this Warrant is exercisable into immediately after
such adjustment.
(b) Certificate
as to Adjustments. Upon the occurrence of each adjustment or
readjustment of the Purchase Price, the Company, at its expense,
shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to the
Holder a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request
at any time of the Holder, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustments and
readjustments,
(ii)
the Purchase Price at the time in effect for this Warrant and (iii)
the number of shares of Common Stock and the amount, if any, or
other property which at the time would be received upon the
exercise of this Warrant.
(c) Notices
of Record Date. In the event of any fixing by the Company of a
record date for the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to
receive any dividend (other than a cash dividend) or other
distribution, any shares of Common Stock or other securities, or
any right to subscribe for, purchase or otherwise acquire, or any
option for the purchase of, any shares of stock of any class or any
other securities or property, or to receive any other right, the
Company shall mail to the Holder at least thirty (30) days prior to
the date specified therein, a notice specifying the date on which
any such record is to be taken for the purpose of such dividend,
distribution or rights, and the amount and character of such
dividend, distribution or right.
(d) Merger,
Consolidation, etc. In case of any capital reorganization or any
reclassification of the capital stock of the Company or in case of
the consolidation or merger of the Company with another corporation
(or in the case of any sale, transfer, or other disposition to
another corporation of all or substantially all the property,
assets, business, and goodwill of the Company), the Holder of this
Warrant shall thereafter be entitled to purchase the kind and
amount of shares of capital stock which this Warrant entitled the
Holder to purchase immediately prior to such capital
reorganization, reclassification of capital stock, consolidation,
merger, sale, transfer, or other disposition; and in any such case
appropriate adjustments shall be made in the application of the
provisions of this Section 6 with respect to rights and interests
thereafter of the Holder of this Warrant to the end that the
provisions of this Section 6 shall thereafter be applicable, as
near as reasonably may be, in relation to any shares or other
property thereafter purchasable upon the exercise of this
Warrant.
(e) Fractional
Shares. No certificate for fractional shares shall be issued upon
the exercise of this Warrant, but in lieu thereof the Company shall
purchase any such fractional shares calculated to the nearest cent
or round up the fraction to the next whole share.
A-3
(f) Rights
of the Holder. The Holder of this Warrant shall not be entitled to
any rights of a shareholder of the Company in respect of any
Warrant Shares purchasable upon the exercise hereof until such
Warrant Shares have been paid for in full and issued to it. As soon
as practicable after such exercise, the Company shall deliver a
certificate or certificates for the number of full shares of Common
Stock issuable upon such exercise, to the person or persons
entitled to receive the same.
7.
REPRESENTATIONS
AND WARRANTIES.
The
Holder, by acceptance of this Warrant, represents and warrants to,
and covenants and agrees with, the Company as follows:
(a) The
Warrant is being acquired for the Holder’s own account for
investment and not with a view toward resale or distribution of any
part thereof, and the Holder has no present intention of selling,
granting any participation in, or otherwise distributing the
same.
(b) The
Holder is aware that the Warrant is not registered under the Act or
any state securities or “blue sky” laws and, as a
result, substantial restrictions exist with respect to the
transferability of the Warrant and the Warrant Shares to be
acquired upon exercise of the Warrant.
(c) The
Holder is an accredited investor as defined in Rule 501(a) of
Regulation D under the Act and is a sophisticated investor familiar
with the type of risks inherent in the acquisition of securities
such as the Warrant, and its financial position is such that it can
afford to retain the Warrant and the Warrant Shares for an
indefinite period of time without realizing any direct or indirect
cash return on this investment.
8.
NO
IMPAIRMENT.
The
Company shall not by any action including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the
par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefore upon
such exercise immediately prior to such increase in par value, (b)
take all such actions as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock upon the exercise of this
Warrant, and (c) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant. Upon the
request of Holder, the Company will at any time during the period
this Warrant is outstanding acknowledge in writing, in form
satisfactory to Holder, the continuing validity of this Warrant and
the obligations of the Company hereunder.
9.
NO
REGISTRATION RIGHTS.
There
are no registration rights associated with this Warrant; the
registration rights associated with the underlying Warrant Shares
when issued are provided in the Subscription Agreement dated as of
the date hereof by and among the Company and the signatories
thereto.
