EXHIBIT 10.20
PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 10th day of June 2005, by and between
Ovation Products Corporation (the "Company"), a corporation organized under the
laws of the State of Delaware, with its principal offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, and the purchaser whose name and address is set forth on
the signature page hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:
SECTION 1. Authorization of Sale of the Shares. Subject to the terms and
conditions of this Agreement, the Company has authorized the issuance and sale
of up to 400,000 shares (the "Shares") of common stock, par value $1.00 per
share (the "Common Stock"), of the Company and 800,000 warrants to purchase one
share of Common Stock subject to the terms and conditions set forth in the form
of warrant set forth in Exhibit 1 to this Agreement (the "Warrants" and,
together with the Shares, the "Securities"). The Company reserves the right to
increase or decrease the number of Shares and the number of Warrants sold in
this private placement prior to the Final Closing Date.
SECTION 2. Agreement to Sell and Purchase the Shares. At the Closing (as
defined in Section 3), the Company will, subject to the terms of this Agreement,
issue and sell to the Purchaser, and the Purchaser will buy from the Company,
upon the terms and conditions hereinafter set forth, the number of Shares and
Warrants (at the purchase price) shown below:
Number of Shares to Be Price Per Share In Aggregate
Purchased Number of Warrants Dollars Price
$5.00
The Company proposes to enter into this same form of purchase agreement
with certain other investors (the "Other Purchasers") and expects to complete
sales of the Securities to them. The Purchaser and the Other Purchasers are
hereinafter sometimes collectively referred to as the "Purchasers," and this
Agreement and the agreements executed by the Other Purchasers are hereinafter
sometimes collectively referred to as the "Agreements." Purchaser hereby
acknowledges that the Company may complete sales of the Securities to Other
Purchasers following the Closing Date but not later than the Expiration Date (as
defined below) and, as result, the total number of Securities sold pursuant to
the Offering will not be known until the closing of all sales of Securities to
the Other Purchasers (such final closing, the "Final Closing," and the date of
such closing, the "Final Closing Date"). The offering of the Shares will expire
on July 15, 2005, unless extended by the Company in its sole discretion (such
expiration date, the "Expiration Date").
SECTION 3. Delivery of the Shares at the Closing. The completion of the
purchase and sale of the Securities to the Purchaser (the "Closing") shall occur
at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as soon as practicable and as agreed to by the parties
hereto, within three business days following the execution of the Agreements, or
on such later date or at such different location as the Purchaser and the
Company shall agree to in writing, but not prior to the date that the conditions
for Closing set forth below have been satisfied or waived by the appropriate
party (the "Closing Date").
At the Closing, the Company shall deliver to the Purchaser (i) one or more
stock certificates registered in the name of the Purchaser, or, if so indicated
on the Securities Certificate Questionnaire attached hereto as Appendix I, in
such nominee name(s) as designated by the Purchaser, representing the number of
Shares set forth in Section 2 above and (ii) one or more warrant certificates
registered in the name of the Purchaser, or, if so indicated on the Securities
Certificate Questionnaire attached hereto as Appendix I, in such nominee name(s)
as designated by Purchaser, representing the number of Warrants set forth in
Section 2 above, each bearing an appropriate legend referring to the fact that
the Securities were sold in reliance upon the exemption from registration under
the Securities Act of 1933, as amended (the "Securities Act") provided by
Section 4(2) thereof and Rule 506 thereunder. The name(s) in which the
certificates are to be registered are set forth in the Securities Certificate
Questionnaire attached hereto as Appendix I. The Company's obligation to
complete the purchase and sale of the Securities and deliver such certificates
to the Purchaser at the Closing shall be subject to the following conditions,
any one or more of which may be waived by the Company: (a) receipt by the
Company of same-day funds in the full amount of the purchase price for the
Securities being purchased hereunder and (b) the accuracy in all material
respects of the representations and warranties made by the Purchasers (as if
such representations and warranties were made on the Closing Date) and the
fulfillment of those undertakings of the Purchasers to be fulfilled prior to the
Closing. The Purchaser's obligation to accept delivery of such certificates and
to pay for the Securities evidenced thereby shall be subject to the following
conditions, any one or more of which may be waived by the Purchaser: (a) each of
the representations and warranties of the Company made herein shall be accurate
in all material respects as of the Closing Date; and (b) the fulfillment in all
material respects of those undertakings of the Company to be fulfilled prior to
Closing. The Purchaser's obligations hereunder are expressly not conditioned on
the purchase by any or all of the Other Purchasers of the Securities that they
have agreed to purchase from the Company.
