Exhibit 10.14
INVESTMENT AGREEMENT
INVESTMENT AGREEMENT (this "AGREEMENT"), dated as of January 16, 2007 by and
between On The Go Healthcare, Inc. a Delaware corporation (the "Company"),
and Dutchess Private Equities Fund, Ltd, a Cayman Islands exempted company
(the "Investor").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Investor shall invest up to Five Million
dollars ($5,000,000) to purchase the Company's Common Stock, $0.0001 par
value per share (the "Common Stock");
WHEREAS, such investments will be made in reliance upon the provisions of
Section 4(2) under the Securities Act of 1933, as amended (the "1933 Act"),
Rule 506 of Regulation D, and the rules and regulations promulgated thereunder,
and/or upon such other exemption from the registration requirements of the
1933 Act as may be available with respect to any or all of the investments
in Common Stock to be made hereunder; and
WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights
Agreement substantially in the form attached hereto (the "Registration
Rights Agreement") pursuant to which the Company has agreed to provide
certain registration rights under the 1933 Act, and the rules and regulations
promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, in consideration of the foregoing recitals, which shall be
considered an integral part of this Agreement, the covenants and agreements
set forth hereafter, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Company and the Investor
hereby agree as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings specified or indicated below, and such meanings shall be equally
applicable to the singular and plural forms of such defined terms.
"1933 Act" shall have the meaning set forth in the preamble of this
agreement.
"1934 Act" shall mean the Securities Exchange Act of 1934, as it may
be amended.
"Affiliate" shall have the meaning specified in Section 5(H), below.
"Agreement" shall mean this Investment Agreement.
"Best Bid" shall mean the highest posted bid price of the Common Stock
during a given period of time.
"By-laws" shall have the meaning specified in Section 4(C).
"Certificate of Incorporation" shall have the meaning specified in
Section 4(C).
"Closing" shall have the meaning specified in Section 2(G).
"Closing Date" shall mean no more than seven (7) Trading Days following the
Put Notice Date.
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"Common Stock" shall have the meaning set forth in the preamble of this
Agreement.
"Control" or "Controls" shall have the meaning specified in Section 5(H).
"Effective Date" shall mean the date the SEC declares effective under
the 1933 Act the Registration Statement covering the Securities.
"Environmental Laws" shall have the meaning specified in Section 4(M).
"Equity Line Transaction Documents" shall mean this Agreement, the
Registration Rights Agreement.
"Execution Date" shall mean the date indicated in the preamble to
this Agreement.
"Indemnities" shall have the meaning specified in Section 11.
"Indemnified Liabilities" shall have the meaning specified in Section 11.
"Ineffective Period" shall mean any period of time that the Registration
Statement or any Supplemental Registration Statement (as defined in the
Registration Rights Agreement between the parties) becomes ineffective or
unavailable for use for the sale or resale, as applicable, of any or all
of the Registrable Securities (as defined in the Registration Rights
Agreement) for any reason (or in the event the prospectus under either
of the above is not current and deliverable) during any time period
required under the Registration Rights Agreement.
"Investor" shall have the meaning indicated in the preamble of this Agreement.
"Material Adverse Effect" shall have the meaning specified in Section 4(A).
"Maximum Common Stock Issuance" shall have the meaning specified in
Section 2(H).
"Minimum Acceptable Price" with respect to any Put Notice Date shall mean
seventy-five percent (75%) of the lowest closing bid prices for the ten
(10) Trading Day period immediately preceding each Put Notice Date.
"Open Market Adjustment Amount" shall have the meaning specified in
Section 2(I).
"Open Market Purchase" shall have the meaning specified in Section 2(I)
"Open Market Share Purchase" shall have the meaning specified in
Section 2(I).
"Open Period" shall mean the period beginning on and including the
Trading Day immediately following the Effective Date and ending on the
earlier to occur of (i) the date which is thirty-six (36) months from the
Effective Date; or (ii) termination of the Agreement in accordance with
Section 9, below.
"Pricing Period" shall mean the period beginning on the Put Notice Date and
ending on and including the date that is five (5) Trading Days after such
Put Notice Date.
"Principal Market" shall mean the American Stock Exchange, Inc., the National
Association of Securities Dealers, Inc. Over-the-Counter Bulletin Board, the
NASDAQ National Market System or the NASDAQ SmallCap Market, whichever is the
principal market on which the Common Stock is listed.
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"Prospectus" shall mean the prospectus, preliminary prospectus and supplemental
prospectus used in connection with the Registration Statement.
"Purchase Amount" shall mean the total amount being paid by the Investor on a
particular Closing Date to purchase the Securities.
"Purchase Price" shall mean ninety-four percent (94%) of the lowest closing
Best Bid price of the Common Stock during the Pricing Period.
"Put" shall have the meaning set forth in Section 2(B)(1) hereof.
"Put Amount" shall have the meaning set forth in Section 2(B)(1) hereof.
"Put Notice" shall mean a written notice sent to the Investor by the Company
stating the Put Amount in U.S. dollars the Company intends to sell to the
Investor pursuant to the terms of the Agreement and stating the current
number of Shares issued and outstanding on such date.
"Put Notice Date" shall mean the Trading Day, as set forth below, immediately
following the day on which the Investor receives a Put Notice, however a Put
Notice shall be deemed delivered on (a) the Trading Day it is received by
facsimile or otherwise by the Investor if such notice is received prior to
9:00 am Eastern Time, or (b) the immediately succeeding Trading Day if it
is received by facsimile or otherwise after 9:00 am Eastern Time on a
Trading Day. No Put Notice may be deemed delivered on a day that is not a
Trading Day.
"Put Restriction" shall mean the days between the beginning of the Pricing
Period and Closing Date. During this time, the Company shall not be
entitled to deliver another Put Notice.
"Put Shares Due" shall have the meaning specified in Section 2(I).
"Registration Period" shall have the meaning specified in Section 5(C), below.
"Registration Rights Agreement" shall have the meaning set forth in the
recitals, above.
"Registration Statement" means the registration statement of the Company
filed under the 1933 Act covering the Common Stock issuable hereunder.
"Related Party" shall have the meaning specified in Section 5(H).
"Resolution" shall have the meaning specified in Section 8(E).
"SEC" shall mean the U.S. Securities & Exchange Commission.
"SEC Documents" shall have the meaning specified in Section 4(F).
"Securities" shall mean the shares of Common Stock issued pursuant to the
terms of the Agreement.
"Shares" shall mean the shares of the Company's Common Stock.
"Subsidiaries" shall have the meaning specified in Section 4(A).
"Trading Day" shall mean any day on which the Principal Market for the
Common Stock is open for trading, from the hours of 9:30 am until 4:00 pm.
SECTION 2. PURCHASE AND SALE OF COMMON STOCK.
(A) PURCHASE AND SALE OF COMMON STOCK. Subject to the terms and conditions
set forth herein, the Company shall issue and sell to the Investor, and the
Investor shall purchase from the Company, up to that number of Shares having
an aggregate Purchase Price of Five Million dollars ($5,000,000).
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(B) DELIVERY OF PUT NOTICES.
(I) Subject to the terms and conditions of the Transaction Documents,
and from time to time during the Open Period, the Company may, in
its sole discretion, deliver a Put Notice to the Investor which
states the dollar amount (designated in U.S. Dollars) (the "Put
Amount"), which the Company intends to sell to the Investor on a
Closing Date (the "Put"). The Put Notice shall be in the form
attached hereto as Exhibit C and incorporated herein by reference.
