SECURITIES PURCHASE AGREEMENT
Exhibit
4.1
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of May 27, 2008, among SulphCo, Inc., a Nevada corporation (the
“Company”),
and
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser”
and
collectively the “Purchasers”);
and
WHEREAS,
the Company desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company shares of Common
Stock on the Closing Date;
WHEREAS,
the offer and sale of the shares of Common Stock hereunder have been registered
by the Company in the Registration Statement, which has been declared effective
by order of the Commission under the Securities Act; and
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, and intending to be legally bound, the Company and
each
Purchaser agrees 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 indicated in this Section
1.1:
“Action”
shall
have the meaning ascribed to such term in Section 3.1(i).
“AMEX”
means
the American Stock Exchange.
“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 144.
“Board
of Directors”
shall
have the meaning ascribed to such term in Section 2.2(a).
“Business
Day”
means
any day except Saturday, Sunday and any day that shall be a legal holiday or
a
day on which banking institutions in the State of New York generally are
authorized or required by law or other government actions to close.
“Closing”
means
the closing of the purchase and sale of the Shares pursuant to Section
2.1.
“Closing
Date”
means
the second Business Day after AMEX has given written notice to the Company
that
the Shares have been approved for listing on AMEX, or such later date as is
mutually acceptable to the parties.
“Commission”
means
the U.S. Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, $0.001 par
value
per share, and any securities into which such common stock may hereafter be
reclassified.
“Common
Stock Equivalents”
means
any securities of the Company which would entitle the holder thereof to acquire
at any time Common Stock, including without limitation, any debt, preferred
stock, rights, options, warrants or other instrument that is at any time
convertible into or exchangeable for, or otherwise entitles the holder thereof
to receive, Common Stock.
“Company
Counsel”
means
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxx Xxxxx Xxxxx LLP.
“Disclosure
Schedules”
means
the Disclosure Schedules of the Company delivered concurrently herewith.
“Escrow
Agent”
shall
have the meaning ascribed to such term in Section 2.1.
“Escrow
Agreement”
shall
have the meaning ascribed to such term in Section 2.1.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“GAAP”
shall
have the meaning ascribed to such term in Section 3.1(g).
“Intellectual
Property Rights”
shall
have the meaning ascribed to such term in Section 3.1(n).
“Liens”
means
a
lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction.
“Material
Adverse Effect”
shall
mean (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 financial condition of the Company,
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; provided, that none of the following alone shall be deemed, in and
of
itself, to constitute a Material Adverse Effect: (i) a change in the market
price or trading volume of the Common Stock or (ii) changes in general economic
conditions or changes affecting the industry in which the Company operates
generally (as opposed to Company-specific changes) so long as such changes
do
not have a disproportionate effect on the Company.
“Material
Permits”
shall
have the meaning ascribed to such term in Section 3.1(l).
“Per
Share Purchase Price”
means
$3.20, 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 and prior to the Closing Date.
“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.
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“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus
Supplement”
means
the prospectus supplement to be filed with the Commission pursuant to Rule
424
under the Securities Act relating to the offer and sale of the Shares as listed
in the form of prospectus included in the Registration Statement.
“Purchaser
Representative”
means
________________.
“Recent
Reports”
shall
have the meaning ascribed to such term in Section 3.1(h).
“Registration
Statement”
means
the registration statement filed with the Commission on Form S-3 (File No.
333-145460) under the Securities Act and the rules and regulations of the
Commission thereunder, declared effective as of September 4, 2007, and such
amendments to such registration statement as have been filed as of the date
of
this Agreement, the exhibits and any schedules thereto, the documents
incorporated by reference therein and the documents and information otherwise
deemed to be a part thereof or included therein, including the Prospectus
Supplement and any post-effective amendment.
“Required
Approvals”
shall
have the meaning ascribed to such term in Section 3.1(d).
“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(g).
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Secretary’s
Certificate”
shall
have the meaning ascribed to such term in Section 2.2(a).
“Shares”
means
the shares of Common Stock issued or issuable to each Purchaser pursuant to
this
Agreement.
“Subscription
Amount”
means,
as to each Purchaser, the amount set forth below such Purchaser’s signature
block on the signature page hereto, in United States dollars and in immediately
available funds.
“Subscription
Amounts”
means
the total of each Subscription Amount from all Purchasers.
“Trading
Day”
means
a
day on which the Common Stock is traded on a Trading Market.
“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 New York
Stock Exchange, the Nasdaq Global Market or the Nasdaq Capital
Market.