SECTION 4. Representations, Warranties and Covenants of the Company. The
Company hereby represents and warrants to, and covenants with, the Purchaser as
follows:
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4.1 Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and the Company is qualified to do business as a foreign corporation
in each jurisdiction in which qualification is required, except where failure to
so qualify would not reasonably be expected to have a Material Adverse Effect
(as defined herein). The Company has no subsidiaries. For purposes of this
Agreement, the term "Material Adverse Effect" shall mean a material adverse
effect upon the business, prospects, financial condition, properties or results
of operations of the Company.
4.2 Authorized Capital Stock. The Company has the outstanding capital
stock set forth in the Confidential Private Placement Memorandum, dated June 10,
2005, prepared by the Company, including all exhibits, supplements and
amendments thereto (the "Private Placement Memorandum).
4.3 Issuance, Sale and Delivery of the Shares. The Securities have been
duly authorized and, when issued, delivered and paid for in the manner set forth
in this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable and free and clear of all pledges, liens, restrictions and
encumbrances (other than restrictions on transfer under state and/or federal
securities laws), and will conform in all material respects to the description
thereof set forth in the Private Placement Memorandum. The Company has reserved
from its duly authorized capital stock the maximum number of shares of Common
Stock issuable pursuant to the Warrants (the "Warrant Shares"). No further
approval or authority of the stockholders or the Board of Directors of the
Company will be required for the issuance and sale of the Securities to be sold
by the Company as contemplated herein.
4.4 Due Execution, Delivery and Performance of this Agreement. The Company
has full legal right, corporate power and authority to enter into this Agreement
and perform the transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by the Company. The execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions herein contemplated will not violate any provision of the
certificate of incorporation or bylaws of the Company. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery of
this Agreement or the consummation of the transactions contemplated by this
Agreement, except for compliance with the blue sky laws and federal securities
laws applicable to the offering of the Securities. Upon the execution and
delivery of this Agreement, and assuming the valid execution thereof by the
Purchaser, this Agreement will constitute a valid and binding obligation of the
Company, enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Company in
Section 7.3 hereof may be limited by federal or state securities laws or the
public policy underlying such laws.
4.5 Accountant. The firm of Wolf & Company, P.C., has expressed its
opinion with respect to the financial statements contained in the Company's Form
10-SB, as amended, which is attached to and made a part of the Private Placement
Memorandum, is an independent accountant as required by the Securities Act and
the rules and regulations promulgated thereunder (the "Rules and Regulations").
4.6 Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
sale and transfer of the Securities to be sold to the Purchaser hereunder will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been complied with.
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4.7 Additional Information. The information contained in the following
documents, which the Company has furnished to the Purchaser or will furnish
prior to the Closing, did not, as of the date of the applicable document,
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances in which they were made, not misleading, as of
their respective filing dates or, if amended, as so amended:
(a) the Private Placement Memorandum;
(b) Amendment No. 2 to the Company's Registration Statement on Form
10-SB (the "Form 10-SB"), as amended;
(c) the Company's Quarterly Report on Form 10-QSB for the quarterly
period ender March 31, 2005;
(d) the Company's Current Report on Form 8-K filed on June 6, 2005;
and
(e) all other documents, if any, filed by the Company with the
Commission since June 1, 2005 pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Purchaser
hereby acknowledges that the Company is still in the process of responding to
SEC comments to the Form 10-SB and as a result the disclosure contained in the
Form 10-SB remains subject to change.
4.8 Reporting Company. The Company is subject to the reporting
requirements of the Exchange Act.
4.9 Use of Proceeds. The Company shall use the proceeds from the sale of
the Securities as described in the Private Placement Memorandum.
4.10 Use of Purchaser Name. Except as may be required by applicable law or
regulation, the Company shall not use the Purchaser's name or the name of any of
its affiliates in any advertisement, announcement, press release or other
similar public communication unless it has received the prior written consent of
the Purchaser for the specific use contemplated or as otherwise required by
applicable law or regulation.
4.11 Financial Statements. The financial statements of the Company and the
related notes contained in the Private Placement Memorandum present fairly, in
accordance with generally accepted accounting principles, the financial position
of the Company and its Subsidiary as of the dates indicated, and the results of
their operations, cash flows and the changes in stockholders' equity for the
periods therein specified, subject, in the case of unaudited financial
statements for interim periods, to normal year-end audit adjustments. Such
financial statements (including the related notes) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods therein specified, except that unaudited financial
statements may not contain all footnotes required by generally accepted
accounting principles.
