STOCK PURCHASE AGREEMENT
STOCK
PURCHASE AGREEMENT (this “Agreement”),
dated
as of _____, 2007, by and between (i) Southridge Technology Group, Inc., a
Delaware corporation (“Pubco”)
that
will acquire all of the issued and outstanding capital stock of RxElite Holdings
Inc., a Delaware corporation (“RxElite”),
and
succeed to the business of RxElite as its sole line of business (on a combined,
post-acquisition basis, Pubco and its subsidiary, RxElite, are collectively
referred to as “Seller”)
and
(ii) the investors listed on Exhibit
A
hereto
(the “Buyers”).
WITNESSETH:
WHEREAS,
Seller desires to sell to the Buyers the shares of Seller’s common stock (the
“Common
Stock”)
and
warrants to purchase common stock (the “Warrants”
and
together with the Common Stock, the “Securities”)
listed
next to each Buyer’s name on Exhibit
A
hereto;
and
WHEREAS,
Seller has agreed to effect the registration of the shares of Common Stock
referred to above and the shares of Common Stock underlying the Warrants (the
“Underlying
Shares”)
subject to and on the terms and conditions set forth in an amended and restated
registration rights agreement substantially in the form of Exhibit
B
hereto
(the “Registration
Rights Agreement”
and
together with this Agreement and the Warrants, the “Transaction
Documents”).
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, the parties agree as
follows:
1. Sale
and Purchase of the Common Stock and Warrants.
1.1 Sale
and Purchase.
Subject
to the terms and conditions of this Agreement, at the Closing (as defined in
Section 2 hereof), Seller shall issue to each Buyer, and each Buyer shall
purchase from Seller, for the Purchase Price per share (as defined in Section
1.2(a) hereof), the shares of Common Stock and the Warrants listed next to
each
Buyer’s name on Exhibit
A.
1.2 Purchase
Price and Payment.
(a) Purchase
Price.
The
purchase price per .090606 of one share of Common Stock and for one-half Warrant
to purchase .090606 of one share shall be US$6.62 (the “Purchase
Price”).
Each
Warrant shall be exercisable for two years following the date Pubco amends
its
certificate of incorporation in order to, among other things, increase its
authorized capital to allow for full exercise of all Warrants, at an exercise
price of US$9.38 per share, and shall be in the form of Exhibit
C
hereto.
(b) Payment
of Purchase Price.
Upon
the execution of this Agreement, the Purchase Price for the Securities shall
be
delivered by the Buyers via federal funds wire transfer(s) of immediately
available funds, in accordance with written instructions on Exhibit
D.
All
funds received in connection with any purchase of Securities hereunder shall
be
deposited in a separate escrow account held by Signature Bank (the “Escrow
Agent”)
pursuant to the terms hereof and of that certain Escrow Agreement, by and among
RxElite, the Investor Representative and the Escrow Agent (the “Escrow
Agreement”).
2. Closing.
(a) The
closing of the sale and purchase of the Securities hereunder (the “Closing”)
shall
be deemed to take place at the offices of Seller, at 4:00 p.m., local time,
on
the date hereof, or at such later time or date as the Buyers and Seller may
mutually agree in writing. The date upon which the Closing shall occur is herein
called the “Closing
Date”.
(b)
The Closing shall not take place until such time as the Buyers have agreed
to
purchase Securities for an aggregate Purchase Price of $3,500,000 or more.
(c)
During a period of 90 calendar days after the Closing, Seller may hold one
or
more additional Closings with respect to Buyers who desire to purchase
Securities on the terms set forth in this Agreement and such Buyers shall become
parties to this Agreement on the date of such subsequent Closing, provided,
however, that (i) nothing herein shall be implied to require Seller to sell
Securities to such prospective Buyers and (ii) the representations and
warranties made herein by Seller shall be made only as of the initial Closing
Date.
3. Representations
and Warranties of Seller.
Except
as set forth on the disclosure schedules delivered to Buyers herewith (the
“Disclosure
Schedules”)
or in
the Jumbo 8-K (as defined below) delivered to Buyers contemplated in
Section 4.4 hereof or the Capitalization Table provided herewith, Seller
hereby represents and warrants to the Buyers as follows:
3.1 Subsidiaries.
RxElite
has no direct or indirect subsidiaries, other than Cendian Pharmaceuticals
Ltd.,
an inactive Canadian corporation which is in the process of being
administratively dissolved. RxElite owns all of the capital stock of the
foregoing subsidiary.
3.2 Organization
and Qualification.
Each of
Pubco and RxElite is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of its state of organization,
with
the requisite power and authority to own and use its properties and assets
and
to carry on its business as currently conducted. Neither Pubco nor RxElite
is in
violation or default of any of the provisions of its articles or certificate
of
incorporation or bylaws. Each of Pubco and RxElite 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, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality, validity or enforceability
of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets or business of Pubco or RxElite, or (iii) a material adverse
effect on Pubco or RxElite’s ability to perform in any material respect on a
timely basis its obligations under any Transaction Document (any of (i), (ii)
or
(iii), a “Material
Adverse Effect”)
and to
Seller’s Knowledge, no legal 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. “Seller’s
Knowledge”
and
“Knowledge
Of Seller”
shall
mean the actual knowledge of Seller’s executive officers after reasonable
inquiry.
3.3 Authorization;
Enforcement.
Seller
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. The execution and delivery of each
of
the Transaction Documents by Seller and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of Seller and no further action is required by Seller, its
board of directors or its stockholders in connection therewith. Each Transaction
Document has been (or upon delivery will have been) duly executed by Seller
and,
when delivered in accordance with the terms thereof, will constitute the valid
and binding obligation of Seller enforceable against Seller 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.
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3.4 No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by Seller
and
the consummation by Seller of the other transactions contemplated hereby and
thereby do not and will not: (i) conflict with or violate any provision of
Seller’s articles or certificate of incorporation or bylaws, or (ii) conflict
with, or constitute a default (or an event that with notice or lapse of time
or
both would become a default) under, result in the creation of any lien upon
any
of the properties or assets of Seller, 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 Seller debt or otherwise) or other understanding to
which Seller is a party or by which any property or asset of Seller is bound
or
affected, or (iii) to Seller’s Knowledge, 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 Seller is subject
(including federal and state securities laws and regulations), or by which
any
property or asset of Seller is bound or affected; except in the case of each
of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.
3.5 Filings,
Consents and Approvals.
