amar_ex2-1
Exhibit 2.1
[Execution Version]
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
AMARILLO BIOSCIENCES, INC.,
AINOS, INC.
and
THE MAJOR SHAREHOLDERS NAMED HEREIN
DATED AS OF DECEMBER 24, 2020
SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”) is dated as
of December 24, 2020, by and between Amarillo
Biosciences, Inc., a Texas corporation (the “Company”), Ainos, Inc., a
Cayman Islands corporation (the “Purchaser”), and each of
the Major Shareholders named herein.
RECITALS
WHEREAS, the Company, the Major
Shareholders, and the Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities
registration afforded by Section 4(a)(2) of the Securities Act
of 1933, as amended (the “Securities Act”), and
Rule 506 of Regulation D (“Regulation D”) as
promulgated by the United States Securities and Exchange Commission
(the “Commission”) under the
Securities Act;
WHEREAS, the Purchaser desires to
purchase, and the Company desires to sell, upon the terms and
conditions stated in this Agreement, one hundred million
(100,000,000) shares of common stock, par value one cent ($0.01)
per share, of the Company (the “Common Stock”), which
such total amount of shares of Common Stock shall be referred to
herein as the “Shares”; and
WHEREAS, the board of
directors of the Company has unanimously: (i) determined that
the sale of the Shares pursuant to this Agreement is in the best
interests of the Company and the shareholders of the Company, and
declared it advisable, to enter into this Agreement, (ii) approved
this Agreement and the transactions contemplated hereby on the
terms and subject to the conditions of this Agreement, and (iii)
adopted a resolution recommending that the Company Shareholder
Matters be adopted by the shareholders of the Company at the
Special Meeting (the “Company
Recommendation”).
NOW, THEREFORE, IN CONSIDERATION of the
mutual covenants contained in this Agreement, and for other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company, the Major Shareholders, and the
Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the
terms defined elsewhere in this Agreement, for all purposes of this
Agreement, the following terms shall have the meanings indicated in
this Section 1.1:
“Action” means any
Proceeding, inquiry, or notice of violation pending or, to the
Company’s Knowledge, threatened against the Company, any
Subsidiary or any of their respective properties or any officer,
director or employee of the Company or any Subsidiary acting in his
or her capacity as an officer, director or employee before or by
any federal, state, county, local or foreign court, arbitrator,
governmental or administrative agency, regulatory authority, stock
market, stock exchange or trading facility.
“Acquisition Proposal”
means a written offer or proposal involving the Company or any of
its Subsidiaries with respect to: (a) any merger, reorganization,
consolidation, share exchange, share issuance, recapitalization,
business combination, liquidation, dissolution or other similar
transaction involving any sale, issuance, lease, exchange,
mortgage, pledge, transfer or other disposition of, all or a
material portion of the assets or equity securities or deposits of,
the Company or any of its Subsidiaries, in a single transaction or
series of related transactions; (b) any tender offer or exchange
offer for all or a material portion of the outstanding shares of
capital stock of the Company or any of its Subsidiaries; or (c) any
public announcement of a proposal, plan or intention to do any of
the foregoing or any agreement to engage in any of the
foregoing.
“Affiliate” means, with
respect to any Person, any other Person that, directly or
indirectly through one or more intermediaries, Controls, is
controlled by or is under common control with such Person, as such
terms are used in and construed under Rule 405 under the Securities
Act.
“Agreement” shall have the
meaning ascribed to such term in the Preamble.
“Appraisal” means an
appraisal report prepared by Titan International Valuation Ltd., a
third-party appraiser retained by Purchaser, purporting to value
Purchaser’s Gas Sensor Patents and Patent License Agreements
as of October 31, 2020.
“Approvals” has the
meaning set forth in Section 3.1(f).
“Board” has the meaning
set forth in Section 2.2(a)(iv).
“Business Combination” the
consummation of a merger, consolidation, statutory share exchange,
or similar transaction that requires adoption by the
Company’s shareholders.
“Business Day” means a
day, other than a Saturday or Sunday, on which banks in the City of
Delaware are open for the general transaction of
business.
“CARES Act” means the
Coronavirus Aid, Relief, and Economic Security Act, as may be
amended or modified.
“CFIUS” means the
Committee on Foreign Investment in the United States.
“Change in Recommendation”
has the meaning set forth in Section 4.18(b).
“Charter Documents” has
the meaning set forth in Section 3.1(b).
“Closing” means the
closing of the purchase and sale of the Shares pursuant to this
Agreement.
“Closing Date” means the
Trading Day when all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all
of the conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied or
waived, as the case may be, or such other date as the parties may
agree.
“CMS” has the meaning set
forth in Section 3.1(hh).
“Code” means the Internal
Revenue Code of 1986, as amended.
“Commission” has the
meaning set forth in the Recitals.
“Common Stock” has the
meaning set forth in the Recitals, and also includes any securities
into which the Common Stock may hereafter be reclassified or
changed.
“Company” has the meaning
set forth in the Preamble.
“Company Business
Combination” has the meaning set forth in Section 4.14(b).
“Company Deliverables” has
the meaning set forth in Section 2.2(a).
“Company Recommendation”
has the meaning set forth in the Recitals.
“Company Registered Intellectual
Property” has the meaning set forth in Section 3.1(s)(i).
“Company Shareholder
Matters” has the meaning set forth in Section 4.18(a).
“Company’s
Knowledge” means, with respect to any statement made
to the knowledge of the Company and the Major Shareholders, that
the statement is based upon the constructive or actual knowledge of
the Major Shareholders and, in the case of the Company, the
executive officers of the Company after reasonable
investigation.
“Contract” shall mean any
contract, subcontract, agreement, indenture, note, bond, loan or
credit agreement, instrument, installment obligation, lease,
sublease, mortgage, use or occupancy agreement, deed of trust,
license, sublicense, commitment, power of attorney, guaranty or
other legally binding commitment, arrangement, understanding or
obligation, whether written or oral, in each case, as amended and
supplemented from time to time and including all schedules, annexes
and exhibits thereto.
“Control” (including the
terms “controlling”, “controlled by” or
“under common control with”) means the possession,
direct or indirect, of the power 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.
“Covered Persons” has the
meaning set forth in Section 3.1(v).
“Damages” has the meaning
set forth in Section
4.23(e).
“Deferral Notice” has the
meaning set forth in Section 4.23(b).
“Delaware Courts” has the
meaning set forth in Section 6.8.
“Disclosure Schedules” has
the meaning set forth in Section 3.1.
“Disqualifications Events”
has the meaning set forth in Section 3.1(v).
“Employee Benefit Plan”
shall mean each “employee benefit plan” (within the
meaning of Section 3(3) of ERISA) and each other retirement,
supplemental retirement, deferred compensation, employment, bonus,
incentive compensation, stock purchase, employee stock ownership,
equity-based, severance, change in control, employee loan, health
welfare, retiree medical or life insurance, educational, employee
assistance, fringe benefit plan or program and all other employee
benefit plans, policies, agreement (including any employment,
consulting and collective bargaining agreements), programs or
arrangements, whether or not subject to ERISA, whether formal or
informal, oral or written, which the Company or any Subsidiary or
any ERISA Affiliate sponsors or maintains or contributes or has any
obligation to contribute for the benefit of the current or former
employees, directors or other individual service providers of the
Company or any Subsidiary or with respect to which the Company or
any Subsidiary has any direct or indirect present or future
liability on behalf of such employees, director or other individual
service providers.
“Environmental Laws” has the meaning set forth in
Section 3.1(l).
“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” shall
mean any trade or business (whether or not incorporated) that,
together with the Company or any Subsidiary is treated as a
“single employer” under Section 414 of the
Code.
“Evaluation Date” has the
meaning set forth in Section 3.1(qq).
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated
thereunder.
“FDA” has the meaning set
forth in Section 3.1(hh).
“Financial Statements” has
the meaning set forth in Section 3.1(h)(ii).
“Major Shareholder Shares”
has the meaning set forth in Section 4.18(c).
“Major Shareholders” means
Stephen T. Chen and Virginia M. Chen, individually and as Trustees
of Stephen T. Chen and Virginia M. Chen Living Trust, dated April
12, 2018, and Hung Lan Lee.
“GAAP” means U.S.
generally accepted accounting principles, as applied by the
Company.
“Governmental Entity”
shall mean: (a) any federal, provincial, state, local,
municipal, national or international court, governmental
commission, government or governmental authority, department,
regulatory or administrative agency, board, bureau, agency or
instrumentality, tribunal, arbitrator or arbitral body (public or
private), or similar body; (b) any self-regulatory
organization; or (c) any political subdivision of any of the
foregoing.
“Indemnified Person” has
the meaning set forth in Section 4.7(a).
“Information” has the
meaning set forth in Section 4.14(c).
“Intellectual Property”
shall mean all rights, title and interest in, relating to or
deriving from intellectual property, whether protected, created or
arising under the laws of the United States or any other
jurisdiction, whether registered or unregistered, including: (a)
all patents and patent applications, including provisional patent
applications and similar filings and any and all substitutions,
divisions, continuations, continuations-in-part, divisions,
reissues, renewals, extensions, reexaminations, patents of
addition, supplementary protection certificates, utility models,
inventors’ certificates, or the like and any foreign
equivalents of the foregoing (including certificates of invention
and any applications therefor) (collectively, “Patents”); (b) all
domestic and foreign copyrights, copyright registrations, copyright
applications, including any of the foregoing that protect original
works of authorship fixed in any tangible medium of expression,
including literary works (including all forms and types of computer
software, including all source code, object code, firmware,
development tools, files, records and data, and all documentation
related to any of the foregoing), pictorial and graphic works
(collectively, “Copyrights”);
(c) computer software and firmware, including data files,
source code, object code and software-related specifications and
documentation (collectively “Software”) (d) all
trademarks, service marks, trade names, business marks, service
names, brand names, trade dress rights, logos, corporate names,
trade styles, and other source or business identifiers and general
intangibles of a like nature, together with the goodwill associated
with any of the foregoing, along with all applications,
registrations, renewals and extensions thereof (collectively,
“Trademarks”); (e) all
Internet domain names and social media accounts; (f) trade secrets,
technology, discoveries and improvements, know-how, proprietary
rights, formulae, confidential and proprietary information,
technical information, techniques, inventions (including
conceptions and/or reductions to practice), designs, drawings,
procedures, processes, models, formulations, manuals and systems,
whether or not patentable or copyrightable (collectively
“Trade
Secrets”); (g) proprietary databases and data
compilations and all documentation relating to the foregoing; and,
including in each case any; (h) all other intellectual property
rights, proprietary rights, or confidential information and
materials.
“Insolvent” means, with
respect to any Person, (a) the present fair saleable value of such
Person’s assets is less than the amount required to pay such
Person’s debts as they become due, (b) such Person is unable
to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and
matured or (c) such Person has unreasonably small capital with
which to conduct the business in which it is engaged as such
business is now conducted and is currently proposed to be
conducted.
“Law” shall mean any
federal, state, local, municipal, foreign or other law, statute,
constitution, treaty, principle of common law, resolution,
ordinance, code, edict, decree, rule, regulation, ruling,
injunction, judgment, order, assessment, writ or other legal
requirement, administrative policy or guidance, or requirement
issued, enacted, imposed, adopted, promulgated, implemented,
entered into or otherwise put into effect by or under the authority
of any Governmental Entity.
“Lien” means any lien,
charge, claim, encumbrance, security interest, right of first
refusal, preemptive right, mortgage, deed of trust, pledge,
conditional sale agreement, restrictions on transfer or other
restriction of any kind.
“Losses” has the meaning
set forth in Section 4.7(a).
“Material Adverse
Effect” means any event,
circumstance, change or occurrence that has had or would reasonably
be expected to have, individually or in the aggregate (a) a
material and adverse effect on the legality, validity or
enforceability of any Transaction Document, (b) a material and
adverse effect on the results of operations, assets, properties,
business, condition (financial or otherwise), liabilities or
prospects of the Company or any Subsidiary, or (c) any adverse
impairment to the Company’s ability to perform in any
material respect on a timely basis its obligations under any
Transaction Document.