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SECTION 5. Representations, Warranties and Covenants of the Purchaser. (a)
The Purchaser represents and warrants to, and covenants with, the Company that:
(i) the Purchaser is knowledgeable, sophisticated and experienced in making, and
is qualified to make, decisions with respect to investments in shares
representing an investment decision like that involved in the purchase of the
Securities, including investments in securities issued by the Company and
comparable entities, and has had the opportunity to request, receive, review and
consider all information it deems relevant in making an informed decision to
purchase the Securities; (ii) the Purchaser is acquiring the number of Shares
and Warrants set forth in Section 2 above in the ordinary course of its business
and for its own account for investment only and with no present intention of
distributing any of such Securities or any arrangement or understanding with any
other persons regarding the distribution of such Securities (this representation
and warranty not limiting the Purchaser's right to sell pursuant to the
Registration Statement or in compliance with the Securities Act and the Rules
and Regulations, or, other than with respect to any claims arising out of a
breach of this representation and warranty, the Purchaser's right to
indemnification under Section 7.3); (iii) the Purchaser will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the
Securities, nor will the Purchaser engage in any short sale that results in a
disposition of any of the Securities (including the Warrant Shares) by the
Purchaser, except in compliance with the Securities Act and the Rules and
Regulations and any applicable state securities laws; (iv) the Purchaser has
completed or caused to be completed the Registration Statement Questionnaire
attached hereto as part of Appendix I, for use in preparation of the
Registration Statement, and the answers thereto are true and correct as of the
date hereof and will be true and correct as of the effective date of the
Registration Statement and the Purchaser will notify the Company immediately of
any material change in any such information provided in the Registration
Statement Questionnaire until such time as the Purchaser has sold all of its
Securities or until the Company is no longer required to keep the Registration
Statement effective; (v) the Purchaser has, in connection with its decision to
purchase the number of Shares and Warrants set forth in Section 2 above, relied
solely upon the Private Placement Memorandum and the documents included therein
or incorporated by reference and the representations and warranties of the
Company contained herein and its own independent investigation and review of the
Company; (vi) the Purchaser has had an opportunity to discuss this investment
and the business of the Company with representatives of the Company and ask
questions of and to receive answers from them, and has been provided with all
information requested and has had all inquiries answered to its full
satisfaction ; (vii) the Purchaser is an "accredited investor" within the
meaning of Rule 501(a) of Regulation D promulgated under the Securities Act ;
and (vii) the Purchaser agrees to notify the Company immediately of any change
in any of the foregoing information until such time as the Purchaser has sold
all of its Securities or the Company is no longer required to keep the
Registration Statement effective.
(b) The Purchaser understands that the Securities are being offered
and sold to it in reliance upon specific exemptions from the registration
requirements of the Securities Act, the Rules and Regulations and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility of
the Purchaser to acquire the Securities.
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(c) The Purchaser previously agreed orally with the Company to keep
confidential all information concerning this private placement. The Purchaser
understands that the existence and nature of all conversations and
presentations, if any, regarding the Company and this offering must be kept
strictly confidential. The Purchaser understands that the federal securities
laws impose restrictions on trading based on information regarding this
offering. In addition, the Purchaser hereby acknowledges that unauthorized
disclosure of information regarding this offering may result in a violation of
Regulation FD. This obligation will terminate upon the filing by the Company of
a Current Report on Form 8-K or press release or press releases describing this
offering. In addition to the above, the Purchaser shall maintain in confidence
the receipt and content of any notice of a Suspension (as defined in Section
5(i) below). The foregoing agreements shall not apply to any information that is
or becomes publicly available through no fault of the Purchaser, or that the
Purchaser is legally required to disclose; provided, however, that if the
Purchaser is requested or ordered to disclose any such information pursuant to
any court or other government order or any other applicable legal procedure, it
shall provide the Company with prompt notice of any such request or order in
time sufficient to enable the Company to seek an appropriate protective order.
(d) The Purchaser understands that nothing in the Agreement or any
other materials presented to the Purchaser in connection with the purchase and
sale of the Securities constitutes legal, tax or investment advice and that
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP is counsel to the Company and is acting solely in that
capacity. The Purchaser has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its evaluation of the Company and purchase of the Securities.
(e) The Purchaser understands that its investment in the Securities
involves a significant degree of risk, including a risk of total loss of the
Purchaser's investment, and the Purchaser has full cognizance of and understands
all of the risk factors related to the Purchaser's purchase of the Securities.