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“Transaction
Documents”
means
this Agreement, the Escrow Agreement and any other documents or agreements
executed in connection with the transaction contemplated hereunder.
“Transfer
Agent”
means
the Company’s transfer agent, Integrity Stock Transfer.
ARTICLE
II.
PURCHASE
AND SALE
2.1 Closing.On
the
Closing Date, each Purchaser shall purchase from the Company, severally and
not
jointly with the other Purchasers, and the Company shall issue and sell to
each
Purchaser, the number of Shares set forth on Schedule 2.1
under
the caption “Shares of Common Stock Purchased” with respect to such Purchaser.
The aggregate number of Shares sold hereunder shall be 6,818,750. Prior
to
the Closing, the Subscription Amount payable by each Purchaser in the Closing,
together with all other closing deliverables available, shall be placed in
escrow pending the Closing pursuant to a closing escrow agreement among the
Company, the Purchaser Representative and the Transfer Agent (the latter serving
as the “Escrow
Agent”),
in
substantially the form of Exhibit
A
hereto
(the “Escrow
Agreement”).
Upon
satisfaction of the conditions to the obligations of the Purchasers set forth
in
Section 2.2(a)
and the
conditions to the obligations of the Company set forth in Section 2.2(b),
the
Closing shall occur on the Closing Date at the New York offices of Company
Counsel or such other location as the parties shall mutually agree.
2.2 Closing
Conditions; Deliveries.
(a) The
obligations of each Purchaser to purchase the Shares and to pay the Subscription
Amount therefor are subject to the satisfaction, or waiver by the Purchaser
Representative, of each of the following conditions:
(i) AMEX
shall have notified the Company in writing of its approval of the Company’s
additional listing application providing for listing of the Shares.
(ii) All
representations and warranties of the Company contained herein shall remain
true
and correct as of the Closing Date and all covenants of the Company shall have
been performed if due prior to such date.
(iii) There
shall have been delivered by wire transfer to the Escrow Agent, to the account
set forth on Exhibit
A
hereto,
Subscription Amounts in cash of at least $15,000,000.
(iv) The
Company shall deliver or cause to be delivered to each Purchaser the following
(each document to be reasonably satisfactory in form and substance to the
Purchaser Representative and to counsel for the Purchaser
Representative):
(A) this
Agreement duly executed by the Company;
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(B) a
copy
of, and written acknowledgement of receipt by the Transfer Agent of, irrevocable
instructions duly signed by an authorized signatory of the Company addressed
to
the Transfer Agent instructing the Transfer Agent to (i) deliver, on an
expedited basis and no later than the third Trading Day after the Closing Date,
one or more certificates evidencing the aggregate number of shares of Common
Stock duly authorized, issued, fully paid and non-assessable, or (ii)
instructing the Transfer Agent to issue electronic shares via the DWAC system
of
the Depository Trust Company duly authorized, issued, fully paid and
non-assessable, if so requested by such Purchaser, in each case equal to such
Purchaser’s Subscription Amount divided by the Per Share Purchase Price,
registered in the name of such Purchaser;
(C) A
legal
opinion of Company Counsel, dated as of the Closing Date, covering the matters
and in substantially the form attached hereto as Exhibit C;
(D) A
certificate of the Secretary of the Company (the “Secretary’s
Certificate”),
in
form and substance satisfactory to the Purchaser Representative, certifying
in
his capacity as an officer of the Company as follows:
(1) that
attached to the Secretary’s Certificate is a true and complete copy of the
Certificate of Incorporation of the Company, as amended to the Closing
Date;
(2) that
attached to the Secretary’s Certificate is a true and complete copy of the
Bylaws of the Company, as amended to the Closing Date;
(3) that
attached to the Secretary’s Certificate are true and complete copies of the
resolutions of the Board of Directors of the Company (the “Board
of Directors”)
authorizing the execution, delivery and performance of this Agreement and the
other Transaction Documents, instruments and certificates required to be
executed by it in connection herewith and approving the consummation of the
transactions in the manner contemplated hereby and by the other Transaction
Documents including, but not limited to, the authorization and issuance of
the
Shares; and
(4) the
names
and true signatures of the officers of the Company signing this Agreement and
all other documents executed on behalf of the Company to be delivered in
connection with this Agreement;
(E) A
certificate executed by the chief financial officer of the Company stating
that
the representations and warranties of the Company hereunder are true and correct
as of the Closing Date and that the Company has performed all obligations
required to be performed prior to such date; and
(F) A
certificate of good standing of the Company as of a recent date.