Seller
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 Seller of the
Transaction Documents, other than filings in compliance with U.S. federal and
state securities laws and Canadian securities laws.
3.6 Issuance
of the Securities.
The
Securities are duly authorized and, when issued and paid for in accordance
with
the applicable Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all liens imposed by Seller other
than
restrictions provided for in the Transaction Documents. The Underlying Shares,
when issued in accordance with the terms of the Transaction Documents, will
be
validly issued, fully paid and nonassessable, free and clear of all liens
imposed by Seller other than restrictions provided for in the Transaction
Documents. Seller has reserved from its duly authorized capital stock a number
of shares of Common Stock sufficient for the Warrants to be exercised in
full.
3.7 Capitalization.
The
capitalization of Pubco and RxElite is as set forth in the Jumbo
8-K.
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3.8 Financial
Statements.
The
audited financial statements of RxElite as of December 31, 2006 are as set
forth
in the Jumbo 8-K. 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 fairly present in all material respects the financial position
of
Seller as of and for the dates thereof and the results of operations and cash
flows for the periods then ended.
3.9 Material
Changes.
Since
December 31, 2006, (i) there has been no event, occurrence or development that
has had a Material Adverse Effect, (ii) RxElite 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 RxElite’s financial statements
pursuant to GAAP, (C) liabilities and costs and expenses incurred in connection
with the raising of funding for RxElite, (iii) RxElite has not altered its
method of accounting, (iv) RxElite has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) RxElite has not issued any equity securities to any officer,
director or affiliate, except pursuant to existing stock option
plans.
3.10 Litigation.
There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the Knowledge of Seller, threatened against or affecting RxElite
or any of its properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local
or
foreign) (collectively, an “Action”)
which
(i) adversely affects or challenges the legality, validity or enforceability
of
any of the Transaction Documents or the Securities or (ii) could, if there
were
an unfavorable decision, have a Material Adverse Effect. Neither RxElite nor
any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws
or a
claim of breach of fiduciary duty.
3.11 Labor
Relations.
No
material labor dispute exists or, to the Knowledge of Seller, is imminent with
respect to any of the employees of RxElite that could reasonably be expected
to
result in a Material Adverse Effect. None of RxElite’s employees is a member of
a union that relates to such employee’s relationship with RxElite, and RxElite
is not a party to a collective bargaining agreement, and Seller believes that
RxElite’s relationship with its employees is good. No executive officer, to the
Knowledge of Seller, is, or is now expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other contract or
agreement with RxElite. To Seller’s Knowledge, RxElite is in compliance with all
applicable U.S. federal, state, local and foreign laws and regulations relating
to employment and employment practices, terms and conditions of employment
and
wages and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
3.12 Compliance.
RxElite
(i) is not 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 Seller under), nor has RxElite received notice of a claim that
it
is in default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is not in violation of any order of any court,
arbitrator or governmental body, or (iii) to Seller’s Knowledge, is not and has
not been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local
laws applicable to its business and all such laws that affect the environment,
except in each case as could not have or reasonably be expected to result in
a
Material Adverse Effect.
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3.13 Regulatory
Permits.
To
Seller’s Knowledge, RxElite possesses all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct its business as is presently conducted, except
where the failure to possess such permits could not have or reasonably be
expected to result in a Material Adverse Effect (“Material
Permits”),
and
RxElite has not received any notice of proceedings relating to the revocation
or
modification of any Material Permit.
3.14 Title
to Assets.
RxElite
has good and marketable title in fee simple to all real property owned by it
that is material to its business and good and marketable title in all personal
property owned by it that is material to its business, 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 RxElite and liens for the payment of federal, state
or other taxes, the payment of which is neither delinquent nor subject to
penalties or liens that arose in the ordinary course of RxElite’s business. Any
real property and facilities held under lease by RxElite are held by it under
valid, subsisting and enforceable leases with which RxElite is in compliance,
except for such violations which would not cause a Material Adverse
Effect.
3.15 Patents
and Trademarks.
RxElite
has, or has rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets, inventions,
copyrights, licenses and other intellectual property rights and similar rights
necessary or material for use in connection with its business as presently
conducted and which the failure to so have could have a Material Adverse Effect
(collectively, the “Intellectual
Property Rights”).
RxElite has not received a notice (written or otherwise) that the Intellectual
Property Rights used by RxElite violates or infringes upon the rights of any
person. To the Knowledge of Seller, (i) all such Intellectual Property Rights
are enforceable and (ii) there is no existing infringement by another person
of
any of the Intellectual Property Rights. RxElite has taken reasonable security
measures to protect the secrecy, confidentiality and value of all of its
Intellectual Property Rights, except where failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
3.16 Insurance.
RxElite
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 RxElite is engaged and for companies similar in size to
RxElite. Seller has no reason to believe that RxElite 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 RxElite’s
business without a significant increase in cost.
5
3.17 Private
Placement.
Assuming the accuracy of the Buyers’ representations and warranties set forth in
the Transaction Documents, no registration under the Securities Act of 1933,
as
amended (the “Act”),
is
required for the offer and sale of the Securities by Seller to the Buyers as
contemplated hereby.
3.18 Registration
Rights.
Other
than as set forth in the Registration Rights Agreement to which the Buyers
are a
party, no person has any right to cause Seller to effect the registration under
the Act of any securities of Seller.
3.19 Tax
Status.
Except
for matters that would not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect, RxElite 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 Seller has no knowledge
of a
tax deficiency which has been asserted or threatened against
RxElite.
3.20 Transactions
with Affiliates and Employees.
None of
the officers or directors of RxElite and, to the Knowledge of Seller, none
of
the employees of RxElite is presently a party to any transaction with RxElite
(other than for services as employees, officers and directors or in connection
with such person’s acquisition or holding of securities of RxElite), 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 Seller, 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 in excess of $60,000 other than
for
(i) payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of RxElite and (iii) other
employee benefits, including stock option agreements under any stock option
plan
of RxElite.
3.21 Certain
Fees.
No
brokerage or finder’s fees or commissions are or will be payable by Seller to
any broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other person with respect to the transactions contemplated
by
the Transaction Documents. The Buyers shall have no obligation with respect
to
any fees or with respect to any claims made by or on behalf of other persons
for
fees of a type contemplated in this Section that may be due in connection with
the transactions contemplated by the Transaction Documents.
3.22 Accountants.
Seller’s accounting firm is H. J. & Associates.
3.23 No
Disagreements with Accountants and Lawyers.
