Exhibit 10.44
SECURITIES PURCHASE
AGREEMENT
THIS SECURITIES
PURCHASE AGREEMENT (this “ Agreement ”),
dated as of August 1, 2007, by and among SENESCO TECHNOLOGIES,
INC., a Delaware corporation (the “ Company
”), and the Buyers listed on Schedule I attached
hereto (individually, a “ Buyer ” or
collectively “ Buyers ”).
WITNESSETH
WHEREAS , the
Company and the Buyer(s) are executing and delivering this
Agreement in reliance upon an exemption from securities
registration pursuant to Section 4(2) and/or Rule 506 of
Regulation D (“ Regulation D ”) as promulgated
by the U.S. Securities and Exchange Commission (the “
SEC ”) under the Securities Act of 1933, as amended
(the “ Securities Act ”);
WHEREAS , the
parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Buyer(s),
as provided herein, and the Buyer(s) shall purchase (i) up to Five
Million Dollars ($5,000,000) of secured convertible debentures in
the form attached hereto as “ Exhibit A ” (the
“ Convertible Debentures ”), which shall be
convertible into shares of the Company’s common stock, par
value $0.01 (the “ Common Stock ”) (as
converted, the “ Conversion Shares ”), and (ii)
Series A warrants substantially in the form attached hereto as
“ Exhibit B ” and Series B warrants
substantially in the form attached hereto as “ Exhibit
C ” (collectively, the “ Warrants ”),
to acquire up to that number of additional shares of Common Stock
set forth opposite such Buyer’s name on Schedule I (as
exercised, the “ Warrant Shares ”), of which One
Million Five Hundred Thousand Dollars ($1,500,000) shall be funded
within two (2) business days following the date hereof (the “
First Closing ”), One Million Five Hundred Thousand
Dollars ($1,500,000) shall be funded on the date the registration
statement (the “ Registration Statement ”) is
filed, pursuant to the Registration Rights Agreement dated the date
hereof, with the SEC (the “ Second Closing ”),
and Two Million Dollars ($2,000,000) shall be funded on the date
that is the later of (i) Stockholders Approval (as defined
below); or (ii) the Registration Statement is declared
effective by the SEC (the “ Third Closing ”)
(individually referred to as a “ Closing ”
collectively referred to as the “ Closings ”),
for a total purchase price of up to Five Million Dollars
($5,000,000), (the “ Purchase Price ”) in the
respective amounts set forth opposite each Buyer(s) name on
Schedule I (the “ Subscription Amount ”);
WHEREAS ,
contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement (the “ Registration Rights
Agreement ”) pursuant to which the Company has agreed to
provide certain registration rights under the Securities Act and
the rules and regulations promulgated there under, and applicable
state securities laws;
WHEREAS , the
Convertible Debentures are secured by (i) a security interest in
all of the assets of the Company and of each of the Company’s
subsidiaries as evidenced by the security agreement of even date
herewith (the “ Security Agreement ”) and (ii) a
security interest in all of the intellectual property of the
Company and of each of the Company’s subsidiaries as
evidenced by the patent security agreement of even date herewith
(the “ Patent Security Agreement ” and together
with the Security Agreement collectively the “ Security
Documents ”);
WHEREAS ,
contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering
Irrevocable Transfer Agent Instructions (the “ Irrevocable
Transfer Agent Instructions ”); and
WHEREAS , the
Convertible Debentures, the Conversion Shares, the Warrants, and
the Warrants Shares collectively are referred to herein as the
“ Securities ”).
NOW, THEREFORE , in
consideration of the mutual covenants and other agreements
contained in this Agreement the Company and the Buyer(s) hereby
agree as follows:
1.
PURCHASE AND SALE OF CONVERTIBLE DEBENTURES .
(a)
Purchase of Convertible Debentures . Subject to the
satisfaction (or waiver) of the terms and conditions of this
Agreement, each Buyer agrees, severally and not jointly, to
purchase at each Closing and the Company agrees to sell and issue
to each Buyer, severally and not jointly, at each Closing,
Convertible Debentures in amounts corresponding with the
Subscription Amount set forth opposite each Buyer’s name on
Schedule I hereto and the Warrants to acquire up to that number of
Warrant Shares as set forth opposite such Buyer’s name in
column (5) on Schedule I.