“Material Contract” means
any of the following agreements of the Company or any
Subsidiary:
(a) any
employment, severance, termination, consulting, or retirement
agreement with any Person (including current or former directors,
officers, or employees of the company or any
Subsidiary);
(b) regarding
any outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing
indebtedness of the Company or by which the Company is
bound;
(c) any
contract containing covenants that limit in any material respect
the ability of the Company or its Subsidiary or any employee of the
Company or its Subsidiary to compete in any line of business or
with any Person or which involve any material restriction of the
geographical area in which, or method by which or with whom, the
Company or its Subsidiary may carry on its business (other than as
may be required by law or applicable regulatory authorities), and
any contract that could require the disposition of any material
assets or line of business of the Company or its
Subsidiary;
(d) any
joint venture, partnership, strategic alliance, or other similar
contract (including any franchising agreement, but in any event
excluding introducing broker agreements), and any contract relating
to the acquisition or disposition of any material business or
material assets (whether by merger, sale of stock or assets, or
otherwise), which acquisition or disposition is not yet complete or
where such contract contains continuing material obligations or
contains continuing indemnity obligations of the Company or its
Subsidiary;
(e) any
real property lease and any other lease with annual rental payments
aggregating $50,000 or more;
(f) other
than with respect to loans, any contract providing for, or
reasonably likely to result in, the receipt or expenditure of more
than $50,000 on an annual basis, including the payment or receipt
of royalties or other amounts calculated based upon revenues or
income;
(g) any
contract or arrangement under which the Company or its Subsidiary
is licensed or otherwise permitted by a third party to use any
Intellectual Property that is material to its business (except for
any “shrinkwrap” or “click through” license
agreements or other agreements for software that is generally
available to the public and has not been customized for the Company
or its Subsidiary) or under which a third party is licensed or
otherwise permitted to use any Intellectual Property owned by the
Company or its Subsidiary;
(h) any
contract that by its terms limits the payment of dividends or other
distributions by the Company or its Subsidiary;
(i) any
standstill or similar agreement pursuant to which any party has
agreed not to acquire assets or securities of another
person;
(j) any
contract that would reasonably be expected to prevent, materially
delay, or materially impede the Company’s ability to
consummate the transactions contemplated by this Agreement and the
other Transaction Documents;
(k) any
contract providing for indemnification by the Company or its
Subsidiary of any person, except for immaterial contracts entered
into in the ordinary course of business consistent with past
practice;
(l)
any contract that contains a put, call, or similar
right pursuant to which the Company or its Subsidiary could be
required to purchase or sell, as applicable, any equity interests
or assets that have a fair market value or purchase price of more
than $50,000;
(m)
any agreement relating to the provision of data processing, network
communication, or other technical services to or by the Company or
any Subsidiary;
(n) any
agreement that contains any (i) exclusive dealing obligation, (ii)
“clawback” or similar undertaking requiring the
reimbursement or refund of any fees, (iii) “most favored
nation” or similar provision granted by the Company or any
Subsidiary, or (iv) provision that grants any right of first
refusal or right of first offer or similar right or that limits or
purposes to limit the ability of the Company or any Subsidiary to
own, operate, sell, transfer, pledge or otherwise dispose of any
assets or business; and
(o) any
other contract, agreement or understanding material to the Company
or its Subsidiary or their respective operations.
“Material Permits” has the
meaning set forth in Section 3.1(q).
“OFAC” has the meaning set
forth in Section 3.1(ii).
“Outside Date” means the
forty-fifth (45th) day following the
date of this Agreement; provided that if such day is not a
Business Day, the first (1st) day following such
day that is a Business Day.
“Owned Intellectual
Property” shall mean all Intellectual Property owned
or purported to be owned by the Company or any
Subsidiary.
“Patent Assets” means
those certain rights, title and interest in and to the patents,
patent applications, and patent license agreements as set forth in
Schedule A to
the Patent Assignment.
“Patent Assignment” means
a patent assignment in the form attached hereto as Exhibit E.
“Person” means an
individual, corporation, partnership, limited liability company,
trust, business trust, association, joint stock company, joint
venture, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not specifically
listed herein.
“Personnel” has the
meaning set forth in Section 3.1(s)(vii).
“Press Release” has the
meaning set forth in Section 4.5.
“Principal Trading Market”
means the Trading Market on which the Common Stock is primarily
listed on and quoted for trading. For the avoidance of doubt, the
Common Stock is quoted for trading on the OTC Bulletin Board and the Pink Open Market of
the OTC Markets Group Inc. as of the date of this
Agreement.
“Proceeding” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
“Public Disclosure” means
all filings, documents, and other filings filed by the Company with
the Commission including all filings made under the Exchange Act
and all registration statements filed under the Securities
Act.
“Purchase Price” is the
fair market value of the Patent Assets as agreed to by the
parties.
“Purchaser” has the
meaning set forth in the Preamble.
“Purchaser Deliverables”
has the meaning set forth in Section 2.2(b).
“Registrable Stock” has
the meaning set forth in Section 4.23(a).
“Registration Statement”
has the meaning set forth in Section 4.23(a).
“Regulation D” has the
meaning set forth in the Recitals.
“Representatives” has the
meaning set forth in Section 4.16(a).
“Required Filings” has the
meaning set forth in Section 4.18(f).
“Rule 144” means
Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.
“Securities Act” means the
Securities Act of 1933, as amended.
“Shareholder Approval” has
the meaning set forth in Section 5.1(i).
“Shareholder Litigation”
has the meaning set forth in Section 4.12.
“Shares” has the meaning
set forth in the Recitals.
“Solicitor” has the
meaning set forth in Section 3.1(v).
“Special Meeting” has the
meaning set forth in Section 4.18(a).
“Stock Certificates” has
the meaning set forth in Section 2.2(a)(ii).
“Subsidiary” means any
entity in which the Company, directly or indirectly, owns fifty
percent (50%) or more of the outstanding capital stock or otherwise
has Control over such entity.
“Tax” or
“Taxes”
mean (a) any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or add on minimum,
ad valorem, transfer or excise Tax , or any other Tax ,
custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty,
imposed by any Governmental Entity and (b) any liability in
respect of any items described in clause (a) above payable
by reason of contract, assumption, transferee or successor
liability, operation of law, Treasury Regulations
Section 1.1502-6(a) (or any predecessor or successor thereof
or analogous or similar provisions of Law) or
otherwise.
“Tax Return” means any
return, declaration, report or similar statement filed or required
to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return,
claim for refund, amended return or declaration of estimated
Tax.
“Trading Day” means a day on which the Common Stock is
listed or quoted and traded on its Principal Trading Market;
provided, that in the event that the Common Stock is not listed or
quoted on a Trading Market, then Trading Day shall mean a Business
Day.
“Trading Market” means whichever of the New York Stock
Exchange, the NYSE MKT, the NASDAQ Global Select Market, the NASDAQ
Global Market, the NASDAQ Capital Market, the OTC Bulletin
Board or any tier of the OTC
Markets Group, Inc. (or any successors to any of the foregoing) on
which the Common Stock is listed or quoted for trading on the date
in question.
“Transaction Documents”
means this Agreement, the schedules and exhibits attached hereto,
the Patent Assignment and any other documents or agreements
executed or delivered in connection with the transactions
contemplated hereunder.
“Transfer Agent” means
American Stock Transfer & Trust Company, LLC, or any successor
transfer agent for the Company.
ARTICLE II
PURCHASE AND SALE
2.1 Closing.
(a) Purchase of Shares. Subject to
the terms and conditions set forth in this Agreement, at the
Closing the Company shall issue and sell to the Purchaser, and the
Purchaser shall purchase from the Company, the Shares in exchange
for the Purchase Price.
(b) Closing. The Closing of the
purchase and sale of the Shares shall take place on the Closing
Date remotely by facsimile transmission or other electronic means
as the parties may mutually agree.
(c) Delivery of the Shares. On the
Closing Date, the Company shall deliver (or irrevocably instruct
the Transfer Agent to deliver) to the Purchaser (i) one or more
stock certificates reflecting the issuance of, or (ii) in
electronic form via book-entry transfer to the account(s)
maintained by the Purchaser (or its designated custodian), the
Shares.
(d) Purchase Price; Form of
Payment. In consideration for 100,000,000 duly authorized
and issued shares of Common Stock of the Company valued at $0.20
per share, at the Closing and contemporaneously with the
Purchaser’s receipt of the Shares in accordance with
Section 2.1(c), the
Purchaser shall execute and deliver the Patent Assignment to the
Company, which such Patent Assignment is deemed to have an
appraised value between $20,168,000 and $22,488,000 pursuant to the
Appraisal. The Patent Assignment shall not be deemed effective
until the Purchaser (or its designated custodian per its delivery
instructions) confirms receipt of the Shares
2.2 Closing
Deliveries.
(a) On or prior to the
Closing, the Company shall issue, deliver or cause to be delivered
to the Purchaser the following (the “Company
Deliverables”):
(i)
this Agreement,
duly executed by the Company;
(ii)
the Shares, either
by delivery of one or more stock certificates evidencing the Shares
or by book-entry transfer to the account(s) maintained by the
Purchaser (or its designated custodian), registered in the name of
the Purchaser or its nominee (per its instructions) (the
“Stock
Certificates”);
(iii)
a legal opinion of
the Company’s counsel, dated as of the Closing Date and in
the form attached hereto as Exhibit A, executed by
such counsel and addressed to the Purchaser;
(iv)
a certificate of
the Secretary of the Company, in the form attached hereto as
Exhibit B,
dated as of the Closing Date, (a) certifying the resolutions
adopted by the Board of Directors of the Company (the
“Board”) approving the
transactions contemplated by this Agreement and the other
Transaction Documents, including the issuance of the Shares,
(b) certifying the current versions of the certificate of
formation, as amended, and bylaws, as amended, of the Company, and
(c) certifying as to the signatures and authority of persons
signing the Transaction Documents and related documents on behalf
of the Company;
(v)
a certificate of
the Chief Executive Officer and Chief Financial Officer of the
Company, in the form attached hereto as Exhibit C, dated as of the
Closing Date, certifying to the fulfillment of the conditions
specified in Sections 5.1(a) and
5.1(b);
(vi)
a
certificate of good standing for the Company from the Texas
Secretary of State as of a recent date; and
(vii)
the resignations contemplated by
Section
4.17 hereof.
(b) On or prior to the
Closing, the Purchaser shall deliver or cause to be delivered to
the Company the following (the “Purchaser
Deliverables”):
(i)
this Agreement,
duly executed by the Purchaser;
(ii)
the Patent
Assignment duly executed by the Purchaser;
(iii)
a true and correct
copy of the Appraisal;
(iv)
a
certificate of good standing for the Company from the Cayman
Islands General Registry as of a recent date; and
(v)
a list of nominees
of Persons to be nominated, appointed, and/or elected to the Board
of the Company; and
(vi)
a certificate of
the Chief Executive Officer of the Purchaser, in the form attached
hereto as Exhibit
D, dated as of the Closing Date, certifying to the
fulfillment or waiver of the conditions in this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties
Relating to the Company. Except as set forth in the
schedules delivered herewith (the “Disclosure Schedules”),
which Disclosure Schedules shall be deemed part hereof and shall
qualify any representation made herein to the extent of the
disclosure contained in the corresponding section of the Disclosure
Schedules, each of the Company and Major Shareholder hereby jointly
and severally represents and warrants as of the date hereof and as
of the Closing Date (except for the representations and warranties
that expressly speak as of a specific date, which shall be made as
of such date), to the Purchaser that:
(a) Subsidiaries. The Company has
no direct or indirect Subsidiaries other than those listed in
Schedule 3.1(a) of the
Disclosure Schedules. The Company owns, directly or indirectly, all
of the capital stock or comparable equity interests of each
Subsidiary free and clear of any and all Liens, and all the issued
and outstanding shares of capital stock or comparable equity
interest of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b) Organization and Qualification.
The Company and each Subsidiary is an entity duly incorporated or
otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own or
lease and use its properties and assets and to carry on its
business as currently conducted. Neither the Company nor any
Subsidiary is in violation of any of the provisions of its
respective certificate or articles of formation, bylaws or other
organizational or charter documents. The Company and each
Subsidiary is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the
case may be, would not be expected to have a Material Adverse
Effect. True, correct and complete copies of the certificate of
formation, as amended, and bylaws, as amended (or equivalent
organizational documents) of the Company and each Subsidiary as
currently in effect (collectively referred to herein as
“Charter
Documents”), have been made available to the
Purchaser. The Company and each Subsidiary are not in violation of
any of the provisions of their respective Charter
Documents.
(c) Capitalization.
(i)
The Company’s
authorized and outstanding equity interests is as set forth in
Schedule 3.2(c) of the
Disclosure Schedules.
(ii)
No securities or
ownership interests are reserved for issuance upon the exercise of
outstanding options, warrants, convertible securities, or other
rights to purchase Common Stock. All outstanding shares of Common
Stock have been duly authorized, validly issued, fully paid and are
non-assessable and are not subject to preemptive rights. Each share
of Common Stock has been issued in compliance in all material
respects with (A) applicable Law and (B) the Charter
Documents.
(iii)
Other than as set
forth on Schedule 3.2(c) of the
Disclosure Schedules, there are no subscriptions, options,
warrants, equity or debt securities, partnership interests or
similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which the
Company is a party or by which it is bound obligating the Company
to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption or acquisition of, any ownership interests
of the Company or obligating the Company to grant, extend,
accelerate the vesting of or enter into any such subscription,
option, warrant, equity security, call, right, commitment or
agreement. Other than as set forth on Schedule 3.2(c) of the
Disclosure Schedules, there are no stock appreciation, phantom
stock, stock-based performance unit, profit participation,
restricted stock, restricted stock unit or other equity-based
compensation award or similar rights with respect to the
Company.
(iv)
Except as set forth
in Section 4.23 of
this Agreement, there are no registration rights, and there is no
voting trust, proxy, rights plan, anti-takeover plan or other
agreements or understandings to which the Company is a party or by
which the Company is bound with respect to any ownership interests
of the Company.
(v)
Except as provided
for in this Agreement and the other Transaction Documents, as a
result of the consummation of the transactions contemplated
hereunder and thereunder, no shares of capital stock, warrants,
options or other securities of the Company are issuable and no
rights in connection with any shares, warrants, options or other
securities of the Company accelerate or otherwise become triggered
(whether as to vesting, exercisability, convertibility or
otherwise).
(d) Authorization;
Enforcement; Validity. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated hereby and by each of the other
Transaction Documents to which it is a party and otherwise to carry
out its obligations hereunder and thereunder, including, without
limitation, to issue the Shares in accordance with the terms
hereof. The Company’s execution and delivery of each of the
Transaction Documents and the consummation by it of the
transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the
Company, and no further corporate action is required by the
Company, its Board or its shareholders in connection therewith.
Each of the Transaction Documents has been (or upon delivery will
have been) duly executed by the Company and is, or when delivered
in accordance with the terms hereof or thereof, will constitute the
legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except (i) as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of,
creditors’ rights and remedies or by other equitable
principles of general application, (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. There are no shareholder agreements, voting
agreements, voting trust agreements or similar agreements with
respect to the Company’s capital stock to which the Company
is a party or, between or among any of the Company’s
shareholders.