The amount that the Company shall be entitled to Put to the
Investor (the "Put Amount") shall be equal to, at the Company's
election, either: (A) Two Hundred percent (200%) of the average
daily volume (U.S. market only) of the Common Stock for the Ten
(10) Trading Days prior to the applicable Put Notice Date,
multiplied by the average of the three (3) daily closing bid
prices immediately preceding the Put Date, or (B) two hundred
fifty thousand dollars ($250,000). During the Open Period,
the Company shall not be entitled to submit a Put Notice until
after the previous Closing has been completed. The Purchase
Price for the Common Stock identified in the Put Notice shall
be equal to ninety-four percent (94%) of the lowest closing
Best Bid price of the Common Stock during the Pricing Period.
(C) COMPANY'S RIGHT TO WITHDRAWAL. The Company shall reserve the right,
but not the obligation, to withdraw that portion of the Put that is below
the Minimum Acceptable Price, by submitting to the Investor, in writing,
a notice to cancel that portion of the Put. Any shares above the Minimum
Acceptable price due to the Investor shall be carried out by the Company
under the terms of this Agreement.
(D) INTENTIONALLY OMITTED
(E) CONDITIONS TO INVESTOR'S OBLIGATION TO PURCHASE SHARES. Notwithstanding
anything to the contrary in this Agreement, the Company shall not be
entitled to deliver a Put Notice and the Investor shall not be obligated
to purchase any Shares at a Closing (as defined in Section 2(G)) unless
each of the following conditions are satisfied:
(I) a Registration Statement shall have been declared effective and
shall remain effective and available for the resale of all the
Registrable Securities (as defined in the Registration Rights
Agreement) at all times until the Closing with respect to the
subject Put Notice;
(II) at all times during the period beginning on the related Put
Notice Date and ending on and including the related Closing
Date, the Common Stock shall have been listed on the Principal
Market and shall not have been suspended from trading thereon
for a period of two (2) consecutive Trading Days during the
Open Period and the Company shall not have been notified of any
pending or threatened proceeding or other action to suspend the
trading of the Common Stock;
(III) the Company has complied with its obligations and is otherwise
not in breach of or in default under, this Agreement, the
Registration Rights Agreement or any other agreement executed
in connection herewith which has not been cured prior to
delivery of the Investor's Put Notice Date;
(IV) no injunction shall have been issued and remain in force, or
action commenced by a governmental authority which has not been
stayed or abandoned, prohibiting the purchase or the issuance
of the Securities; and
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(V) the issuance of the Securities will not violate any shareholder
approval requirements of the Principal Market.
If any of the events described in clauses (I) through (V) above occurs during
a Pricing Period, then the Investor shall have no obligation to purchase the
Put Amount of Common Stock set forth in the applicable Put Notice.
(F) RESERVED
(G) MECHANICS OF PURCHASE OF SHARES BY INVESTOR. Subject to the satisfaction
of the conditions set forth in Sections 2(E), 7 and 8, the closing of the
purchase by the Investor of Shares (a "Closing") shall occur on the date
which is no later than seven (7) Trading Days following the applicable
Put Notice Date (each a "Closing Date"). Prior to each Closing Date,
(I) the Company shall deliver to the Investor pursuant to this Agreement,
certificates representing the Shares to be issued to the Investor on
such date and registered in the name of the Investor; and (II) the
Investor shall deliver to the Company the Purchase Price to be paid
for such Shares, determined as set forth in Section 2(B). In lieu of
delivering physical certificates representing the Securities and provided
that the Company's transfer agent then is participating in The Depository
Trust Company ("DTC") Fast Automated Securities Transfer ("FAST") program,
upon request of the Investor, the Company shall use all commercially
reasonable efforts to cause its transfer agent to electronically transmit
the Securities by crediting the account of the Investor's prime broker
(as specified by the Investor within a reasonably in advance of the
Investor's notice) with DTC through its Deposit Withdrawal Agent
Commission ("DWAC") system.
The Company understands that a delay in the issuance of Securities beyond
the Closing Date could result in economic damage to the Investor. After
the Effective Date, as compensation to the Investor for such loss, the
Company agrees to make late payments to the Investor for late issuance of
Securities (delivery of Securities after the applicable Closing Date) in
accordance with the following schedule (where "No. of Days Late" is defined
as the number of trading days beyond the Closing Date, with the Amounts
being cumulative.):
LATE PAYMENT FOR EACH
NO. OF DAYS LATE $10,000 WORTH OF COMMON STOCK
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
Over 10 $1,000 + $200 for each
Business Day late beyond 10 days
The Company shall make any payments incurred under this Section in immediately
available funds upon demand by the Investor. Nothing herein shall limit the
Investor's right to pursue actual damages for the Company's failure to issue
and deliver the Securities to the Investor, except that such late payments
shall offset any such actual damages incurred by the Investor, and any Open
Market Adjustment Amount, as set forth below.
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(H) OVERALL LIMIT ON COMMON STOCK ISSUABLE. Notwithstanding anything contained
herein to the contrary, if during the Open Period the Company becomes
listed on an exchange that limits the number of shares of Common Stock
that may be issued without shareholder approval, then the number of
Shares issuable by the Company and purchasable by the Investor, shall
not exceed that number of the shares of Common Stock that may be
issuable without shareholder approval (the "Maximum Common Stock
Issuance"). If such issuance of shares of Common Stock could cause
a delisting on the Principal Market, then the Maximum Common Stock
Issuance shall first be approved by the Company's shareholders in
accordance with applicable law and the By-laws and Amended and Restated
Certificate of Incorporation of the Company, if such issuance of shares
of Common Stock could cause a delisting on the Principal Market. The
parties understand and agree that the Company's failure to seek or
obtain such shareholder approval shall in no way adversely affect the
validity and due authorization of the issuance and sale of Securities
or the Investor's obligation in accordance with the terms and conditions
hereof to purchase a number of Shares in the aggregate up to the Maximum
Common Stock Issuance limitation, and that such approval pertains only
to the applicability of the Maximum Common Stock Issuance limitation
provided in this Section 2(H).
(I) If, by the third (3rd) business day after the Closing Date, the Company
fails to deliver any portion of the shares of the Put to the Investor
(the "Put Shares Due") and the Investor purchases, in an open market
transaction or otherwise, shares of Common Stock necessary to make
delivery of shares which would have been delivered if the full amount
of the shares to be delivered to the Investor by the Company (the
"Open Market Share Purchase") , then the Company shall pay to the
Investor, in addition to any other amounts due to Investor pursuant
to the Put, and not in lieu thereof, the Open Market Adjustment
Amount (as defined below). The "Open Market Adjustment Amount" is
the amount equal to the excess, if any, of (x) the Investor's total
purchase price (including brokerage commissions, if any) for the
Open Market Share Purchase minus (y) the net proceeds (after brokerage
commissions, if any) received by the Investor from the sale of the Put
Shares Due. The Company shall pay the Open Market Adjustment Amount
to the Investor in immediately available funds within five (5)
business days of written demand by the Investor. By way of
illustration and not in limitation of the foregoing, if the Investor
purchases shares of Common Stock having a total purchase price
(including brokerage commissions) of $11,000 to cover an Open Market
Purchase with respect to shares of Common Stock it sold for net
proceeds of $10,000, the Open Market Purchase Adjustment Amount which
the Company will be required to pay to the Investor will be $1,000.