There
are no disagreements of any kind presently existing, or reasonably anticipated
by Seller to arise, between Seller and the accountants and lawyers formerly
or
presently employed by RxElite.
3.24 No
General Solicitation.
Neither
RxElite nor any person acting on behalf of RxElite has offered or sold any
of
the Securities by any form of general solicitation or general advertising.
Seller has offered the Securities for sale only to the Buyers and certain other
“accredited investors” within the meaning of Rule 501 under the
Act.
6
3.25 Acknowledgment
Regarding Buyers’ Purchase of Securities.
Seller
acknowledges and agrees that each of the Buyers is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. Seller further acknowledges that no Buyer
is
acting as a financial advisor or fiduciary of Seller (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated thereby and any advice given by any Buyer or any of their
respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to
the
Buyers’ purchase of the Securities. Seller further represents to each Buyer that
Seller’s decision to enter into the Transaction Documents has been based solely
on the independent evaluation of the transactions contemplated hereby by Seller
and its representatives.
4. Representations
and Warranties of Buyer.
Each of
the Buyers, severally and not jointly, hereby represents and warrants to Seller
as follows:
4.1 Due
Existence; Authority.
If the
Buyer is a company, it is a duly organized legal entity, validly existing and
in
good standing under the laws of the state of its organization and has the
requisite company power and authority to execute and deliver this Agreement
and
to perform its obligations hereunder. If the Buyer is a partnership, syndicate
or other form of unincorporated organization, the Buyer has the necessary legal
capacity and authority to execute and deliver this Agreement and to observe
and
perform its covenants and obligations hereunder and has obtained all necessary
approvals in respect thereof. If the Buyer is a natural person, the Buyer has
obtained the age of majority and has the legal capacity and competence to
execute this Agreement and to take all actions required pursuant
thereto.
4.2 Enforceability.
This
Agreement has been duly executed and delivered by Buyer and is the valid and
binding obligation of the Buyer, enforceable against the Buyer in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
moratorium, insolvency, reorganization or other similar laws generally affecting
the enforcement of creditors' rights, specific performance, injunctive or other
equitable remedies.
4.3 Investment
Representations.
The
Buyer is acquiring the Securities, and any capital stock issuable upon exercise
of the Securities, for the Buyer’s own account, for investment and not with a
view to, or for sale in connection with, any distribution of such securities
or
any part thereof. The Buyer (i) has such knowledge and experience in financial
and business affairs that it is capable of evaluating the merits and risks
involved in purchasing the Securities, (ii) is able to bear the economic risks
(including, a complete loss) involved in purchasing the Securities and has
the
adequate means of providing for its current needs and contingencies, (iii)
has
had the opportunity to ask questions of, and receive answers from, Seller and
persons acting on Seller’s behalf concerning Seller’s business, management, and
financial affairs and the terms and conditions of the Securities. The Buyer’s
jurisdiction of residence is set forth on Exhibit
A.
4.4 1933
SEC Act.
The
Buyer acknowledges that (i) it has received and had the opportunity to review
the Jumbo 8-K with respect to the pending acquisition of RxElite by Pubco
describing Seller’s business and operations following such acquisition, and (ii)
it has reviewed the Jumbo 8-K, including, without limitation, the description
of
business and risk factors with respect to Seller and this offering set forth
in
the Jumbo 8-K. The Buyer acknowledges that all documents, records and books
pertaining to this investment have been made available for inspection by the
Buyer, the Buyer’s attorney and/or the Buyer’s accountant as set forth in Rule
502 of Regulation D under the Act and that all records and books of RxElite
were
available during reasonable business hours at RxElite’s principal place of
business. The Buyer and/or its adviser(s) have had a reasonable opportunity
to
ask questions of and receive answers from RxElite, or a person or persons acting
on its behalf, concerning the terms and conditions of the offering of the
Securities, and to obtain additional information, to the extent possessed or
obtainable without unreasonable effort or expense. All such questions have
been
answered to the full satisfaction of the Buyer.
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4.5 Accredited
Investor; Residence.
The
Buyer is an “accredited investor” as such term is defined in Rule 501 of
Regulation D under the Act. The jurisdiction referred to under “Address” in
Exhibit
A
attached
hereto is the Buyer’s residence or place of business and is not created or used
solely for the purpose of acquiring the Securities and the Buyer is not
purchasing the Securities for the account or benefit of any person in any
jurisdiction other than such jurisdiction;
4.6 THE
BUYER RECOGNIZES THAT AN INVESTMENT IN SELLER IS SPECULATIVE AND INVOLVES A
HIGH
DEGREE OF RISK, AND THAT PURCHASERS OF SECURITIES COULD LOSE THEIR ENTIRE
INVESTMENT.
4.7 Certain
Securities Matters.
In
reliance upon the Buyers’ representations and warranties in this Agreement
(including Appendix
A
and
Appendix
B
to this
Agreement), neither the offering nor the sale of the Securities has been
registered under the Act or any state securities laws or regulations. The Buyer
was not offered or sold the Securities, directly or indirectly, by means of
any
form of general solicitation or general advertising, including the following:
(i) any advertisement, article, notice, or other communication published in
any
newspaper, magazine, or similar medium or broadcast over television or radio;
or
(ii) to the knowledge of the Buyer, any seminar or meeting whose attendees
had
been invited by any general advertising. There is no public market for the
Securities and Seller is under no obligation to register the Securities on
the
Buyer’s behalf or to assist the Buyer in complying with any exemption from
registration (other than as set forth in the Registration Rights Agreement).
The
Buyer has not received or been provided with a prospectus, offering memorandum
or sales or advertising literature and the Buyer’s decision to purchase the
Securities was not based upon and the Buyer has not relied upon any verbal
or
written representations as to fact made by Seller or any other person (other
than those representations and warranties set forth in Article 3 of this
Agreement) but that the Buyer’s decision was based upon the information about
Seller that is publicly available.
4.8 Liquidity.
The
Buyer must hold the Securities indefinitely unless the sale or transfer thereof
is subsequently registered under the Act or an exemption from such registration
is available. The Buyer may not subsequently sell, assign, pledge, or otherwise
transfer the Securities except: (i) pursuant to an effective registration
statement registering the securities under the Act and/or applicable state
securities laws, or (ii) pursuant to the opinion of counsel, which is
satisfactory to Seller, that such registration under the Act and/or such state
securities laws is not required to effect such subsequent sale, assignment,
pledge, or other transfer.
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4.9 Legend.