(e) No Conflicts. The execution,
delivery and performance by the Company of the Transaction
Documents and the consummation by the Company of the transactions
contemplated hereby or thereby do not and will not
(i) conflict with or violate any provisions of the Charter
Documents or otherwise result in a violation of the Charter
Documents, (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would result in a
default) under, result in the creation of any Lien upon any of the
properties or assets of the Company under, or give to others any
rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any Material
Contract, or (iii) conflict with or result in a violation of any
Law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the
Company is subject (including federal and state securities laws and
the rules and regulations thereunder, assuming the correctness of
the representations and warranties made by the Purchaser herein, of
any self-regulatory organization to which the Company or its
securities are subject, including all applicable Trading Markets),
or by which any property or asset of the Company is bound or
affected, except in the case of clauses (ii) and
(iii) such as
would not have or reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
(f) Filings, Consents and
Approvals. The Company is in possession of all franchises,
grants, authorizations, licenses, permits, consents, certificates,
approvals and orders from Governmental Entities
(“Approvals”)
necessary to own, lease, and operate the properties it purports to
own, operate or lease and to carry on its business as it is now
being conducted. Neither the Company nor any of its Subsidiaries is
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 Entity,
self-regulatory organization (including any Trading Market) or
other Person in connection with the execution, delivery and
performance by the Company of the Transaction Documents (including
the issuance of the Shares), other than (i) filings required, if
any, by the Securities Act, the Exchange Act, or by applicable blue
sky state securities laws, and the rules and regulations
thereunder, and appropriate documents received from or filed with
the relevant authorities of other jurisdictions in which the
Company is licensed or qualified to do business (ii) the
filing of a Notice of Exempt Offering of Securities on Form D
with the Commission under Regulation D of the Securities Act,
(iii) the filing of any requisite notices and/or application(s) to
the Principal Trading Market for the issuance and sale of the
Shares for trading or quotation, as the case may be, thereon in the
time and manner required thereby, and (iv) the Shareholder
Approval. The Company is unaware of any facts or circumstances
relating to the Company that might prevent the Company from
obtaining or effecting any of the foregoing.
(g) Issuance of the Shares. The
issuance of the Shares has been duly authorized and the Shares,
when issued and paid for in accordance with the terms of the
Transaction Documents, will be duly and validly issued, fully paid
and non-assessable and free and clear of all Liens, other than
restrictions on transfer imposed by applicable securities Laws, and
shall not be subject to preemptive or similar rights. Assuming the
accuracy of the representations and warranties of the Purchaser in
this Agreement, the Shares will be issued in compliance with all
applicable federal and state securities laws.
(h) Financial
Statements.
(i) The consolidated
financial statements of the Company and each Subsidiary included in
the Public Disclosure comply in all material respects with
applicable accounting requirements and the rules and regulations of
the applicable Governmental Entity with respect thereto as in
effect at the time of filing. Such financial statements have been
prepared in accordance with GAAP applied on a consistent basis
during the periods involved, except as may be otherwise specified
in such financial statements or the notes thereto or as required by
the applicable Governmental Entity and except that unaudited
financial statements may not contain all footnotes required by
GAAP, and fairly present in all material respects the balance sheet
of the Company and each Subsidiary taken as a whole as of and for
the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited
statements, to normal, year-end audit adjustments, which would not
be material, either individually or in the aggregate.
(ii) The
Company has delivered to the Purchaser the audited consolidated
financial statements of the Company and each Subsidiary as of
December 31, 2018 and for the fiscal year ended
December 31, 2019 and the unaudited consolidated financial
statements of the Company and each Subsidiary (including balance
sheet, income statement and statement of cash flows) as of
September 30, 2020 (collectively, the “Financial Statements”).
The Financial Statements have been prepared based on the books and
records of the Company or its Subsidiaries, as applicable, in
accordance with GAAP applied on a consistent basis throughout the
periods indicated, except that the unaudited Financial Statements
may not contain all footnotes required by GAAP. The Financial
Statements fairly present in all material respects the consolidated
financial condition, position, results of operation, and cash flow
of the Company and its Subsidiaries as of the dates, and for the
periods, indicated therein, subject in the case of the unaudited
Financial Statements to normal year-end audit adjustments, which
would not be material, either individually or in the aggregate.
Except as set forth in the Financial Statements, the Company and
each Subsidiary has no material liabilities or obligations,
contingent or otherwise, other than (A) liabilities incurred in the
ordinary course of business subsequent to December 31, 2019; and
(B) liabilities appropriately reflected or reserved against in
accordance with GAAP in the audited consolidated balance sheet of
the Company and each Subsidiary for the year ended December 31,
2019.
(iii) Except
as reported in the Public Disclosures, the Company and each
Subsidiary maintains a system of internal accounting controls
established and administered in accordance with GAAP and sufficient
to provide reasonable assurance that (A) transactions are executed
in accordance with management’s general or specific
authorizations, and (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
and to maintain asset accountability.
(i) Tax Matters.
(i) All Tax Returns
required to be filed by or on behalf of the Company or any
Subsidiary have been duly and timely filed with the appropriate
Governmental Entity and all such Tax Returns are true, correct and
complete in all material respects. All Taxes due and payable by or
on behalf of the Company or any Subsidiary (whether or not shown on
any Tax Return) have been fully and timely paid and the Company has
adequately reserved in the Financial Statements in accordance with
GAAP for all Taxes (whether or not shown on any Tax Return) that
have accrued but are not yet due or payable as of the dates
thereof.
(ii) No
claim, assessment, deficiency or proposed adjustment for any Tax
has been asserted or assessed by any Governmental Entity against
the Company or any Subsidiary (or any consolidated, combined or
unitary group of which the Company or any Subsidiary is a member)
that has not been paid or resolved. No Tax audit, proceeding or
other examination of the Company or any Subsidiary (or any
consolidated, combined, or unitary group of which the Company or
any Subsidiary is a member) by any Governmental Entity is presently
in progress, nor has the Company or any Subsidiary been notified of
any request or threat for such an audit, proceeding or other
examination. Neither the Company nor any Subsidiary (or any
consolidated, combined, or unitary group of which the Company or
any Subsidiary is a member) is a party to any litigation or
administrative proceeding relating to Taxes. There are no Liens for
Taxes upon any of the assets of the Company or any Subsidiary (or
any consolidated, combined, or unitary group of which the Company
or any Subsidiary is a member). Neither the Company nor any
Subsidiary (or any consolidated, combined, or unitary group of
which the Company or any Subsidiary is a member) has consented to
extend the time in which any Tax may be assessed or collected by
any Governmental Entity (other than pursuant to extensions of time
to file Tax Returns obtained in the ordinary course of business),
which extension is still in effect. No the Company nor any
Subsidiary has received a claim by any Governmental Entity in any
jurisdiction where it does not file a particular Tax Return or pay
a particular Tax that it is or may be subject to taxation by that
jurisdiction or required to file a Tax Return.
(iii) Neither
the Company nor any Subsidiary has requested, has received or is
subject to any ruling of a Governmental Entity or has entered into
any written agreement with a Governmental Entity with respect to
any Taxes, and neither the Company nor any Subsidiary has entered
into any “closing agreement” as described in Section
7121 of the Code (or any corresponding or similar provision of
state, local or foreign income Tax Law).
(iv) Neither
the Company nor any Subsidiary has entered into or been a party to
any “listed transaction” within the meaning of Section
6707A(c)(2) of the Code.
(v) Neither the Company
nor any Subsidiary has in any year for which the applicable statute
of limitations remains open distributed stock of another person, or
has had its stock distributed by another person, in a transaction
that was purported or intended to be governed in whole or in part
by Section 355 or Section 361 of the Code.
(vi) Neither
the Company nor any Subsidiary is a party to or bound by any Tax
allocation, indemnity or sharing agreement. Neither the Company nor
any Subsidiary (A) has been a member of an affiliated group filing
a consolidated federal income Tax Return, or (B) has any liability
for the Taxes of another Person pursuant to Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or
foreign Law) or as a transferee or a successor or by Contract
(other than pursuant to commercial agreements entered into in the
ordinary course of business and the principal purpose of which is
not related to Taxes) or otherwise.
(vii) The
Company and each Subsidiary has complied with all applicable Laws
relating to the payment and withholding of Taxes (including
withholding of Taxes pursuant to Sections 1441, 1442, 1445, 1446,
1471-1474, 3102 and 3402 of the Code or similar provisions under
any state or foreign Laws) and has duly and timely withheld and, in
each case, has paid over to the appropriate Governmental Entity any
and all amounts required to be so withheld and paid over on or
prior to the due date thereof under all applicable
Laws.
(viii) No
payment under this Agreement shall be subject to any withholding
Taxes under the Code or any other Applicable Law.
(ix) The
Company and each Subsidiary has collected or withheld and paid (or
had collected or withheld and paid on its behalf) all applicable
sales, use, ad valorem, and value added Taxes.
(x) Neither the Company
nor any Subsidiary has received notice from a taxing authority that
it has a permanent establishment (within the meaning of an
applicable Tax treaty) or otherwise has an office or fixed place of
business in a country or is subject to Tax on its net income other
than the country in which it is organized.
(xi) Neither
the Company nor any Subsidiary will be required to include any item
of income in, or exclude any item of deduction from, taxable income
for any taxable period (or portion thereof) ending after the
Closing Date as a result of: (A) any change in method of accounting
for a taxable period ending on or prior to the Closing Date; (B)
any “closing agreement” as described in Section 7121
(or any corresponding or similar provision of state, local or
foreign income Tax Law) executed on or prior to the Closing Date;
(C) any intercompany transaction, deferred intercompany gain or
excess loss account described in Treasury Regulations under Section
1502 of the Code (or any corresponding or similar provision of
state, local or foreign income Tax Law); any (D) installment sale
or open transaction disposition made on or prior to the Closing
Date; or (E) any prepaid amount received on or prior to the Closing
Date.
(xii) Neither
the Company nor any Subsidiary has any deferred payment obligation
pursuant to Section 965 of the Code.
(xiii) The
unpaid Taxes of the Company and each Subsidiary as of the date
hereof (A) are estimated not to exceed the reserve for Tax
liability (rather than any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) set
forth on the face of the Financial Statements (rather than in any
notes thereto) and (B) are estimated not to exceed that reserve as
adjusted for the passage of time through the Closing Date in
accordance with the historical practice of the Company and each
Subsidiary in filing its Tax Returns. Since the date of the
Financial Statements, the Company has not incurred any liability
for Taxes arising from extraordinary gains or losses, as that term
is used in GAAP, outside the ordinary course of business and
consistent with historical practice.
(xiv) Neither
the Company nor any Subsidiary has deferred any “applicable
employment taxes” (as defined in Section 2302(d)(1) of
the CARES Act) in respect of calendar year 2020 pursuant to Section
2302 of the CARES Act, which Taxes would otherwise have been
payable by the Company or any Company Subsidiary in respect of
calendar year 2020 but for the application of the CARES
Act.
(xv) Schedule 3.1(i)(xv)
of the Disclosure Schedules lists all federal, state, local, and
non-U.S. income Tax Returns filed (and the jurisdictions in which
such Tax Returns have been filed) with respect to the Company and
each Subsidiary for taxable periods ended on or after December 31,
2017, indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of
audit.
(xvi) Neither
the Company nor any Subsidiary is currently required or will be
required on or after the Closing Date to make any payments in
respect of the transfer or surrender of any liability to Tax or any
Tax loss or relief by virtue of having been a member of a
consolidated, combined, unitary, group relief or other similar Tax
group prior to the Closing.
(xvii) To
the Company’s Knowledge, there currently are no limitations
on the utilization of the net operating losses, built-in
losses,
capital losses,
tax
credits or other similar items
of the Company or any Subsidiary under
Sections
382, 383 or 384 of the Code
(or
any corresponding or similar provision of state, local or
foreign law).
(xviii) The
Company is classified as a corporation for U.S. federal income tax
purposes.
(xix) For
purposes of this Section 3.1(i), any
reference to the Company or any Subsidiary shall be deemed to
include any Person that merged with or was liquidated into such
Person.
(j) No Undisclosed Liabilities.
There are no debts, liabilities or obligations, whether accrued or
fixed, absolute or contingent, matured or unmatured or determined
or determinable, of the Company or any Subsidiary of a nature
required to be reflected on a balance sheet prepared in accordance
with GAAP, other than any such debts, liabilities or obligations
(i) specifically accrued or reserved against on the Financial
Statements or the notes thereto, (ii) incurred since
December 31, 2019 in the ordinary course of business of the
Company or any Subsidiary, or (iii) that would not, individually or
in the aggregate, reasonably be expected to be material to the
Company or any Subsidiary.
