This Purchase and Sale Agreement involves
Title: SECURITIES PURCHASE AGREEMENT
Governing Law: New York Date: 10/31/2006
Industry: Auto and Truck Parts
Securities Purchase Agreement
Quantum Fuel Systems Technologies Worldwide, Inc.
17872 Cartwright Road
Irvine, CA 92614
The undersigned investor (the " Investor ") hereby confirms Investor's agreement with Quantum Fuel Systems Technologies Worldwide, Inc. ("Quantum" or the " Company ") as follows:
1. This Securities Purchase Agreement is made as of the date set forth below between the Company and the Investor.
2. The Company has authorized the sale and issuance of up to 6,097,561 shares (the " Shares ") of the common stock of the Company, $0.001 par value per share (the " Common Stock "), to certain investors in a private placement and has authorized that each investor shall receive (i) warrants to purchase that number of shares of the Company's Common Stock as specified herein at an exercise price of $2.36 per share, exercisable at any time or from time to time (the " Common Stock Purchase Warrant A ") and (ii) (a) warrants to purchase that number of shares of the Company's Common Stock as specified herein at an exercise price of $1.64 per share, exercisable at any time or from time to time (the " Common Stock Purchase Warrant B ") and (b) only as part of and in connection with the exercise of the Common Stock Purchase Warrant B, an additional warrant to purchase that number of shares of the Company's Common Stock as specified herein at an exercise price of $2.36 per share, exercisable at any time or from time to time (the " Additional Warrant "), in each case on or prior to October 30, 2006 (the " Offering "). As used herein, " Warrants " shall mean the Common Stock Purchase Warrant A, in the form attached as Exhibit 1 hereto and the Common Stock Purchase Warrant B, in the form attached as Exhibit 2 hereto, and " Warrant Shares " shall mean the shares of the Common Stock issuable upon the exercise of the Warrants and Additional Warrants. The Shares, Warrants, Additional Warrant and Warrant Shares are sometimes referred to collectively as the " Securities ."
3. The Company and the Investor agree that the Investor will purchase from the Company and the Company will issue and sell to the Investor 2,012,195 Shares at a purchase price of $1.64 per Share, for an aggregate purchase price of $3,300,000 (the " Purchase Price "), subject to the Terms and Conditions for Purchase of Shares attached hereto as Annex I and incorporated herein by reference as if fully set forth herein. Unless otherwise requested by the Investor in Exhibit "A", certificates representing the Shares purchased by the Investor will be registered in the Investor's name and address as set forth below. In addition, Investor shall receive (i) the Common Stock Purchase Warrant A, registered in the Investor's name, to purchase 704,268 shares of the Company's Common Stock, and (ii) the Common Stock Purchase Warrant B, registered in the Investor's name, to purchase (a) 603,659 shares of the Company's Common Stock, and (b) only as part of and in connection with the exercise of the Common Stock Purchase Warrant B, an additional warrant to purchase up to 211,280 shares of the Company's Common Stock.
4. The Investor represents that, except as set forth below, (a) it has had no position, office or other material relationship within the past three (3) years with the Company or its affiliates, (b) neither it, nor any group of which it is a member or to which it is related, acquired, directly or indirectly, any securities of the Company in a certain private placement transaction that closed on June 30, 2006, and (c) it has no direct or indirect affiliation or association with any National Association of Securities Dealers, Inc. (" NASD ") member. Exceptions:
(If no exceptions, write "none." If left blank, response will be deemed to be "none.")
Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose.
Dated as of: October 28, 2006
/s/ Iroquois Master Fund Ltd
By: /s/ Joshua Silverman
Name: Joshua Silverman
Title: Authorized Signer
Address: 641 Lexington Ave., 26 th Street
New York, New York 10122
AGREED AND ACCEPTED :
Quantum Fuel Systems Technologies Worldwide, Inc.
By: /s/ W. Brian Olson
Name: W. Brian Olson
Title: Chief Financial Officer
[SECURITIES PURCHASE AGREEMENT SIGNATURE PAGE]
Terms and Conditions for Purchase of Shares
1. Agreement to Sell and Purchase the Shares; Subscription Date.
1.1 Purchase and Sale . At the Closing (as defined in Section 2), the Company will sell to the Investor, and the Investor will purchase from the Company, upon the terms and subject to the conditions set forth herein, and at the Purchase Price, the number of Shares and Warrant described in paragraph 3 of the Securities Purchase Agreement attached hereto (collectively with this Annex I and the other exhibits attached hereto, this " Agreement ").