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(b) The
obligations of the Company to issue and sell the Shares to each Purchaser
hereunder are subject to the satisfaction or waiver by the Company of each
of
the following conditions:
(i) The
Company shall have received written notification from AMEX of its approval
of
the Company’s additional listing application providing for listing of the
Shares.
(ii) All
representations and warranties of such Purchaser contained herein shall remain
true and correct as of the Closing Date and all covenants of such Purchaser
shall have been performed if due prior to such date.
(iii) There
shall have been delivered by wire transfer to the Escrow Agent, to the account
set forth on Exhibit
A
hereto,
Subscription Amounts in cash of at least $15,000,000.
(iv) Such
Purchaser shall have delivered or caused to be delivered to the Company this
Agreement duly executed by such Purchaser.
(v) Such
Purchaser shall have delivered or caused to be delivered by wire transfer to
the
Escrow Agent, to the account set forth on Exhibit
B
hereto,
such Purchaser’s Subscription Amount.
Notwithstanding
the foregoing, in the event that the conditions set forth in
Sections 2.2(a)(i)
and
2.2(b)(i)
shall
not be satisfied by the date 15 Business Days after the date of this Agreement,
none of the parties hereto shall be obligated to consummate the transactions
contemplated by this Agreement and any items delivered pursuant to this
Section 2.2
shall be
returned by the Escrow Agent to the appropriate party.
2.3 Optional
Xxxxxxx.Xx
the
event the conditions set forth in Sections 2.2(a)(iii)
and 2.2(b)(iii)
shall
not be satisfied as of the Closing Date, each Purchaser shall have the option
to
proceed with the Closing solely with respect to such Purchaser’s own investment;
provided,
however,
that
all other conditions set forth in Section 2.2
shall
have been satisfied by the Closing Date or waived by the Company or such
Purchaser, as appropriate. Upon such Purchaser’s exercise of such option, such
Purchaser shall be obligated to purchase the Shares and to pay the Subscription
Amount therefor, and the Company shall be obligated to issue and sell Shares
to
such Purchaser. A Purchaser electing to exercise such option shall provide
the
Company with written notice thereof on the Closing Date.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Company.Except
as
set forth in the Disclosure Schedules specified in the items below, which
Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
the
representations and warranties set forth below to each Purchaser as of the
date
hereof and as of the Closing Date:
6
(a) Organization
and Qualification.
The
Company is a corporation 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 of its certificate of incorporation
or bylaws. The Company is duly qualified to conduct business and is in good
standing as a foreign corporation in each jurisdiction in which the nature
of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing,
as
the case may be, would not result in a Material Adverse Effect, and no
Proceeding has been instituted in any such jurisdiction revoking, limiting
or
curtailing or seeking to revoke, limit or curtail such power and authority
or
qualification.
(b) 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 thereunder. No approval by the
Company’s stockholders is required for the consummation of the transactions
contemplated by the Transaction Documents, including the issuance and sale
of
the Shares. 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 in connection therewith other
than
in connection with the Required Approvals (as defined in Section 3.1(d)).
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, will be
a
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, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or
other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
(c) 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 thereby do not and will not (i) conflict with
or
violate any provision of the Company’s certificate of incorporation or bylaws,
(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 assuming the accuracy
of
the representations and warranties of the Purchasers set forth in
Section 3.2
hereof,
federal and state securities laws and regulations), or by which any property
or
asset of the Company is bound or affected, or (iv) conflict with or violate
the
terms of any agreement by which the Company is bound or to 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 would not result in a Material Adverse
Effect.
7
(d) 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 (i) filings required pursuant to
Section 4.2
of this
Agreement, (ii) the filing with the Commission of a prospectus supplement and
Form 8-K, and (iii) application(s) to AMEX for the listing of the Shares for
trading thereon in the time and manner required thereby (collectively, the
“Required
Approvals”).
The
Company has filed, or will file, a prospectus supplement with the Commission
with respect to the offer and sale of the Shares at or before the date such
filing is required by Rule 424 of the rules under the Securities Act, and has
filed or will file an application with AMEX for the listing of the Shares for
trading thereon in the time and manner required by the rules and listing
requirements of AMEX.
(e) Issuance
of the Shares.
The
Shares are authorized and, when issued and paid for in accordance with the
Transaction Documents, will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company other than restrictions
on
transfer provided for in the Transaction Documents.
(f) Capitalization.