The Purchaser understands that there is presently no public market for
securities issued by the Company. In the event a public market for the Common
Stock develops, the market price of the Common Stock may be volatile and the
Purchaser understands that no representation is being made as to the future
value of the Common Stock. The Purchaser has the knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Securities and has the ability to bear the
economic risks of an investment in the Securities.
(f) The Purchaser understands that no United States federal or state
agency or any other government or governmental agency has passed upon or made
any recommendation or endorsement of the Securities.
(g) The Purchaser understands that, until such time as the
Registration Statement has been declared effective or the Securities may be sold
pursuant to Rule 144 under the Securities Act without any restriction as to the
number of securities as of a particular date that can then be immediately sold,
the Securities will bear a restrictive legend in substantially the following
form:
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"The Securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or
the securities laws of any state or other jurisdiction. The Securities may
not be offered, sold, pledged or otherwise transferred except (1) pursuant
to an exemption from registration under the Securities Act or (2) pursuant
to an effective registration statement under the Securities Act, in each
case in accordance with all applicable securities laws of the states and
other jurisdictions, and in the case of a transaction exempt from
registration, unless the Company has received an opinion of counsel
reasonably satisfactory to it that such transaction does not require
registration under the Securities Act and such other applicable laws."
(h) The Purchaser's principal executive offices or primary
residence, as applicable, is/are in the jurisdiction set forth immediately below
the Purchaser's name on the signature pages hereto.
(i) The Purchaser hereby covenants with the Company not to make any
sale of the Securities (including any Warrant Shares) under the Registration
Statement without complying with the provisions of this Agreement and without
effectively causing the prospectus delivery requirement under the Securities Act
to be satisfied, and the Purchaser acknowledges and agrees that such Securities
(including any Warrant Shares) are not transferable on the books of the Company
unless the certificate submitted to the transfer agent evidencing the Securities
(including any Warrant Shares) is accompanied by a separate Purchaser's
Certificate of Subsequent Sale: (i) in the form of Appendix II hereto, (ii)
executed by an officer of, or other authorized person designated by, the
Purchaser, and (iii) to the effect that (A) the Securities (including any
Warrant Shares) have been sold in accordance with the Registration Statement,
the Securities Act and any applicable state securities or blue sky laws and (B)
the requirement of delivering a current prospectus has been satisfied. The
Purchaser will notify the Company promptly after the sale of all of its
Securities. The Purchaser acknowledges that there may occasionally be times when
the Company must suspend the use of the Prospectus forming a part of the
Registration Statement (a "Suspension") until such time as an amendment to the
Registration Statement has been filed by the Company and declared effective by
the Commission, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. The Purchaser hereby
covenants that it will not sell any Securities (including any Warrant Shares)
pursuant to said Prospectus during the period commencing at the time at which
the Company gives the Purchaser written notice of the Suspension of the use of
said Prospectus and ending at the time the Company gives the Purchaser written
notice that the Purchaser may thereafter effect sales pursuant to said
Prospectus.
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(j) The Purchaser further represents and warrants to, and covenants
with, the Company that (i) the Purchaser has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, (ii) the making and
performance of this Agreement by the Purchaser and the consummation of the
transactions herein contemplated will not violate any provision of the
organizational documents of the Purchaser or conflict with, result in the breach
or violation of, or constitute, either by itself or upon notice or the passage
of time or both, a default under any material agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument to which
the Purchaser is a party, or any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Purchaser, (iii) no consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required on the part of the
Purchaser for the execution and delivery of this Agreement or the consummation
of the transactions contemplated by this Agreement, (iv) upon the execution and
delivery of this Agreement, this Agreement shall constitute a legal, valid and
binding obligation of the Purchaser, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except to the extent enforcement of the
indemnification provisions, set forth in Section 7.3 of this Agreement, may be
limited by federal or state securities laws or the public policy underlying such
laws, and (v) there is not in effect any order enjoining or restraining the
Purchaser from entering into or engaging in any of the transactions contemplated
by this Agreement.
SECTION 6. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates for the Securities delivered
pursuant hereto shall survive for a period of 1 (one) year from the execution of
this Agreement, the delivery to the Purchaser of the Securities being purchased
and the payment therefore.
SECTION 7. Registration of the Shares and the Warrant Shares; Compliance
with the Securities Act.
