Exhibit 10.2
SECURITIES PURCHASE
AGREEMENT
This Securities Purchase Agreement
(this “ Agreement ”) is dated as of
October 1, 2009, between Catalyst Pharmaceutical Partners,
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
”).
WHEREAS, subject to the terms and
conditions set forth in this Agreement and pursuant to an effective
registration statement under the Securities Act of 1933, as amended
(the “ Securities Act ”), the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and
not jointly, desires to purchase from the Company, securities of
the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of
the mutual covenants contained in this Agreement, and for other
good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as
follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions . In addition
to the terms defined elsewhere in this Agreement, for all purposes
of this Agreement, the following terms have the meanings set forth
in this Section 1.1:
“ Acquiring Person
” shall have the meaning ascribed to such in
Section 4.4.
“ Action ” shall
have the meaning ascribed to such term in
Section 3.1(j).
“ Affiliate ”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under
Rule 405 under the Securities Act.
“ 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.
“ Closing ” means
the closing of the purchase and sale of the Shares pursuant to
Section 2.1.
“ Closing Date ”
means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and
all conditions precedent to (i) the Purchasers’
obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Shares have been
satisfied or waived, and in any event, on or before the third
Trading Day following the date hereof.
1
“ Commission ”
means the United States Securities and Exchange
Commission.
“ Common Stock ”
means the common stock of the Company, par value $0.001 per share,
and any other class of securities into which such securities may
hereafter be reclassified or changed into.
“ Common Stock
Equivalents ” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at
any time Common Stock, including, without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that
is at any time convertible into or exercisable or exchangeable for,
or otherwise entitles the holder thereof to receive, Common
Stock.
“ Company Counsel
” means Akerman Senterfitt, with offices located at 1 SE
3 rd
Avenue, Suite 2500, Miami, Florida
33131.
“ Disclosure Schedules
” means the Disclosure Schedules of the Company delivered
concurrently herewith.
“ Discussion Time
” shall have the meaning ascribed to such term in
Section 3.2(e).
“ Evaluation Date
” shall have the meaning ascribed to such term in
Section 3.1(r).
“ Exchange Act ”
means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
“ Exempt Issuance
” means the issuance of (a) shares of Common Stock or
options to employees, officers or directors of the Company pursuant
to any stock or option plan duly adopted for such purpose, by a
majority of the non-employee members of the Board of Directors or a
majority of the members of a committee of non-employee directors
established for such purpose and (b) securities issued
pursuant to acquisitions or strategic transactions approved by a
majority of the disinterested directors of the Company, provided
that any such issuance shall only be to a Person which is, itself
or through its subsidiaries, an operating company in a business
synergistic with the business of the Company and in which the
Company receives benefits in addition to the investment of funds,
but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an
entity whose primary business is investing in
securities.
“ GAAP ” shall
have the meaning ascribed to such term in
Section 3.1(h).
“ Indebtedness ”
shall have the meaning ascribed to such term in
Section 3.1(z).
“ Intellectual Property
Rights ” shall have the meaning ascribed to such term in
Section 3.1(o).
“ Liens ” means a
lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
2
“ Material Adverse
Effect ” shall have the meaning assigned to such term in
Section 3.1(b).
“ Material Permits
” shall have the meaning ascribed to such term in
Section 3.1(m).
“ Per Share Purchase
Price ” equals $1.00 , subject to adjustment for
reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock
that occur after the date of this Agreement.
“ Person ” means
an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“ Pharmaceutical
Product ” shall have the meaning ascribed to such term in
Section 3.1(gg).
“ Proceeding ”
means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or
partial proceeding, such as a deposition), whether commenced or
threatened.
“ Prospectus ”
means the final prospectus filed for the Registration
Statement.
“ Prospectus Supplement
” means the supplement to the Prospectus complying with Rule
424(b) of the Securities Act that is filed with the Commission and
delivered by the Company to each Purchaser at the
Closing.
“ Purchaser Party
” shall have the meaning ascribed to such term in
Section 4.8.
“ Registration
Statement ” means the effective registration statement
with Commission file No. 333-151368 which registers the sale
of the Shares by the Purchasers.
“ Required Approvals
” shall have the meaning ascribed to such term in
Section 3.1(e).
“ Rule 144 ”
means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.
“ SEC Reports ”
shall have the meaning ascribed to such term in
Section 3.1(h).
“ Securities Act
” means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
“ Shares ” means
the shares of Common Stock issued or issuable to each Purchaser
pursuant to this Agreement.