(k) Absence of Certain Changes or
Events. Except as contemplated by this Agreement, since
December 31, 2019, (i) there have been no events, occurrences
or developments that have had or would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse
Effect, (ii) neither the Company nor any Subsidiary has
incurred any material liabilities (contingent or otherwise) other
than (A) trade payables, accrued expenses and other
liabilities incurred in the ordinary course of business consistent
with past practice, and (B) liabilities not required to be
reflected in the Financial Statements pursuant to GAAP or required
to be disclosed in filings made with the Commission,
(iii) neither the Company nor any Subsidiary has altered
materially its method of accounting or the manner in which it keeps
its accounting books and records, (iv) there has not been any
change in the independent auditors of the Company or any
Subsidiary, (v) any purchase, redemption or other acquisition
by the Company of any of the shares of Common Stock or any other
securities of the Company or any options, warrants, calls or rights
to acquire any such Common Stock or other securities, (vi) any
split, combination or reclassification of any of the shares of
Common Stock, (vii) any issuance of shares of Common Stock
(viii) neither the Company nor any Subsidiary has declared or
made any dividend or distribution of cash or other property to its
shareholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its respective capital stock,
(ix) neither the Company nor any Subsidiary has issued any
equity securities to any officer, director or Affiliate, except
Common Stock issued pursuant to existing stock option plans or
equity-based plans disclosed in the Financial Statements,
(x) there has not been any material change or amendment to, or
any waiver of any material right by the Company or any Subsidiary
under, any Material Contract under which the Company or any
Subsidiary is bound or subject, (xi) to the Company’s
Knowledge, there has not been a material increase in the aggregate
dollar amount of the reserves or allowances established on the
Financial Statements with respect thereto, (xii) there has not
occurred any material transfer, assignment, sale or other
disposition of any of the assets shown or reflected in the
Financial Statements or any material cancellation, discharge or
payment of any debts, Liens or entitlements, (xiii) neither
the Company nor any Subsidiary has made any material capital
investment in, or any material loan to, any Person, (xix) the
Company has not adopted, entered into, modified or terminated any
employee benefit plan or any material employment, severance,
retention or other agreement with any current or former employee,
officer, director, independent contractor or consultant,
(xv) the Company has not entered into a material new line of
business or abandoned or discontinued any material existing line of
business, and (xvi) neither the Company nor any Subsidiary has
entered into any Contract or agreement to do any of the foregoing,
or has taken any action or omission to act that would result in any
of the foregoing.
(l) Environmental Matters. Neither
the Company nor any Subsidiary (i) is in violation of any
statute, rule, regulation, decision or order of any governmental
agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or
relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively,
“Environmental
Laws”), (ii) owns or operates any real property
contaminated with any substance that is in violation of any
Environmental Laws, (iii) is liable for any off-site disposal
or contamination pursuant to any Environmental Laws, or
(iv) is subject to any claim relating to any Environmental
Laws; in each case, which violation, contamination, liability or
claim has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect; and, to the
Company’s Knowledge, there is no pending or threatened
investigation that might lead to such a claim. Except as would not
result in a Material Adverse Effect, and, to the Company’s
Knowledge, there are no circumstances or conditions (including the
presence of asbestos, underground storage tanks, lead products,
polychlorinated biphenyls, prior manufacturing operations,
dry-cleaning or automotive services) involving the Company or any
Subsidiary, or any currently or formerly owned or operated property
of the Company or any Subsidiary, that could reasonably be expected
to result in any claim, liability, investigation, cost or
restriction against the Company or any Subsidiary, or result in any
restriction on the ownership, use, or transfer of any property
pursuant to any Environmental Law, or adversely affect the value of
any currently owned property of the Company or any
Subsidiary.
(m) Litigation. There is no Action,
pending or, to the Company’s Knowledge, threatened, which
(i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the issuance
of the Shares pursuant to this Agreement and the other Transaction
Documents or (ii) is reasonably likely to have a Material
Adverse Effect, individually or in the aggregate, if there were an
unfavorable decision. Neither the Company nor any Subsidiary, 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 nor
is any Action, to the Company’s Knowledge, currently
threatened. There is no Action by the Company or any Subsidiary
pending or which the Company or any Subsidiary intends to initiate
(other than collection or similar claims in the ordinary course of
business). There has not been, and to the Company’s Knowledge
there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director
or officer of the Company. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator
or governmental or regulatory body against the Company or any
officers or directors of the Company in their capacities as such,
which individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
(n) Employee
Benefit Plans.
(i) Schedule 3.10(a) of the
Disclosure Schedules sets forth a true, correct and complete list
of each material Employee Benefit Plan, excluding any employment or
consulting agreement or offer letter that either: (i) is terminable
by the Company at will; or (ii) provides for notice and/or
garden leave obligations as required by applicable Law, in each
case, so long as such agreement or offer letter does not provide
for: (A) severance or similar obligations; (B) transaction bonuses
or change in control or similar payments; or (C) Tax gross-ups;
provided that a form of
such employment or consulting agreement or offer letter is listed
and made available to the Purchaser and the individual agreements
or offer letters do not deviate from such form in any material
respect.
(ii) With
respect to each material Employee Benefit Plan, the Company has
made available to the Purchaser a true, correct and complete copy
of the following documents, to the extent applicable: (A) all plan
documents, including any related trust documents, insurance
contracts or other funding arrangements, third party administrative
service contracts, and all amendments to the foregoing; (B) for the
most recent two (2) plan years: (I) the IRS Form 5500 and all
schedules thereto; (II) audited financial statements; and (III)
actuarial or other valuation reports; (C) the most recent IRS
determination letter or opinion letter, as applicable; (D) the most
recent summary plan descriptions, and (E) all correspondence with
the Internal Revenue Service and the Department of Labor under any
voluntary compliance resolution system or delinquent flier
programs.
(iii) Each
Employee Benefit Plan has been established, maintained and
administered in all material respects in accordance with its terms
and with all applicable Law. No non-exempt “prohibited
transaction” (within the meaning of Section 406 of ERISA and
Section 4975 of the Code) has occurred or is reasonably expected to
occur with respect to any Employee Benefit Plan.
(iv) Each
Employee Benefit Plan intended to qualify under Section 401(a) of
the Code is qualified and has received a determination letter (or
the prototype plan on which such Employee Benefit Plan is based has
received an opinion letter) from the Internal Revenue Service upon
which it may rely regarding its qualified status under the Code,
and nothing has occurred with respect to the operation of any such
plan that would reasonably be expected to result in the loss of
such qualification or the imposition of any material Tax
penalty.
(v) Neither the Company
nor any of its respective ERISA Affiliates has at any time
sponsored or has ever been obligated to contribute to, or had any
liability in respect of: (A) an “employee pension benefit
plan” (as defined in Section 3(2) of ERISA) subject to Title
IV of ERISA, Section 412 of the Code or Section 302 of ERISA
(including any “multiemployer plan” within the meaning
of Section (3)(37) of ERISA); (B) a “multiple employer
plan” as defined in Section 413(c) of the Code; or (C) a
“multiple employer welfare arrangement” within the
meaning of Section 3(40) of ERISA. No Employee Benefit Plan is a
“multiple employer plan” (within the meaning of
Section 4063 or 4064 of ERISA).
(vi) None
of the Employee Benefit Plans provides for, and the Company and any
Subsidiary do not have liability in respect of, post-retiree
health, welfare or life insurance benefits or coverage for any
participant or any beneficiary of a participant, except as may be
required under the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, or similar state or other applicable
Law.
(vii) With
respect to any Employee Benefit Plan, no actions, suits, claims
(other than non-material routine claims for benefits in the
ordinary course), audits, inquiries, investigations, proceedings or
lawsuits are pending, or, to the Company’s Knowledge,
threatened against any Employee Benefit Plan, the assets of any of
the trusts under such plans or the plan sponsor or administrator,
or against any fiduciary of any Employee Benefit Plan with respect
to the operation thereof that could reasonably be expected to
result in any material liability.
(viii) All
contributions, reserves or premium payments required to be made or
accrued for all prior periods through the date hereof to the
Employee Benefit Plans have been timely made or accrued in all
material respects in accordance with the provisions of each of
Employee Benefit Plans, applicable Law and GAAP.
(ix) Neither
the execution, delivery or performance of this Agreement nor the
consummation of the transactions contemplated by the Transaction
Documents will, either alone or in connection with any other
event(s): (A) result in any payment or benefit becoming due to
any current or former employee, contractor or director of the
Company or any Subsidiary or under any Employee Benefit Plan;
(B) increase any amount of compensation or benefits otherwise
payable to any current or former employee, contractor or director
of the Company or any Subsidiary or under any Employee Benefit
Plan; (C) result in the acceleration of the time of payment,
funding or vesting of any benefits to any current or former
employee, contractor or director of the Company or any Subsidiary
or under any Employee Benefit Plan; or (D) limit the right to
merge, amend or terminate any Employee Benefit Plan.
(x) Neither the
execution, delivery or performance of this Agreement nor the
consummation of the transactions contemplated by the Transaction
Documents shall, either alone or in connection with any other
event(s) give rise to any “excess parachute payment” as
defined in Section 280G(b)(1) of the Code, any excise Tax owing
under Section 4999 of the Code or any other amount that would not
be deductible under Section 280G of the Code.
(xi) The
Company maintains no obligations to gross-up or reimburse any
individual for any Tax or related interest or penalties incurred by
such individual, including under Sections 409A or 4999 of the Code
or otherwise.
(xii) Each
Employee Benefit Plan which is a “nonqualified deferred
compensation plan” subject to Section 409A of the Code has
been established, operated and maintained in compliance with
Section 409A of the Code in all material respects.
(xiii) Except
as set forth in Schedule 3.1(n)(xiii) of
the Disclosure Schedules, there are no outstanding loans by the
Company or any Subsidiary to any of their respective employees,
directors or other service providers.
(xiv) None
of the Company, any Subsidiary or any employee, director or other
service provider of the Company or any Subsidiary has made any
promises or commitments, whether legally binding or not, to create
any additional Employee Benefit Plan, or to modify or change in any
material way any existing Employee Benefit Plan.
(xv) Any
individual who performs services for the Company or any Company
Subsidiary and who is not treated as an employee for U.S. federal
income tax purposes by the Company or any Subsidiary is not an
employee under applicable Law or for any purpose including, without
limitation, for Tax withholding purposes or Employee Benefit Plan
purposes with only immaterial exceptions. The Company and each
Subsidiary has no liability by reason of an individual who performs
or performed services for the Company or any Subsidiary in any
capacity being improperly excluded from participating in an
Employee Benefit Plan. Each employee of the Company and each
Subsidiary has been properly classified as “exempt” or
“non-exempt” under applicable Law with only immaterial
exceptions, and no individual treated as an independent contractor
or consultant by the Company or any Subsidiary should have been
properly classified as an employee under applicable
Law.
(xvi) With
respect to each Employee Benefit Plan that is mandated by a
government other than the United States or subject to the
applicable Laws of a jurisdiction outside of the United States, (A)
the fair market value of the assets of each such plan to the extent
funded, the liability of each insurer for any such funded through
insurance or the book reserve established for any such plan,
together with any accrued contributions, is sufficient to procure
or provide for the accrued benefit obligations, as of the date of
this Agreement, with respect to all current and former participants
in such plan according to the actuarial assumptions and valuations
most recently used to determine employer contributions to such
plan, and no transaction contemplated by this Agreement shall cause
such assets or insurance obligations to be less than such benefit
obligations, and (B) each such plan has been maintained and
operated in all material respects in accordance with the applicable
plan document and all applicable Laws and other requirements, and
if intended to qualify for special tax treatment, satisfies, in all
material respects, the requirements for such
treatment.
(o) Labor Matters.
(i) Neither the Company
nor any Subsidiary is a party to any collective bargaining
agreement or other labor Contract applicable to persons employed by
the Company or any Subsidiary. There are no representation
proceedings, demands for recognition or petitions seeking a
representation proceeding presently pending or, to the
Company’s Knowledge, threatened to be brought or filed, with
the National Labor Relations Board or other labor relations
tribunal, nor has any such representation proceeding, petition, or
demand been brought, filed, made, or, to the Company’s
Knowledge, threatened within the last three (3) years. There is no
organizing activity involving the Company or any Subsidiary pending
or, to the Company’s Knowledge, threatened by any labor
organization or group of employees, and nor, to the Company’s
Knowledge, has there been any such activity during the last three
(3) years.
(ii) There
are no pending: (A) strikes, work stoppages, slowdowns, lockouts or
arbitrations (nor have there been any strikes, work stoppages,
slowdowns, lockouts or arbitrations within the last three (3)
years); or (B) grievances or other labor disputes pending or, to
the Company’s Knowledge, threatened against or involving the
Company or any Subsidiary involving any employee of the Company or
any Subsidiary, in each case, that could reasonably be expected to
result in any material liability. Except as set forth on
Schedule 3.1(o)(ii), there
are no charges, grievances or complaints, in each case, related to
alleged unfair labor practices, pending or, to the Company’s
Knowledge, threatened by or on behalf of any employee, former
employee, or labor organization that could reasonably be expected
to result in any material liability.
(iii) To
the Company’s Knowledge, as of the date hereof, none of the
Company’s officers or employees has given notice of any
intent to terminate his or her employment with the Company in
connection with the transactions contemplated by the Transaction
Documents. The Company and each Subsidiary is in compliance in all
material respects and, to the Company’s Knowledge, each of
their employees and consultants are in compliance in all material
respects, with the terms of any employment and consulting
agreements between the Company or any Subsidiary and such
individuals.
(iv) Except
as set forth on Schedule 3.1(o)(iv) of the
Disclosure Schedules, there are no complaints, lawsuits, actions,
investigations, audits, charges or claims against the Company or
any Subsidiary pending or, to the Company’s Knowledge,
threatened that could be brought or filed, by or with any
Governmental Entity based on, arising out of, in connection with or
otherwise relating to the employment or termination of employment
or failure to employ by the Company or any Subsidiary, of any
individual that could reasonably be expected to result in any
material liability. The Company and each Subsidiary is in
compliance in all material respects with all applicable Laws
respecting labor, employment and employment practices, including,
but not limited to, all applicable Laws concerning terms and
conditions of employment, wages and hours, overtime, worker
classification, the provision of meal and rest breaks and accurate
wage statements, immigration, the Worker Adjustment and Retraining
Notification Act, and any similar state or local “mass
layoff” or “plant closing” laws, collective
bargaining, discrimination, civil rights, safety and health,
workers’ compensation and the collection and payment of
withholding and/or social security Taxes and any similar Tax.