1.2 Other Investors . As part of the Offering, the Company proposes to enter into Securities Purchase Agreements in the same form as this Agreement with certain other investors (the " Other Investors "), and the Company expects to complete sales of Shares to them. The Investor and the Other Investors are sometimes collectively referred to herein as the " Investors ," and this Agreement, the Registration Rights Agreement and the Securities Purchase Agreements executed by the Other Investors are sometimes collectively referred to herein as the " Agreements " or the " Transaction Documents ". The Company may accept executed Agreements from Investors for the purchase of Shares commencing upon the date on which the Company provides the Investors with the proposed purchase price per Share and concluding upon the date (the " Subscription Date ") on which the Company has notified Canaccord Adams, Inc. (in its capacity as placement agent for the Shares, the " Placement Agent ") in writing that it will no longer accept Agreements for the purchase of Shares in the Offering, but in no event shall the Subscription Date be later than October __, 2006. Each Investor must execute and deliver a Securities Purchase Agreement and a Registration Rights Agreement and must complete a Stock Certificate Questionnaire (in the form attached as Exhibit "A" hereto) and an Investor Questionnaire (in the form attached as Exhibit "B" hereto) in order to purchase Shares in the Offering.
1.3 Placement Agent Fee . The Investor acknowledges that the Company intends to pay to the Placement Agent a fee in respect of the sale of Shares to the Investor from the proceeds of the Offering.
2. Delivery of the Shares at Closing. The completion of the purchase and sale of the Shares (the " Closing ") shall occur on a date specified by the Company and the Placement Agent that is anticipated to be October 27, 2006 (the " Closing Date "), but which date shall not be later than October 30, 2006 (the " Outside Date "), and of which the Investors will be notified in advance by the Placement Agent. At the Closing, the Company shall deliver to the Investor (i) one or more stock certificates representing the number of Shares set forth in paragraph 3 of the Securities Purchase Agreement and (ii) a Warrant pursuant to which such Investor shall have the right to acquire the number of Warrant Shares set forth in paragraph 3 of the Securities Purchase Agreement, each such certificate to be registered in the name of the Investor or, if so indicated on the Stock Certificate Questionnaire, in the name of a nominee designated by the Investor, together with the Warrant. In exchange for the delivery of the subscription agreements, the Investor shall deliver the Purchase Price directly to the Company by wire transfer of immediately available funds pursuant to written instructions. On the Closing Date, the Company shall cause counsel to the Company to deliver to the Investors a legal opinion, dated the Closing Date, in the form attached hereto as Exhibit "C" (the " Legal Opinion ").
The Company's obligation to issue and sell the Shares to the Investor and to deliver to the Investor the Warrant shall be subject to the following conditions, any one or more of which may be waived by the Company: (a) prior receipt by the Company of an executed copy of this Securities Purchase Agreement; (b) completion of purchases and sales of Shares under the Agreements with the Other Investors; (c) the accuracy of the representations and warranties made by the Investor in this Agreement and the fulfillment of the obligations of the Investor to be fulfilled by it under this Agreement on or prior to the Closing ; (d) the Company is satisfied that the issuance of the Securities will not be in violation of applicable Nasdaq listing qualification rules; and (e) the absence of any order, writ, injunction, judgment or decree that questions the validity of the Agreements or the right of the Company or the Investor to enter into such Agreements or to consummate the transactions contemplated hereby and thereby.
The Investor's obligation to purchase the Shares and Warrants shall be subject to the following conditions, any one or more of which may be waived by the Investor: (a) the delivery of the Legal Opinion to the Investor by counsel to the Company; (b) the accuracy of the representations and warranties made by the Company in this Agreement on the Closing Date; (c) the execution and delivery by the Company of the Registration Rights Agreement; and (d) the absence of any order, writ, injunction, judgment or decree that questions the validity of the Agreements or the right of the Company or the Investor to enter into such Agreements or to consummate the transactions contemplated hereby and thereby.
In the event that the Closing does not occur on or before the Outside Date as a result of the Company's failure to satisfy any of the conditions set forth above (and such condition has not been waived by the Investor), the Company shall return any and all funds paid hereunder to the Investor no later than one Business Day following the Outside Date and the Investors shall have no further obligations hereunder. For purposes of this Agreement, " Business Day " shall mean any day other than a Saturday, Sunday or other day on which the New York Stock Exchange is permitted or required by law to close.
3. Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to, and covenants with, the Investor as of the date hereof and the Closing Date, as follows:
3.1 Organization. The Company is duly incorporated and validly existing in good standing under the laws of the State of Delaware. The Company has full power and authority to own, operate and occupy its properties and to conduct its business as presently conducted and is registered or qualified to do business and in good standing in each jurisdiction in which it owns property or transacts business and where the failure to be so qualified would have a material adverse effect upon the Company and its subsidiaries as a whole or the business, financial condition, properties, operations or assets of the Company and its subsidiaries as a whole or the Company's ability to perform its obligations under the Agreements in all material respects (" Material Adverse Effect "), and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification.
3.2 Due Authorization. The Company has all requisite power and authority to execute, deliver and perform its obligations under the Agreements. The execution and delivery of the Agreements, and the consummation by the Company of the transactions contemplated hereby, have been duly authorized by all necessary corporate action and no further action on the part of the Company or its Board of Directors or stockholders is required. The Agreements have been validly executed and delivered by the Company and constitute legal, valid and binding agreements of the Company enforceable against the Company in accordance with their terms, except to the extent (i) rights to indemnity and contribution may be limited by state or federal securities laws or the public policy underlying such laws, (ii) such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and (iii) such enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
3.3 No Conflict or Default. The execution and delivery of the Agreements, the issuance and sale of the Shares to be sold by the Company under the Agreements, the fulfillment of the terms of the Agreements and the consummation of the transactions contemplated thereby will not: (A) result in a conflict with or constitute a material violation of, or material default (with the passage of time or otherwise) under, (i) any bond, debenture, note, loan agreement or other evidence of indebtedness, or any material lease, or contract to which the Company is a party or by which the Company or their respective properties are bound, (ii) the Certificate of Incorporation, by-laws or other organizational documents of the Company, as amended, or (iii) any law, administrative regulation, or existing order of any court or governmental agency, or other authority binding upon the Company or the Company's respective properties; or, (B) result in the creation or imposition of any lien, encumbrance, claim, or security interest upon any of the material assets of the Company or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Company is a party or by which it is bound or to which any of the property or assets of the Company is subject, that would have a Material Adverse Effect. No consent, approval, authorization or other order of, or registration, qualification or filing with, any regulatory body, administrative agency, or other governmental body is required for the execution and delivery of the Agreements by the Company and the valid issuance or sale of the Shares by the Company pursuant to the Agreements, other than such as have been made or obtained, and except for any filings required to be made under federal or state securities laws.
3.4 Capitalization. The outstanding capital stock of the Company is as described in the Company's Annual Report on Form 10-K for the year ended April 30, 2006 (the "10-K) and the Company's most recent Quarterly Report on Form 10-Q for the quarter ended July 31, 2006 (the 10-Q"). Except as described in the 10-K and the 10-Q, since July 31, 2006, the Company has not issued any capital stock, other than pursuant to the purchase of shares under the Company's employee stock option plan and the exercise of outstanding warrants or stock options. The Shares and Warrant Shares to be sold pursuant to the Agreements and the Common Stock Purchase Warrant A and Common Stock Purchase Warrant B have been duly authorized, and when issued and paid for in accordance with the terms of the Agreements and the Common Stock Purchase Warrant A and Common Stock Purchase Warrant B, will be duly and validly issued, fully paid and nonassessable, subject to no lien, claim or encumbrance (except for any such lien, claim or encumbrance created, directly or indirectly, by the Investor). The outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and nonassessable, have been issued in compliance with the registration requirements of federal and state securities laws, and were not issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Except as described otherwise in the 10-K and the 10-Q, the Company owns one hundred percent of all of the outstanding capital stock of each of its subsidiaries, free and clear of all liens, claims and encumbrances. There are not (i) any outstanding preemptive rights, or (ii) any rights, warrants or options to acquire, or instruments convertible into or exchangeable for, any unissued shares of capital stock or other equity interest in the Company not disclosed in the 10-K and the 10-Q, or (iii) any contract, commitment, agreement, understanding or arrangement of any kind to which the Company is a party that would provide for the issuance or sale of any capital stock of the Company, any such convertible or exchangeable securities or any such rights, warrants or options not disclosed in the 10-K and the 10-Q. There are no shareholders agreements, voting agreements or other similar agreements with respect to the Common Stock to which the Company is a party, other than as described in 10-K and the 10-Q.