The
following legend referring to the foregoing restrictions will be set forth
on
certificates representing the Securities, as set forth below:
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH
A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE
OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933.
The
following additional legend shall be set forth on certificates representing
the
Securities issued to Buyers resident in Canada:
UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE
LATER
OF (I) [insert issuance date], AND (II) THE DATE THE ISSUER BECAME A REPORTING
ISSUER IN ANY PROVINCE OR TERRITORY.
4.10 Certain
Prohibited Persons.
The
Buyer is not a person or entity (a “Person”)
with
whom a United States citizen, entity organized under the laws of the United
States or its territories or entity having its principal place of business
within the United States or any of its territories (collectively, a
“U.S.
Person”)
is
prohibited from transacting business of the type contemplated by this Agreement,
whether such prohibition arises under United States law, regulation, executive
orders and lists published by the Office of Foreign Assets Control, Department
of the Treasury (“OFAC”)
(including those executive orders and lists published by OFAC with respect
to
Persons that have been designated by executive order or by the sanction
regulations of OFAC as Persons with whom U.S. Persons may not transact business
or must limit their interactions to types approved by OFAC (“Specially
Designated Nationals and Blocked Persons”)
or
otherwise. Neither the Buyer nor any Person who owns an interest in the Buyer
(collectively, a “Purchaser
Party”)
is a
Person with whom a U.S. Person, including a United States Financial Institution
as defined in 31 U.S.C. Section 5312, as amended (“Financial
Institution”),
is
prohibited from transacting business of the type contemplated by this Agreement,
whether such prohibition arises under United States law, regulation, executive
orders and lists published by the OFAC (including those executive orders and
lists published by OFAC with respect to Specially Designated Nationals and
Blocked Persons) or otherwise.
4.11 Source
of Funds.
The
Buyer has taken such measures as are required by law to assure that the funds
used to pay to Seller the Purchase Price are derived: (i) from transactions
that
do not violate United States law nor, to the extent such funds originate outside
the United States, do not violate the laws of the jurisdiction in which they
originated; and (ii) from permissible sources under United States law and to
the
extent such funds originate outside the United States, under the laws of the
jurisdiction in which they originated.
9
4.12 Certain
Legislation.
To the
best of the Buyer’s knowledge, neither the Buyer nor any Purchaser Party, nor
any Person providing funds to the Buyer: (i) is under investigation by any
governmental authority for, or has been charged with, or convicted of, money
laundering, drug trafficking, terrorist related activities, any crimes which
in
the United States would be predicate crimes to money laundering, or any
violation of any Anti-Money Laundering Laws (as hereinafter defined); (ii)
has
been assessed civil or criminal penalties under any Anti-Money Laundering Laws;
or (iii) has had any of its funds seized or forfeited in any action under any
Anti-Money Laundering Laws. For purposes of this Section,
the
term “Anti-Money
Laundering Laws”
shall
mean laws, regulations and sanctions, state and federal, criminal and civil,
that: (i) limit the use of and/or seek the forfeiture of proceeds from illegal
transactions; (ii) limit commercial transactions with designated countries
or
individuals believed to be terrorists, narcotics dealers or otherwise engaged
in
activities contrary to the interests of the United States; (iii) require
identification and documentation of the parties with whom a Financial
Institution conducts business; or (iv) are designed to disrupt the flow of
funds
to terrorist organizations. Such laws, regulations and sanctions shall be deemed
to include the USA Patriot Act of 2001, Pub. L. No. 107-56 (the “Patriot
Act”),
the
Bank Secrecy Act, 31 U.S.C. Section 5311 et. seq. (the “Bank
Secrecy Act”),
the
Trading with the Enemy Act, 50 U.S.C. Appendix, the International Emergency
Economic Powers Act, 50 U.S.C. Section 1701 et. seq., and the sanction
regulations promulgated pursuant thereto by the OFAC, as well as laws relating
to prevention and detection of money laundering in 18 U.S.C. Sections 1956
and
1957.
4.13 Bank
Act.
The
Buyer is in compliance with any and all applicable provisions of the Patriot
Act
including, without limitation, amendments to the Bank Secrecy Act. If the Buyer
is a Financial Institution, it has established and is in compliance with all
procedures required by the Buyer and the Bank Secrecy Act.
4.14 Appendix.
The
Buyer has accurately and truthfully completed Appendix
A
attached
hereto. Each Buyer that is a resident of Canada or is otherwise subject to
the
securities laws of any Province of Canada (a “Canadian
Buyer”)
has
accurately and truthfully also completed Appendix
B
attached
hereto.
4.15 Canadian
Representations.
Each
Canadian Buyer hereby represents and warrants to Seller that the
representations, warranties and acknowledgements set out in Exhibit
E
attached
hereto.
4.16 Covenants
of Purchasers Not to Short Stock.
The
Buyer, on behalf of itself and its affiliates, hereby covenants and agree not
to, directly or indirectly, offer to “short sell”, contract to “short sell” or
otherwise “short sell” the securities of Seller, including, without limitation,
shares of Common Stock that will be received as a result of the exercise of
the
Warrants.
5. Further
Assurances.
Each of
the parties shall, prior to or at the Closing, as may be appropriate, execute
such documents and other papers and take such other further actions as may
be
reasonably required to carry out the provisions hereof and effectuate the
transactions contemplated hereby. Each party shall use its commercially
reasonable efforts to fulfill or obtain the fulfillment of the conditions to
its
obligation to effect the Closing, including promptly obtaining any consents
required in connection herewith.
10
6. Conditions
Precedent to the Obligation of Buyer to Close.
The
obligation of each Buyer to complete the Closing, and the right for Seller
to
accept any purchase of Securities hereunder, is subject to the fulfillment
on or
prior to the Closing Date of all of the following conditions, any one or more
of
which may be waived by the holders of a majority of the Securities sold
hereunder, collectively, in writing:
6.1 Agreements
and Conditions.
On or
before the Closing Date, Seller shall have complied with and duly performed
and
satisfied in all material respects all agreements and conditions on its part
to
be complied with and performed by such date pursuant to this
Agreement.
6.2 Consents.
Seller
shall have obtained any consents necessary to effectuate this Agreement and
to
consummate the transactions contemplated hereby.
6.3 Registration
Rights Agreement.
Seller
shall have duly executed and delivered to the Buyers the Registration Rights
Agreement.
6.4 Minimum
Amount.
The
Buyers shall have delivered to the Escrow Agent at least $3,500,000 in the
aggregate.
6.5 Jumbo
8-K.