The
number of authorized and outstanding shares of capital stock and Common Stock
Equivalents of the Company, before giving effect to the Closing of the
transaction contemplated herein, is as described in the Company’s most recent
periodic report filed with the Commission. The Company has not issued any
capital stock (including, without limitation, any Common Stock Equivalents)
since such filing other than pursuant to the exercise of employee stock options
under the Company’s stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company’s omnibus incentive plan and pursuant to
the conversion or exercise of outstanding Common Stock Equivalents. All of
the
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable. Except as set forth in the SEC Reports, 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. None of the stockholders of the Company possess any preemptive
rights in respect of the Shares.
(g) SEC
Reports; Financial Statements.
The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including, without limitation, pursuant to Section
13(a) or 15(d) thereof and including, without limitation, any registration
statements or prospectuses filed by the Company, during the twenty-four months
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, 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 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 or may be condensed or summary statements, and fairly
present in all material respects the financial position of the Company and
its
consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case
of
unaudited statements, to normal, year-end audit adjustments. There are no
pending internal investigations (including investigations by any committee
of
the Board of Directors) relating to any accounting or internal controls matters,
including without limitation, stock option pricing and grant
procedures.
8
(h) Material
Changes.
Since
December 31, 2007, except as disclosed in the SEC Reports filed since
December 31, 2007 including exhibits thereto filed or incorporated by reference
therein (the “Recent
Reports”),
(i)
there has been no event, occurrence or development that has had or that could
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
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, and (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders.
(i) Litigation.
Except
as set forth in the Recent Reports, there is no action, suit, inquiry, notice
of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against the Company before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an “Action”)
other
than (i) Actions described in the Disclosure Schedules, and (ii) Actions which
did not exist, and were not known to the Company, as of the date of this
Agreement and which (i) adversely affect or challenge the legality, validity
or
enforceability of any of the Transaction Documents or the Shares or (ii) if
there were an unfavorable decision, would result in a Material Adverse
Effect.
(j) Labor
Relations.
The
Company is not party to any collective bargaining agreement or employs any
member of a union. 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
would result in a Material Adverse Effect.
(k) 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), or (ii) in violation of any
order of any court, arbitrator or governmental body, in each case, applicable
to
its business or assets, except in each case as would not have a Material Adverse
Effect.
9
(l) Regulatory
Requirements.
The
Company possesses all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary
to
conduct its business as described in the Recent Reports, except where the
failure to possess such permits would not result in a Material Adverse Effect
(“Material
Permits”),
and
the Company has not received any notice of proceedings relating to the
revocation or modification of any Material Permit. All the Material Permits
have
been duly issued or obtained and are in full force and effect, and the Company
is in material compliance with the terms of all the Material Permits. The
Company has not engaged in any activity that, to its knowledge, would cause
revocation or suspension of any such Material Permits. The Company has no
knowledge of any facts which could reasonably be expected to cause the Company
to believe that the Material Permits will not be renewed by the appropriate
governmental authorities in the ordinary course. Neither the execution, delivery
nor performance of this Agreement shall adversely affect the status of any
of
the Material Permits.
(m) 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 it 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.
(n) Intellectual
Property.
(i) The
Company owns or possesses adequate rights to use all material foreign and
domestic patents, patent rights, trademarks, service marks, trade names, brands
and copyrights (whether or not registered and, if applicable, including pending
applications for registration) owned, used or controlled by the Company
(collectively, the “Intellectual
Property Rights”)
and in
and to each material invention, software, trade secret, technology, product,
composition, formula and method of process used by the Company (the Intellectual
Property Rights and such other items, the “Intellectual
Property”),
and,
to the Company’s knowledge, has the right to use the same, free and clear of any
claim or conflict with the rights of others;
(ii) Except
as
set forth in the SEC Filings, there have been no claims made against the Company
asserting the invalidity, abuse, misuse, or unenforceability of any of the
Intellectual Property, and, to its knowledge, there are no reasonable grounds
for any such claims;
(iii) Except
as
set forth in the SEC Filings, the Company has not made any claim of any
violation or infringement by others of its rights in the Intellectual Property,
and to the best of the Company’s knowledge, no reasonable grounds for such
claims exist; and
10
(iv) Except
as
set forth in the SEC Filings, the Company has not received notice that it is
in
conflict with or infringing upon the asserted rights of others in connection
with the Intellectual Property.
(o) 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.
(p) Transactions
With Affiliates and Employees.
Except
as set forth in the Recent 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, in each case and in the aggregate in excess of $100,000, 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 or other stock incentive agreements
under any stock option or incentive plan of the Company.
(q) Xxxxxxxx-Xxxxx;
Internal Accounting Controls.