7.1 Registration Procedures and Expenses. The Company shall:
(a) as soon as reasonably practicable, but in no event later than 90
days following the Closing Date (the "Filing Date"), prepare and file with the
Commission the Registration Statement on Form SB-2 relating to the sale of the
Shares and the Warrant Shares (together, the "Registrable Securities") by the
Purchaser and the Other Purchasers from time to time on the facilities of any
national securities exchange or electronic quotation service on which the Common
Stock is then traded or in privately-negotiated transactions;
(b) use its commercially reasonable efforts, subject to receipt of
necessary information from the Purchasers, to cause the Commission to declare
the Registration Statement effective within 60 days after the date the
Registration Statement is filed with the Commission (such date, the "Required
Effective Date"). However, so long as the Company filed the Registration
Statement by the Filing Date, if the Registration Statement receives Commission
review, then the Required Effective Date will be the ninetieth (90th) calendar
day after the date the Registration Statement is filed with the Commission;
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(c) use its commercially reasonable efforts to promptly prepare and
file with the Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection therewith as may be necessary to
keep the Registration Statement effective until the earliest of (i) two years
after the effective date of the Registration Statement, or (ii) such time as the
Registrable Securities become eligible for resale by non-affiliates pursuant to
Rule 144(k) under the Securities Act of 1933;
(d) furnish to the Purchaser with respect to the Registrable
Securities registered under the Registration Statement (and to each underwriter,
if any, of such Registrable Securities) such number of copies of prospectuses
and such other documents as the Purchaser may reasonably request, in order to
facilitate the public sale or other disposition of all or any of the Registrable
Securities by the Purchaser;
(e) file documents required of the Company for normal Blue Sky
clearance in states specified in writing by the Purchaser; provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented;
(f) bear all expenses in connection with the procedures in
paragraphs (a) through (e) of this Section 7.1 and the registration of the
Registrable Securities pursuant to the Registration Statement, other than fees
and expenses, if any, of counsel or other advisers to the Purchaser or the Other
Purchasers or underwriting discounts, brokerage fees and commissions incurred by
the Purchaser or the Other Purchasers, if any;
(g) file a Form D with respect to the Securities as required under
Regulation D and to provide a copy thereof to the Purchaser promptly after
filing;
(h) make available, while the Registration Statement is effective
and available for resale, its Chief Executive Officer, Chief Financial Officer,
and Chief Technology Officer for questions regarding information which the
Purchaser may reasonably request in order to fulfill any due diligence
obligation on its part.
The Company understands that the Purchaser disclaims being an underwriter,
but the Purchaser being deemed an underwriter shall not relieve the Company of
any obligations it has hereunder. A questionnaire related to the Registration
Statement to be completed by the Purchaser is attached hereto as Appendix I.
7.2 Transfer of Securities After Registration. The Purchaser agrees that
it will not effect any disposition of the Securities (including any Warrant
Shares) or its right to purchase the Securities (including any Warrant Shares)
that would constitute a sale within the meaning of the Securities Act or any
applicable state securities laws, except as contemplated in the Registration
Statement referred to in Section 7.1 or as otherwise permitted by law, and that
it will promptly notify the Company of any changes in the information set forth
in the Registration Statement regarding the Purchaser or its plan of
distribution.
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7.3 Indemnification. For the purpose of this Section 7.3:
(i) the term "Purchaser/Affiliate" shall mean any affiliates of the
Purchaser and any person who controls the Purchaser or any affiliate
of the Purchaser within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act; and
(ii) the term "Registration Statement" shall include any preliminary
prospectus, final prospectus, exhibit, supplement or amendment
included in or relating to, and any document incorporated by
reference in, the Registration Statement referred to in Section 7.1
of this Agreement.