RxElite
shall have provided each Buyer with a substantially completed draft of a Current
Report on Form 8-K containing such information about RxElite as would be
required to be disclosed in a Registration Statement on Form 10-SB (the
“Jumbo
8-K”),
and
following receipt of such Jumbo 8-K, each Buyer shall have reconfirmed, in
writing, its purchase of the Securities hereunder.
6.6 Pubco
Merger.
Pubco
shall have consummated its acquisition of RxElite’s issued and outstanding
capital stock and Pubco shall have succeeded to RxElite’s business as its sole
line of business.
7. Conditions
Precedent to the Obligation of Seller to Close.
The
obligation of Seller to complete the Closing is subject to the fulfillment
on or
prior to the Closing Date of all of the following conditions, any one or more
of
which may be waived by Seller in writing:
7.1 Agreements
and Conditions.
On or
before the Closing Date, each Buyer shall have complied with and performed
and
satisfied in all material respects all agreements and conditions to be complied
with and performed by such date pursuant to this Agreement.
7.2 Payment
of Purchase Price.
Each
Buyer shall have paid to the Escrow Agent the entire Purchase
Price.
7.3 Registration
Rights Agreement.
Each
Buyer shall have duly executed and delivered to Seller the Registration Rights
Agreement.
7.4 Appendices.
Each
Buyer shall have completed and delivered to Seller Appendix A
or
Appendix
B,
as the
case may be, to this Agreement, which shall be acceptable to Seller, in Seller’s
discretion.
11
7.5 Minimum
Amount.
The
Buyers shall have delivered to the Escrow Agent at least $3,500,000 in the
aggregate.
7.6 Jumbo
8-K.
RxElite
shall have provided each Buyer with the Jumbo 8-K and, following receipt of
such
Jumbo 8-K, each Buyer shall have reconfirmed, in writing, its purchase of the
Securities hereunder.
7.7 Pubco
Merger.
Pubco
shall have consummated its acquisition of RxElite’s issued and outstanding
capital stock and Pubco shall have succeeded to RxElite’s business as its sole
line of business.
8. Miscellaneous.
8.1 Publicity.
Subject
to the requirements of the applicable securities laws, no publicity release
or
announcement concerning this Agreement or the transactions contemplated hereby
shall be issued without advance approval of the form and substance thereof
by
the Buyers and Seller jointly.
8.2 Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed to have been given when delivered by hand or by facsimile transmission,
when telexed, or upon receipt when mailed by registered or certified mail
(return receipt requested), postage prepaid, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) If
to
Seller:
RxElite
Holdings Inc.
0000
X.
Xxxx Xx., Xxx. 000
Xxxxxxxx,
XX 00000
Attention:
Xxxxxx Xxxx, CEO
Facsimile:
(000) 000-0000
With
a
copy (which copy shall not constitute notice) to:
Xxxxxxxx
Xxxxxxxx
00000
Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attention:
Xxx xx Xxxxx
Facsimile:
(000) 000-0000
And
Xxxx
& Berlis LLP
BCE
Place
1800
-
000 Xxx Xxxxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Attention:
Xxxxxxx X. Xxxxx
Facsimile:
(000) 000-0000
12
(ii) If
to the
Buyers: to the address(es) listed on Exhibit
A
hereto
8.3 Entire
Agreement; Exercise of Rights.
(a) This
Agreement (including the Appendices and Exhibits hereto) embodies the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof. No amendment or waiver of any provision of this Agreement, or
consent to the departure by any party from any such provision, shall be
effective unless it is in writing and signed by Seller and the holders of a
majority of the Securities sold hereunder. Any such waiver or consent shall
be
effective only in the specific instance and for the specific purpose for which
given.
(b) No
failure on the part of a party to exercise, and no delay in exercising, any
right under this Agreement, or any agreement contemplated hereby, shall operate
as a waiver hereof by such party, nor shall any single or partial exercise
of
any right under this Agreement, or any agreement contemplated hereby, preclude
any other or further exercise thereof or the exercise of any other right.
8.4 Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement 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 agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the County of New York, State of New York. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the County of New York, State of 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 this Agreement), 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. Each party hereto
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by delivering a copy thereof
via overnight delivery (with evidence of delivery) to such party at the address
in effect for notices to it under this Agreement 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. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right
to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed
by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
8.5 Expenses.
Seller
and the Buyers shall, bear their respective expenses incurred in connection
with
the negotiation, preparation, execution and performance of this Agreement and
the consummation of the transactions contemplated hereby, including, without
limitation, all fees and expenses of agents, representatives, counsel, brokers
or finders, and accountants.
13
8.6 Acknowledgment;
Waiver of Conflicts.
Each
Buyer acknowledges that: (a) it has read this Agreement; (b) it has been
represented in the preparation, negotiation and execution of this Agreement
by
legal counsel of its own choice or has voluntarily declined to seek such
counsel; and (c) it understands the terms and consequences of this Agreement
and
is fully aware of the legal and binding effect of this Agreement. Each Buyer
understands that RxElite has been represented in the preparation, negotiation
and execution of this Agreement by Xxxxxxxx & Xxxxxxxx LLP, counsel to
RxElite, and that Xxxxxxxx & Xxxxxxxx LLP has not represented any Buyer or
any stockholder, director or employee of Seller or any Investor in the
preparation, negotiation and execution of this Agreement. Each Buyer and Seller
acknowledges that Xxxxxxxx & Xxxxxxxx LLP has in the past represented and is
now or may in the future represent one or more Buyers or their affiliates in
matters unrelated to the transactions contemplated by this Agreement, including
the representation of such Buyers or their affiliates in matters of a nature
similar to those contemplated by this Agreement. Each Buyer and Seller hereby
acknowledges that it has had an opportunity to ask for and has obtained
information relevant to such representation, including disclosure of the
reasonably foreseeable adverse consequences of such representation, and hereby
waives any conflict arising out of such representation with respect to the
matters contemplated by this Agreement.
8.7 Investor
Representative.
Each
Buyer hereby appoints Xxxx Xxxxxxxxx (the “Investor
Representative”)
as the
agent and attorney-in-fact for and on behalf of each holder of Buyer to take
all
actions specified in the Escrow Agreement. No bond shall be required of the
Investor Representative and the Investor Representative shall receive no
compensation for services rendered from RxElite or the Seller. Any decision,
act, consent or instruction of the Investor Representative shall be final,
binding and conclusive upon each of the Buyers and Seller and the Escrow Agent
may rely upon any written decision, act, consent or instruction of the Investor
Representative. Seller is hereby relieved from any liability to any Person
for
any acts done by it in accordance with such written decision, act, consent
or
instruction of the Investor Representative.