The
Company is in material compliance with all provisions of the Xxxxxxxx-Xxxxx
Act
of 2002 which are applicable to it 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
designed such disclosure controls and procedures to ensure that material
information relating to the Company is made known to the
individuals responsible for the timely and accurate preparation of the Company’s
filings with the Commission and other public disclosure documents.
(r) Certain
Fees.
Except
as set forth on Schedule
3.1(r),
no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. Each Purchaser shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Purchasers or other Persons for fees of a type contemplated in this
Section 3.1(r)
that may
be due from the Company in connection with the transactions contemplated by
this
Agreement.
(s) Investment
Company.
The
Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Shares, will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not become
subject to the Investment Company Act.
11
(t) Listing
and Maintenance Requirements.
The
Company’s Common Stock is registered pursuant to Section 12(b) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any notification
that
the Commission is contemplating terminating such registration. The Company
has
not, in the 12 months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to
the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market.
(u) Form
S-3 Eligibility.
The
Company is eligible to register the offer and sale of the Shares to the
Purchasers under Form S-3 promulgated under the Securities Act. The offer and
sale of the Shares have been registered under, and are entitled to the benefits
of, the Registration Statement, and the Shares are not restricted securities
pursuant to the Securities Act.
(v) Taxes.
Except
for matters that would not, individually or in the aggregate, would result
in a
Material Adverse Effect, the Company has filed all necessary federal, state
and
foreign income and franchise tax returns and has paid or accrued all taxes
shown
as due thereon, and the Company has no knowledge of a tax deficiency which
has
been asserted or threatened against the Company.
The
Purchasers each acknowledge and agree that the Company does not make or has
not
made any representations or warranties with respect to the transactions
contemplated hereby other than those set forth in this Agreement and in the
other Transaction Documents.
(a) Organization;
Authority.
Such
Purchaser (if other than a natural person) is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate, partnership or limited liability
company power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of the Transaction Documents
to which such Purchaser is a party and performance by such Purchaser of the
transactions contemplated thereby have been duly authorized by all necessary
corporate or similar action on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and
when delivered by such Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except (i) as limited
by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be
limited by applicable law.
12
(b) Investment
Intent.
Such
Purchaser is acquiring the Shares as principal for its own account for
investment purposes only and not with a view to or for distributing or reselling
such Shares or any part thereof, has no present intention of distributing any
of
such Shares and has no arrangement or understanding with any other persons
regarding the distribution of such Shares (this representation and warranty
not
limiting such Purchaser’s right to sell the Shares in compliance with the terms
of the Shares and applicable federal and state securities laws at any time).
Such Purchaser is acquiring the Shares hereunder in the ordinary course of
its
business. Such Purchaser does not have any agreement or understanding, directly
or indirectly, with any Person to distribute any of the Shares.
(c) Compliance.
Such
Purchaser has complied with all applicable federal securities laws and
regulations, including without limitation, Regulation M, in connection with
the
transactions contemplated by this Agreement.
(d) Receipt
of Registration Statement.
Such
Purchaser acknowledges that it has received the Company’s prospectus supplement
dated April 30, 2008 relating to the issuance and sale by the Company of the
securities described therein in one of more offerings up to a total dollar
amount of proceeds of $150,000,000, as filed in the Registration
Statement.
(e) Information.
All
materials relating to the business, financial condition, management and
operations of the Company and materials relating to the offer and sale of the
Shares which have been requested by such Purchaser have been made available
to
such Purchaser or its advisors. Such Purchaser and its advisors have been
afforded the opportunity to ask questions of representatives of the Company.
Such Purchaser has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to
its
acquisition of the Shares and understands that it (and not the Company) shall
be
responsible for its own tax liabilities that may arise as a result of this
investment or the transactions contemplated by this Agreement.
The
Company acknowledges and agrees that each Purchaser does not make or has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those set forth in this Section 3.2.
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions. Subject to compliance with state and federal securities laws,
the Purchasers shall be entitled to assign and transfer, without any prior
consent and without restriction, any portion or all of the Shares and the rights
thereto.