Neither the Company nor any Subsidiary is liable for any arrears of
wages or penalties with respect thereto, except in each case as
would not, individually or in the aggregate, reasonably be expected
to be material to the Company. Except as set forth on Schedule 3.1(o)(iv), there
are no pending, or to the Company’s Knowledge, threatened
Proceedings against the Company or any Subsidiary by any employee
in connection with such employee’s employment or termination
of employment by the Company or Subsidiary, as applicable, that
could reasonably be expected to result in any material
liability.
(v) During the last
three (3) years, (A) no allegations of workplace sexual harassment,
discrimination or other similar misconduct have been made,
initiated, filed or, to the Company’s Knowledge, threatened
in writing against the Company or any Subsidiary or any of their
respective current or former directors, officers or senior level
management employees, (B) to the Company’s Knowledge, no
incidents of any workplace sexual harassment, discrimination or
other similar misconduct have occurred, and (C) neither the Company
nor any Subsidiary has entered into any settlement agreement
related to allegations of sexual harassment, discrimination or
other similar misconduct by any of their directors, officers or
employees described in clause (A) hereof or any
independent contractor.
(p) Compliance. Neither the Company
nor any Subsidiary (i) is in default under or in violation of
(and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any
Subsidiary received written notice of a claim that it is in default
under or that it is in violation of, any Material Contract (whether
or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator Governmental
Entity, or other governmental body having jurisdiction over the
Company, any Subsidiary or their respective properties or assets,
or (iii) is in violation of, or in receipt of written notice
that it is in violation of, any applicable Law, statute, rule,
regulation, policy or guideline or order of any governmental
authority, self-regulatory organization applicable to the Company
or any Subsidiary.
(q) Material Permits. The Company
and each Subsidiary possess all certificates, authorizations,
consents and permits issued by the appropriate federal, state,
local or foreign regulatory authorities necessary to conduct its
respective businesses as currently conducted, except where the
failure to possess such certificates, authorizations, consents or
permits, individually or in the aggregate, has not and would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect (“Material Permits”), and
(i) neither the Company nor any Subsidiary has received any
notice in writing of Proceedings relating to the revocation or
material adverse modification of any such Material Permits, and
(ii) the Company is unaware of any facts or circumstances that
would give rise to the revocation or material adverse modification
of any Material Permits.
(r) Title to Assets; Real Property;
Tangible Property. The Company and each Subsidiary has good
and marketable title to all tangible personal property owned by it
which is material to the business of the Company or Subsidiary, as
applicable, in each case free and clear of all Liens except such
Liens, if any, as may be reflected on the Financial Statements and
such other Liens as do not materially affect the value of such
property or do not interfere with the use made and proposed to be
made of such property by the Company or any Subsidiary. Neither the
Company nor any Subsidiary own any real property. Any real property
and facilities held under lease by the Company and the Bank are
held by them under valid, subsisting and enforceable leases with
such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and facilities by
the Company or any Subsidiary. No notice of a claim of default by
any party to any real property lease entered into by the Company or
any Subsidiary has been delivered to either the Company or any
Subsidiary or is now pending, and there does not exist any event or
circumstance that with notice or passing of time, or both, would
constitute a default or excuse performance by any party thereto. To
the Company’s Knowledge, none of the owned or leased premises
or real properties of the Company or any Subsidiary are subject to
any Proceedings, or any current or potential interests of third
parties or other restrictions or limitations that would impair or
be inconsistent in any material respect with the current use of
such property by the Company or Subsidiary, as the case may
be.
(s) Intellectual
Property.
(i) Schedule 3.1(s)(i) of the
Disclosure Schedules sets forth a true, correct and complete list,
as of the date of this Agreement, of all of the following Owned
Intellectual Property: (A) registered Patents and pending
applications for Patents; (B) registered Trademarks and pending
applications for registration of Trademarks; (C) registered
Copyrights and pending applications for registration of Copyrights;
(D) Internet domain names actively used by the Company or any
Subsidiary (the Intellectual Property referred to in clauses (A)
through (D), collectively, the “Company Registered Intellectual
Property”); (E) unregistered Trademarks (for
which there are no pending applications) that are material to any
of the businesses of the Company or any Subsidiary; and (F) social
media accounts that are material to any of the businesses of the
Company or any Subsidiary.
(ii) The
Company and its Subsidiaries are the sole and unrestricted legal
and beneficial owners of all Owned Intellectual Property, and no
Owned Intellectual Property will at Closing be subject to any
Liens, adverse claims, any requirement of any past (if
outstanding), present or future royalty payments, or otherwise
encumbered or restricted by any rights of any third
party.
(iii) Except
as would not, individually or in the aggregate, reasonably be
expected to be material to the Company or any Subsidiary: (A) no
Company Registered Intellectual Property is involved in any
interference, inter partes, reissue, reexamination, opposition or
cancellation proceeding and (B) all of the Company Registered
Intellectual Property is subsisting and, to the Company’s
Knowledge and excepting any pending applications included therein,
valid and enforceable in all material respects and all necessary
registration, maintenance, renewal, and other relevant filing fees
due through the date of this Agreement have been timely paid and
all necessary documents and certificates in connection therewith
have been timely filed with the relevant Patent, Trademark,
Copyright, domain name registrar, or other authorities in the
United States or foreign jurisdictions, as the case may be, for the
purpose of maintaining such Company Registered Intellectual
Property and those Internet domain names actively used by the
Company or any Subsidiary that are material to any of the
businesses of the Company or any Subsidiary, in full force and
effect.
(iv) Except
as set forth on Schedule 3.1(s)(iv) of the
Disclosure Schedules, neither the Company nor any Subsidiary has
received any written notice of any violation or infringement of any
asserted rights of any other Person, or alleging invalidity of any
Owned Intellectual Property of the Company or any Subsidiary,
challenging the Company’s or any Subsidiary’s ownership
of any Intellectual Property, or otherwise with respect to any
Intellectual Property of any other Person. Neither the Company nor
any Subsidiary is or has been party to any lawsuit, or other
judicial, administrative or arbitral proceeding, relating to its
use of Intellectual Property, including any such lawsuit or
proceeding involving any claim that the Company or any Subsidiary
infringed, misappropriated, diluted or otherwise violated the
Intellectual Property of any third party.
(v) Except as set forth
on Schedule 3.1(s)(v) of the
Disclosure Schedules, to the Company’s Knowledge, no third
party is infringing, in any material respect, any of the Owned
Intellectual Property of the Company or any Subsidiary, and neither
the Company nor any Subsidiary has sent any written communication
to or asserted or threatened any action or claim against any Person
involving or relating to any Owned Intellectual Property. The
conduct of the business of the Company, its Subsidiaries and
Affiliates as currently conducted does not materially infringe,
misappropriate or otherwise violate the Intellectual Property
rights of any Person.
(vi) Except
as set forth on Schedule 3.1(s)(vi) of the
Disclosure Schedules, the Company or its Subsidiary has the right
to use, execute, reproduce, display, perform, modify, enhance,
distribute, prepare derivative works of and sublicense, without
payment to any other Person, all of the Owned Intellectual
Property.
(vii) Except
as set forth on Schedule 3.1(s)(vii) of
the Disclosure Schedules, each of the employees, agents,
consultants, contractors and others who have contributed to or
participated in the discovery, creation or development of any
material Intellectual Property on behalf of the Company or its
Subsidiaries (“Personnel”) (A) has
assigned to the Company or its Subsidiary pursuant to a written and
enforceable agreement all right, title and interest in such
Intellectual Property, which agreement includes a present tense
assignment of Intellectual Property, or (B) is a party to a valid
“work for hire” agreement under which the Company or
its Subsidiary is deemed to be the original author/owner of all
subject matter included in such Intellectual Property. Without
limiting the foregoing, but subject to Schedule 3.1(s)(vii) of
the Disclosure Schedules, the Company or its Subsidiary has secured
from all employees a written and enforceable agreement providing
for the non-disclosure by such Person of confidential information
of the Company and its Subsidiaries.
(viii) Each
of the Company and its Subsidiaries, as applicable, has taken
commercially reasonable steps to maintain the secrecy,
confidentiality and value of all material Trade Secrets included in
the Owned Intellectual Property. Except as set forth on
Schedule 3.1(s)(viii)
of the Disclosure Schedules, no Trade Secret or confidential
information of the Company or each Subsidiary has been authorized
to be disclosed, or, to the Company’s Knowledge, has been
disclosed to any of the Company’s or Subsidiary’s past
or present employees or any other Person, in each case, other than
as subject to an agreement restricting the disclosure and use of
such Trade Secret or confidential information.
(ix) All
material Software owned, licensed, used, or otherwise held for use
in the business of the Company or any Subsidiary is in good working
order and condition and is sufficient in all material respects for
the purposes for which it is used in the business of the Company
and each Subsidiary. To the Company’s Knowledge, neither the
Company nor any Subsidiary has experienced any material defects in
design, workmanship or material in connection with the use of such
Software that have not been corrected.
(t) Insurance. The Company and each
Subsidiary are, and following the Closing Date will remain, insured
by insurers of recognized financial responsibility against such
losses and risks and in such amounts as the Company reasonably
believes in good faith to be prudent and customary in the
businesses and locations in which the Company and its Subsidiaries
are engaged. The Company and each Subsidiary has not been refused
any insurance coverage sought or applied for, and the Company and
each Subsidiary do not have any reason to believe that they will
not be able to renew their existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue their business at a cost
that would not have a Material Adverse Effect. All premiums due and
payable under all such policies and bonds have been timely paid,
and the Company and each Subsidiary are in material compliance with
the terms of such policies and bonds. Neither the Company nor any
Subsidiary has received any notice of cancellation of any such
insurance, nor, to the Company’s Knowledge, will it or any
Subsidiary be unable to renew their respective existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would be materially higher than their
existing insurance coverage. The Company (i) maintains
directors’ and officers’ liability insurance and
fiduciary liability insurance with benefits and levels of coverage
as disclosed in Schedule
3.1(t), (ii) has timely paid all premiums on such policies,
and (iii) there has been no lapse in coverage during the term of
such policies.
(u) Transactions With Affiliates and
Employees. Except as set forth in Schedule 3.1(u) of the
Disclosure Schedules:
(i) The Company and its
Subsidiaries are not parties to any Contracts with any Affiliate,
shareholder, employee, member, manager, officer or director of any
the Company or any Subsidiary other than Contracts governing an
individual’s provision of services to the Company or any
Subsidiary and employee benefits and Contracts between the Company
and any Subsidiary.
(ii) Neither
the Company nor any Subsidiary has loaned any amounts that remain
outstanding to any Affiliate, shareholder, employee, member,
manager, officer or director of the Company or any Subsidiary,
other than intercompany loans between the Company or its
Subsidiaries, and neither the Company nor any Subsidiary has
borrowed material funds from any of the foregoing that remains
outstanding other than intercompany loans between the Company and
its Subsidiaries.
(iii) There
are no loans, advances or Indebtedness incurred by the Company or
any Subsidiary from any Affiliate, shareholder, employee, member,
manager, officer or director of the Company or any Subsidiary other
than intercompany loans and advances.
(iv) No
Affiliate, shareholder, employee, member, manager, officer or
director of the Company or a Subsidiary (A) owns any material
property right, tangible or intangible, which is used by the
Company or any Subsidiary in the conduct of its business or
(B) owns, directly or, to the Company’s Knowledge,
indirectly, any Person that is a material customer, supplier,
competitor or lessor of the Company or any Subsidiary.
(v) No “Bad Actor”
Disqualification. The Company has exercised reasonable care,
in accordance with Commission rules and guidance, and has conducted
a factual inquiry including the procurement of relevant information
from each Covered Person (as defined below) or other means, the
nature and scope of which reflect reasonable care under the
relevant facts and circumstances, to determine whether any Covered
Person (as defined below) is subject to any of the “bad
actor” disqualifications described in Rule 506(d)(1)(i)
to (viii) under the Securities Act (“Disqualification
Events”). To the Company’s Knowledge, after
conducting such sufficiently diligent factual inquiries, no Covered
Person is subject to a Disqualification Event, except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3)
under the Securities Act. The Company has complied, to the extent
applicable, with any disclosure obligations under Rule 506(e)
under the Securities Act. “Covered Persons” are
those persons specified in Rule 506(d)(1) under the Securities
Act, including the Company; any predecessor or affiliate of the
Company; any director, executive officer, other officer
participating in the offering, general partner or managing member
of the Company; any beneficial owner of 20% or more of the
Company’s outstanding voting equity securities, calculated on
the basis of voting power; any promoter (as defined in
Rule 405 under the Securities Act) connected with the Company
in any capacity at the time of the sale of the Securities; and any
person that has been or will be paid (directly or indirectly)
remuneration for solicitation of purchasers in connection with the
sale of the Securities (a “Solicitor”), any general
partner or managing member of any Solicitor, and any director,
executive officer or other officer participating in the offering of
any Solicitor or general partner or managing member of any
Solicitor.
(w) Certain Fees. No Person will
have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the
Company, any Subsidiary or the Purchaser for any commission, fee or
other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company or any
Subsidiary. The Company shall indemnify, pay, and hold the
Purchaser harmless against, any liability, loss or expense
(including, without limitation, attorneys’ fees and
out-of-pocket expenses) arising in connection with any such right,
interest or claim.
(x) Private Placement. Assuming the
accuracy of the Purchaser’s representations and warranties
set forth in Section 3.3 of this
Agreement and the accuracy of the information disclosed by the
Purchaser to the Company, no registration under the Securities Act
is required for the offer and sale of the Shares by the Company to
the Purchaser under the Transaction Documents.