3
“ Short Sales ”
means all “short sales” as defined in Rule 200 of
Regulation SHO under the Exchange Act (but shall not be deemed to
include the location and/or reservation of borrowable shares of
Common Stock).
“ Subscription Amount
” means, as to each Purchaser, the aggregate amount to be
paid for Shares purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement and
next to the heading “Subscription Amount,” in United
States dollars and in immediately available funds.
“ Trading Day ”
means a day on which the New York Stock Exchange is open for
trading.
“ Trading Market
” means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in
question: the American Stock Exchange, the Nasdaq Capital Market,
the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange or the OTC Bulletin Board.
“ Transaction Documents
” means this Agreement and any other documents or agreements
executed in connection with the transactions contemplated
hereunder.
“ Transfer Agent
” means Continental Stock Transfer & Trust Company,
the current transfer agent of the Company, with a mailing address
of 17 Battery Park, 8 th Floor, New York, New York 10004 and a facsimile
number of (212) 509-5150, and any successor transfer agent of
the Company.
“ WS ” means
Weinstein Smith LLP with offices located at 420 Lexington Avenue,
Suite 2620, New York, New York 10170-0002.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing . On the Closing
Date, upon the terms and subject to the conditions set forth
herein, substantially concurrent with the execution and delivery of
this Agreement by the parties hereto, the Company agrees to sell,
and the Purchasers, severally and not jointly, agree to purchase,
up to an aggregate of $4,000,000 of Shares. Each Purchaser shall
deliver to the Company, via wire transfer or a certified check,
immediately available funds equal to its Subscription Amount and
the Company shall deliver to each Purchaser its respective Shares,
and the Company and each Purchaser shall deliver the other items
set forth in Section 2.2 deliverable at the Closing. Upon
satisfaction of the covenants and conditions set forth in Sections
2.2 and 2.3, the Closing shall occur at the offices of WS or such
other location as the parties shall mutually agree.
2.2 Deliveries .
(a) On or prior to the Closing Date,
the Company shall deliver or cause to be delivered to each
Purchaser the following:
(i) this Agreement duly executed by
the Company;
4
(ii) a legal opinion of Company
Counsel, substantially in the form of Exhibit A attached
hereto;
(iii) a copy of the irrevocable
instructions to the Company’s transfer agent instructing the
transfer agent to deliver via the Depository Trust Company Deposit
Withdrawal Agent Commission System (“ DWAC ”)
Shares equal to such Purchaser’s Subscription Amount divided
by the Per Share Purchase Price, registered in the name of such
Purchaser; and
(iv) the Prospectus and Prospectus
Supplement (which may be delivered in accordance with Rule 172
under the Securities Act).
(b) On or prior to the Closing Date,
each Purchaser shall deliver or cause to be delivered to the
Company the following:
(i) this Agreement duly executed by
such Purchaser; and
(ii) such Purchaser’s
Subscription Amount by wire transfer to the account as specified in
writing by the Company.
2.3 Closing Conditions
.
(a) The obligations of the Company
hereunder in connection with the Closing are subject to the
following conditions being met:
(i) the accuracy in all material
respects on the Closing Date of the representations and warranties
of the Purchasers contained herein (unless as of a specific date
therein);
(ii) all obligations, covenants and
agreements of each Purchaser required to be performed at or prior
to the Closing Date shall have been performed; and
(iii) the delivery by each Purchaser
of the items set forth in Section 2.2(b) of this
Agreement.
(b) The respective obligations of
the Purchasers hereunder in connection with the Closing are subject
to the following conditions being met:
(i) the accuracy in all material
respects on the Closing Date of the representations and warranties
of the Company contained herein (unless as of a specific date
therein);
(ii) all obligations, covenants and
agreements of the Company required to be performed at or prior to
the Closing Date shall have been performed;
5
(iii) the delivery by the Company of
the items set forth in Section 2.2(a) of this
Agreement;
(iv) there shall have been no
Material Adverse Effect with respect to the Company since the date
hereof; and
(v) from the date hereof to the
Closing Date, trading in the Common Stock shall not have been
suspended by the Commission or the Company’s principal
Trading Market (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be
terminated prior to the Closing), and, at any time prior to the
Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades
are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each
case, in the reasonable judgment of each Purchaser, makes it
impracticable or inadvisable to purchase the Shares at the
Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and
Warranties of the Company . Except as set forth in the
Disclosure Schedules, which Disclosure Schedules shall be deemed a
part hereof and shall qualify any representation or otherwise made
herein to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules, the Company
hereby makes the following representations and warranties to each
Purchaser:
(a) Subsidiaries . The
Company has no subsidiaries (as defined in the Securities Act).