10.
SUPPLYING
INFORMATION.
The
Company shall cooperate with Holder and each holder of Warrant
Shares in supplying such information pertaining to the Company as
may be reasonably necessary for such Holder and each
A-4
holder
of Warrant Shares to complete and file any information reporting
forms presently or hereafter required by the Securities and
Exchange Commission as a condition to the availability of an
exemption from the Act for the sale of Warrant Shares.
11.
LIMITATION
OF LIABILITY.
No
provision hereof, in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of Holder hereof, shall give rise to any
liability of Holder for the purchase price of any Common Stock or
as a stockholder of the Company, whether such liability is asserted
by the Company or by creditors of the Company.
12.
MISCELLANEOUS.
(a) Transfer
Taxes; Expenses. The Holder shall pay any and all
underwriters’ discounts, brokerage fees, and transfer taxes
incident to the sale or exercise of this Warrant or the sale of the
underlying shares issuable hereunder and shall pay the fees and
expenses of any special attorneys or accountants retained by
it.
(b) Successors
and Assigns. Subject to compliance with the provisions of Section
3, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and
the successors and assigns of Holder. The provisions of this
Warrant are intended to be for the benefit of all Holders from time
to time of this Warrant and shall be enforceable by any such
Holder.
(c) Severability.
If a court of competent jurisdiction holds any provision of this
Warrant invalid or unenforceable, the other provisions of this
Warrant will remain in full force and effect. Any provision of this
Warrant held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or
unenforceable.
(d) Notice.
Any notice or other communication required or permitted to be given
to the Company shall be in writing and shall be delivered by
certified mail with return receipt or delivered in person against
receipt, addressed to the Company at 000 Xxxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxx, XX 00000.
(e) Amendments
and Waivers. Any term of this Warrant may be amended and the
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the
Holders of a majority of the Financing Warrants.
(f) Governing
Law. This Warrant Certificate shall be governed by, and construed
in accordance with, the internal laws of the State of New York,
without reference to the conflicts of laws provisions
thereof.
A-5
IN
WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed as of the date set forth below.
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By:
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/s/
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Name:
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Xxxxxxxx
XxXxxxxx
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Title: Chief
Executive Officer
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A-6
IOTA COMMUNICATIONS, INC. FORM
OF EXERCISE OF
WARRANT
No.
IOTA –
□ The undersigned hereby elects to
exercise this
Warrant
as
to
shares of
the
Common
Stock of Iota Communications, Inc., a Delaware corporation, covered
thereby. Enclosed herewith is a bank or certified check in the
amount of $ payable to the Company.
Delivery of exercise notice requiring a payment by check must be by
national courier (FedEx, UPS, etc.) to the Company at:
000
Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX
00000
Attn:
Xxxxxxxx XxXxxxxx
The
shares should be sent to me at the address provided
below.
Date:
(Signature)
Name (Printed)
Address:
Social
Security Number (for individual
holder) or Employer Identification Number (Tax ID)
(for entity):
X-0
XXXXXXX X-0
INVESTOR
QUESTIONNAIRE
(See
attached)
B-1
B-2
B-3
FOR ENTITIES ONLY:
4.
A bank as defined
in Section 3(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), or any savings and loan association
or other institution as defined in Section 3(a)(5)(A) of the
Securities Act whether acting in its individual or fiduciary
capacity.
5.
A broker or dealer
registered pursuant to Section 15 of the Securities Exchange Act of
1934 (the “Exchange Act”).
6.
An insurance
company as defined in Section 2(a)(13) of the Securities
Act.
7.
An investment
company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of that
act.
8.
A Small Business
Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
9.
A plan established
and maintained by a state, its political subdivisions, or an agency
or instrumentality of a state or its political subdivisions for the
benefit of its employees, if such plan has total assets in excess
of $5,000,000.
10.
An employee benefit
plan within the meaning of the Employee Retirement Income Security
Act of 1974 if the investment decision is made by a plan fiduciary,
as defined in Section 3(21) of such act, which is either a bank,
savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total
assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by Persons that are accredited
investors.
11.