(y) Registration Rights. Other than
the Purchaser, no Person has any right to cause the Company to
effect the registration under the Securities Act of any securities
of the Company.
(z) No Integrated Offering.
Assuming the accuracy of the Purchaser’s representations and
warranties set forth in Section 3.3 of this
Agreement, none of the Company, any Subsidiary nor, to the
Company’s Knowledge, any of its Affiliates or any Person
acting on its behalf has, directly or indirectly, at any time
within the past six (6) months, made any offers or sales of any
Company security or solicited any offers to buy any security under
circumstances that would cause such offers and sales to be
integrated for purposes of Regulation D with the offer and
sale by the Company of the Shares or that otherwise would cause the
exemption from registration under Regulation D to be unavailable in
connection with the offer and sale by the Company of the
Shares.
(aa) Investment
Company. Neither the Company nor any Subsidiary is required
to be registered as, and immediately after receipt of payment for
the Shares will not be required to be registered as, an
“investment company,” an “affiliated
person” of, “promoter” for or “principal
underwriter” for, an entity “controlled” by an
“investment company,” within the meaning of the
Investment Company Act of 1940, as amended.
(bb) Unlawful
Payments. Neither the Company nor any Subsidiary, nor any
directors, officers, nor to the Company’s Knowledge,
employees, agents or other Persons acting at the direction of or on
behalf of the Company or any Subsidiary has, in the course of its
actions for, or on behalf of, the Company or any Subsidiary: (i)
directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
relating to foreign or domestic political activity; (ii) made any
direct or indirect unlawful payments to any foreign or domestic
governmental officials or employees or to any foreign or domestic
political parties or campaigns from corporate funds;
(iii) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or (iv) made any other unlawful
bribe, rebate, payoff, influence payment, kickback or other
material unlawful payment to any foreign or domestic government
official or employee.
(cc) Application
of Takeover Protections; Rights Agreements. The Company does
not currently have in place any stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of
Common Stock or a “change in control” of the Company.
The Company and its Board have taken all action necessary to render
inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Charter
Documents or the laws of the jurisdiction of its incorporation or
otherwise which is or could become applicable to the Purchaser as a
direct consequence of the transactions contemplated by the
Transaction Documents, including, without limitation, the
Company’s issuance of the Shares and the Purchaser’s
ownership of the Shares.
(dd) Disclosure.
(i) All of the
disclosure furnished by or on behalf of the Company to the
Purchaser regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, is
true and correct in all material respects and does not contain any
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not
misleading.
(ii) Any
material, non-public information provided to the Purchaser
hereunder will be disclosed by the Company in the Press Release as
contemplated by Section 4.5 hereof. The
Company understands and confirms that the Purchaser will rely on
the foregoing representations in effecting transactions in
securities of the Company. No event or circumstance has occurred or
information exists with respect to the Company or any Subsidiary or
its or their business, properties, operations or financial
conditions, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed.
(ee) Off
Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company (or any
Subsidiary) and an unconsolidated or other affiliated entity that
is not reflected on or disclosed in the Financial
Statements.
(ff) Acknowledgment
Regarding Purchase of Shares. The Company acknowledges and
agrees that the Purchaser is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby. The
Company further acknowledges that the
Purchaser is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and
any advice given by the Purchaser or any of their respective
representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely
incidental to the Purchaser’s purchase of the
Shares.
(gg) Regulation
M Compliance. The Company has not, and to the
Company’s Knowledge no one acting on its behalf has,
(i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or
resale of any of the Shares, (ii) sold, bid for, purchased,
or, paid any compensation for soliciting purchases of, any of the
Shares in violation of Regulation M under the Exchange Act, or
(iii) paid or agreed to pay to any Person any compensation for
soliciting another to purchase any other securities of the
Company.
(hh) FDA
and Other Governmental Entities. There is no legal or
governmental proceeding to which the Company or any Subsidiary is a
party or of which any property or assets of the Company or any
Subsidiary is the subject, including any proceeding before the
United States Food and Drug Administration (“FDA”), the Centers for
Medicare & Medicaid Services (“CMS”) or any other
comparable federal, state, local or non-U.S. governmental
authority (it being understood that any interaction between the
Company and the FDA, CMS or any such comparable governmental
authority relating to the product development process or the
Company’s laboratory services shall not be deemed proceedings
for purposes of this representation), which, singularly or in the
aggregate, if determined adversely to the Company or any
Subsidiary, would have or would reasonably be expected to have a
Material Adverse Effect; and to the Company’s Knowledge, no
such Proceedings are threatened or contemplated by any Governmental
Entities or threatened by others. The Company and each Subsidiary
is in compliance with all applicable federal, state, local
and non-U.S. laws, regulations, orders and decrees
governing its business as prescribed by the FDA, CMS, or any other
federal, state or non-U.S. governmental authority to the
extent that they may be engaged in the regulation of the
Company’s services, products or product candidates, except
where noncompliance would not, singularly or in the aggregate, be
reasonably likely to have a Material Adverse Effect. All
preclinical studies and clinical trials conducted by or on behalf
of the Company and any subsidiary, including those necessary to
support approval for commercialization of the Company’s or
any Subsidiary’s products or product candidates or to support
coverage and reimbursement of the Company’s testing services
by demonstrating clinical utility, have been conducted by the
Company or any Subsidiary, as applicable, or to the Company’s
Knowledge by third parties, in material compliance with all
applicable federal, state or non-U.S. laws, rules, orders
and regulations.
(ii) OFAC.
Neither the Company nor the Bank nor, to the Company’s
Knowledge, any director, officer, agent, employee, Affiliate or
Person acting on behalf of the Company or any Subsidiary is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”); and the Company
will not knowingly, directly or indirectly, use the proceeds of the
sale of the Shares, or lend, contribute or otherwise make available
such proceeds to any Subsidiary, joint venture partner or other
Person or entity, towards any sales or operations in Cuba, Iran,
Syria, Sudan, Myanmar or any other country sanctioned by OFAC or
for the purpose of financing the activities of any Person currently
subject to any U.S. sanctions administered by OFAC.
(jj) PFIC
Status. Neither the Company nor any of its Subsidiaries is
or intends to become a “passive foreign investment
company” within the meaning of Section 1297 of the U.S.
Internal Revenue Code of 1986, as amended.
(kk) No
Additional Agreements. Except as set forth herein, the
Company has no other agreements or understandings (including,
without limitation, side letters) with any other Person to purchase
Shares or other shares of Common Stock on terms more favorable to
such Person than as set forth herein.
(ll) No
General Solicitation or General Advertising. Neither the
Company nor any Person acting on its behalf has engaged or will
engage in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) in
connection with any offer or sale of the Shares.
(mm) Shell
Company Status. The Company is not, and has never been, an
issuer identified in Rule 144(i)(1).
(nn) Change
in Control. The issuance of the Shares to the Purchaser as
contemplated by this Agreement will not trigger any rights under
any “change in control” provision in any agreements to
which the Company or any of its Subsidiaries is a party, including
any employment, “change in control,” severance or other
compensatory agreements and any benefit plan, which results in
payments to the counterparty or the acceleration of vesting of
benefits.
(oo) Material
Contracts. The Company has made available to the Purchaser
or its representatives, prior to the date hereof, true, correct,
and complete copies of each Material Contract to which the Company
or any Subsidiary is a party or subject (whether written or oral,
express or implied) as of the date of this Agreement. Each Material
Contract is a valid and binding obligation of the Company or its
Subsidiary (as applicable) that is a party thereto and, to the
Company’s Knowledge, each other party to such Material
Contract, except for such failures to be valid and binding as,
individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. Each such Material Contract is
enforceable against the Company or its Subsidiary (as applicable)
that is a party thereto and, to the Company’s Knowledge, each
other party to such Material Contract in accordance with its terms
(subject in each case to applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting the
enforcement of creditors’ rights generally and general
equitable principles, regardless of whether such enforceability is
considered in a Proceeding of law or at equity), except for such
failures to be enforceable as, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any Subsidiary, nor to the Company’s
Knowledge, any other party to a Material Contract, is in material
default or material breach of a Material Contract and there does
not exist any event, condition or omission that would constitute
such a default or breach (whether by lapse of time or notice or
both), in each case, except as, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse
Effect.
(pp) Public
Disclosure. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it
under the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the twelve (12) months preceding the date hereof
(or such shorter period as the Company was required by law or
regulation to file such material) on a timely basis or has received
a valid extension of such time of filing and has filed any such
Public Disclosure prior to the expiration of any such extension,
except where the failure to file on a timely basis would not have
or reasonably be expected to result in a Material Adverse Effect
and would not have or reasonably be expected to result in any
limitation or prohibition, or with respect to Rule 144 further
delay, on the Company’s ability to register the Shares for
resale on Form S-1 or the Purchaser’s ability to
use Rule 144 to resell any Shares. As of their respective filing
dates, or to the extent corrected by a subsequent amendment, the
Public Disclosure complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the
rules and regulations of the Commission promulgated thereunder, and
none of the Public Disclosure, when filed, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. Each of the Material Contracts to which
the Company or any Subsidiary is a party or to which the property
or assets of the Company or any of its Subsidiaries are subject has
been filed (or incorporated by reference) as an exhibit to the
Public Disclosure.
(qq) Sarbanes-Oxley;
Disclosure Controls; ICOFR. The Company is in compliance in
all material respects with all of the provisions of the
Sarbanes-Oxley Act of 2002 which are applicable to it. The Company
has established disclosure controls and procedures (as such term is
defined in Rule 13a-15(e) and 15d-15(e) under
the Exchange Act) for the Company and designed such disclosure
controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules
and forms. The Company’s certifying officers have evaluated
the effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by the
Company’s most recently filed periodic report under the
Exchange Act (such date, the “Evaluation Date”). The
Company presented in its most recently filed periodic report under
the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the Company’s
internal control over financial reporting (as such term is defined
in Rule 13a-15(f) under the Exchange Act) that have
materially affected, or are reasonably likely to materially affect,
the Company’s internal control over financial
reporting.
(rr) Listing
and Maintenance Requirements. The Company’s Common
Stock is registered pursuant to Section 12(b) or 12(g) of the
Exchange Act, and the Company has taken no action designed to
terminate the registration of the Common Stock under the Exchange
Act, nor has the Company received any notification that the
Commission is contemplating terminating such registration. The
Company has not, in the twelve (12) months preceding the date
hereof, received written notice from any Trading Market on which
the Common Stock is listed or quoted to the effect that the Company
is not in compliance with the listing or maintenance requirements
of such Trading Market. The Company is in compliance with all
listing and maintenance requirements of the Principal Trading
Market on the date hereof and the issuance of the Shares will not
violate any such listing or maintenance requirements.
(ss) Solvency.
The Company is not as of the date hereof and, after giving effect
to the transactions contemplated hereby at the Closing, will not
be, Insolvent. The Company is not entering into this Agreement or
the transactions contemplated hereby with the actual intent to
hinder, delay or defraud either present or future
creditors.
3.2 Representations and Warranties of the
Major Shareholders. Each Major Shareholder hereby represents
and warrants as of the date hereof and as of the Closing Date to
the Purchaser as follows:
(a) Authority. Such Major
Shareholder has full power, authority and legal capacity to enter
into and to consummate the transactions contemplated by the
applicable Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of
this Agreement and performance by the Major Shareholder of the
transactions contemplated by the Transaction Documents have been
duly authorized by all necessary action on the part of the Major
Shareholder. This Agreement and each Transaction Document has been
duly executed by the Major Shareholder, and when delivered by the
parties hereto in accordance with the terms hereof and thereof,
will constitute the valid and legally binding obligation of the
Major Shareholder, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable
principles of general application.
(b) No Conflicts. The execution,
delivery and performance by the Major Shareholder of this Agreement
and the consummation by the Major Shareholder of the transactions
contemplated hereby will not (i) conflict with, or constitute
a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Major Shareholder
is a party, or (ii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state
securities laws) applicable to the Major Shareholder, except for
such conflicts, defaults, rights or violations which would not,
individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of the Major Shareholder to
perform its obligations hereunder.
(c) Litigation. There is no Action,
pending or, to the Major Shareholder’s Knowledge, threatened,
which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or
the issuance of the Shares pursuant to this Agreement and the other
Transaction Documents or (ii) is reasonably likely to have a
Material Adverse Effect, individually or in the aggregate, if there
were an unfavorable decision. The Major Shareholder is not nor 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 nor is any Action, to the Major
Shareholder’s Knowledge, currently threatened. There has not
been, and to the Major Shareholder’s Knowledge there is not
pending or contemplated, any investigation by the Commission
involving the Company, the Major Shareholder or any current or
former director or officer of the Company. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator
or governmental or regulatory body against the Major Shareholder,
which individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
(d) Other Agreements. Except as
contemplated by or disclosed in the Transaction Documents, such
Major Shareholder is not a party to and has no knowledge of any
agreements, written or oral, relating to the acquisition,
disposition, registration under the Securities Act, or voting of
the securities of the Company.
(e) Prior Legal Matters. Such Major
Shareholder has not been (i) subject to voluntary or involuntary
petition under the federal bankruptcy laws or any state insolvency
law or the appointment of a receiver, fiscal agent or similar
officer by a court for his business or property; (ii) convicted in
a criminal proceeding or named as a subject of a pending criminal
proceeding (excluding traffic violations and other minor offenses);
(iii) subject to any order, judgment, or decree (not subsequently
reversed, suspended, or vacated) of any court of competent
jurisdiction permanently or temporarily enjoining him from
engaging, or otherwise imposing limits or conditions on his
engagement in any securities, investment advisory, banking,
insurance, or other type of business or acting as an officer or
director of a public company; or (iv) found by a court of competent
jurisdiction in a civil action or by the Commission to have
violated any federal or state securities, commodities or unfair
trade practices law, which such judgment or finding has not been
subsequently reversed, suspended, or vacated.