(b)
Closing Dates . The First Closing of the purchase and
sale of the Convertible Debentures and Warrants shall take place at
10:00 a.m. Eastern Standard Time on the second (2 nd )
business day following the date hereof, subject to notification of
satisfaction of the conditions to the First Closing set forth
herein and in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and the Buyer(s)) (the “
First Closing Date ”), the Second Closing of the
purchase and sale of the Convertible Debentures shall take place at
4:00 p.m. Eastern Standard Time on the date the Registration
Statement is filed with the SEC, subject to notification of
satisfaction of the conditions to the Second Closing set forth
herein and in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and the Buyer(s)) (the “
Second Closing Date ”), and the Third Closing of the
purchase and sale of the Convertible Debentures shall take place at
10:00 a.m. Eastern Standard Time on the later of
(i) Stockholder Approval (as defined below), or (ii) the
date the Registration Statement is declared effective by the SEC,
subject to notification of satisfaction of the conditions to the
Third Closing set forth herein and in Sections 6 and 7 below (or
such earlier date as is mutually agreed to by the Company and the
Buyer(s)) (the “ Third Closing Date ”)
(collectively referred to a the “ Closing Dates
”). The Closings shall occur on the respective Closing
Dates at the offices of Yorkville Advisors, LLC, 3700 Hudson
Street, Suite 3700, Jersey City, New Jersey 07302 (or such other
place as is mutually agreed to by the Company and the
Buyer(s)).
(c)
Form of Payment . Subject to the satisfaction of the
terms and conditions of this Agreement, on each Closing Date, (i)
the Buyers shall deliver to the Company such aggregate proceeds for
the Convertible Debentures and Warrants to be issued and sold to
such Buyer at such Closing, minus the fees to be paid directly from
the proceeds of such Closing as set forth herein, via irrevocable
wire transfer, and (ii) the Company shall deliver to each
Buyer, Convertible Debentures and Warrants which such Buyer is
purchasing at such Closing in amounts indicated opposite such
Buyer’s name on Schedule I, duly executed on behalf of the
Company.
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(d)
Stanford Agreement . In addition to the
foregoing, Buyer hereby agrees to the Company’s sale and
issuance of an additional $5,000,000 of convertible debentures to
Stanford Venture Capital Holdings, Inc. (“ Stanford
”) on substantially similar terms hereunder subject to
Stockholder Approval as set forth in Section 1(e) below (the
“ Stanford Closing ”).
(e)
Stockholders Approval . Within ninety (90) days of the
date hereof and prior to the consummation of the Third Closing and
Stanford Closing, the Company shall use its reasonable best efforts
to call and hold a special meeting of the shareholders, for the
purpose of (i) approving the transactions contemplated herein and
the Stanford Closing, and (ii) increasing the authorized Common
Stock of the Company to at least 100,000,000 shares of Common Stock
(such affirmative approval being referred to herein as the “
Stockholder Approval ”). The Company’s
Board shall recommend to the shareholders to vote in favor of
approving the transactions contemplated herein and the Stanford
Closing and the increase of the Company’s authorized Common
Stock; provided , however that the Board shall not be
obligated to make such a recommendation if the Board determines in
good faith, after receiving the advice of its independent legal and
financial advisors, that such a recommendation would cause the
Board to breach its fiduciary duties.
2.
BUYER’S REPRESENTATIONS AND WARRANTIES .
Each Buyer
represents and warrants, severally and not jointly,
that:
(a)
Investment Purpose . Each Buyer is acquiring the
Securities for its own account for investment only and not with a
view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or
exempted under the Securities Act; provided , however, that
by making the representations herein, such Buyer reserves the right
to dispose of the Securities at any time in accordance with or
pursuant to an effective registration statement covering such
Securities or an available exemption under the Securities
Act. Such Buyer does not presently have any agreement or
understanding, directly or indirectly, with any Person to
distribute any of the Securities.
(b)
Accredited Investor Status . Each Buyer is an “
Accredited Investor ” as that term is defined in Rule
501(a)(3) of Regulation D.
(c)
Reliance on Exemptions . Each Buyer 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 in part upon the truth and accuracy of, and such
Buyer’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set
forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire the
Securities.
(d)
Information . Each Buyer and its advisors (and his, or
its, counsel), if any, have been furnished with all materials
relating to the business, finances and operations of the Company
and information he deemed material to making an informed investment
decision regarding his purchase of the Securities, which have been
requested by such Buyer. Each Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company
and
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its
management. Neither such inquiries nor any other due
diligence investigations conducted by such Buyer or its advisors,
if any, or its representatives shall modify, amend or affect such
Buyer’s right to rely on the Company’s representations
and warranties contained in Section 3 below. Each Buyer
understands that its investment in the Securities involves a high
degree of risk. Each Buyer is in a position regarding the
Company, which, based upon employment, family relationship or
economic bargaining power, enabled and enables such Buyer to obtain
information from the Company in order to evaluate the merits and
risks of this investment. Each Buyer has sought such
accounting, legal and tax advice, as it has considered necessary to
make an informed investment decision with respect to its
acquisition of the Securities.