3.5 Legal Proceedings. There is no material legal or governmental proceeding pending, or to the actual knowledge of the Company, threatened, to which the Company is a party or of which the business or property of the Company is subject. The Company is not subject to any injunction, judgment, decree or order of any court, regulatory body, administrative agency or other government body, which has a material effect on the business or property of the Company.
3.6 No Violations. The Company is not in violation of its Certificate of Incorporation, bylaws or other organizational documents, as amended, that is reasonably likely to have a Material Adverse Effect. The Company is not in violation of any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company, which violation, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect. The Company is not in default (and there exists no condition which, with the passage of time or otherwise, would constitute a default) in the performance of any bond, debenture, note or any other evidence of indebtedness or any indenture, mortgage, deed of trust or any other material agreement or instrument to which the Company is a party or by which the Company is bound, which such default is reasonably likely to have a Material Adverse Effect upon the Company.
3.7 Governmental Permits, Etc. The Company has all necessary franchises, licenses, certificates and other authorizations from any foreign, federal, state or local government or governmental agency, department or body that are currently necessary for the operation of the business of the Company as currently conducted, except where the failure to currently possess such franchises, licenses, certificates and other authorizations is not reasonably likely to have a Material Adverse Effect.
3.8 Intellectual Property.
(a) Except for matters which are not reasonably likely to have a Material Adverse Effect, (i) each of the Company has ownership of, or a license or other legal right to use, all patents, copyrights, trade secrets, trademarks, customer lists, designs, manufacturing or other processes, computer software, systems, data compilation, research results or other proprietary rights used in the business of the Company (collectively, " Intellectual Property ") and (ii) all of the Intellectual Property owned by the Company consisting of patents, registered trademarks and registered copyrights have been duly registered in, filed in or issued by the United States Patent and Trademark Office, the United States Register of Copyrights or the corresponding offices of other jurisdictions and have been maintained and renewed in accordance with all applicable provisions of law and administrative regulations in the United States and/or such other jurisdictions.
(b) Except for matters which are not reasonably likely to have a Material Adverse Effect, all material licenses or other material agreements under which (i) the Company employs rights in Intellectual Property, or (ii) the Company has granted rights to others in Intellectual Property owned or licensed by the Company are in full force and effect, and there is no default by the Company with respect thereto.
(c) The Company believes that it has taken all steps reasonably required in accordance with sound business practice and business judgment to establish and preserve the ownership of the Company's material Intellectual Property.
(d) Except for matters which are not reasonably likely to have a Material Adverse Effect, to the actual knowledge of the Company, (i) the present business, activities and products of the Company do not infringe any intellectual property of any other person; (ii) neither the Company is making unauthorized use of any confidential information or trade secrets of any person; and (iii) the activities of any of the employees of the Company, acting on behalf of the Company, do not materially violate any agreements or arrangements related to confidential information or trade secrets of third parties.
(e) Except for matters which are not reasonably likely to have a Material Adverse Effect, no proceedings are pending, or to the knowledge of the Company, threatened, which challenge the rights of the Company to the use the Company's Intellectual Property.
3.9 SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof (or such shorter period as the Company was required by law to file such reports) (the foregoing materials being collectively referred to herein as the " SEC Reports " and, together with the Schedules to this Agreement, the " Disclosure Materials ") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. Except as may have been corrected or supplemented in a subsequent SEC Report, as of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Except as may have been corrected or supplemented in a subsequent SEC Report, the financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Except as may have been corrected or supplemented in a subsequent SEC Report, such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (" GAAP "), except as may be otherwise specified in such financial statements or the notes thereto, or, in the case of unaudited financial statements, as permitted by Rule 10-01 of Regulation S-X promulgated under the Securities Act and the Exchange Act, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
3.10 No Material Adverse Change. There has not been, since July 31, 2006: (i) an event, circumstance or change that has had or is reasonably likely to have a Material Adverse Effect upon the Company, (ii) any obligation incurred by the Company that is material to the Company, other than obligations incurred in the ordinary course of business consistent with past practice, (iii) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company, or (iv) any loss or damage (whether or not insured) to the physical property of the Company which has had a Material Adverse Effect.
3.11 Nasdaq Compliance. The Company's Common Stock is registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the " Exchange Act "), and is listed on the Nasdaq Capital Market (" Nasdaq "), and the Company has taken no action intended to, or which to its actual knowledge could have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from Nasdaq. The Company's Series B Common Stock is not publicly traded.
3.12 Reporting Status. The Company is currently eligible to register the resale of Common Stock by the Investors pursuant to a registration statement on Form S-3 under the Securities Act or on such other form as may be available to the Company (the " Registration Statement ").