13
4.2 Securities
Laws Disclosure; Publicity. The Company shall (i) as soon as practicable
upon receipt of each Purchaser’s signatures, but not later than 9:30 a.m. (New
York time) on May 28, 2008, and (ii) not later than two Business Days following
the Closing Date, issue press releases, and (iii) within four Business Days
following the Closing Date, file a Current Report on Form 8-K, in each case
reasonably acceptable to the Purchaser Representative, disclosing the material
terms of the transactions contemplated hereby. The Company shall, not later
than
9:30 a.m. (New York time) on the day following the day that the Company receives
written notification from AMEX of its approval of the Company’s additional
listing application providing for listing of the Shares, issue a press release
disclosing such approval. The Company and the Purchaser Representative shall
consult with each other in issuing any press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser
shall issue any such press release or otherwise make any such public statement
without the prior consent of the Company, with respect to any press release
of
any Purchaser, or without the prior consent of the Purchaser Representative,
with respect to any press release of the Company, which consent shall not
unreasonably be withheld or delayed, except if such disclosure is required
by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication. Notwithstanding
the
foregoing, following the date of this Agreement and following the Closing Date,
the Company may file Current Reports on Form 8-K with the SEC describing the
terms of the transactions contemplated by the Transaction Documents and the
occurrence of the execution of this Agreement and the Closing of the
transactions contemplated herein, respectively, and including as exhibits to
such Forms 8-K this Agreement (including the schedules hereto and the names
and
addresses of the Purchasers), in the form required by the Exchange Act and
Regulation FD promulgated thereunder; further,
each
Purchaser acknowledges that the Company may choose to delay filing of such
exhibits until the filing of its Quarterly Report on Form 10-Q for the quarter
in which such documents are executed, and that such exhibits to such Forms
8-K
or 10-Q may be incorporated by reference into subsequent filings of the Company
with the Commission. Except as herein provided or with the prior written consent
of such Purchaser, the Company shall not publicly disclose the name of any
Purchaser, or include the name of any Purchaser in any press release, the
non-Exhibit sections of any filing with the Commission or any regulatory agency
or Trading Market, except to the extent such disclosure is required by law
or
Trading Market regulations.
4.3 Non-Public
Information. The Company represents and warrants to each Purchaser that
neither it nor any other Person acting on its behalf has provided the Purchaser
or its agents or counsel with any information that constitutes material
non-public information. The Company covenants and agrees that neither it nor
any
other Person acting on its behalf will provide any Purchaser or its agents
or
counsel with any information that constitutes material non-public information,
unless prior thereto such Purchaser shall have executed a written agreement
regarding the confidentiality and use of such information. The Company
understands and confirms that each Purchaser shall be relying on the foregoing
representation and covenant in effecting transactions in securities of the
Company. Nothing in this Section 4.3
limits
Purchasers’ rights with respect to the representations and warranties set forth
in Section 3.1.
4.4 Use
of
Proceeds. The Company shall use the net proceeds from the sale of the Shares
for general corporate purposes and working capital.
4.5 Reservation
of Common Stock. As of the date hereof, the Company has reserved, and the
Company shall continue to reserve and keep available at all times, a sufficient
number of shares of Common Stock for the purpose of enabling the Company to
issue the Shares pursuant to this Agreement.
14
4.6 Listing
of Common Stock. The Company hereby agrees to use reasonable best efforts to
maintain the listing of the Common Stock on a Trading Market, and, to the extent
that the Common Stock is so listed, to use its best efforts to list all of
the
Shares on such Trading Market. The Company further agrees, if the Company
applies to have the Common Stock traded on any other Trading Market, it will
include in such application all of the Shares, and will take such other action
as is necessary to cause all of the Shares to be listed on such other Trading
Market as promptly as possible. The Company will take all action reasonably
necessary to continue the listing and trading of its Common Stock on a Trading
Market and will comply in all respects with the Company’s reporting, filing and
other obligations under the bylaws or rules of the Trading Market.
4.7 Additional
Covenants.
(a) The
Company shall timely prepare and file such applications, consents to service
of
process (but not including a general consent to service of process) and similar
documents and take such other steps and perform such further acts as shall
be
required by the securities law requirements of each jurisdiction where a
Purchaser resides, as indicated on the signature pages hereto, with respect
to
the sale of the Shares under this Agreement.
(b) From
the
date of this Agreement until the Closing Date, the Company (1) shall conduct
its
business in all material respects in the ordinary course, consistent with its
past practices, and (2) shall not issue, sell, or agree to issue or sell, any
Common Stock or Common Stock Equivalents, other than (A) the grant of options
or
other stock incentive awards to employees, consultants and directors pursuant
to
the Company’s equity incentive plans, or (B) the issuance of shares of Common
Stock upon the exercise or conversion of Common Stock Equivalents that are
outstanding on the date hereof.
ARTICLE
V.