(J) LIMITATION ON AMOUNT OF OWNERSHIP. Notwithstanding anything to the
contrary in this Agreement, in no event shall the Investor be entitled
to purchase that number of Shares, which when added to the sum of
the number of shares of Common Stock beneficially owned (as such term
is defined under Section 13(d) and Rule 13d-3 of the 1934 Act), by the
Investor, would exceed 4.99% of the number of shares of Common Stock
outstanding on the Closing Date, as determined in accordance with
Rule 13d-1(j) of the 1934 Act.
SECTION 3. INVESTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Investor represents and warrants to the Company, and covenants, that:
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(A) SOPHISTICATED INVESTOR. The Investor has, by reason of its business and
financial experience, such knowledge, sophistication and experience in
financial and business matters and in making investment decisions of
this type that it is capable of (I) evaluating the merits and risks of
an investment in the Securities and making an informed investment
decision; (II) protecting its own interest; and (III) bearing the
economic risk of such investment for an indefinite period of time.
(B) AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Investor and is a
valid and binding agreement of the Investor enforceable against the
Investor in accordance with its terms, subject as to enforceability
to general principles of equity and to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar
laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
(C) SECTION 9 OF THE 1934 ACT. During the term of this Agreement, the
Investor will comply with the provisions of Section 9 of the 1934 Act,
and the rules promulgated thereunder, with respect to transactions
involving the Common Stock. The Investor agrees not to sell the Company's
stock short, either directly or indirectly through its affiliates,
principals or advisors, the Company's common stock during the term of
this Agreement.
(D) ACCREDITED INVESTOR. Investor is an "Accredited Investor" as that term
is defined in Rule 501(a) of Regulation D of the 1933 Act.
(E) NO CONFLICTS. The execution, delivery and performance of the Transaction
Documents by the Investor and the consummation by the Investor of the
transactions contemplated hereby and thereby will not result in a
violation of Partnership Agreement or other organizational documents
of the Investor.
(F) OPPORTUNITY TO DISCUSS. The Investor has received all materials relating
to the Company's business, finance and operations which it has requested.
The Investor has had an opportunity to discuss the business, management
and financial affairs of the Company with the Company's management.
(G) INVESTMENT PURPOSES. The Investor is purchasing the Securities for its
own account for investment purposes and not with a view towards
distribution and agrees to resell or otherwise dispose of the Securities
solely in accordance with the registration provisions of the 1933 Act (or
pursuant to an exemption from such registration provisions).
(H) NO REGISTRATION AS A DEALER. The Investor is not and will not be required
to be registered as a "dealer" under the 1934 Act, either as a result of
its execution and performance of its obligations under this Agreement or
otherwise.
(I) GOOD STANDING. The Investor is a Limited Partnership, duly organized,
validly existing and in good standing in the State of Delaware.
(J) TAX LIABILITIES. The Investor understands that it is liable for its own
tax liabilities.
(K) REGULATION M. The Investor will comply with Regulation M under the 1934
Act, if applicable.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth in the Schedules attached hereto, or as disclosed on the
Company's SEC Documents, the Company represents and warrants to the
Investor that:
(A) ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized
and validly existing in good standing under the laws of the State of
Delaware, and has the requisite corporate power and authorization to own
its properties and to carry on its business as now being conducted. Both
the Company and the companies it owns or controls ("Subsidiaries") are duly
qualified to do business and are in good standing in every jurisdiction in
which its ownership of property or 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 a Material
Adverse Effect. As used in this Agreement, "Material Adverse Effect" means
any material adverse effect on the business, properties, assets,
operations, results of operations, financial condition or prospects of
the Company and its Subsidiaries, if any, taken as a whole, or on the
transactions contemplated hereby or by the agreements and instruments to
be entered into in connection herewith, or on the authority or ability of
the Company to perform its obligations under the Transaction Documents
(as defined in Section 1 and 4(B), below).
(B) AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.
(I) The Company has the requisite corporate power and authority to
enter into and perform this Agreement and the Registration
Rights 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 reservation for issuance and the issuance of the Securities
pursuant to this Agreement, have been duly and validly
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 shareholders.
(III) The Transaction Documents have been duly and validly 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.
(C) CAPITALIZATION. As of the date hereof, the authorized capital stock of
the Company consists of 100,000,000 shares of Common Stock, $.0001 par
value per share, of which as of the date hereof, 5,976,779 shares are
issued and outstanding; 1,000,000 shares of Preferred Stock authorized
with 229,134 shares issued or outstanding; as of December 15, 2006, and
32,384 shares reserved for issuance pursuant to options, warrants and
other convertible securities. All of such outstanding shares have been,
or upon issuance will be, validly issued and are fully paid and
nonassessable.
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Except as disclosed in the Company's publicly available filings with the SEC:
(I) no shares of the Company's capital stock are 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 debt securities; (III) there are no outstanding
shares of capital stock, options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares
of 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 shares of 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, any shares of capital
stock of the Company or any of its Subsidiaries; (IV) there are no
agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their
securities under the 1933 Act (except the Registration Rights
Agreement); (V) there are no outstanding securities 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 as described in this Agreement; (VII) the Company
does not have any stock appreciation rights or "phantom stock"
plans or agreements or any similar plan or agreement; and
(VIII) there is no dispute as to the classification of any
shares of the Company's capital stock.
The Company has furnished to the Investor, or the Investor has had access
through XXXXX to, true and correct copies of the Company's Amended and
Restated Certificate of Incorporation, as in effect on the date hereof
(the "Certificate of Incorporation"), and the Company's By-laws, as in
effect on the date hereof (the "By-laws"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights
of the holders thereof in respect thereto.
(D) ISSUANCE OF SHARES. The Company has reserved a number of Shares for
issuance pursuant to this Agreement, which have been duly authorized and
reserved those Shares for issuance (subject to adjustment pursuant to
the Company's covenant set forth in Section 5(F) below) pursuant to
this Agreement. Upon issuance in accordance with this Agreement, the
Securities will be validly issued, fully paid for and non-assessable
and free from all taxes, liens and charges with respect to the issue
thereof. In the event the Company cannot register a sufficient number
of Shares for issuance pursuant to this Agreement, the Company will
use its best efforts to authorize and reserve for issuance the number
of Shares required for the Company to perform its obligations hereunder
as soon as reasonably practicable.