A private business
development company as defined in Section 202(a)(22) of the
Investment Advisers Act.
12.
An organization
described in Section 501(c)(3) of the Internal Revenue Code, a
corporation, a Massachusetts or similar business trust, a
partnership or a limited liability company, not formed for the
specific purpose of acquiring the Units, with total assets in
excess of $5,000,000.
B-4
13.
A trust, with total
assets in excess of $5,000,000, not formed for the specific purpose
of acquiring the Units, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) under the
Securities Act.
14.
An entity as to
which all the equity owners (or, in the case of a trust, all the
income beneficiaries) are accredited investors.
NOTE:
If the undersigned qualifies as an “accredited
investor” under this Category 14 only, a list of equity
owners of the undersigned, and the accredited investor category in
this Exhibit A that each such equity owner satisfies, should be
listed on the below table as indicated. Please attach additional
pages if necessary.
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Equity
Owners
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Accredited Investor
Category Under Exhibit A
That
Equity Owner Satisfies
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C.
Tax
Exempt Status
Is
the Investor exempt from taxation under Section 501 of the Internal
Revenue Code of 1986, as amended, or otherwise?
o
Yes
o
No
[remainder of page intentionally left blank]
B-5
B-6
EXHIBIT B-2
STOCK
CERTIFICATE QUESTIONNAIRE
Pursuant to
Section 2.2(b) of
the Agreement, please provide us with the following
information:
1.
The exact name that
the Securities are to be registered in (this is the name that will
appear on the stock certificate(s)).
You may use a
nominee name if
appropriate:
2.
The relationship
between the Purchaser of the Securities and
the Registered
Holder listed in response to Item 1
above:
3.
The mailing
address, telephone, and telecopy number of the
Registered Holder
listed in response to Item 1
above:
4.
The Tax
Identification Number (or, if an individual, the Social Security
Number) of the Registered Holder listed in
response to Item 1
above:
B-7
EXHIBIT C
FORM OF
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
As
of
, 202
VStock
Transfer, LLC 00 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx
00000 Attn:
Ladies
and Gentlemen:
Reference is made
to that certain Subscription Agreement, dated as
of
, 2020 (the “Agreement”), by and among Iota
Communications, Inc., a Delaware corporation (the
“Company”), and the purchasers named on the signature
pages thereto (collectively, and including permitted transferees,
the “Holders”), pursuant to which the Company is
issuing to the Holders shares (the “Shares”) of Common
Stock of the Company, par value
$0.0001
per share (the “Common Stock”), and warrants (the
“Warrants”), which are exercisable into shares of
Common Stock.
This
letter shall serve as our irrevocable authorization and direction
to you (provided that you are the transfer agent of the Company at
such time and the conditions set forth in this letter are
satisfied), subject to any stop transfer instructions that we may
issue to you from time to time, if any:
(i)
to issue
certificates representing shares of Common Stock upon transfer or
resale of
the
Shares; and
(ii)
to issue shares of
Common Stock upon the exercise of the Warrants (the
“Warrant
Shares”) to
or upon the order of a Holder from time to time upon delivery to
you of a properly completed and duly executed Exercise Notice, in
the form attached hereto as Annex I, which has been
acknowledged by the Company as indicated by the signature of a duly
authorized officer of the Company thereon together with indication
of receipt of the exercise price therefor.
You
acknowledge and agree that so long as you have received (a) written
confirmation from the Company’s legal counsel that either (1)
a registration statement covering resales of the Shares and the
Warrant Shares has been declared effective by the Securities and
Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “Securities
Act”), or (2) the Shares and the Warrant Shares have been
sold in conformity with Rule 144 under the Securities Act
(“Rule 144”) or 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 as to such
securities and without volume or manner-of-sale restrictions and
(b) if applicable, a copy of such registration statement, then,
unless otherwise required by law, within three (3) Trading Days of
your receipt of a notice of transfer, Shares or the Exercise
Notice, you shall issue the certificates representing the Shares
and/or the Warrant Shares, as the case may be, registered in the
names of such Holders or transferees, as the case may be, and such
certificates shall not bear any legend restricting transfer of the
Shares or the Warrant Shares thereby and should not be subject to
any stop-transfer restriction; provided, however, that if such
Shares and Warrant Shares are not registered for resale under the
Securities Act or able to be sold under Rule 144 without the
requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such securities
and without volume or manner-of- sale restrictions, then the
certificates for such Shares and/or Warrant Shares shall bear the
following legend:
C-1
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTSOF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
A form
of written confirmation to be delivered by the Company’s
outside legal counsel in the event a registration statement
covering resales of the Shares and the Warrant Shares is declared
effective by the Commission under the Securities Act is attached
hereto as Annex
II.