MISCELLANEOUS
5.1 Fees
and Expenses. Except as otherwise set forth in this Agreement, each party
shall pay the fees and expenses of its advisors, counsel, 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;
provided, however, upon the Closing of the transactions contemplated by this
Agreement; the Company shall reimburse the Purchaser Representative for its
reasonable legal fees and expenses, up to $10,000. Such fees and expenses shall
be reimbursed only if a Closing is completed for the transactions contemplated
by this Agreement. Such fees and expenses, may, at the election of the Company,
be paid out of the funds due from the Purchasers at the Closing.
5.2 Entire
Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.
15
5.3 Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) one Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number set forth on the signature pages attached hereto prior to 5:00 p.m.
(New
York time) on a Trading Day, (b) two Trading Days after the date of
transmission, if such notice or communication is delivered via facsimile at
the
facsimile number set forth on the signature pages attached hereto on a day
that
is not a Trading Day or later than 5:00 p.m. (New York time) on any Trading
Day,
(c) the fourth Trading Day following the date of shipment, if sent by
internationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto. The Company shall, concurrently with providing any notice in the manner
set forth in the preceding two sentences, transmit a copy of such notice (which
copy shall not, by itself, be deemed to constitute notice hereunder) by email
to
such email address as is set forth on the signature pages attached hereto).
5.4 Amendments;
Waivers. No provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the Company and
Purchasers holding a majority of the Shares or, in the case of a waiver, by
the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of
any subsequent default or a waiver of any other provision, condition or
requirement hereof.
5.5 Construction.
The headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
5.6 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties and their successors and permitted assigns. The Company may
not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of each Purchaser. Any Purchaser may assign any or all of its
rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Shares, to the extent of the transferability of such Shares,
provided such transferee agrees in writing to be bound, with respect to the
transferred Shares, by the provisions hereof that apply to the
“Purchasers”.
5.7 No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is
not
for the benefit of, nor may any provision hereof be enforced by, any other
Person.
5.8 Further
Assurances. Each party agrees to cooperate fully with the other parties and
to execute such further instruments, documents and agreements and to give such
further written assurances as may be reasonably requested by any other party
to
better evidence and reflect the transactions described herein and contemplated
hereby and to carry into effect the intents and purposes of this Agreement,
and
further agrees to take promptly, or cause to be taken, all actions, and to
do
promptly, or cause to be done, all things necessary, proper or advisable under
applicable law to consummate and make effective the transactions contemplated
hereby, to obtain all necessary waivers, consents and approvals, to effect
all
necessary registrations and filings, and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and make
effective the transactions contemplated by this Agreement for the purpose of
securing to the parties hereto the benefits contemplated by this
Agreement.
16
5.9 Governing
Law. All questions concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in New York, New York, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding
is
improper or inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
(provided that for deliveries to addresses outside of the United States, such
copy shall be delivered to such address by internationally recognized overnight
courier) and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
To the extent permitted by the law applicable to the court in which claims
hereunder may be adjudicated, each of the parties hereby waives all rights
to a
trial by jury. If any party shall commence an action or proceeding to enforce
any provisions of the Transaction Documents, then the prevailing party in such
action or proceeding shall be reimbursed by the non-prevailing party for its
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
5.10 Survival.
The representations and warranties herein shall not survive the Closing and
delivery of the Shares.
5.11 Execution.
This Agreement may be executed in two or more counterparts, all of which when
taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
5.12 Severability.
If any provision of this Agreement is held to be invalid or unenforceable in
any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
17
5.13 Replacement
of Shares. If any certificate or instrument evidencing any Shares is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation thereof, or in
lieu of and substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested.
The
applicants for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs associated with the issuance of such
replacement Shares.
5.14 Remedies.
In addition to being entitled to exercise all rights provided herein or granted
by law, including recovery of damages, each of the Purchasers and the Company
will be entitled to specific performance under the Transaction Documents. The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation the defense that a remedy at law would be
adequate.
5.15 Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in
any
way for the performance of the obligations of any other Purchaser under any
Transaction Document. Nothing contained herein or in any Transaction Document,
and no action taken by any Purchaser pursuant thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture
or
any other kind of entity, or create a presumption that the Purchasers are in
any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Document. Each Purchaser shall
be
entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser
to
be joined as an additional party in any proceeding for such purpose. Each
Purchaser has been represented by its own separate legal counsel in their review
and negotiation of the Transaction Documents.
5.16 Appointment
of Purchaser Representative. For reasons of administrative convenience, the
Purchasers appoint _________________. to act as the Purchaser Representative.