(E) NO CONFLICTS. The execution, delivery and performance of the Equity Line
Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby will not (I) result
in a violation of the Certificate of Incorporation, any Certificate of
Designations, Preferences and Rights of any outstanding series of
preferred stock of the Company or the By-laws; or (II) conflict with, or
constitute a material default (or an event which with notice or lapse of
time or both would become a material default) under, or give to others
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any rights of termination, amendment, acceleration or cancellation of,
any material agreement, contract, indenture mortgage, indebtedness or
instrument to which the Company or any of its Subsidiaries is a party,
or to the Company's knowledge result in a violation of any law, rule,
regulation, order, judgment or decree (including United States federal
and state securities laws and regulations and the rules and regulations
of the Principal Market or principal securities exchange or trading
market on which the Common Stock is traded or listed) 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 as
disclosed in Schedule 4(e), neither the Company nor its Subsidiaries is
in violation of any term of, or in default under, the Certificate of
Incorporation, any Certificate of Designations, Preferences and Rights
of any outstanding series of preferred stock of the Company or the
By-laws or their organizational charter or by-laws, respectively, or
any contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable
to the Company or its Subsidiaries, except for possible conflicts,
defaults, terminations, amendments, accelerations, cancellations and
violations that would not individually or in the aggregate have or
constitute 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 law, statute, ordinance, rule, order or regulation
of any governmental authority or agency, regulatory or self-regulatory
agency, or court, except for possible violations the sanctions for which
either individually or in the aggregate would not have a Material Adverse
Effect. Except as specifically contemplated by this Agreement and as
required under the 1933 Act or any securities laws of any states, to
the Company's knowledge, the Company is not required to obtain any
consent, authorization, permit or order of, or make any filing or
registration (except the filing of a registration statement as outlined
in the Registration Rights Agreement between the Parties) with, any court,
governmental authority or agency, regulatory or self-regulatory agency or
other third party in order for it to execute, deliver or perform any of
its obligations under, or contemplated by, the Transaction Documents in
accordance with the terms hereof or thereof. All consents, authorizations,
permits, 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 and are in full force and
effect as of the date hereof. Except as disclosed in Schedule 4(e),
the Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing. The Company is not, and
will not be, in violation of the listing requirements of the Principal
Market as in effect on the date hereof and on each of the Closing Dates
and is not aware of any facts which would reasonably lead to delisting
of the Common Stock by the Principal Market in the foreseeable future.
(F) SEC DOCUMENTS; FINANCIAL STATEMENTS. As of the date hereof, the Company
has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to 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"). The Company has
delivered to the Investor or its representatives, or they have had access
through XXXXX to, true and complete copies of the SEC Documents. As of
their respective filing dates, the SEC Documents complied in all material
respects with the requirements of the 1934 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
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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
to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of their respective dates,
the financial statements of the Company included in the SEC Documents
complied 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, by a firm that
is a member of the Public Companies Accounting Oversight Board ("PCAOB")
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 written
information provided by or on behalf of the Company to the Investor
which is not included in the SEC Documents, including, without limitation,
information referred to in Section 4(D) of this Agreement, contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading. Neither
the Company nor any of its Subsidiaries or any of their officers,
directors, employees or agents have provided the Investor with any
material, nonpublic information which was not publicly disclosed prior
to the date hereof and any material, nonpublic information provided to
the Investor by the Company or its Subsidiaries or any of their officers,
directors, employees or agents prior to any Closing Date shall be
publicly disclosed by the Company prior to such Closing Date.
(G) ABSENCE OF CERTAIN CHANGES. Except as otherwise set forth in the SEC
Documents, the Company does not intend to change the business operations
of the Company in any material way. The Company has not taken any steps,
and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company or its Subsidiaries
have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings.
(H) ABSENCE OF LITIGATION AND/OR REGULATORY PROCEEDINGS. Except as set forth
in the SEC Documents, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
executive officers of Company or any of its Subsidiaries, threatened
against or affecting the Company, the Common Stock or any of the Company's
Subsidiaries or any of the Company's or the Company's Subsidiaries'
officers or directors in their capacities as such, in which an adverse
decision could have a Material Adverse Effect.
(I) ACKNOWLEDGMENT REGARDING INVESTOR'S PURCHASE OF SHARES. The Company
acknowledges and agrees that the Investor is acting solely in the capacity
of an arm's length purchaser with respect to the Transaction Documents
and the transactions contemplated hereby and thereby. The Company further
acknowledges that the Investor is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Equity Line Transaction Documents and the transactions contemplated hereby
and thereby and any advice given by the Investor or any of its respective
representatives or agents in connection with the Equity Line Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to the Investor's purchase of the Securities, and is not being
relied on by the Company. The Company further represents to the Investor
that the Company's decision to enter into the Equity Line Transaction
Documents has been based solely on the independent evaluation by the
Company and its representatives.
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(J) NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. Except
as set forth in the SEC Documents, as of the date hereof, no event,
liability, development or circumstance has occurred or exists, or to
the Company's knowledge is contemplated to occur, with respect to the
Company or its Subsidiaries or their respective business, properties,
assets, prospects, operations or financial condition, that would be
required to be disclosed by the Company under applicable securities
laws on a registration statement filed with the SEC relating to an issuance
and sale by the Company of its Common Stock and which has not been
publicly announced.
(K) EMPLOYEE RELATIONS. Neither the Company nor any of its Subsidiaries is
involved in any union labor dispute nor, to the knowledge of the Company
or any of its Subsidiaries, is any such dispute threatened. Neither the
Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that relations
with their employees are good. No executive officer (as defined in
Rule 501(f) of the 0000 Xxx) has notified the Company that such officer
intends to leave the Company's employ or otherwise terminate such officer's
employment with the Company.
(L) INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted. Except as set forth in the SEC
Documents, none of the Company's trademarks, trade names, service marks,
service xxxx registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, government authorizations,
trade secrets or other intellectual property rights necessary to conduct
its business as now or as proposed to be conducted have expired or
terminated, or are expected to expire or terminate within two (2) years
from the date of this Agreement. The Company and its Subsidiaries do not
have any knowledge of any infringement by the Company or its Subsidiaries
of trademark, trade name rights, patents, patent rights, copyrights,
inventions, licenses, service names, service marks, service xxxx
registrations, trade secret or other similar rights of others, or of any
such development of similar or identical trade secrets or technical
information by others and, except as set forth in the SEC Documents, there
is no claim, action or proceeding being made or brought against, or to the
Company's knowledge, being threatened against, the Company or its
Subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service xxxx
registrations, trade secret or other infringement; and the Company and its
Subsidiaries are unaware of any facts or circumstances which might give
rise to any of the foregoing. The Company and its Subsidiaries have taken
commercially reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties.
(M) ENVIRONMENTAL LAWS. The Company and its Subsidiaries (I) are, to the
knowledge of the management and directors of the Company and its
Subsidiaries, in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"); (II) have, to
the knowledge of the management and directors of the Company, received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses; and (III) are
in compliance, to the knowledge of the management and directors of the
Company, with all terms and conditions of any such permit, license or
approval where, in each of the three (3) foregoing cases, the failure
to so comply would have, individually or in the aggregate, a Material
Adverse Effect.
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(N) TITLE. The Company and its Subsidiaries have good and marketable title to
all personal property owned by them which is material to the business of
the Company and its Subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as are described in the SEC
Documents or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by the Company or any of its Subsidiaries. Any real property
and facilities held under lease by the Company or any of its
Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.
(O) INSURANCE. Each of the Company's Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company reasonably believes
to be prudent and customary in the businesses in which the Company and
its Subsidiaries are engaged. Neither the Company nor any of its
Subsidiaries has been refused any insurance coverage sought or applied
for and neither the Company nor its Subsidiaries has any 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 at a cost that would not have a Material Adverse Effect.
(P) REGULATORY PERMITS. The Company and its Subsidiaries have in full force
and effect all certificates, approvals, authorizations and permits from
the appropriate federal, state, local or foreign regulatory authorities
and comparable foreign regulatory agencies, necessary to own, lease or
operate their respective properties and assets and conduct their
respective businesses, and neither the Company nor any such Subsidiary
has received any notice of proceedings relating to the revocation or
modification of any such certificate, approval, authorization or permit,
except for such certificates, approvals, authorizations or permits which
if not obtained, or such revocations or modifications which, would not
have a Material Adverse Effect.
(Q) INTERNAL ACCOUNTING CONTROLS. The Company and each of its Subsidiaries
maintain 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 generally accepted accounting principles by a firm
with membership to the PCAOB 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.