3.13 No Manipulation; Disclosure of Information. The Company has not taken and will not take any action designed to or that might reasonably be expected to cause or result in an unlawful manipulation of the price of the Common Stock to facilitate the sale or resale of the Shares. The Company has not disclosed any material non-public information to the Investors.
3.14 Accountants. McGladrey and Pullen, LLP, who expressed their opinion with respect to the consolidated financial statements to be incorporated by reference from the Company's Annual Report on Form 10-K for the year ended April 30, 2006 into the Registration Statement and the prospectus which forms a part thereof (the " Prospectus "), have advised the Company that they are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.
3.15 Contracts. Except for matters which are not reasonably likely to have a Material Adverse Effect and those contracts that are substantially or fully performed or expired by their terms, the contracts listed as exhibits to or described in the SEC Reports that are material to the Company and all amendments thereto, are in full force and effect on the date hereof, and neither the Company nor, to the Company's actual knowledge, any other party to such contracts is in material breach of or default under any of such contracts.
3.16 Taxes. Except for tax matters which are not reasonably likely to have a Material Adverse Effect, each of the Company and each of its Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon.
3.17 Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares hereunder will be, or will have been, fully paid or provided for by the Company and the Company will have complied with all laws imposing such taxes.
3.18 Investment Company. The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended, and will not be deemed an "investment company" as a result of the transactions contemplated by this Agreement.
3.19 Insurance. The Company maintains insurance of the types and in the amounts that the Company reasonably believes is adequate for its businesses, including, but not limited to, insurance covering real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.
3.20 Offering Prohibitions. Neither the Company nor to its actual knowledge any person acting on its behalf or at its direction has in the past or will in the future take any action to sell, offer for sale or solicit offers to buy any securities of the Company which would bring the offer or sale of the Shares as contemplated by this Agreement within the provisions of Section 5 of the Securities Act.
3.21 Listing. The Company shall comply with all requirements with respect to the issuance of the Shares and the listing thereof on Nasdaq.
3.22 Related Party Transactions. Since July 31, 2006, to the actual knowledge of the Company, no transaction has occurred between or among the Company or any of its affiliates, officers or directors or any affiliate or affiliates of any such officer or director that with the passage of time are reasonably likely be required to be disclosed pursuant to Section 13, 14 or 15(d) of the Exchange Act.
3.23 Books and Records. The books, records and accounts of the Company accurately and fairly reflect, in reasonable detail and in all material respects, the transactions in, and dispositions of, the assets of, and the operations of, the Company.
3.24 Press Releases. Each press release disseminated by the Company during the one (1) year preceding the date of this Agreement, taken as a whole (and in the context of other public disclosures by the Company available at the time of each press release, including without limitation in the SEC Reports) and when disseminated, did not contain, at the time of such release, any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, which individually or in the aggregate is reasonably likely to have a Material Adverse Effect.
3.25 Labor Relations. No material labor dispute exists or, to the actual knowledge of the Company, is imminent with respect to any of the employees of the Company, which is reasonably likely to have a Material Adverse Effect.
3.26 Title to Assets . The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to their respective businesses and good and marketable title in all personal property owned by them that is material to their respective businesses, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in material compliance.
3.27 Internal Control Over Financial Accounting. Except as disclosed in Schedule 3.27 , the Company and the Subsidiaries maintain a system of internal controls over financial reporting 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 generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
3.28 Solvency. Based on the Financial Statement of the Company, as contained in the SEC Reports, after giving effect to the receipt by the Company of the proceeds from the sale of Securities hereunder, the Company represents that, to the best of the Company's actual knowledge: (i) the Company's fair saleable value of its assets (including tangible and intangible assets) exceeds the amount that will be required to be paid on or in respect of the Company's existing debts and other liabilities as they mature; (ii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid; (iii) the Company does not intend to file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date; and (iv) the Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
3.29 Certain Fees. Except as described in Schedule 3.29, no brokerage or finder's fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Investors shall have no obligation with respect to any fees or with respect to any claims (other than such fees or commissions owed by a Investor pursuant to written agreements executed by such Investor which fees or commissions shall be the sole responsibility of such Investor) made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement.