In
connection with the transactions contemplated by this Agreement, each Purchaser
expressly authorizes the Purchaser Representative to execute the Escrow
Agreement on such Purchaser’s behalf.
(Signature
Page Follows)
18
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
SULPHCO,
INC.
|
|
Address
for Notice:
|
||
0000
X. Xxx Xxxxxxx Xxxx X.
|
||||
Xxxxx
000
|
||||
By:
|
Xxxxxxx,
XX 00000
|
|||
Name:
|
Xxxxxxx
X. Xxxxxx
|
Telephone:
(000) 000-0000
|
||
Title:
|
Vice President and Chief Financial
Officer
|
Fax:
(000) 000-0000
|
||
With
a copy to (which shall not constitute notice):
|
||||
Xxxxxx
X. Xxxxxx, Esq.
|
||||
Xxxxxxxxxxx
& Xxxxxxxx Xxxxxxx Xxxxx Xxxxx LLP
|
||||
000
Xxxxxxxxx Xxxxxx
|
||||
Xxx
Xxxx, XX 00000
|
REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
(Signature
Pages for Purchasers Follow)
19
PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
Name
of
Investing Entity: _______________________________
Signature
of Authorized Signatory of Investing Entity:
__________________________________
Name
of
Authorized Signatory:
____________________________________________________
Title
of
Authorized Signatory:
_____________________________________________________
Email
Address of Authorized
Entity:________________________________________________
Address
for Notice of Investing Entity:
_________________________________
_________________________________
_________________________________
_________________________________
Address
for Delivery of Securities for Investing Entity (if not same as
above):
_________________________________
_________________________________
_________________________________
_________________________________
Subscription
Amount: $__________________
Shares:
________________
[___________________
Signature Page to SulphCo, Inc. Securities Purchase Agreement]
20
Exhibit
4.1
SCHEDULE
2.1
LIST
OF PURCHASERS
Name
of Purchaser
|
Shares
of
Common
Stock
Purchased
|
|
|
||
|
||
Total:
|
SCHEDULE
3.1
DISCLOSURE
SCHEDULES
Schedule
3.1(r).
Certain
Fees.
The
Company has agreed to pay to Olympus Securities, LLC a fee in cash with respect
to the transactions contemplated by this Agreement. Such fee is based upon
the
gross proceeds of the transactions contemplated by this Agreement.
EXHIBIT
A
FORM
OF ESCROW AGREEMENT
EXHIBIT
B
ESCROW
AGENT INFORMATION
EXHIBIT
C
FORMS
OF LEGAL OPINIONS FROM COMPANY COUNSEL
Opinions
of counsel for the Company to be delivered pursuant to Section 2.2(a)(iv)(C)
of the
Agreement. Capitalized terms herein shall, unless the context indicates
otherwise, have the same meanings as in the Agreement. Any reference in one
section hereof to another section or a schedule attached to the Agreement shall
be deemed to incorporate the matters addressed in such referenced section or
schedule. To be provided with reference to such assumptions and qualifications
that are customary in opinion letters of this kind:
1. The
Company is a corporation validly existing and in good standing under the laws
of
the State of Nevada. The Company has the corporate power required to conduct
its
business as described in the Recent Reports.
2. The
Company has taken all corporate action necessary to authorize the execution,
delivery and performance by the Company of the Transaction
Documents.
3. The
execution and delivery by the Company of the Transaction Documents, and the
performance by the Company of its obligations under the Transaction Documents,
do not violate the Company’s certificate of incorporation or bylaws. The
execution and delivery by the Company of the Transaction Documents, and the
performance by the Company of its obligations under the Transaction Documents,
do not violate the Covered Laws (to be identified in the opinion)
4. Each
of
the Transaction Documents is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
5. The
Shares are duly authorized and, when issued and sold in accordance with the
Agreement, the Shares will be validly issued, fully paid and nonassessable.
6. The
Registration Statement has become effective under the Securities Act. Any
required filing of the Prospectus Supplement pursuant to Rule 424(b) has been
made in accordance with Rule 424(b). To our knowledge, without investigation,
no
stop order suspending the effectiveness of the Registration Statement has been
issued under the Securities Act and no proceedings for that purpose have been
initiated or threatened by the Commission.
7. The
Registration Statement and the Prospectus, as of their respective effective
or
issue dates (other than the financial statements and related notes and schedules
and other financial, accounting, and statistical information included therein
or
omitted therefrom, as to which we express no opinion), complied as to form
in
all material respects with the requirements of the Securities Act and the
regulations under the Securities Act.