(e)
No Governmental Review . Each Buyer 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 of the Securities.
(f)
Transfer or Resale . Each Buyer understands that
except as provided in the Registration Rights Agreement: (i) the
Securities have not been and are not being registered under the
Securities Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to
the effect that such Securities to be sold, assigned or transferred
may be sold, assigned or transferred pursuant to an exemption from
such registration requirements, or (C) such Buyer provides the
Company with reasonable assurances (in the form of seller and
broker representation letters) that such Securities can be sold,
assigned or transferred pursuant to Rule 144, Rule 144(k), or Rule
144A promulgated under the Securities Act, as amended (or a
successor rule thereto) (collectively, “ Rule 144
”), in each case following the applicable holding period set
forth therein; (ii) any sale of the Securities made in reliance on
Rule 144 may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the
person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may
require compliance with some other exemption under the Securities
Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to
register the Securities under the Securities Act or any state
securities laws or to comply with the terms and conditions of any
exemption thereunder.
(g)
Legends . Each Buyer agrees to the imprinting, so long
as is required by this Section 2(g), of a restrictive legend in
substantially the following form:
THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION
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STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS.
Certificates evidencing
the Conversion Shares or Warrant Shares shall not contain any
legend (including the legend set forth above), (i) while a
registration statement (including the Registration Statement)
covering the resale of such security is effective under the
Securities Act, (ii) following any sale of such Conversion Shares
or Warrant Shares pursuant to Rule 144, (iii) if such Conversion
Shares or Warrant Shares are eligible for sale under Rule 144(k),
or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
SEC). The Company shall cause its counsel to issue a legal
opinion to the Company’s transfer agent promptly after the
effective date (the “ Effective Date ”) of a
Registration Statement if required by the Company’s transfer
agent to effect the removal of the legend hereunder. If all
or any portion of the Convertible Debentures or Warrants are
exercised by a Buyer that is not an Affiliate of the Company (a
“ Non-Affiliated Buyer ”) at a time when there
is an effective registration statement to cover the resale of the
Conversion Shares or the Warrant Shares, such Conversion Shares or
Warrant Shares shall be issued free of all legends. The
Company agrees that following the Effective Date or at such time as
such legend is no longer required under this Section 2(g), it will,
no later than three (3) Trading Days following the delivery by a
Non-Affiliated Buyer to the Company or the Company’s transfer
agent of a certificate representing Conversion Shares or Warrant
Shares, as the case may be, issued with a restrictive legend (such
third Trading Day, the “ Legend Removal Date ”),
deliver or cause to be delivered to such Non-Affiliated Buyer a
certificate representing such shares that is free from all
restrictive and other legends. The Company may not make any
notation on its records or give instructions to any transfer agent
of the Company that enlarge the restrictions on transfer set forth
in this Section. Each Buyer acknowledges that the
Company’s agreement hereunder to remove all legends from
Conversion Shares or Warrant Shares is not an affirmative statement
or representation that such Conversion Shares or Warrant Shares are
freely tradable. Each Buyer, severally and not jointly with
the other Buyers, agrees that the removal of the restrictive legend
from certificates representing Securities as set forth in this
Section 3(g) is predicated upon the Company’s reliance that
the buyer will sell any Securities pursuant to either the
registration requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an exemption
therefrom, and that if Securities are sold pursuant to a
Registration Statement, they will be sold in compliance with the
plan of distribution set forth therein.
(h)
Authorization, Enforcement . This Agreement has been
duly and validly authorized, executed and delivered on behalf of
such Buyer and is a valid and binding agreement of such Buyer
enforceable in accordance with its terms, except as such
enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors’ rights
and remedies.
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(i)
Receipt of Documents . Each Buyer and his or its
counsel has received and read in their entirety: (i) this
Agreement and each representation, warranty and covenant set forth
herein and the Transaction Documents (as defined herein); (ii) all
due diligence and other information necessary to verify the
accuracy and completeness of such representations, warranties and
covenants; (iii) the Company’s Form 10-K for the fiscal year
ended June 30, 2006; (iv) the Company’s Form 10-Q for the
fiscal quarter ended March 31, 2007 and (v) answers to all
questions each Buyer submitted to the Company regarding an
investment in the Company; and each Buyer has relied on the
information contained therein and has not been furnished any other
documents, literature, memorandum or prospectus.