(R) NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which
in the judgment of the Company's officers has or is expected in the future
to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party to any contract or agreement which in the judgment
of the Company's officers has or is expected to have a Material Adverse
Effect.
13
(S) TAX STATUS. The Company and each of its Subsidiaries has made or filed
all United States federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that
are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any
such claim.
(T) CERTAIN TRANSACTIONS. Except as set forth in the SEC Documents filed
at least ten (10) days prior to the date hereof and except for arm's
length transactions pursuant to which the Company makes payments in
the ordinary course of business upon terms no less favorable than the
Company could obtain from disinterested third parties and other than
the grant of stock options disclosed in the SEC Documents, none of
the officers, directors, or employees of the Company is presently a
party to any transaction with the Company or any of its Subsidiaries
(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 corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.
(U) DILUTIVE EFFECT. The Company understands and acknowledges that the
number of shares of Common Stock issuable upon purchases pursuant to
this Agreement will increase in certain circumstances including,
but not necessarily limited to, the circumstance wherein the trading
price of the Common Stock declines during the period between the
Effective Date and the end of the Open Period. The Company's executive
officers and directors have studied and fully understand the nature
of the transactions contemplated by this Agreement and recognize
that they have a potential dilutive effect on the shareholders of
the Company. The Board of Directors of the Company has concluded,
in its good faith business judgment, and with full understanding of
the implications, that such issuance is in the best interests of the
Company. The Company specifically acknowledges that, subject to such
limitations as are expressly set forth in the Equity Line
Transaction Documents, its obligation to issue shares of Common
Stock upon purchases pursuant to this Agreement is absolute and
unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other shareholders of the
Company.
(V) LOCK-UP. The Company shall cause its officers, insiders, directors,
and affiliates or other related parties under control of the Company,
to refrain from selling Common Stock during each Pricing Period.
(W) NO GENERAL SOLICITATION. Neither the Company, nor any of its affiliates,
nor any person acting on its behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D)
in connection with the offer or sale of the Common Stock to be offered
as set forth in this Agreement.
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(X) NO BROKERS, FINDERS OR FINANCIAL ADVISORY FEES OR COMMISSIONS.
No brokers, finders or financial advisory fees or commissions will be
payable by the Company, it's agents or Subsidiaries, with respect to
the transactions contemplated by this Agreement, except as otherwise
disclosed in this Agreement.
SECTION 5. COVENANTS OF THE COMPANY
(A) BEST EFFORTS. The Company shall use all commercially reasonable efforts
to timely satisfy each of the conditions set forth in Section 7 of this
Agreement.
(B) BLUE SKY. The Company shall, at its sole cost and expense, on or before
each of the Closing Dates, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for, or obtain exemption
for the Securities for, sale to the Investor at each of the Closings
pursuant to this Agreement under applicable securities or "Blue Sky" laws
of such states of the United States, as reasonably specified by the
Investor, and shall provide evidence of any such action so taken to the
Investor on or prior to the Closing Date.
(C) REPORTING STATUS. Until one of the following occurs, the Company shall
file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status, or take an
action or fail to take any action, which would terminate its status as
a reporting company under the 1934 Act: (i) this Agreement terminates
pursuant to Section 9 and the Investor has the right to sell all of the
Securities without restrictions pursuant to Rule 144(k) promulgated under
the 1933 Act, or such other exemption (ii) the date on which the Investor
has sold all the Securities and this Agreement has been terminated
pursuant to Section 9.
(D) USE OF PROCEEDS. The Company will use the proceeds from the sale of the
Shares (excluding amounts paid by the Company for fees as set forth in
the Transaction Documents) for general corporate and working capital
purposes and acquisitions or assets, businesses or operations or for
other purposes that the Board of Directors, in its good xxxxx xxxx to
be in the best interest of the Company.
(E) FINANCIAL INFORMATION. During the Open Period, the Company agrees to
make available to the Investor via XXXXX or other electronic means the
following documents and information on the forms set forth: (I) within
five (5) Trading Days after the filing thereof with the SEC, a copy of
its Annual Reports on Form 10-KSB, its Quarterly Reports on Form 10-QSB,
any Current Reports on Form 8-K and any Registration Statements or
amendments filed pursuant to the 1933 Act; (II) copies of any notices and
other information made available or given to the shareholders of the
Company generally, contemporaneously with the making available or giving
thereof to the shareholders; and (III) within two (2) calendar days of
filing or delivery thereof, copies of all documents filed with, and all
correspondence sent to, the Principal Market, any securities exchange or
market, or the National Association of Securities Dealers, Inc., unless
such information is material nonpublic information.
(F) RESERVATION OF SHARES. The Company shall take all action necessary to at
all times have authorized, and reserved for the purpose of issuance, a
sufficient number of shares of Common Stock to provide for the issuance
of the Securities to the Investor as required hereunder. In the event
that the Company determines that it does not have a sufficient number
of authorized shares of Common Stock to reserve and keep available for
issuance as described in this Section 5(F), the Company shall use all
commercially reasonable efforts to increase the number of authorized
shares of Common Stock by seeking shareholder approval for the
authorization of such additional shares.
15
(G) LISTING. The Company shall promptly secure and maintain the listing of
all of the Registrable Securities (as defined in the Registration Rights
Agreement) on the Principal Market and each other national securities
exchange and automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance)
and shall maintain, such listing of all Registrable Securities from
time to time issuable under the terms of the Equity Line Transaction
Documents. Neither the Company nor any of its Subsidiaries shall take
any action which would be reasonably expected to result in the
delisting or suspension of the Common Stock on the Principal Market
(excluding suspensions of not more than one (1) trading day resulting
from business announcements by the Company). The Company shall
promptly provide to the Investor copies of any notices it receives
from the Principal Market regarding the continued eligibility of the
Common Stock for listing on such automated quotation system or
securities exchange. The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 5(G).
(H) TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall cause
each of its Subsidiaries not to, enter into, amend, modify or
supplement, or permit any Subsidiary to enter into, amend, modify
or supplement, any agreement, transaction, commitment or arrangement
with any of its or any Subsidiary's officers, directors, persons who
were officers or directors at any time during the previous two
(2) years, shareholders who beneficially own 5% or more of the
Common Stock, or Affiliates or with any individual related by blood,
marriage or adoption to any such individual or with any entity in
which any such entity or individual owns a 5% or more beneficial
interest (each a "Related Party"), except for (I) customary employment
arrangements and benefit programs on reasonable terms, (II) any
agreement, transaction, commitment or arrangement on an arms-length
basis on terms no less favorable than terms which would have been
obtainable from a disinterested third party other than such Related
Party, or (III) any agreement, transaction, commitment or arrangement
which is approved by a majority of the disinterested directors of
the Company. For purposes hereof, any director who is also an
officer of the Company or any Subsidiary of the Company shall not
be a disinterested director with respect to any such agreement,
transaction, commitment or arrangement. "Affiliate" for purposes
hereof means, with respect to any person or entity, another person
or entity that, directly or indirectly, (I) has a 5% or more equity
interest in that person or entity, (II) has 5% or more common
ownership with that person or entity, (III) controls that person
or entity, or (IV) is under common control with that person or entity.
"Control" or "Controls" for purposes hereof means that a person or
entity has the power, directly or indirectly, to conduct or govern
the policies of another person or entity.
(I) FILING OF FORM 8-K. On or before the date which is four (4) Trading
Days after the Execution Date, the Company shall file a Current Report
on Form 8-K with the SEC describing the terms of the transaction
contemplated by the Equity Line Transaction Documents in the form
required by the 1934 Act, if such filing is required.