(a) The Company agrees to indemnify and hold harmless each Purchaser
and each Purchaser/Affiliate against any losses, claims, damages, liabilities or
expenses, joint or several, to which the Purchaser or such Purchaser/Affiliates
may become subject, under the Securities Act, the Exchange Act, or any other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the prior written consent of the Company), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement,
including the Prospectus, financial statements and schedules, and all other
documents filed as a part thereof, as amended at the time of effectiveness of
the Registration Statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A,
or pursuant to Rule 434, of the Rules and Regulations, or the prospectus, in the
form first filed with the Commission pursuant to Rule 424(b) of the Regulations,
or filed as part of the Registration Statement at the time of effectiveness if
no Rule 424(b) filing is required (the "Prospectus"), or any subsequent
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in the Registration Statement
or any amendment or supplement thereto not misleading or in the Prospectus or
any amendment or supplement thereto not misleading, in light of the
circumstances under which they were made, or arise out of or are based in whole
or in part on any inaccuracy in the representations and warranties of the
Company contained in this Agreement, or any failure of the Company to perform
its obligations hereunder or under law, and will reimburse each Purchaser and
each such Purchaser/Affiliate for any legal and other expenses as such expenses
are reasonably incurred by such Purchaser or such Purchaser/Affiliate in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
the Company will not be liable for amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably withheld, and
the Company will not be liable in any such case to the extent, but only to the
extent, that any such loss, claim, damage, liability or expense arises out of or
is based upon (i) an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Purchaser expressly
for use therein, or (ii) the failure of such Purchaser to comply with the
covenants and agreements contained in Sections 5 or 7.2, with respect to the
sale of the Securities or (iii) the inaccuracy of any representation or warranty
made by such Purchaser herein or (iv) any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
the Purchaser prior to the pertinent sale or sales by the Purchaser.
-10-
(b) Each Purchaser will severally indemnify and hold harmless the
Company, each of its directors, each of its executive officers, including such
officers who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any losses, claims, damages, liabilities
or expenses to which the Company, each of its directors, each of its officers
who signed the Registration Statement or controlling person may become subject,
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser) insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon (i) any failure to comply with the covenants and agreements
contained in Sections 5 or 7.2 hereof with respect to the sale of the
Securities, or (ii) the inaccuracy of any representation or warranty made by
such Purchaser herein, or (iii) any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements in the Registration Statement or any
amendment or supplement thereto not misleading or in the Prospectus or any
amendment or supplement thereto not misleading in the light of the circumstances
under which they were made, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Purchaser expressly
for use therein, and will reimburse the Company, each of its directors, each of
its officers who signed the Registration Statement or controlling person for any
legal and other expense reasonably incurred by the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that each Purchaser's aggregate liability under this
Section 7 shall not exceed the amount of proceeds received by such Purchaser on
the sale of the Registrable Securities pursuant to the Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 7.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 7.3, promptly notify the indemnifying
party in writing thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party for contribution or otherwise under the indemnity agreement contained in
this Section 7.3 to the extent it is not prejudiced as a result of such failure.
In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party based upon the advice of such indemnified party's counsel
shall have reasonably concluded, based on an opinion of counsel reasonably
satisfactory to the indemnifying party, that there may be a conflict of interest
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 7.3 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall have
employed such counsel in connection with the assumption of legal defenses in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, reasonably satisfactory to such indemnifying
party, representing the indemnified parties who are parties to such action, plus
local counsel, if appropriate) or (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of commencement of
action, in each of which cases the reasonable fees and expenses of counsel shall
be at the expense of the indemnifying party. The indemnifying party shall not be
liable for any settlement of any action without its written consent.
-11-
(d) If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) of this Section 7.3 in respect to any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the private placement of Common
Stock hereunder or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but the relative
fault of the Company and the Purchaser in connection with the statements or
omissions or inaccuracies in the representations and warranties in this
Agreement and/or the Registration Statement which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company on the one hand and each Purchaser on the other shall be deemed to be in
the same proportion as the amount paid by such Purchaser to the Company pursuant
to this Agreement for the Shares purchased by such Purchaser that were sold
pursuant to the Registration Statement bears to the difference (the
"Difference") between the amount such Purchaser paid for the Shares that were
sold pursuant to the Registration Statement and the amount received by such
Purchaser from such sale. The relative fault of the Company, on the one hand,
and each Purchaser on the other shall be determined by reference to, among other
things, whether the untrue or alleged statement of a material fact or the
omission or alleged omission to state a material fact or the inaccurate or the
alleged inaccurate representation and/or warranty relates to information
supplied by the Company or by such Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in paragraph (c) of this
Section 7.3, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in paragraph (c) of this Section 7.3 with respect to the
notice of the threat or commencement of any threat or action shall apply if a
claim for contribution is to be made under this paragraph (d); provided,
however, that no additional notice shall be required with respect to any threat
or action for which notice has been given under paragraph (c) for purposes of
indemnification. The Company and each Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 7.3 were determined
solely by pro rata allocation (even if the Purchaser were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in this paragraph.
Notwithstanding the provisions of this Section 7.3, no Purchaser shall be
required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages that such Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Purchasers' obligations to contribute pursuant to this
Section 7.3 are several and not joint.