8.8 Stock
Dividend.
As soon
as practicable following the Closing, Pubco shall declare a stock dividend
of
10.036789 shares for each outstanding share of Common Stock (the “Dividend”),
such
that following consummation of the Dividend, each stockholder shall hold
11.036789 shares of Common Stock for each one share of stock held prior to
the
Dividend and the adjusted Purchase Price for one share of Common Stock shall
be
$.60, the adjusted exercise price of each Warrant shall be $0.85 per share
and
the adjusted number of shares of Common Stock issuable pursuant to a whole
Warrant shall be one share.
[SIGNATURE
PAGE FOLLOWS]
14
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.
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Title:
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15
APPENDIX
A
THIS
APPENDIX MUST BE COMPLETED BY EACH BUYER THAT IS RESIDENT IN THE UNITED STATES
OF AMERICA
NAME
OF BUYER:
___________________________________________
I. PLEASE
INITIAL THE SPACE AFTER THE DEFINITION OF “ACCREDITED INVESTOR” THAT APPLIES TO
YOU. (ONLY ONE SPACE NEEDS TO BE INITIALED.)
(i) Any
natural person whose individual net worth, or joint net worth with that person’s
spouse, at the time of his purchase exceeds $1,000,000. __________
(For
purposes of calculating an investor’s net worth, “net worth” is defined as the
difference between total assets and total liabilities, including home, home
furnishings, and personal automobiles.)
(ii) Any
natural person who had an individual income in excess of $200,000 in each of
the
two most recent years or joint income with that person’s spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching
the
same income level in the current year. __________
(iii) Any
entity in which all of the equity owners are accredited investors.
__________
II. Please
indicate the form of ownership desired for the Securities:
_______
Individual (one signature required)
_______
Joint Tenants with right of survivorship (both parties must sign)
_______
Tenants by the Entirety (both parties must sign)
_______
Tenants in Common (all parties must sign)
_______
Limited Liability Company (signature of authorized party or parties
required)
III.
_____________________________________________________________________________
Please
PRINT here the exact name Buyer desires for registration of the
Securities.
APPENDIX
B
THIS
APPENDIX MUST BE COMPLETED BY EACH BUYER THAT IS RESIDENT IN
CANADA
PLEASE
XXXX YOUR INITIALS BESIDE THE CATEGORY TO WHICH YOU BELONG
In
connection with the purchase by the undersigned purchaser (“Canadian Buyer”) of
Securities of Seller, Canadian Buyer or the undersigned on behalf of Canadian
Buyer, as the case may be, certifies for the benefit of Seller:
Canadian
Buyer, or one or more beneficial purchaser(s) for whom Canadian Buyer is acting,
is a resident of, or the purchase and sale of securities to Canadian Buyer
is
otherwise subject to the securities legislation of, a Province or Territory
of
Canada and Canadian Buyer is (and will at the time of acceptance of the
subscription be) an accredited investor within the meaning of National
Instrument 45-106 - Prospectus and Registration Exemptions (“NI 45-106”) because
Canadian Buyer, or beneficial purchaser(s) is/are:
(a) a
Canadian financial institution, or a bank listed in Schedule III of the Bank
Act
(Canada);
(b) the
Business Development Bank of Canada incorporated under the Business Development
Bank Act (Canada);
(c) a
subsidiary of any person referred to in paragraphs (a) or (b), if the person
owns all of the voting securities of the subsidiary, except the voting
securities required by law to be owned by directors of that
subsidiary;
(d) a
person
registered under the securities legislation of a jurisdiction of Canada as
an
adviser or dealer, other than a person registered solely as a limited market
dealer under one or both of the Securities Act (Ontario) or the Securities
Act
(Newfoundland and Labrador);
(e) an
individual registered or formerly registered under the securities legislation
of
a jurisdiction of Canada as a representative of a person referred to in
paragraph (d);
(f) the
Government of Canada or a jurisdiction of Canada, or any crown corporation,
agency or wholly owned entity of the Government of Canada or a jurisdiction
of
Canada;
(g) a
municipality, public board or commission in Canada and a metropolitan community,
school board, the Comité de gestion de la taxe scolaire de l’ île
de Montréal or an intermunicipal management board in Québec;
(h) any
national, federal, state, provincial, territorial or municipal government of
or
in any foreign jurisdiction, or any agency of that government;
(i) a
pension
fund that is regulated by either the Office of the Superintendent of Financial
Institutions (Canada) or a pension commission or similar regulatory authority
of
a jurisdiction of Canada;
(j) an
individual who, either alone or with a spouse, beneficially owns, directly
or
indirectly, financial assets having an aggregate realizable value that before
taxes, but net of any related liabilities, exceeds CDN$1,000,000;
(k) an
individual whose net income before taxes exceeded CDN$200,000 in each of the
two
most recent calendar years or whose net income before taxes combined with that
of a spouse exceeded CDN$300,000 in each of the two most recent calendar years
and who, in either case, reasonably expects to exceed that net income level
in
the current calendar year;
(l) an
individual who, either alone or with a spouse, has net assets of at least
CDN$5,000,000;
(m) a
person,
other than an individual or an investment fund, that has net assets of at least
CDN$5,000,000, as shown on its most recently prepared financial
statements;
(n) an
investment fund that distributes or has distributed its securities only
to:
(i) a
person
that is or was an accredited investor at the time of the
distribution,
(ii) a
person
that acquires or acquired securities in the circumstances referred to in
sections 2.10 of NI 45-106 (where the person subscribes for a minimum amount
investment) and 2.19 of NI 45-106 (where the person makes an additional
investment in investment funds), or
(iii) a
person
described in paragraph (i) or (ii) that acquires or acquired securities under
section 2.18 of NI 45-106 (investment fund reinvestment);
(o) an
investment fund that distributes or has distributed securities under a
prospectus in a jurisdiction of Canada for which the regulator or, in Québec,
the securities regulatory authority, has issued a receipt;
(p) a
trust
company or trust corporation registered or authorized to carry on business
under
the Trust and Loan Companies Act (Canada) or under comparable legislation in
a
jurisdiction of Canada or a foreign jurisdiction acting on behalf of a fully
managed account managed by the trust company or trust corporation, as the case
may be;
(q) a
person
acting on behalf of a fully managed account managed by that person, if that
person
(i) is
registered or authorized to carry on business as an adviser or the equivalent
under the securities legislation of a jurisdiction of Canada or a foreign
jurisdiction, and
(ii) in
Ontario, is purchasing a security that is not a security of an investment
fund;
(r) a
registered charity under the Income Tax Act (Canada) that, in regard to the
trade, has obtained advice from an eligibility adviser or an adviser registered
under the securities legislation of the jurisdictions of the registered charity
to give advice on the securities being traded;
(s) an
entity
organized in a foreign jurisdiction that is analogous to any of the entities
referred to in paragraphs (a) to (d) or paragraph (i) in form and
function;
(t) a
person
in respect of which all of the owners of interests, direct, indirect or
beneficial, except the voting securities required by law to be owned by
directors, are persons that are accredited investors;
(u) an
investment fund that is advised by a person registered as an adviser or a person
that is exempt from registration as an adviser; or
(v) a
person
that is recognized or designated by the securities regulatory authority or,
except in Ontario and Québec, the regulator as
(i) an
accredited investor, or
(ii) an
exempt
purchaser in Alberta or British Columbia after NI 45-106 comes into
force.