(j)
Due Formation of Corporate and Other Buyers . If the
Buyer(s) is a corporation, trust, partnership or other entity that
is not an individual person, it has been formed and validly exists
and has not been organized for the specific purpose of purchasing
the Securities and is not prohibited from doing so.
(k)
No Legal Advice From the Company . Each Buyer
acknowledges, that it had the opportunity to review this Agreement
and the transactions contemplated by this Agreement with his or its
own legal counsel and investment and tax advisors. Each Buyer
is relying solely on such counsel and advisors and not on any
statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with
respect to this investment, the transactions contemplated by this
Agreement or the securities laws of any jurisdiction.
3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY .
Except as set
forth under the corresponding section of the Disclosure Schedules
or in the Company’s SEC Documents (as defined below) which
Disclosure Schedules and/or SEC Documents shall be deemed a part
hereof and to qualify any representation or warranty otherwise made
herein to the extent of such disclosure, the Company hereby makes
the representations and warranties set forth below to each
Buyer:
(a)
Subsidiaries . All of the direct and indirect
subsidiaries of the Company are set forth on Schedule 3(a)
. The Company owns, directly or indirectly, all of the
capital stock or other equity interests of each subsidiary free and
clear of any liens, and all the issued and outstanding shares of
capital stock of each subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b)
Organization and Qualification . The Company and its
subsidiaries are corporations duly organized and validly existing
in good standing under the laws of the jurisdiction in which they
are incorporated, and have the requisite corporate power to own
their properties and to carry on their business as now being
conducted. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing
would not have or reasonably be expected to result in (i) a
material adverse effect on the legality, validity or enforceability
of any Transaction Document, (ii) a material adverse effect on the
results of
6
operations, assets, business or condition
(financial or otherwise) of the Company and the subsidiaries, taken
as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a
timely basis its obligations under any Transaction Document (any of
(i), (ii) or (iii), a “ Material Adverse Effect
”) and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail such power and authority or
qualification.
(c)
Authorization, Enforcement, Compliance with Other
Instruments . (i) The Company has the requisite
corporate power and authority to enter into and perform its
obligations under this Agreement, the Convertible Debentures, the
Warrants, the Security Documents, the Registration Rights
Agreement, the Irrevocable Transfer Agent Instructions, and each of
the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement
(collectively the “ Transaction Documents ”) and
to issue the Securities in accordance with the terms hereof and
thereof, (ii) the execution and delivery of the Transaction
Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Securities, the reservation for
issuance and the issuance of the Conversion Shares, and the
reservation for issuance and the issuance of the Warrant Shares,
have been duly authorized by the Company’s Board of Directors
and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders, (iii) the Transaction
Documents have been duly executed and delivered by the Company,
(iv) the Transaction Documents constitute the valid and binding
obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of
creditors’ rights and remedies. The authorized officer
of the Company executing the Transaction Documents knows of no
reason why the Company cannot file the Registration Statement as
required under the Registration Rights Agreement or perform any of
the Company’s other obligations under the Transaction
Documents.
(d)
Capitalization . The authorized capital stock of the
Company consists of 60,000,000 shares of Common Stock and 5,000,000
shares of Preferred Stock, par value $0.01 (“ Preferred
Stock ”) of which 17,473,694 shares of Common Stock and
zero shares of Preferred Stock are issued and outstanding.
All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and none of
such outstanding shares was issued in violation of any preemptive
rights or similar rights to subscribe for or purchase
securities. Except as disclosed in Schedule 3(d): (i) none of
the Company’s capital stock is subject to preemptive rights
or any other similar rights or any liens or encumbrances suffered
or permitted by the Company; (ii) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital
stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or
any of its subsidiaries is or may become bound to issue additional
capital stock of the Company or any of its subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital
stock of the Company or any of its subsidiaries;
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(iii) there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing indebtedness of the Company or
any of its subsidiaries or by which the Company or any of its
subsidiaries is or may become bound; (iv) there are no financing
statements securing obligations in any material amounts, either
singly or in the aggregate, filed in connection with the Company or
any of its subsidiaries; (v) there are no outstanding securities or
instruments of the Company or any of its subsidiaries which contain
any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or
any of its subsidiaries is or may become bound to redeem a security
of the Company or any of its subsidiaries; (vi) there are no
securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the
Securities; (vii) the Company does not have any stock appreciation
rights or “phantom stock” plans or agreements or any
similar plan or agreement; and (viii) the Company and its
subsidiaries have no liabilities or obligations required to be
disclosed in the SEC Documents but not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of the
Company’s or its subsidiaries’ respective businesses
and which, individually or in the aggregate, do not or would not
have a Material Adverse Effect. The Company has furnished to
the Buyers true, correct and complete copies of the Company’s
Certificate of Incorporation, as amended and as in effect on the
date hereof (the “ Certificate of Incorporation
”), and the Company’s Bylaws, as amended and as in
effect on the date hereof (the “ Bylaws ”), and
the terms of all securities convertible into, or exercisable or
exchangeable for, shares of Common Stock and the material rights of
the holders thereof in respect thereto. Except for
Stockholder Approval of the transactions contemplated by this
Agreement, no further approval or authorization of any stockholder,
the Board of Directors of the Company 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 knowledge of the Company,
between or among any of the Company’s stockholders.