3.30 Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Investors or their agents or counsel with any information that constitutes or might constitute material, nonpublic information. The Company understands and confirms that each of the Investors will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure materials provided to the Investors regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Materials to this Agreement, furnished by or on behalf of the Company are, taken as a whole, true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. 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, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed. The Company acknowledges and agrees that no Investor makes or has made (i) any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 4 or (ii) any statement, commitment or promise to the Company or, to its knowledge, any of its representatives which is or was an inducement to the Company to enter into this Agreement or otherwise.
3.31 Acknowledgment Regarding Investors' Purchase of Securities. The Company acknowledges and agrees that, to its actual knowledge, each of the Investors is acting solely in the capacity of an arm's length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that no Investor is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by any Investor, or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Investors' purchase of the Securities. The Company further represents to each Investor that the Company's decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
3.32 Application of Takeover Protections. Except as disclosed in Schedule 3.32 , the Company has 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 Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Investors, resulting in a Material Adverse Effect, as a result of the Investors 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 Investors' ownership of the Securities.
3.33 Sarbanes-Oxley Act. Except as disclosed in Schedule 3.27, the Company is in compliance with applicable requirements of the Sarbanes-Oxley Act of 2002 and applicable rules and regulations promulgated by the Commission thereunder in effect as of the date of this Agreement, except where such noncompliance could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
3.34 Securities Law Representation Private Placement. Neither the Company nor any Person acting on the Company's behalf has sold or offered to sell or solicited any offer to buy the Securities by means of any form of general solicitation or advertising. Neither the Company nor any of its Affiliates nor any Person acting on the Company's behalf has, directly or indirectly, at any time within the past six months, made any offer or sale of any security or solicitation of any offer 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 of the Securities as contemplated hereby or (ii) cause the offering of the Securities pursuant to this Agreement 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 Nasdaq. Assuming the accuracy of the representations of each of the Investors, no consent, authorization, approval, permit or order of or filing with any governmental or regulatory authority is required under current laws and regulations in connection with the execution and delivery of this Agreement or the offer, issuance, sale or delivery of the Shares or the Warrant Shares, other than the qualification thereof, if required, under applicable Nasdaq and state securities law, which qualification has been or will be effected as a condition of these sales and the filing of a Form D with the Securities and Exchange Commission (the " SEC ") in connection with the transactions contemplated by this Agreement. Under the circumstances contemplated by this Agreement, the offer, issuance, sale and delivery of the Shares will not, under current laws and regulations, require compliance with the registration requirements of the Securities Act of 1933, as amended (the " Securities Act ").
4. Representations, Warranties and Covenants of the Investor.
4.1 Investor Knowledge and Status . The Investor represents and warrants to, and covenants with, the Company that: (i) the Investor is an "accredited investor" as defined in Regulation D under the Securities Act, is knowledgeable, sophisticated and experienced in making, and is qualified to make decisions with respect to, investments in securities presenting an investment decision similar to that involved in the purchase of the Securities, and has requested, received, reviewed and considered all information it deemed relevant in making an informed decision to purchase the Securities; (ii) the Investor understands that the Securities are "restricted securities" and have not been registered under the Securities Act and is acquiring the number of Securities set forth in paragraph 3 of the Securities Purchase Agreement in the ordinary course of its business and for investment only, has no present intention of distributing any of such Securities and has no arrangement or understanding with any other persons regarding the distribution of such Securities (this representation and warranty not limiting the Investor's right to sell Securities pursuant to a Registration Statement filed under the Registration Rights Agreement or otherwise or hold the Securities for any prescribed time period, or other than with respect to any claim arising out of a breach of this representation and warranty, the Investor's right to indemnification under Section 3 of the Registration Rights Agreement); (iii) the Investor will not, directly or indirectly, offer or sell any of the Securities except in compliance with the Securities Act, applicable state securities laws and the respective rules and regulations promulgated thereunder; (iv) the Investor has answered all questions in paragraph 4 of the Securities Purchase Agreement and the Investor Questionnaire attached hereto as Exhibit B for use in preparation of the Registration Statement and the answers thereto are true and correct as of the date hereof and will be true and correct as of the Closing Date; (v) the Investor will notify the Company promptly of any change in any of such information that occurs prior to the Closing Date; and (vi) the Investor has, in connection with its decision to purchase the number of Securities set forth in paragraph 3 of the Securities Purchase Agreement, relied upon the representations and warranties of the Company contained herein and the information contained in the Disclosure Materials. The Investor understands that the issuance of the Securities to the Investor has not been registered under the Securities Act, or registered or qualified under any state securities law, in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the representations made by the Investor in this Agreement. No person (including without limitation the Placement Agent) is authorized by the Company to provide any represen