Please
be advised that the Holders are relying upon this letter as an
inducement to enter into the Agreement and, accordingly, each
Holder is a third-party beneficiary to these
instructions.
Please
execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these
instructions.
Very
truly yours,
By:
Name:
Title:
Acknowledged and
Agreed:
By:
Name:
Title:
Date:
,
C-2
Annex I
FORM OF
EXERCISE NOTICE
[To be
executed by the Holder to purchase shares of Common Stock under the
Warrant] Ladies and Gentlemen:
(1) The undersigned
is the Holder of Warrant
No.
(the “Warrant”) issued by Iota Communications, Inc., a
Delaware corporation (the “Company”). Capitalized terms
used herein and not otherwise defined herein have the respective
meanings set forth in the Warrant.
(2) The undersigned
hereby exercises its right to
purchase
Warrant Shares pursuant to the Warrant.
(3) The Holder
shall pay the sum of
$
in immediately available funds to the Company in accordance with
the terms of the Warrant.
(4) Pursuant to this
Exercise Notice, the Company shall deliver to the Holder Warrant
Shares determined in accordance with the terms of the
Warrant.
(5) By its delivery of
this Exercise Notice, the undersigned represents and warrants to
the Company that in giving effect to the exercise evidenced hereby
the Holder will not beneficially own in excess ofthe number of
shares of Common Stock (as determined in accordance with Section
13(d) of the Securities Exchange Act of 1934) permitted to be owned
under Section 3.2(r) of the Purchase Agreement pursuant to which
the Warrant to which this notice relates was granted.
Dated:
Name of Holder:
*By:
Name:
Title:
*(Signature must
conform in all respects to name of Holder as specified on the face
of the Warrant)
C-3
ACKNOWLEDGEMENT
The
Company hereby acknowledges this Exercise Notice and receipt of the
appropriate exercise price and hereby directs VStock Transfer, LLC
to issue the above indicated number of shares of Common Stock in
accordance with the Irrevocable Transfer Agent Instructions
dated, 2020, from
the Company and acknowledged and agreed to by VStock Transfer,
LLC.
IOTA
COMMUNICATIONS, INC.
By:
Name:
Title:
C-4
Annex II
FORM OF
NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT
[
]
[Address]
[Address]
Attn:
Re:
Iota Communications, Inc.
Ladies
and Gentlemen:
We are
counsel to Iota Communications, Inc., a Delaware corporation (the
“Company”), and have represented the Company in
connection with that certain Subscription Agreement, dated as
of , 2020, entered into by and among the Company and the
purchasers named therein (collectively, the
“Purchasers”) pursuant to which the Company issued to
the Purchasers shares of the Company’s common stock, $0.0001
par value per share (the “Common Stock”), and warrants
exercisable for shares of Common Stock (the
“Warrants”). Pursuant to the Subscription Agreement,
the Company granted the Purchasers certain piggyback registration
rights providing for the registration of the resale of the Common
Stock, including the shares of Common Stock issuable upon exercise
of the Warrants (collectively, the “Registrable
Securities”), under the Securities Act of 1933, as amended
(the “Securities Act”), under certain circumstances
asdescribed in the Securities Agreement.
In
connection with the Company’s obligations under the
Subscription Agreement, on ,
2020,
the Company filed a Registration Statement on Form S-1 (File No.
333- ) (the “Registration Statement”) with the
Securities and Exchange Commission (the “Commission”)
providing for the registration of, among other things, the resale
of the Registrable Securities which names each of the Purchasers as
a selling stockholder thereunder.