Except as described in the SEC Reports, the Company does not own,
directly or indirectly, any long-term debt or equity interest in
any firm, corporation, partnership, joint venture, association or
other entity.
(b) Organization and
Qualification . The Company has no subsidiaries. The Company is
an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation, with the requisite power and authority to own
and use its properties and assets and to carry on its business as
currently conducted. The Company is not in violation or default of
any of the provisions of its certificate of incorporation, bylaws
or other organizational or charter documents. The Company is 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, could 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 operations, assets, business, prospects or condition
(financial or otherwise) of the
6
Company, 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” (which for purposes of this Agreement
shall mean any action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened)
has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and
authority or qualification
(c) Authorization;
Enforcement . The Company has the requisite corporate power and
authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder. The execution
and delivery of each of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary action on the part of
the Company and no further action is required by the Company, its
board of directors or its stockholders in connection therewith
other than in connection with the “Required Approvals”
(as defined in subsection 3(D) below). Each Transaction Document
has been (or upon delivery will have been) duly executed by the
Company and, when delivered in accordance with the terms hereof and
thereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights
generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other
equitable remedies
(d) No Conflicts . The
execution, delivery and performance of the Transaction Documents by
the Company, the issuance and sale of the Shares and the
consummation by the Company of the other transactions contemplated
hereby and thereby do not and will not (i) conflict with or
violate any provision of the Company’s certificate of
incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the
properties or assets of the Company, or give to others any rights
of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company debt or
otherwise) or other understanding to which the Company is a party
or by which any property or asset of the Company is bound or
affected, 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 is subject (including
federal and state securities laws and regulations), or by which any
property or asset of the Company is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not
have or reasonably be expected to result in a Material Adverse
Effect.
7
(e) Filings, Consents and
Approvals . The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state,
local or other governmental authority or other Person in connection
with the execution, delivery and performance by the Company of the
Transaction Documents, other than such filings as are required to
be made under applicable Federal and state securities laws
(collectively, the “Required Approvals”).
(f) Issuance of the Shares;
Registration . The Shares are duly authorized and, when issued
and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company.
The Company has prepared and filed the Registration Statement in
conformity with the requirements of the Securities Act, which
became effective on June 26, 2008 (the “ Effective
Date ”), including the Prospectus, and such amendments
and supplements thereto as may have been required to the date of
this Agreement. The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued by the
Commission and no proceedings for that purpose have been instituted
or, to the knowledge of the Company, are threatened by the
Commission. The Company, if required by the rules and regulations
of the Commission, proposes to file the Prospectus, with the
Commission pursuant to Rule 424(b). At the time the Registration
Statement and any amendments thereto became effective, at the date
of this Agreement and at the Closing Date, the Registration
Statement and any amendments thereto conformed and will conform in
all material respects to the requirements of the Securities Act and
did not and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
and the Prospectus and any amendments or supplements thereto, at
time the Prospectus or any amendment or supplement thereto was
issued and at the Closing Date, conformed and will conform in all
material respects to the requirements of the Securities Act and did
not and will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(g) Capitalization . The
capitalization of the Company is as set forth on Schedule
3.1(g) . The Company has not issued any capital stock since its
most recently filed periodic report under the Exchange Act, other
than pursuant to the exercise of employee stock options under the
Company’s stock option plans and pursuant to the conversion
or exercise of securities exercisable, exchangeable or convertible
into Common Stock (“Common Stock Equivalents”). 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. Except as a
result of the purchase and sale of the Shares, there are no
outstanding options, warrants, script 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 is
or may become bound
8
to issue additional shares of Common
Stock or Common Stock Equivalents. The issuance and sale of the
Shares 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
such securities. 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. 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 Shares. 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.
(h) SEC Reports; Financial
Statements . The Company has complied in all material respects
with requirements to file all reports, schedules, forms, statements
and other documents required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a)
or 15(d) thereof, for the two years preceding the date hereof (or
such shorter period as the Company was required by law to file such
material) (the foregoing materials, including the exhibits thereto
and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) 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. 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 the light of
the circumstances under which they were made, not misleading. 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. 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 and except that unaudited financial statements may
not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company 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.