-12-
7.4 Termination of Conditions and Obligations. The restrictions imposed by
Section 5 or this Section 7 upon the transferability of the Securities shall
cease and terminate as to any particular number of the Securities (including the
Warrant Shares) upon the passage of two years from the effective date of the
Registration Statement covering such Securities or at such time as an opinion of
counsel satisfactory in form and substance to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
7.5 Information Available. So long as the Registration Statement is
effective covering the resale of Registrable Securities owned by the Purchaser,
the Company will furnish to the Purchaser:
(a) upon the reasonable request of the Purchaser, a reasonable
number of copies of the Prospectuses, and any supplements thereto, to supply to
any other party requiring such Prospectuses; and
(b) the Company, upon the reasonable request of the Purchaser and
with prior notice, will be available to the Purchaser or a representative
thereof at the Company's headquarters to discuss information relevant for
disclosure in the Registration Statement covering the Registrable Securities and
will otherwise cooperate with any Purchaser conducting an investigation for the
purpose of reducing or eliminating such Purchaser's exposure to liability under
the Securities Act, including the reasonable production of information at the
Company's headquarters, subject to appropriate confidentiality limitations.
-13-
7.6 Delay in Filing or Effectiveness of Registration Statement. If the
Registration Statement is not filed by the Company with the Commission on or
prior to the Filing Date, then for each day following the Filing Date, until but
excluding the date the Registration Statement is filed, or if the Registration
Statement is not declared effective by the Commission by the Required Effective
Date, then for each day following the Required Effective Date, until but
excluding the date the Commission declares the Registration Statement effective,
the Company shall, for each such day, pay the Purchaser with respect to any such
failure, as liquidated damages and not as a penalty, an amount equal to 0.0333%
of the purchase price paid by such Purchaser for its Securities pursuant to this
Agreement; and for any such day, such payment shall be made no later than the
first business day of the calendar month next succeeding the month in which such
day occurs. Any payments made pursuant to this Section 7.6 shall not constitute
the Purchaser's exclusive remedy for such events. Notwithstanding the foregoing
provisions, in no event shall the Company be obligated to pay such liquidated
damages to more than one Purchaser in respect of the same Securities for the
same period of time. Such payments shall be made to the Purchaser in cash.
SECTION 8. Notices. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (i) upon delivery to the party
to be notified; (ii) when received by confirmed facsimile or (iii) one (1)
business day after deposit with a nationally recognized overnight carrier,
specifying next business day delivery, with written verification of receipt. All
communications shall be sent to the Company and the Purchaser as follows or at
such other addresses as the Company or the Purchaser may designate upon ten (10)
days' advance written notice to the other party:
(a) if to the Company, to:
Ovation Products Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(b) if to the Purchaser, at its address as set forth at the end of
this Agreement.
-14-
SECTION 9. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Purchaser. No
provision hereunder may be waived other than in a written instrument executed by
the waiving party.
SECTION 10. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
SECTION 11. Severability. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the federal
law of the United States of America.
SECTION 13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered (including by facsimile) to the other parties.
SECTION 14. Entire Agreement. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Purchaser makes any
representation, warranty, covenant or undertaking with respect to such matters.
SECTION 15. Assignment. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
parties hereto and their respective permitted successors, assigns, heirs,
executors and administrators. This Agreement and the rights of the Purchaser
hereunder may be assigned by the Purchaser with the prior written consent of the
Company, except such consent shall not be required in cases of assignments by an
investment adviser to a fund for which it is the adviser or by or among funds
that are under common control, provided that such assignee agrees to be bound by
the terms of this Agreement.
SECTION 16. 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 assurance as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
-15-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
OVATION PRODUCTS CORPORATION
By:
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
Print or Type:
Name of Purchaser
(Individual or Institution):
----------------------------------------------------
Name of Individual representing
Purchaser (if an Institution):
----------------------------------------------------
Title of Individual representing
Purchaser (if an Institution):
----------------------------------------------------
Signature by:
Individual Purchaser or Individual
representing Purchaser:
----------------------------------------------------
Address:
----------------------------------
Telephone:
----------------------------------
Facsimile:
----------------------------------
E-mail:
----------------------------------
-16-
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Purchase Agreement which this follows)
A. Complete the following items on BOTH Purchase Agreements (Please sign two
originals):
1. Page 16 - Signature:
(i) Name of Purchaser (Individual or Institution)
(ii) Name of Individual representing Purchaser (if an Institution)
(iii) Title of Individual representing Purchaser (if an Institution)
(iv) Signature of Individual Purchaser or Individual representing
Purchaser
2. Appendix I - Stock Certificate Questionnaire/Registration Statement
Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire and the Registration Statement Questionnaire.