In
connection with the foregoing, we advise you that a member of the
Commission’s staff has advised us by telephone that the
Commission has entered an order declaring the Registration
Statement effective under the Securities Act at [a.m.][p.m.]
on , , and we
have no knowledge, after telephonic inquiry of a member of the
staff, that any stop order suspending its effectiveness has been
issued or that any proceedings for that purpose are pending before,
or threatened by, the Commission and the Registrable Securities are
available for resale under the Securities Act pursuant to the
Registration Statement.
This
letter shall serve as our standing notice to you that the Common
Stock may be freely transferred by the Purchasers pursuant to the
Registration Statement. You need not require further letters from
us to effect any future legend-free issuance or reissuance of
shares of Common Stock to the Purchasers or the transferees of the
Purchasers, as the case may be, as contemplated by the
Company’s Irrevocable Transfer Agent Instructions
dated ,2020,
provided at the time of such reissuance, the Company has not
otherwise notified you that the Registration Statement is
unavailable for the resale of the Registrable Securities. This
letter shall serve as our standing instructions with regard to this
matter.
Very
truly yours, Xxxx Xxxxx LLP
By:
C-5
EXHIBIT D
FORM OF
SECRETARY’S CERTIFICATE
The
undersigned hereby certifies that he is the duly elected, qualified
and acting Secretary of Iota Communications, Inc., a Delaware
corporation (the “Company”), and that as such he is
authorized to execute and deliver this certificate in the name and
on behalf of the Company and in connection with the Subscription
Agreement, dated as of,
2020,
by and among the Company and the investors party thereto (the
“Subscription Agreement”), and further certifies in his
official capacity, in the name and on behalf of the Company, the
items set forth below.
1.
Attached hereto as
Exhibit A is a true, correct and complete copy of the resolutions
duly adopted by the [Board of Directors of the Company][duly
authorized Committee of the Board of Directors of the Company] at a
meeting of the [Board of Directors][Committee] held on, 2020. Such
resolutions have not in any way been amended, modified, revoked, or
rescinded, have been in full force and effect since their adoption
to and including the date hereof and are now in full force and
effect.
2.
Attached hereto as
Exhibit B is a true, correct and complete copy of the Certificate
of Incorporation of the Company, together with any and all
amendments thereto currently in effect, and no action has been
taken to further amend, modify or repeal such Certificate of
Incorporation, the same being in full force and effect in the
attached form as of the date hereof.
3.
Attached hereto as
Exhibit C is a true, correct and complete copy of the Bylaws of the
Company and any and all amendments thereto currently in effect, and
no action has been taken to further amend, modify or repeal such
Bylaws, the same being in full force and effect in the attached
form as of the date hereof.
4.
Each person listed
below has been duly elected or appointed to the position(s)
indicated opposite his name and is duly authorized to sign the
Subscription Agreement and each of the Transaction Documents on
behalf of the Company, and the signature appearing opposite such
person’s name below is such person’s genuine
signature.
|
Name
|
Position
|
Signature
|
|
Xxxxxxxx
XxXxxxxx
|
Chief
Executive Officer
|
|
|
Xxxxxxxx
XxXxxxxx
|
Secretary
|
|
|
Xxxxx
Xxxxxxxxx
|
Chief
Financial Officer
|
|
D-1
IN WITNESS WHEREOF,
the undersigned has hereunto set his hand as of
this day of, 2020.
|
|
Name: Xxxxxxxx
XxXxxxxx
Title:
Secretary
|
I,
Xxxxx Xxxxxxxxx, Chief Financial Officer, hereby certify that
Xxxxxxxx XxXxxxxx is the duly elected, qualified and acting
Secretary of the Company and that the signature set forth above is
his true signature.
|
|
Name: Xxxxx
Xxxxxxxxx
Title: Chief
Financial Officer
|
D-2
EXHIBIT
A
Resolutions
EXHIBIT
B
Certificate
of Incorporation
EXHIBIT
C
Bylaws
D-3
EXHIBIT E
WIRE
INSTRUCTIONS
Receiving
Bank:
[
Beneficiary:
Iota
Communications, Inc.
|
Routing
Number:
|
[
|
]
|
|
|
|
|
|
Account
Number:
|
[
|
]
|
E-1