(i) Material Changes; Undisclosed
Events, Liabilities or Developments . Since the date of the
latest audited financial statements included within the SEC
Reports, except as specifically disclosed in the SEC Reports,
(i) there has been no event, occurrence or development that
has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any
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
9
financial statements pursuant to
GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered its method of
accounting, (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 and (v) the
Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the
Commission any request for confidential treatment of information.
Except for the issuance of the Shares contemplated by this
Agreement or as set forth on Schedule 3.1(i), no event, liability
or development has occurred or exists with respect to the Company
or its 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 no later than one
(1) Trading Day prior to the date that this representation is
made
(j) Litigation . There is no
action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its
properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an “ Action
”) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction
Documents or the Shares or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a
Material Adverse Effect. The Company is not and has not 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 knowledge
of the Company, 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 under the Exchange Act or the Securities Act.
(k) Labor Relations . No
material labor dispute exists or, to the knowledge of the Company,
is imminent with respect to any of the employees of the Company,
which could reasonably be expected to result in a Material Adverse
Effect. None of the Company’s employees is a member of a
union that relates to such employee’s relationship with the
Company, and the Company is not a party to a collective bargaining
agreement, and the Company believes that their relationships with
their employees are good. No executive officer, to the knowledge of
the Company, is, or is now expected to be, in violation 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 any third party, and the continued employment
of each such executive officer does not subject the Company to any
liability with respect to any of the foregoing matters. The Company
is 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 could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
10
(l) Compliance . The Company
is not (i) in default under or in violation of (and no event
has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company under), nor
has the Company received notice of a claim that it is in default
under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) in
violation of any order of any court, arbitrator or governmental
body, or (iii) and has not been in violation of any statute,
rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to
taxes, environmental protection, occupational health and safety,
product quality and safety and employment and labor matters, except
in each case as could not have a Material Adverse
Effect.
(m) Regulatory Permits . The
Company possesses all certificates, authorizations and permits
issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the
failure to possess such permits could not have or reasonably be
expected to result in a Material Adverse Effect (“Material
Permits”), and the Company has not received any written
notice of proceedings relating to the revocation or modification of
any Material Permit.
(n) Title to Assets . The
Company has good and marketable title in fee simple to all real
property owned by it that is material to the business of the
Company and good and marketable title in all personal property
owned by them that is material to the business of the Company, 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 Liens for the payment of federal, state
or other taxes, the payment of which is neither delinquent nor
subject to penalties. Any real property and facilities held under
lease by the Company are held by it under valid, subsisting and
enforceable leases of which the Company is in compliance, except
where non-compliance would not have a Material Adverse
Effect.
(o) Patents and Trademarks .
Except to the extent set forth in the SEC Reports, the Company has,
or has rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other similar intellectual
property rights necessary or material for use in connection with
their respective businesses as described in the SEC Reports and
which the failure to so have could have a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). The
Company has not received a notice (written or otherwise) that any
of, the Intellectual Property Rights has expired, terminated or
been abandoned, or is expected to expire or terminate or be
abandoned, within two (2) years from the date of this
Agreement. The Company has not received, since the date of the
latest audited financial statements included within the SEC
Reports, a written notice of a claim or otherwise has any knowledge
that the Intellectual Property Rights violate or infringe upon the
rights of any Person, except as would not have a Material Adverse
Effect. To the
11
knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no
existing infringement by another Person of any of the Intellectual
Property Rights of others. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where failure to do
so could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(p) Insurance . The Company
is insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company is engaged,
including, but not limited to, directors and officers insurance
coverage at least equal to the aggregate Subscription Amount under
the Transaction Documents. To the best knowledge of the Company,
such insurance contracts and policies are accurate and complete.
The Company has no reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business without a significant
increase in cost.
(q) Transactions With Affiliates
and Employees . Except as set forth in the SEC Reports, none of
the officers or directors of the Company and, to the knowledge of
the Company, none of the employees of the Company is presently a
party to any transaction with the Company (other than for services
as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director,
trustee or partner, other than (i) for payment of salary or
consulting fees for services rendered, (ii) reimbursement for
expenses incurred on behalf of the Company and (iii) for other
employee benefits, including stock option agreements under any
stock option plan of the Company.
(r) Sarbanes-Oxley; Internal
Accounting Controls . The Company is in compliance with any and
all applicable requirements of the Sarbanes-Oxley Act of 2002 that
are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the Commission thereunder that
are effective as of the date hereof and as of the Closing Date. The
Company 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 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. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and