3. Return BOTH properly completed and signed Purchase Agreements
including the properly completed Appendix I to (initially by
facsimile with hand copy by overnight delivery):
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
B. Instructions regarding the transfer of funds for the purchase of Securities
will be sent by facsimile to the Purchaser by the Company at a later date.
C. Upon the resale of the Securities by the Purchasers after the Registration
Statement covering the Registrable Securities is effective, as described in the
Purchase Agreement, the Purchaser:
(i) must deliver a current prospectus of the Company to the buyer
(prospectuses must be obtained from the Company at the
Purchaser's request); and
(ii) must send a letter in the form of Appendix II to the Company
so that the Securities may be properly transferred.
Appendix I
(Page 1 of 3)
OVATION PRODUCTS CORPORATION
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Securities are to be
registered in (this is the name that will
appear on your stock certificate(s)). You may
use a nominee name if appropriate: _____________________________
2. The relationship between the Purchaser of the
Securities and the Registered Holder listed in
response to item 1 above: _____________________________
3. The mailing address of the Registered Holder
listed in response to item 1 above:
_____________________________
_____________________________
_____________________________
4. The Social Security Number or Tax
Identification Number of the Registered Holder
listed in response to item 1 above: _____________________________
Appendix I
(Page 2 of 3)
OVATION PRODUCTS CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information:
SECTION 1. Pursuant to the "Selling Stockholder" section of the
Registration Statement, please state your or your organization's name exactly as
it should appear in the Registration Statement: GreenShift Corporation
Please provide the number of shares that you or your organization
will own immediately after Closing, including those Securities purchased by you
or your organization pursuant to this Purchase Agreement and those shares
purchased by you or your organization through other transactions: 200,000
Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates?
_____ Yes ____ No
If yes, please indicate the nature of any such relationships below:
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Are you (i) an NASD Member (see definition), (ii) a Controlling (see
definition) shareholder of an NASD Member, (iii) a Person Associated with a
Member of the NASD (see definition), or (iv) an Underwriter or a Related Person
(see definition) with respect to the proposed offering; or (b) do you own any
shares or other securities of any NASD Member not purchased in the open market;
or (c) have you made any outstanding subordinated loans to any NASD Member?
Answer: [ ] Yes [ ] No If "yes," please describe below
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Appendix I
(Page 3 of 3)
NASD Member. The term "NASD member" means either any broker or dealer
admitted to membership in the National Association of Securities Dealers, Inc.
("NASD"). (NASD Manual, By-laws Article I, Definitions)
Control. The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power, either individually or with others, to direct or cause
the direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise. (Rule 405 under the
Securities Act of 1933, as amended)
Person Associated with a member of the NASD. The term "person associated
with a member of the NASD" means every sole proprietor, partner, officer,
director, branch manager or executive representative of any NASD Member, or any
natural person occupying a similar status or performing similar functions, or
any natural person engaged in the investment banking or securities business who
is directly or indirectly controlling or controlled by a NASD Member, whether or
not such person is registered or exempt from registration with the NASD pursuant
to its bylaws. (NASD Manual, By-laws Article I, Definitions)
Underwriter or a Related Person. The term "underwriter or a related
person" means, with respect to a proposed offering, underwriters, underwriters'
counsel, financial consultants and advisors, finders, members of the selling or
distribution group, and any and all other persons associated with or related to
any of such persons. (NASD Interpretation)
APPENDIX II
[Transfer Agent]
[Address]
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, [an officer of, or other person duly authorized by]
_____________________________________________________________ hereby certifies
[fill in official name of individual or institution]
that he/she [said institution] is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on _______________ in
[date]
accordance with the terms of the Purchase Agreement and in accordance with
Registration Statementnumber ____________________________________________ or
[fill in the number of or otherwise
identify Registration Statement]
otherwise in accordance with the Securities Act of 1933, as amended, and, in the
case of a transfer pursuant to the Registration Statement, the requirement of
delivering a current prospectus by the Company has been complied with in
connection with such sale.
Print or Type:
Name of Purchaser
(Individual or
Institution): ______________________
Name of Individual
representing
Purchaser (if an
Institution) ______________________
Title of Individual
representing
Purchaser (if an
Institution): ______________________
Signature by:
Individual Purchaser
or Individual repre-
senting Purchaser: ______________________