(J) CORPORATE EXISTENCE. The Company shall use all commercially reasonable
efforts to preserve and continue the corporate existence of the Company.
16
(K) NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO
MAKE A PUT. The Company shall promptly notify the Investor upon the
occurrence of any of the following events in respect of a Registration
Statement or related prospectus in respect of an offering of the
Securities: (I) receipt of any request for additional information
by the SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement
for amendments or supplements to the Registration Statement or
related prospectus; (II) the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending
the effectiveness of any Registration Statement or the initiation
of any proceedings for that purpose; (III) receipt of any
notification with respect to the suspension of the qualification
or exemption from qualification of any of the Securities for sale
in any jurisdiction or the initiation or notice of any proceeding
for such purpose; (IV) the happening of any event that makes any
statement made in such Registration Statement or related prospectus
or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making
of any changes in the Registration Statement, related prospectus or
documents so that, in the case of a Registration Statement, it 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 that in the case of the
related prospectus, it 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, in the light of
the circumstances under which they were made, not misleading; and
(V) the Company's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate, and
the Company shall promptly make available to Investor any such
supplement or amendment to the related prospectus. The Company shall
not deliver to Investor any Put Notice during the continuation of
any of the foregoing events in this Section 5(K).
(L) REIMBURSEMENT. If (I) the Investor becomes involved in any capacity
in any action, proceeding or investigation brought by any shareholder
of the Company, in connection with or as a result of the consummation
of the transactions contemplated by the Equity Line Transaction
Documents, or if the Investor is impleaded in any such action,
proceeding or investigation by any person (other than as a result of
a breach of the Investor's representations and warranties set forth
in this Agreement); or (II) the Investor becomes involved in any
capacity in any action, proceeding or investigation brought by the
SEC against or involving the Company or in connection with or as a
result of the consummation of the transactions contemplated by the
Equity Line Transaction Documents (other than as a result of a
breach of the Investor's representations and warranties set forth
in this Agreement), or if this Investor is impleaded in any such
action, proceeding or investigation by any person, then in any such
case, the Company will reimburse the Investor for its reasonable
legal and other expenses (including the cost of any investigation
and preparation) incurred in connection therewith, as such expenses
are incurred. In addition, other than with respect to any matter in
which the Investor is a named party, the Company will pay to the
Investor the charges, as reasonably determined by the Investor, for
the time of any officers or employees of the Investor devoted to
appearing and preparing to appear as witnesses, assisting in
preparation for hearings, trials or pretrial matters, or otherwise
with respect to inquiries, hearing, trials, and other proceedings
relating to the subject matter of this Agreement. The reimbursement
obligations of the Company under this section shall be in addition
to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any affiliates of the Investor
that are actually named in such action, proceeding or investigation,
and partners, directors, agents, employees, attorneys, accountants,
auditors and controlling persons (if any), as the case may be, of
Investor and any such affiliate, and shall be binding upon and inure
to the benefit of any successors of the Company, the Investor and
any such affiliate and any such person.
17
(M) TRANSFER AGENT. Upon effectiveness of the Registration Statement,
and for so long as the Registration Statement is effective, the
Company shall deliver instructions to its transfer agent to issue
Shares to the Investor that are covered for resale by the
Registration Statement free of restrictive legends.
SECTION 6. INTENTIONALLY OMITTED
SECTION 7. CONDITIONS OF THE COMPANY'S OBLIGATION TO SELL.
The obligation hereunder of the Company to issue and sell the Securities
to the Investor is further subject to the satisfaction, at or before each
Closing Date, of each of the following conditions set forth below. These
conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion.
(A) The Investor shall have executed this Agreement and the Registration
Rights Agreement and delivered the same to the Company.
(B) The Investor shall have delivered to the Company the Purchase Price for
the Securities being purchased by the Investor between the end of the
Pricing Period and the Closing Date via a Put Settlement Sheet (hereto
attached as Exhibit D). After receipt of confirmation of delivery of such
Securities to the Investor, the Investor, by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company
will disburse the funds constituting the Purchase Amount.
(C) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by
any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by
this Agreement.
SECTION 8. FURTHER CONDITIONS OF THE INVESTOR'S OBLIGATION TO PURCHASE.
The obligation of the Investor hereunder to purchase Shares is subject to
the satisfaction, on or before each Closing Date, of each of the following
conditions set forth below.
(A) The Company shall have executed the Equity Line Transaction Documents
and delivered the same to the Investor.
(B) The Common Stock shall be authorized for quotation on the Principal
Market and trading in the Common Stock shall not have been suspended
by the Principal Market or the SEC, at any time beginning on the date
hereof and through and including the respective Closing Date (excluding
suspensions of not more than one (1) Trading Day resulting from business
announcements by the Company, provided that such suspensions occur prior
to the Company's delivery of the Put Notice related to such Closing).
(C) The representations and warranties of the Company shall be true and
correct as of the date when made and as of the applicable Closing Date as
though made at that time and the Company shall have performed, satisfied
and complied with the covenants, agreements and conditions required by
the Equity Line Transaction Documents to be performed, satisfied or
complied with by the Company on or before such Closing Date. The
Investor may request an update as of such Closing Date regarding the
representation contained in Section 4(C) above.
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(D) The Company shall have executed and delivered to the Investor the
certificates representing, or have executed electronic book-entry
transfer of, the Securities (in such denominations as the Investor
shall request) being purchased by the Investor at such Closing.
(E) The Board of Directors of the Company shall have adopted resolutions
consistent with Section 4(B)(II) above (the "Resolutions") and such
Resolutions shall not have been amended or rescinded prior to such
Closing Date.
(F) Reserved
(G) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by
this Agreement.
(H) The Registration Statement shall be effective on each Closing Date and
no stop order suspending the effectiveness of the Registration statement
shall be in effect or to the Company's knowledge shall be pending or
threatened. Furthermore, on each Closing Date (I) neither the Company
nor the Investor shall have received notice that the SEC has issued or
intends to issue a stop order with respect to such Registration
Statement or that the SEC otherwise has suspended or withdrawn the
effectiveness of such Registration Statement, either temporarily or
permanently, or intends or has threatened to do so (unless the SEC's
concerns have been addressed and Investor is reasonably satisfied
that the SEC no longer is considering or intends to take such action),
and (II) no other suspension of the use or withdrawal of the
effectiveness of such Registration Statement or related prospectus
shall exist.
(I) At the time of each Closing, the Registration Statement (including
information or documents incorporated by reference therein) and any
amendments or supplements thereto shall 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 or which would require public disclosure or
an update supplement to the prospectus.
(J) If applicable, the shareholders of the Company shall have approved
the issuance of any Shares in excess of the Maximum Common Stock
Issuance in accordance with Section 2(H) or the Company shall have
obtained appropriate approval pursuant to the requirements of Delaware
law and the Company's Articles of Incorporation and By-laws.
(K) The conditions to such Closing set forth in Section 2(E) shall have
been satisfied on or before such Closing Date.
(L) The Company shall have certified to the Investor the number of Shares
of Common Stock outstanding when a Put Notice is given to the Investor.
The Company's delivery of a Put Notice to the Investor constitutes the
Company's certification of the existence of the necessary number of
shares of Common Stock reserved for issuance.