Interpretative
Aids
The
following definitions relate to certain of the categories of NI 45-106 -
Accredited Investor set forth above:
(a) “bank”
means a bank named in Schedule I or II of the Bank Act (Canada);
(b) “Canadian
financial institution” means
(i) an
association governed by the Cooperative Credit Associations Act (Canada) or
a
central cooperative credit society for which an order has been made under
section 473(1) of that Act, or
(ii) a
bank,
loan corporation, trust company, trust corporation, insurance company, treasury
branch, credit union, caisse populaire, financial services cooperative, or
league that, in each case, is authorized by an enactment of Canada or a
jurisdiction of Canada to carry on business in Canada or a jurisdiction of
Canada;
(c) “control
person” has the same meaning as in securities legislation except in Manitoba,
Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario,
Xxxxxx Xxxxxx Island and Québec where control person means any person that holds
or is one of a combination of persons that holds
(i) a
sufficient number of any of the securities of an issuer so as to affect
materially the control of the issuer, or
(ii) more
than
20% of the outstanding voting securities of an issuer except where there is
evidence showing that the holding of those securities does not affect materially
the control of the issuer;
(d) “director”
means:
(i) a
member
of the board of directors of a company or an individual who performs similar
functions for a company, and
(ii) with
respect to a person that is not a company, an individual who performs functions
similar to those of a director of a company;
(e) “eligibility
adviser” means
(i) a
person
that is registered as an investment dealer or in an equivalent category of
registration under the securities legislation of the jurisdiction of a purchaser
and authorized to give advice with respect to the type of security being
distributed, and
(ii) in
Saskatchewan and Manitoba, also means a lawyer who is a practicing member in
good standing with a law society of a jurisdiction of Canada or a public
accountant who is a member in good standing of an institute or association
of
chartered accountants, certified general accountants or certified management
accountants in a jurisdiction of Canada provided that the lawyer or public
accountant must not
(A) have
a
professional, business or personal relationship with the issuer, or any of
its
directors, executive officer, founders, or control persons, and
(B) have
acted for or been retained personally or otherwise as an employee, executive
officer, director, associate or partner of a person that has acted for or been
retained by the issuer or any of its directors, executive officers, founders
or
control persons within the previous 12 months;
(f) “executive
officer” means, for an issuer, an individual who is
(i) a
chair,
vice-chair or president,
(ii) a
vice-president in charge of a principal business unit, division or function
including sales, finance or production,
(iii) an
officer of the issuer or any of its subsidiaries and who performs a
policy-making function in respect of the issuer, or
(iv) performing
a policy-making function in respect of the issuer;
(g) “financial
assets” means
(i) cash,
(ii) securities,
or
(iii) a
contract of insurance, a deposit or an evidence of a deposit that is not a
security for the purposes of securities legislation;
(h) “founder”
means, in respect of an issuer, a person who,
(i) acting
alone, in conjunction, or in concert with one or more persons, directly or
indirectly, takes the initiative in founding, organizing or substantially
reorganizing the business of the issuer, and
(ii) at
the
time of the trade is actively involved in the business of the issuer;
(i) “foreign
jurisdiction” means a country other than Canada or a political subdivision of a
country other than Canada;
(j) “fully
managed account” means an account of a client for which a person makes the
investment decisions if that person has full discretion to trade in securities
for the account without requiring the client's express consent to a
transaction;
(k) “investment
fund” has the same meaning as in National Instrument 81-106 - Investment Fund
Continuous Disclosure;
(l) “jurisdiction”
means a province or territory of Canada except when used in the term foreign
jurisdiction;
(m) “non-redeemable
investment fund” means an issuer,
(i) where
contributions of securityholders are pooled for investment,
(ii) where
securityholders do not have day to day control over the management and
investment decisions of the issuer, whether or not they have the right to be
consulted or to give directions, and
(iii) whose
securities do not entitle the securityholder to receive on demand, or within
a
specified period after demand, an amount computed by reference to the value
of a
proportionate interest in the whole or in part of the net assets of the
issuer;
(n) “person”
includes
(i) an
individual,
(ii) a
corporation,
(iii) a
partnership, trust, fund and an association, syndicate, organization or other
organized group of persons, whether incorporated or not, and
(iv) an
individual or other person in that person's capacity as a trustee, executor,
administrator or personal or other legal representative;
(o) “regulator”
means, for the local jurisdiction, the Executive Director as defined under
securities legislation of the local jurisdiction;
(p) “related
liabilities” means
(i) liabilities
incurred or assumed for the purpose of financing the acquisition or ownership
of
financial assets, or
(ii) liabilities
that are secured by financial assets;
(q) “Schedule
III bank” means an authorized foreign bank named in Schedule III of the Bank Act
(Canada);
(r) “spouse”
means, an individual who,
(i) is
married to another individual and is not living separate and apart within the
meaning of the Divorce Act (Canada), from the other individual,
(ii) is
living
with another individual in a marriage-like relationship, including a
marriage-like relationship between individuals of the same gender,
or
(iii) in
Alberta, is an individual referred to in paragraph (i) or (ii) above, or is
an
adult interdependent partner within the meaning of the Adult Interdependent
Relationships Act (Alberta);
(s) “subsidiary”
means an issuer that is controlled directly or indirectly by another issuer
and
includes a subsidiary of that subsidiary;
(t) An
issuer
is an affiliate of another issuer if:
(i) one
of
them is the subsidiary of the other, or
(ii) each
of
them is controlled by the same person, and
(u) A
person
(first person) is considered to control another person (second person)
if:
(i) the
first
person, directly or indirectly, beneficially owns or exercises control or
direction over securities of the second person carrying votes which, if
exercised, would entitle the first person to elect a majority of the directors
of the second person, unless that first person holds the voting securities
only
to secure an obligation,
(ii) the
second person is a partnership, other than a limited partnership, and the first
person holds more than 50% of the interest of the partnership, or
(iii) the
second person is a limited partnership and the general partner of the limited
partnership is the first person.