3.3 Representations and Warranties of the
Purchaser. The Purchaser hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as
follows:
(a) Organization; Authority. The
Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the Cayman Islands with the
requisite corporate power and authority to enter into and to
consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this
Agreement and performance by the Purchaser of the transactions
contemplated by the Transaction Documents have been duly authorized
by all necessary corporate action on the part of the Purchaser.
This Agreement has been duly executed by the Purchaser, and when
delivered by the Purchaser in accordance with the terms hereof and
thereof, will constitute the valid and legally binding obligation
of the Purchaser, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable
principles of general application.
(b) No Conflicts. Except as
specified in Section
3.3(n), the execution, delivery and performance by the
Purchaser of this Agreement and the consummation by the Purchaser
of the transactions contemplated hereby will not (i) result in
a violation of the organizational documents of the Purchaser,
(ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or
instrument to which the Purchaser is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to
the Purchaser, except in the case of clauses (ii) and
(iii) above, for such conflicts, defaults, rights or
violations which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the
ability of the Purchaser to perform its obligations
hereunder.
(c) Investment Intent. The
Purchaser understands that the Shares are “restricted
securities” and have not been registered under the Securities
Act or any applicable state securities law and is acquiring the
Shares as principal for its own account and not with a view to, or
for distributing or reselling such Shares or any part thereof in
violation of the Securities Act or any applicable state securities
laws, provided,
however, that by making the
representations herein, the Purchaser does not agree to hold any of
the Shares for any minimum period of time and reserves the right at
all times to sell or otherwise dispose of all or any part of such
Shares pursuant to an effective registration statement under the
Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws. The
Purchaser does not presently have any agreement, plan or
understanding, directly or indirectly, with any Person to
distribute or effect any distribution of any of the Shares to or
through any Person.
(d) Purchaser Status. At the time
the Purchaser was offered the Shares, it was, and at the date
hereof it is, an “accredited investor” as defined in
Rule 501(a) under the Securities Act.
(e) General Solicitation. The
Purchaser is not purchasing the Shares as a result of any
advertisement, article, notice or other communication regarding the
Shares published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or
any other general advertisement.
(f) Experience of the Purchaser.
The Purchaser, either alone or together with its representatives,
has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment. The Purchaser is
able to bear the economic risk of an investment in the Shares and,
at the present time, is able to afford a complete loss of such
investment.
(g) Access to Information. The
Purchaser acknowledges that it has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of,
and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Shares
and the merits and risks of investing in the Shares;
(ii) access to information about the Company and its
Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information
that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor
any other investigation conducted by or on behalf of the Purchaser
or its representatives or counsel shall modify, amend or affect the
Purchaser’s right to rely on the truth, accuracy and
completeness of the Financial Statements and Public Disclosure and
the Company’s representations and warranties contained in the
Transaction Documents. The Purchaser has sought such accounting,
legal and Tax advice as it has considered necessary to make an
informed decision with respect to its acquisition of the
Shares.
(h) Brokers and Finders. No Person
will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the
Company or the Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the
Purchaser.
(i) Independent Investment
Decision. The Purchaser has independently evaluated the
merits of its decision to purchase the Shares pursuant to the
Transaction Documents, and the Purchaser confirms that it has not
relied on the advice of any other Person’s business and/or
legal counsel in making such decision. The Purchaser understands
that nothing in this Agreement or any other materials presented by
or on behalf of the Company to the Purchaser in connection with the
purchase of the Shares constitutes legal, Tax or investment advice.
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 purchase of the
Shares.
(j) Reliance on Exemptions. The
Purchaser understands that the Shares being offered and sold to it
in reliance on specific exemptions from the registration
requirements of U.S. federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and the
Purchaser’s compliance with, the representations, warranties,
agreements, acknowledgements 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
Shares.
(k) No Governmental Review/Not Deposits
and Not Insured. The Purchaser understands that no U.S.
federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of
the Shares or the fairness or suitability of the investment in the
Shares nor have such authorities passed upon or endorsed the merits
of the offering of the Shares.
(l) Residency. The
Purchaser’s office in which its investment decision with
respect to the Shares was made is located at the address
immediately below the Purchaser’s name set forth in
Section 6.3
hereto.
(m) No Outside Discussion of
Offering. As of the date of this Agreement, the Purchaser
has not discussed the offering with any other party or potential
investors (other than the Company, the Major Shareholders, and the
Purchaser’s authorized representatives, advisors and
counsel), except as expressly permitted under the terms of this
Agreement.
(n) Ownership and Transfer of Patent
Assets. The Purchaser has exclusive, valid, good and
marketable title to, or in the case of leased or subleased Patent
Assets, valid and subsisting leasehold interests in, all of the
Patent Assets, and such Patent Assets are free and clear of all
Liens. The Purchaser has the unrestricted right to contribute,
sell, transfer, assign, convey and deliver to the Company all
right, title and interest in and to, or in the case of leased or
subleased Patent Assets, all right, title and interest in and to
the leasehold interest relating to, the Patent Assets without
penalty or other adverse consequences, subject to the consent of
the parties to the license agreements set forth on Schedule A of the Patent
Assignment to transfer such license agreements to the
Company.
3.4 No Other Representations. The
Company and the Purchaser acknowledge and agree that no party to
this Agreement has made or makes any representations or warranties
with respect to the transactions contemplated hereby other than
those specifically set forth in this Article III and the
Transaction Documents.
ARTICLE IV
COVENANTS; OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) Compliance with Laws.
Notwithstanding any other provision of this Article IV, the Purchaser
covenants that the Shares may be disposed of only pursuant to an
effective registration statement under, and in compliance with the
requirements of, the Securities Act, or pursuant to an available
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, and in compliance
with any applicable state, federal or foreign securities laws. In
connection with any transfer of the Shares other than (i) pursuant
to an effective registration statement, (ii) to the Company, or
(iii) pursuant to Rule 144 (provided that the transferor
provides the Company with reasonable assurances (in the form of a
seller representation letter and, if applicable, a broker
representation letter) that such securities may be sold pursuant to
such rule), the Company may require the transferor thereof to
provide to the Company and the Transfer Agent, at the
transferor’s expense, an opinion of counsel selected by the
transferor and reasonably acceptable to the Company and the
Transfer Agent, the form and substance of which opinion shall be
reasonably satisfactory to the Company and the Transfer Agent, to
the effect that such transfer does not require registration of such
Shares under the Securities Act.
(b) Legends. Book-entry statements
or stock certificates evidencing the Shares shall bear any legend
as required by the “blue sky” laws of any state and a
restrictive legend in substantially the following form, until such
time as they are not required under Section 4.1(c) or
applicable Law:
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT (PROVIDED THAT
THE TRANSFEROR PROVIDES THE COMPANY WITH REASONABLE ASSURANCES (IN
THE FORM OF A SELLER REPRESENTATION LETTER AND, IF APPLICABLE, A
BROKER REPRESENTATION LETTER) THAT THE SECURITIES MAY BE SOLD
PURSUANT TO SUCH RULE). NO REPRESENTATION IS MADE BY THE ISSUER AS
TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT FOR RESALES OF THESE SECURITIES.
The Company acknowledges and agrees that the Purchaser may from
time to time pledge, and/or grant a security interest in, some or
all of the legended Shares in connection with applicable securities
laws, pursuant to a bona fide margin agreement in compliance with a
bona fide margin loan. Such a pledge would not be subject to
approval or consent of the Company and no legal opinion of legal
counsel to the pledgee, secured party or pledgor shall be required
in connection with the pledge, but such legal opinion shall be
required in connection with a subsequent transfer or foreclosure
following default by the Purchaser transferee of the pledge. No
notice shall be required of such pledge, but the Purchaser’s
transferee shall promptly notify the Company of any such subsequent
transfer or foreclosure of such legended Shares. Each Purchaser
acknowledges that the Company shall not be responsible for any
pledges relating to, or the grant of any security interest in, any
of the Shares or for any agreement, understanding or arrangement
between the Purchaser and its pledgee or secured party. At the
appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party
of Shares may reasonably request in connection with a pledge or
transfer of the Shares, including the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act
to appropriately amend the list of selling stockholders thereunder.
Each Purchaser acknowledges and agrees that, except as otherwise
provided in
Section 4.1(c), any Shares subject to
a pledge or security interest as contemplated by this
Section 4.1(b) shall continue to bear
the legend set forth in this
Section 4.1(b) and be subject to the
restrictions on transfer set forth in
Section 4.1(a).
(c) Removal of Legends. The
restrictive legend set forth in Section 4.1(b) above shall be
removed and the Company shall issue a certificate without such
restrictive legend or any other restrictive legend to the holder of
the applicable Shares upon which it is stamped or issue to such
holder by electronic delivery at the applicable balance account at
the Purchaser’s designated custodian, if (i) such Shares are
registered for resale under the Securities Act, (ii) such Shares
are sold or transferred pursuant to Rule 144, or (iii) such Shares
are eligible for sale under Rule 144, without the requirement for
the Company to be in compliance with the current public information
required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) as
to such securities and without volume or manner-of-sale
restrictions. Upon Rule 144 becoming available for the resale of
Shares, without the requirement for the Company to be in compliance
with the current public information required under Rule 144(c)(1)
(or Rule 144(i)(2), if applicable) as to the Shares and without
volume or manner-of-sale restrictions, the Company shall instruct
the Transfer Agent to remove the legend from the Shares and shall
cause its counsel to issue any legend removal opinion required by
the Transfer Agent. Any fees (with respect to the Transfer Agent,
Company counsel or otherwise) associated with the issuance of such
opinion or the removal of such legend shall be borne by the
Company. If a legend is no longer required pursuant to the
foregoing, the Company will no later than three (3) Trading Days
following the delivery by the Purchaser to the Transfer Agent (with
notice to the Company) of a legended certificate or instrument
representing such Shares (endorsed or with stock powers attached,
signatures guaranteed, and otherwise in form necessary to affect
the reissuance and/or transfer) and a representation letter to the
extent required by Section
4.1(a), deliver or cause to be delivered to the Purchaser a
certificate or instrument (as the case may be) representing the
Shares that are free from all restrictive legends. The Company may
not make any notation on its records or give instructions to the
Transfer Agent that enlarge the restrictions on transfer set forth
in this Section
4.1(c). Certificates for the Shares free from all
restrictive legends may be transmitted by the Transfer Agent to the
Purchaser by crediting the account of the Purchaser’s prime
broker with the Purchaser’s designated custodian as directed
by the Purchaser.
(d) Acknowledgement. Each Purchaser
hereunder acknowledges its primary responsibilities under the
Securities Act and accordingly will not sell or otherwise transfer
the Shares or any interest therein without complying with the
requirements of the Securities Act.
4.2 Acknowledgment of Dilution. The
Company and each Major Shareholder acknowledges that the issuance
of the Shares will result in dilution of the outstanding shares of
Common Stock. The Company and each Major Shareholder further
acknowledges that its obligations under the Transaction Documents,
including without limitation its obligation to issue the Shares
pursuant to the Transaction Documents, are unconditional and
absolute and not subject to any right of set off, counterclaim,
delay or reduction, regardless of the effect of any such dilution
or any claim the Company or the Major Shareholders may have against
the Purchaser and regardless of the dilutive effect that such
issuance may have on the ownership of the other shareholders of the
Company.
4.3 Form
D and Blue Sky. The Company agrees to timely file a
Form D with respect to the Shares as required under
Regulation D. The Company, on or before the Closing Date,
shall take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for or to qualify the
Shares for sale to the Purchaser at the Closing pursuant to this
Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption
from such qualification). The Company
shall make all filings and reports relating to the offer and sale
of the Shares required under applicable securities or “Blue
Sky” laws of the states of the United States following the
Closing Date.
4.4 No Integration. The Company
shall not, and shall use its commercially reasonable efforts to
ensure that no Affiliate of the Company shall, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that
will be integrated with the offer or sale of the Shares in a manner
that would require the registration under the Securities Act of the
sale of the Shares to the Purchaser.
4.5 Securities
Law Disclosure; Publicity. On or before 5:30 p.m., New York
City time, on the fourth (4th) Trading Day
immediately following the execution of this Agreement, the Company
will file a Current Report on Form 8-K with the
Commission describing the terms of the Transaction Documents (and
including as exhibits to such Current Report on
Form 8-K the material Transaction Documents). By 12:00
p.m., Amarillo, Texas time, on the Business Day immediately
following execution of this Agreement, the Company shall issue a
press release (the “Press Release”)
reasonably acceptable to the Purchaser disclosing the transactions
contemplated hereby. Notwithstanding the foregoing, neither the
Company nor any Major Shareholder shall publicly disclose the name
of the Purchaser or any Affiliate or investment adviser of the
Purchaser, or include the name of the Purchaser or any Affiliate or
investment adviser of the Purchaser in any Press Release or in any
filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of the Purchaser, except
to the extent such disclosure is required by applicable Law
(including federal securities law), in which case the Company or
such Major Shareholder, as applicable, shall provide the Purchaser
with prior written notice of such disclosure permitted under this
Section 4.5.
4.6 Non-Public
Information. Except with the express written consent of the
Purchaser and unless prior thereto the Purchaser shall have
executed a written agreement regarding the confidentiality and use
of such information, the Company and each Major Shareholder shall
not, and shall cause each Subsidiary and each of their respective
officers, directors, employees and agents, not to, and the
Purchaser shall not directly solicit the Company, each Major
Shareholder, each Subsidiary or any of their respective officers,
directors, employees or agents to provide the Purchaser with
any material, non-public
information regarding the Company or any Subsidiary
from and after the filing of the Press
Release.