SECTION 9. TERMINATION. This Agreement shall terminate upon any of the
following events:
(I) when the Investor has purchased an aggregate of Five Million
dollars ($5,000,000) in the Common Stock of the Company
pursuant to this Agreement; or,
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(II) on the date which is thirty-six (36) months after the Effective
Date.
SECTION 10. SUSPENSION
This Agreement shall be suspended upon any of the following events, and shall
remain suspended until such event is rectified:
(I) the trading of the Common Stock is suspended by the SEC, the
Principal Market or the NASD for a period of two (2) consecutive
Trading Days during the Open Period; or,
(II) The Common Stock ceases to be registered under the 1934 Act or
listed or traded on the Principal Market. Immediately upon the
occurrence of one of the above-described events, the Company
shall send written notice of such event to the Investor.
SECTION 11. INDEMNIFICATION.
In consideration of the parties mutual obligations set forth in the Transaction
Documents, each of the parties (in such capacity, an "Indemnitor") shall
defend, protect, indemnify and hold harmless the other and all of the other
party's shareholders, officers, directors, employees, counsel, and direct or
indirect investors and any of the foregoing person's agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and
reasonable expenses in connection therewith (irrespective of whether any
such Indemnitee is a party to the action for which indemnification hereunder
is sought), and including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (I) any misrepresentation or breach of any
representation or warranty made by the Indemnitor or any other certificate,
instrument or document contemplated hereby or thereby; (II) any breach of
any covenant, agreement or obligation of the Indemnitor contained in the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby; or (III) any cause of action, suit or
claim brought or made against such Indemnitee by a third party and arising
out of or resulting from the execution, delivery, performance or enforcement
of the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, except insofar as any such misrepresentation,
breach or any untrue statement, alleged untrue statement, omission or alleged
omission is made in reliance upon and in conformity with information
furnished to Indemnitor which is specifically intended for use in the
preparation of any such Registration Statement, preliminary prospectus,
prospectus or amendments to the prospectus. To the extent that the foregoing
undertaking by the Indemnitor may be unenforceable for any reason, the
Indemnitor shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law. The indemnity provisions contained herein shall be in addition to any
cause of action or similar rights Indemnitor may have, and any liabilities
the Indemnitor or the Indemnitees may be subject to.
20
SECTION 12. GOVERNING LAW; DISPUTES SUBMITTED TO ARBITRATION.
All disputes arising under this agreement shall be governed by and interpreted
in accordance with the laws of the Commonwealth of Massachusetts, without
regard to principles of conflict of laws. The parties to this agreement will
submit all disputes arising under this agreement to arbitration in Boston,
Massachusetts before a single arbitrator of the American Arbitration
Association ("AAA"). The arbitrator shall be selected by application of
the rules of the AAA, or by mutual agreement of the parties, except that
such arbitrator shall be an attorney admitted to practice law in the
Commonwealth of Massachusetts. No party to this agreement will challenge
the jurisdiction or venue provisions as provided in this section. No party
to this agreement will challenge the jurisdiction or venue provisions as
provided in this section. Nothing contained herein shall prevent the party
from obtaining an injunction.
(B) LEGAL FEES; AND MISCELLANEOUS FEES. Except as otherwise set forth in
the Transaction Documents, each party shall pay the fees and expenses of
its advisers, counsel, the accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. Any
attorneys' fees and expenses incurred by either the Company or the
Investor in connection with the preparation, negotiation, execution
and delivery of any amendments to this Agreement or relating to the
enforcement of the rights of any party, after the occurrence of any
breach of the terms of this Agreement by another party or any default by
another party in respect of the transactions contemplated hereunder,
shall be paid on demand by the party which breached the Agreement
and/or defaulted, as the case may be. The Company shall pay all stamp
and other taxes and duties levied in connection with the issuance of
any Securities.
(C) COUNTERPARTS. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile
signature shall be considered due execution and shall be binding upon
the signatory thereto with the same force and effect as if the
signature were an original signature.
(D) HEADINGS; SINGULAR/PLURAL. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. Whenever required by the context
of this Agreement, the singular shall include the plural and masculine
shall include the feminine.
(E) SEVERABILITY. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this
Agreement in that jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction.
(F) ENTIRE AGREEMENT; AMENDMENTS. This Agreement is the FINAL AGREEMENT between
the Company and the Investor with respect to the terms and conditions set
forth herein, and, the terms of this Agreement may not be contradicted by
evidence of prior, contemporaneous, or subsequent oral agreements of the
Parties. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the Investor, and no
provision hereof may be waived other than by an instrument in writing
signed by the party against whom enforcement is sought. The execution
and delivery of the Equity Line Transaction Documents shall not alter
the force and effect of any other agreements between the Parties, and
the obligations under those agreements.
21
(G) NOTICES. Any notices or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be
deemed to have been delivered (I) upon receipt, when delivered personally;
(II) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file
by the sending party); or (III) one (1) day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to
the party to receive the same. The addresses and facsimile numbers for
such communications shall be:
If to the Company:
On The Go Healthcare, Inc.
00 Xxxxxxxx Xxxxxx, Xxxx #0
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Investor:
Dutchess Private Equities Fund, Ltd,
00 Xxxxxxxxxxxx Xxxxxx, Xxxxx 0
Xxxxxx, XX 00000
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
Each party shall provide five (5) days prior written notice to the other party
of any change in address or facsimile number.
(H) NO ASSIGNMENT. This Agreement may not be assigned.
(I) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of
the parties hereto and is not for the benefit of, nor may any provision
hereof be enforced by, any other person, except that the Company
acknowledges that the rights of the Investor may be enforced by its
general partner.
(J) SURVIVAL. The representations and warranties of the Company and the
Investor contained in Sections 2 and 3, the agreements and covenants set
forth in Sections 4 and 5, and the indemnification provisions set forth
in Section 11, shall survive each of the Closings and the termination of
this Agreement.
(K) PUBLICITY. The Company and the Investor shall consult with each other in
issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and no party shall issue
any such press release or otherwise make any such public statement without
the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed, except that no prior consent shall
be required if such disclosure is required by law, in which such case
the disclosing party shall provide the other party with prior notice of
such public statement. Notwithstanding the foregoing, the Company shall
not publicly disclose the name of the Investor without the prior consent
of the Investor, except to the extent required by law. The Investor
acknowledges that this Agreement and all or part of the Transaction
Documents may be deemed to be "material contracts" as that term is
defined by Item 601(b)(10) of Regulation S-B, and that the Company may
therefore be required to file such documents as exhibits to reports or
registration statements filed under the 1933 Act or the 1934 Act. The
Investor further agrees that the status of such documents and materials
as material contracts shall be determined solely by the Company, in
consultation with its counsel.
22
(L) FURTHER ASSURANCES. Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(M) PLACEMENT AGENT. The Company agrees to pay a registered broker dealer
to act as a placement agent, if so required. The Investor shall have no
obligation with respect to any fees or with respect to any claims made by
or on behalf of other persons or entities for fees of a type contemplated
in this Section that may be due in connection with the transactions
contemplated by the Transaction Documents. The Company shall indemnify and
hold harmless the Investor, their employees, officers, directors, agents,
and partners, and their respective affiliates, from and against all claims,
losses, damages, costs (including the costs of preparation and attorney's
fees) and expenses incurred in respect of any such claimed or existing fees,
as such fees and expenses are incurred.
(N) NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party, as
the parties mutually agree that each has had a full and fair opportunity
to review this Agreement and seek the advice of counsel on it.