EXHIBIT
A
|
Name
|
Address
|
#
Shares of Common Stock
|
#
Warrants
|
Purchase
Price
|
||||
| ___________ | ____________ | ____________ | ___________ |
US$___________
|
EXHIBIT
B
FORM
OF
REGISTRATION RIGHTS AGREEMENT
EXHIBIT
C
WARRANT
EXHIBIT
D
WIRE
TRANSFER INSTRUCTIONS
EXHIBIT
E
CANADIAN
BUYER REPRESENTATIONS
Each
of
the Canadian Buyers, severally and not jointly, hereby represents, warrants
and
acknowledges to Seller as follows:
(a) the
jurisdiction referred to under “Address” in Exhibit A attached hereto is
Canadian Buyer’s residence or place of business and is not created or used
solely for the purpose of acquiring the Securities and Canadian Buyer is not
purchasing the Securities for the account or benefit of any person in any
jurisdiction other than such jurisdiction;
(b) Canadian
Buyer is acting for Canadian Buyer’s own account and is acquiring the Securities
as principal, to be held for investment purposes only and not with a view to
resale or distribution (or Canadian Buyer is a duly licensed trust company
or
insurance company, or a duly registered dealer or adviser and is subscribing
for
the Securities for the portfolio of a person managed solely by such company,
dealer or adviser);
(c) Canadian
Buyer meets the definition of “accredited investor” pursuant to National
Instrument 45-106 - Prospectus and Registration Exemptions and has delivered
to
Seller together with this Agreement a fully executed Certificate of Accredited
Investor set out as Appendix B hereto;
(d) no
securities commission or similar regulatory authority has reviewed or passed
on
the merits of the Securities;
(e) the
Securities issued hereunder are subject to resale restrictions under applicable
securities legislation. Canadian Buyer agrees not to resell and not to cause
any
purchaser of Securities to resell the Securities in Canada or to any Canadian
person for a period of at least four months following the Closing Date, or
for
such period as is prescribed by applicable securities laws, whichever is longer,
and to file all required reports of the resale of the Securities as may be
required by applicable securities laws within the time periods
prescribed;
(f) the
certificates representing the Securities will bear the legend set forth in
Section 4.9;
(g) Canadian
Buyer has not received or been provided with a prospectus, offering memorandum
or sales or advertising literature and Canadian Buyer’s decision to purchase the
Securities was not based upon and Canadian Buyer has not relied upon any verbal
or written representations as to fact made by Seller or any other person but
that Canadian Buyer’s decision was based upon the information about Seller which
is publicly available;
(h) no
person
has made any written or oral representations:
(i) that
any
person will resell or repurchase the Securities;
(ii) that
any
person will refund the aggregate Purchase Price for the Securities;
or
(iii) as
to the
future price or value of the Securities;
(i) Canadian
Buyer is not purchasing the Securities with knowledge of material information
concerning Seller which has not been generally disclosed;
(j) Canadian
Buyer’s purchase of the Securities has not been made through or as a result of,
and the distribution of the Securities is not being accompanied by, an
advertisement, including in electronic display, or general
solicitation;
(k) Seller
is
relying on an exemption from the requirement to provide Canadian Buyer with
a
prospectus under applicable securities laws and, as a consequence of acquiring
the Securities pursuant to such exemption, certain protections, rights and
remedies provided by applicable securities laws, including statutory rights
of
rescission or damages, may not be available to Canadian Buyer (depending on
the
jurisdiction in which Canadian Buyer resides);
(l) Canadian
Buyer has been advised to consult its own legal advisors with respect to trading
in the Securities and with respect to resale restrictions imposed thereon by
applicable securities laws;
(m) Canadian
Buyer is solely responsible (and Seller is not in any way responsible) for
compliance with applicable resale restrictions under applicable securities
laws;
(n) to
Canadian Buyer’s knowledge, none of the funds being used to purchase the
Securities are proceeds obtained or derived directly or indirectly as a result
of illegal activity;
(o) Canadian
Buyer is not and any beneficial purchaser for whom Canadian Buyer is contracting
hereunder is not a promoter of Seller within the meaning of applicable
securities laws;
(p) in
order
to comply with Canadian legislation aimed at the prevention of money laundering,
Seller may require additional information concerning investors from time to
time, and Canadian Buyer agrees to provide all such information. Canadian Buyer
further acknowledges that if, as a result of any information or other matter
which comes to Seller’s attention, any director, officer or employee of Seller,
or its professional advisers, knows or suspects that a Canadian Buyer is engaged
in money laundering, such person is required to report such information or
other
matter to the Financial Transactions and Reports Analysis Centre of Canada
and
such report shall not be treated as a breach of any restriction upon the
disclosure of information imposed by Canadian law or otherwise; and
(q) if
Canadian Buyer is resident in the Province of Ontario, Seller is required to
file an Authorization of Indirect Collection of Personal Information for
Distributions in Ontario, which contains Canadian Buyer’s personal information
and details of the sale of the Common Stock and Warrants. Canadian Buyer is
hereby notified: (i) of the delivery to the Ontario Securities Commission of
Canadian Buyer’s full name, residential address and telephone number; (ii) that
this information is being collected indirectly by the Ontario Securities
Commission under the authority granted to it in securities legislation; (iii)
that this information is being collected for the purposes of the administration
and enforcement of the securities legislation of Ontario; and (iv) that the
public official set out below can answer questions about the Ontario Securities
Commission’s indirect collection of the information. By signing this Agreement,
Canadian Buyer hereby authorizes the indirect collection of the information
by
the Ontario Securities Commission.
Ontario
Securities Commission
Suite
1903, Box 0000 Xxxxx Xxxxxx Xxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Public
official contact regarding indirect collection of information:
Administrative
Assistant to the Director of Corporate Finance
Telephone: (000)
000-0000