(e)
Issuance of Securities . The issuance of the
Convertible Debentures and the Warrants is duly authorized and free
from all taxes, liens and charges with respect to the issue
thereof. Upon conversion in accordance with the terms of the
Convertible Debentures or exercise in accordance with the Warrants,
as the case may be, the Conversion Shares and Warrant Shares,
respectively, when issued will be validly issued, fully paid and
nonassessable, free from all taxes, liens and charges with respect
to the issue thereof. The Company has reserved from its duly
authorized capital stock the appropriate number of shares of Common
Stock as set forth in this Agreement.
(f)
No Conflicts . The execution, delivery and
performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby
and thereby (including, without limitation, the issuance of the
Convertible Debentures and the Warrants, and reservation for
issuance and issuance of the Conversion Shares and the Warrant
Shares) will not (i) result in a violation of any certificate of
incorporation, certificate of formation, any certificate of
designations or other constituent documents of the Company or any
of its subsidiaries, any capital stock of the Company or any of its
subsidiaries or bylaws of the Company or any of its subsidiaries or
(ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) in any
respect under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or
8
any
of its subsidiaries is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including
foreign, federal and state securities laws and regulations and the
rules and regulations of the Primary Market) applicable to the
Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries is bound or
affected; except in the case of each of clauses (ii) and (iii),
such as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse
Effect. The business of the Company and its subsidiaries is
not being conducted, and shall not be conducted in violation of any
material law, ordinance, or regulation of any governmental
entity. Except as specifically contemplated by this Agreement
and as required under the Securities Act and any applicable state
securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by
this Agreement or the Registration Rights Agreement in accordance
with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company
is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The
Company and its subsidiaries are unaware of any facts or
circumstance, which might give rise to any of the
foregoing.
(g)
SEC Documents; Financial Statements . The Company has
filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC under the Securities
Exchange Act of 1934, as amended (the “ Exchange Act
”), for the two years preceding the date hereof (or such
shorter period as the Company was required by law or regulation to
file such material) (all of the foregoing filed prior to the date
hereof or amended after the date hereof and all exhibits included
therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter
referred to as the “ SEC Documents ”) on timely
basis or has received a valid extension of such time of filing and
has filed any such SEC Document prior to the expiration of any such
extension. The Company has delivered to the Buyers or their
representatives, or made available through the SEC’s website
at http://www.sec.gov., true and complete copies of the SEC
Documents. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, 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 the light of the circumstances under
which they were made, not misleading. As of their respective
dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
No other information provided by or on behalf of the Company to the
Buyers which is not included in the SEC Documents, including,
without limitation, information referred to in Section 2(i) of this
Agreement, contains any untrue statement of a
9
material fact or omits to state any material
fact necessary in order to make the statements therein, in the
light of the circumstance under which they are or were made and not
misleading.
(h)
10(b)-5 . The SEC Documents do not include any untrue
statements of material fact, nor do they omit to state any material
fact required to be stated therein necessary to make the statements
made, in light of the circumstances under which they were made, not
misleading.
(i)
Absence of Litigation . There is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body
pending against or affecting the Company, the Common Stock or any
of the Company’s subsidiaries, wherein an unfavorable
decision, ruling or finding would (i) have a Material Adverse
Effect.
(j)
Acknowledgment Regarding Buyer’s Purchase of the
Convertible Debentures . The Company acknowledges and
agrees that each Buyer 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 each Buyer is not 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 each Buyer or any of their respective
representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to such
Buyer’s purchase of the Securities. The Company further
represents to each Buyer that the Company’s decision to enter
into this Agreement has been based solely on the independent
evaluation by the Company and its representatives.
(k)
No General Solicitation . Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf,
has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the
Securities Act) in connection with the offer or sale of the
Securities.
(l)
No Integrated Offering . Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under
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