(O) REMEDIES. The Investor shall have all rights and remedies set forth in this
Agreement and the Registration Rights Agreement and all rights and remedies
which such holders have been granted at any time under any other agreement
or contract and all of the rights which the Investor has by law. Any person
having any rights under any provision of this Agreement shall be entitled
to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any default or breach of any
provision of this Agreement, including the recovery of reasonable attorneys
fees and costs, and to exercise all other rights granted by law.
(P) PAYMENT SET ASIDE. To the extent that the Company makes a payment or
payments to the Investor hereunder or under the Registration Rights
Agreement or the Investor enforces or exercises its rights hereunder or
thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not
occurred.
(Q) PRICING OF COMMON STOCK. For purposes of this Agreement, the bid price
of the Common Stock shall be as reported on Bloomberg.
SECTION 13. NON-DISCLOSURE OF NON-PUBLIC INFORMATION.
(a) The Company shall not disclose non-public information to the Investor,
its advisors, or its representatives.
23
(b) Nothing herein shall require the Company to disclose non-public
information to the Investor or its advisors or representatives, and
the Company represents that it does not disseminate non-public information
to any investors who purchase stock in the Company in a public offering,
to money managers or to securities analysts, provided, however, that
notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, immediately notify the advisors and representatives
of the Investor and, if any, underwriters, of any event or the existence
of any circumstance (without any obligation to disclose the specific event
or circumstance) of which it becomes aware, constituting non-public
information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration
Statement would cause such prospectus to include a material misstatement
or to omit a material fact required to be stated therein in order to
make the statements, therein, in light of the circumstances in which
they were made, not misleading. Nothing contained in this Section 13
shall be construed to mean that such persons or entities other than the
Investor (without the written consent of the Investor prior to disclosure
of such information) may not obtain non-public information in the course
of conducting due diligence in accordance with the terms of this Agreement
and nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due diligence
by such persons or entities, that the Registration Statement contains an
untrue statement of material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made,
not misleading.
24
SIGNATURE PAGE OF INVESTMENT AGREEMENT
Your signature on this Signature Page evidences your agreement to be bound
by the terms and conditions of the Investment Agreement and the Registration
Rights Agreement as of the date first written above.
The undersigned signatory hereby certifies that he has read and understands
the Investment Agreement, and the representations made by the undersigned in
this Investment Agreement are true and accurate, and agrees to be bound by
its terms.
DUTCHESS PRIVATE EQUITIES FUND, LTD.
By: /s/Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxx, Director
ON THE GO HEALTHCARE, INC.
By: /s/Xxxxxx Xxxx
------------------------------------
Xxxxxx Xxxx, CEO
25
LIST OF EXHIBITS
EXHIBIT A Registration Rights Agreement
EXHIBIT B Opinion of Company's Counsel
EXHIBIT C Put Notice
EXHIBIT D Put Settlement Sheet
LIST OF SCHEDULES
Schedule 4(a) Subsidiaries
________________________________________
EXHIBIT A
________________________________________
EXHIBIT B
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Date: __________
[TRANSFER AGENT]
Re: On The Go Healthcare, Inc.
Ladies and Gentlemen:
We are counsel to On The Go Healthcare, Inc., a Delaware corporation
(the "Company"), and have represented the Company in connection with
that certain Investment Agreement (the "Investment Agreement") entered
into by and among the Company and _________________________ (the
"Investor") pursuant to which the Company has agreed to issue to
the Investor shares of the Company's common stock, $.0001 par value
per share (the "Common Stock") on the terms and conditions set forth
in the Investment Agreement. Pursuant to the Investment Agreement, the
Company also has entered into a Registration Rights Agreement with the
Investor (the "Registration Rights Agreement") pursuant to which the
Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement),
including the shares of Common Stock issued or issuable under
the Investment Agreement under the Securities Act of 1933, as
amended (the "1933 Act"). In connection with the Company's obligations
under the Registration Rights Agreement, on ____________ ___, 2006,
the Company filed a Registration Statement on Form S- ___
(File No. 333-________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the
Registrable Securities which names the Investor as a selling
shareholder thereunder.
In connection with the foregoing, we advise you that [a member of
the SEC's staff has advised us by telephone that the SEC has entered
an order declaring the Registration Statement effective] [the
Registration Statement has become effective] under the 1933 Act
at [enter the time of effectiveness] on [enter the date of
effectiveness] and to the best of our knowledge, after telephonic
inquiry of a member of the SEC's staff, no stop order suspending
its effectiveness has been issued and no proceedings for that
purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933
Act pursuant to the Registration Statement.
Very truly yours,
[Company Counsel]
________________________________________
EXHIBIT C
Date:
RE: Put Notice Number __
Dear Xx. Xxxxxxxx,
This is to inform you that as of today, On The Go Healthcare, Inc., a
Delaware corporation (the "Company"), hereby elects to exercise its right
pursuant to the Investment Agreement to require Dutchess Private Equities
Fund, Ltd to purchase shares of its common stock. The Company hereby
certifies that:
The amount of this put is $__________.
The Pricing Period runs from ________ until _______.
The current number of shares issued and outstanding as of the Company are:
________________________________________
The number of shares currently available for issuance on the SB-2 for the
Equity Line are:
_________________________
Regards,
________________________________________
_____________
Xxxxxx Xxxx, CEO
On The Go Healthcare, Inc.
________________________________________
EXHIBIT D
PUT SETTLEMENT SHEET
Date:
Dear Xx. Xxxx,
Pursuant to the Put given by On The Go Healthcare, Inc. to Dutchess Private
Equities Fund, Ltd. on _________________ 200_, we are now submitting the
amount of common shares for you to issue to Dutchess.
Please have a certificate bearing no restrictive legend totaling __________
shares issued to Dutchess Private Equities Fund, Ltd immediately and send via
DWAC to the following account:
XXXXXX
If not DWAC eligible, please send FedEx Priority Overnight to:
XXXXXX
Once these shares are received by us, we will have the funds wired to the
Company.
Regards,
Xxxxxxx X. Xxxxxxxx
DATE. . . . . . . . . . . . . . . . . . . . . PRICE
Date of Day 1 . . . . . . . . . . . . . . . . Closing Bid of Day 1
Date of Day 2 . . . . . . . . . . . . . . . . Closing Bid of Day 2
Date of Day 3 . . . . . . . . . . . . . . . . Closing Bid of Day 3
Date of Day 4 . . . . . . . . . . . . . . . . Closing Bid of Day 4
Date of Day 5 . . . . . . . . . . . . . . . . Closing Bid of Day 5
LOWEST 1 (ONE) CLOSING BID IN PRICING PERIOD
------------
PUT AMOUNT
------------
AMOUNT WIRED TO COMPANY
------------
PURCHASE PRICE (94)% (NINETY-FOUR PERCENT))
------------
AMOUNT OF SHARES DUE
------------
The undersigned has completed this Put as of this ___th day of _________, 200_.
ON THE GO HEALTHCARE, INC.
______________________________
Xxxxxx Xxxx, CEO
________________________________________
SCHEDULE 4(c) CAPITALIZATION
________________________________________
SCHEDULE 4(e) CONFLICTS
________________________________________
SCHEDULE 4(g) MATERIAL CHANGES
________________________________________
SCHEDULE 4(h) LITIGATION
________________________________________
SCHEDULE 4(l) INTELLECTUAL PROPERTY
________________________________________
SCHEDULE 4(n) LIENS
________________________________________
SCHEDULE 4(t) CERTAIN TRANSACTIONS