4.7 Indemnification.
(a) Indemnification of the
Purchaser. In addition to the indemnity provided in
Section 4.23 of
this Agreement, if any, the Company and each of the Major
Shareholders, jointly and severally, shall indemnify and hold the
Purchaser and its directors, officers, shareholders, members,
partners, employees, agents and investment advisers (and any other
Persons with a functionally equivalent role of a Person holding
such titles notwithstanding a lack of such title or any other
title), each Person who controls the Purchaser (within the meaning
of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, shareholders, agents,
members, partners, employees, agents and investment advisers (and
any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a lack of such title or any
other title) of such controlling person (each, an
“Indemnified
Person”) harmless from any and all damages,
liabilities, obligations, claims, contingencies, costs and
expenses, including all judgments, amounts paid in settlements,
court costs and reasonable attorneys’ fees and costs of
investigation that any such Indemnified Person may suffer or incur
as a result (collectively, “Losses”) of (i)
any breach of any of the
representations, warranties, covenants or agreements made by
the Company or the Major Shareholders in this Agreement or in the
other Transaction Documents, (ii) any Proceeding instituted against
an Indemnified Person in any capacity, or any of them or their
respective Affiliates, by any shareholder of the Company or other
third party who is not an Affiliate of such Indemnified Person,
with respect to any of the transactions contemplated by this
Agreement, or (iii) any Proceeding involving the Company arising
out of or related to any event, fact, change, occurrence,
development or condition prior to the Closing.
(b) Conduct of Indemnification
Proceedings.
Promptly after receipt by any Indemnified Person of any notice of
any demand, claim or circumstances which would or might give rise
to a claim or the commencement of any Proceeding in respect of
which indemnity may be sought pursuant to Section 4.7(a), such
Indemnified Person shall promptly notify the Company and the Major
Shareholders in writing and the Company and the Major Shareholders
shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Person, and
shall assume the payment of all fees and expenses; provided that the failure of any
Indemnified Person to so notify the Company or any Major
Shareholder shall not relieve the Company or each Major Shareholder
of its obligations hereunder except to the extent that such failure
shall have materially and adversely prejudiced the Company and the
Major Shareholders (as finally determined by a court of competent
jurisdiction, which determination is not subject to appeal or
further review). In any such Proceeding, any Indemnified Person
shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such
Indemnified Person unless: (i) the Company or the Major
Shareholders and the Indemnified Person shall have mutually agreed
to the retention of such counsel; (ii) the Company and the Major
Shareholders shall have failed promptly to assume the defense of
such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Person in such Proceeding; or (iii) in the
reasonable judgment of counsel to such Indemnified Person,
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. Without the prior written consent of the Indemnified
Person, neither the Company nor any Major Shareholder shall effect
any settlement of any pending or threatened Proceeding in respect
of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified
Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such
Proceeding.
(c) Once a Loss is
agreed to by the Company or finally adjudicated to be payable to an
Indemnified Person pursuant to this Section 4.7, the Company and
the Major Shareholders shall satisfy its indemnification
obligations to such Indemnified Person within fifteen (15) days of
such agreement or final adjudication by wire transfer of
immediately available funds to such Indemnified Person in
accordance with wire transfer instructions to be provided by such
Indemnified Person.
4.8 Use of
Proceeds. The Company
shall use the net proceeds from the sale of the Shares hereunder
and revenues from the Patent Assets pursuant to the Patent
Assignment, for expansive growth in the Covid-19 rapid tests
business, working capital and general corporate purposes related to
such business goals.
4.9 No Change in Control. The
Company shall use reasonable best efforts to obtain all necessary
irrevocable waivers, adopt any required amendments and make all
appropriate determinations so that the issuance of the Shares to
the Purchaser will not trigger a “change in control” or
other similar provision in any of the agreements to which the
Company or any of its Subsidiaries is a party, including without
limitation any employment, “change in control,”
severance or other agreements and any benefit plan, which results
in payments to the counterparty or the acceleration of vesting of
benefits.
4.10 Reasonable
Efforts. Each of the Company, the Major Shareholders, and
the Purchaser agrees to use its commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the Purchaser in doing, all
commercially reasonable things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
commercially practicable, the transactions contemplated by this
Agreement and the Transaction Documents, including using
commercially reasonable efforts to accomplish the following: (a)
the taking of all reasonable acts necessary to cause the conditions
to the Closings to be satisfied; (b) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations
and filings and the taking of all reasonable steps necessary to
obtain an approval or waiver from, or to avoid an action or
Proceeding by, any Governmental Entities; (c) the obtaining of all
necessary consents, approvals or waivers from third parties; and
(d) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement and the Transaction
Documents, including the assignment of the Patent Assets pursuant
to the Patent Assignment.
4.11 Notice
of Certain Events. Each party hereto shall promptly notify
the other party hereto of (a) any event, condition, fact,
circumstance, occurrence, transaction or other item of which such
party becomes aware prior to the Closing that would constitute a
violation or breach of the Transaction Documents (or a breach of
any representation or warranty contained herein or therein) or, if
the same were to continue to exist as of the Closing Date, would
constitute the non-satisfaction of any of the conditions set forth
in Sections 5.1 or
5.2 hereof, and (b)
any event, condition, fact, circumstance, occurrence, transaction
or other item of which such party becomes aware that would have
been required to have been disclosed pursuant to the terms of this
Agreement had such event, condition, fact, circumstance,
occurrence, transaction or other item existed as of the date
hereof; provided that
delivery of any notice pursuant to this Section 4.11 shall not
modify the representations, warranties, covenants, agreements or
obligations of the parties (or remedies with respect thereto) or
the conditions to the obligations of the parties under this
Agreement. Notwithstanding the foregoing, neither party shall be
required to take any action that would jeopardize such
party’s attorney-client privilege.
4.12 Shareholder
Litigation. The Company shall promptly inform the Purchaser
of any claim, action, suit, arbitration, mediation, demand,
hearing, investigation or Proceeding (“Shareholder Litigation”)
against the Company, any Subsidiary or any of the past or present
executive officers or directors of the Company or any Subsidiary
that is threatened in writing or initiated by or on behalf of any
shareholder of the Company in connection with or relating to the
transactions contemplated hereby or by the Transaction Documents.
The Company shall consult with the Purchaser and keep the Purchaser
informed of all material filings and developments relating to any
such Shareholder Litigation.
4.13 Conduct
of Business.
(a) From the date
hereof until the earlier of the Closing Date or the termination of
this Agreement in accordance with its terms, except as contemplated
by this Agreement, the Company will, and will cause its
Subsidiaries to: (i) operate their business in the ordinary course
consistent with past practice, preserve intact the current business
organization of the Company; (ii) use commercially reasonable
efforts to retain the services of their employees, consultants and
agents; (iii) preserve the current relationships of the Company and
its Subsidiaries with material customers and other Persons with
whom the Company and its Subsidiaries have and intend to maintain
significant relations; (iv) pay all applicable federal, state,
local and foreign Taxes when due and payable (other than those
Taxes the payment of which the Company challenges in good faith in
appropriate proceedings and which are fully reserved for to the
extent required by GAAP); (v) maintain, renew, keep in full force
and effect and preserve its rights, franchises and licenses and all
permits necessary for the conduct of the business of the Company
and its Subsidiaries as currently conducted; (vi) comply with all
orders, writs, and decrees applicable to it and to the conduct of
its business and operations, maintain all of its operating assets
in their current condition (normal wear and tear excepted); (vii)
refrain from taking or omitting to take any action that would
constitute a breach of Section 3.1(k); and (viii)
refrain from (A) declaring, setting aside or paying any
distributions or dividends on, or making any distributions (whether
in cash, securities, or other property) in respect of, any of its
capital stock, (B) splitting, combining or reclassifying any of its
capital stock or issuing or authorizing the issuance of any other
securities in respect of, in lieu of or in substitution for capital
stock or any of its other securities, or (C) purchasing, redeeming
or otherwise acquiring any capital stock, assets or other
securities or any rights, warrants or options to acquire any such
capital stock, assets or other securities, other than acquisitions
of investment securities in the ordinary course of
business.
(b) Without limiting
the generality of Section 4.13(a), from the
date hereof until the earlier of the Closing Date or the
termination of this Agreement in accordance with its terms, except
as contemplated by this Agreement or otherwise required by law,
rule or regulation, or by policies imposed by any governmental
entity, without the prior written consent of the Purchaser (which
shall not be unreasonably withheld, conditioned or delayed), the
Company shall not, and it shall not permit any Subsidiary
to:
(i) enter into any
significant new line of business or materially change its lending,
investment, underwriting, risk and asset liability management, and
other banking and operating policies, except as required by
applicable Law or policies imposed by any Governmental
Entity;
(ii) acquire
or agree to acquire by merging or consolidating with, or by
purchasing a portion of the equity interests of, or by any other
manner, any business or any corporation, partnership, joint
venture, association or other business organization or division
thereof;
(iii) make
any capital expenditure in excess of $50,000 individually or in the
aggregate;
(iv) sell,
lease, license, sublicense, abandon, divest, transfer, cancel,
abandon or permit to lapse or expire, dedicate to the public, or
otherwise dispose of, or agree to do any of the foregoing, or
otherwise dispose of material assets or properties, other than any
sale, lease or disposition in the ordinary course of business
consistent with past practice;
(v) incur any
indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise become responsible for
the obligations of, any other Person, except in the ordinary course
of business and consistent with past practice, including as to
amounts;
(vi) amend
(A) its certificate of formation or bylaws or similar
organizational documents or (B) any term of any outstanding
security issued by the Company or any Subsidiary;
(vii) other
than, in each case, in the ordinary course of business and
consistent with past practice or required by applicable Law, grant
any salary or wage increase or increase any employee benefit,
including incentive or bonus payments;
(viii) change
any material accounting policies or procedures (including
procedures with respect to reserves, revenue recognition, payments
of accounts payable and collection of accounts receivable) used by
it unless required by the Company’s independent auditors,
applicable Law or GAAP;
(ix) settle
any litigation involving claims against the Company or any of its
Subsidiaries resulting in monetary damages or other payments in
excess of $50,000;
(x) fail to use
reasonable best efforts to maintain or renew any Owned Intellectual
Property that is registered, issued, or the subject of a pending
application;
(xi) except
in the ordinary course of business consistent with past practices
(A) materially modify, amend in a manner that is adverse to the
Company or terminate any Material Contract, or (B) enter into any
Contract that would have been a Material Contract had it been
entered into prior to the date of this Agreement without the prior
written consent of the Purchaser;
(xii) unless
required by applicable Law, (A) make, change or revoke any Tax
election, (B) settle or compromise any Tax claim; (C) change (or
request to change) any method of accounting for Tax purposes; (D)
file any Tax Return other than on a timely basis in the ordinary
course, or file any amended Tax Return; (E) waive or extend any
statute of limitations in respect of a period within which an
assessment or reassessment of Taxes may be issued (other than any
extension pursuant to an extension to file any Tax Return); (F)
knowingly surrender any claim for a refund of Taxes; or (G) enter
into any “closing agreement” as described in Section
7121 of the Code (or any similar requirement of Law) with any
Governmental Entity;
(xiii) (A)
except to the extent required by applicable Law or by any Employee
Benefit Plan disclosed to the Purchaser, grant or announce any
material equity or equity-based awards or any other incentive
awards or the material increase in the compensation and employee
benefits payable or to be provided by the Company or any Subsidiary
to any of the employees, directors or other individual service
providers of the Company or any Subsidiary, unless the Company
provides the Purchaser with prior notice of and consults in good
faith with the Purchaser on any such grant or announcement; (B)
terminate (other than for cause) any employees of the Company or
any Subsidiary, except in the ordinary course of business
consistent with past practice with respect to employees with an
annual base salary not to exceed $100,000, (C) hire any
employees of the Company or any Subsidiary, except in the ordinary
course of business consistent with past practice, (D) except to the
extent required by applicable Law or by any Employee Benefit Plan
disclosed to the Purchaser, pay or agree to pay any pension,
retirement allowance or termination or severance pay to any
employee, director or other individual service provider of the
Company or any Subsidiary, whether past or present, except in the
ordinary course of business consistent with past practice, or (E)
except as required to ensure that any Employee Benefit Plan is not
then out of compliance with applicable Law, adopt, materially
amend, materially increase benefits under or terminate any Employee
Benefit Plan or any collective bargaining agreement;
(xiv) authorize,
recommend, propose or announce an intention to adopt a plan of
complete or partial liquidation, dissolution or
winding-up;
(xv) enter
into any other transaction with any of its directors or executive
officers outside the ordinary course of business or any
transactions; or
(xvi) authorize,
agree or commit or resolve to do any of the foregoing.
4.14 Access;
Furnishing Information; Confidentiality.
(a) From and after the
date hereof and until the Closing, the Company shall, and shall
cause each of its Subsidiaries to afford the officers, directors,
employees, attorneys, accountants and other authorized
representatives of the Purchaser reasonable access to the
management personnel, offices, properties, books and records of the
Company and each of its Subsidiaries, other than confidential
supervisory information, at such times during regular business
hours as the Purchaser may reasonably request upon one (1) Business
Days’ notice but not more frequently than once per week, and
shall furnish the Purchaser with all financial, business, operating
and other data and information (including, but not limited to, the
Company’s assets, properties, business and operations) that
the Purchaser, through its directors, officers, employees,
consultants or agents, may reasonably request; provided, that nothing in this
Agreement shall require the furnishing of any information prior to
the Closing which would place at risk the ability of the Company or
its attorneys to claim attorney-client privilege or work product
privilege with respect to any third parties; provided, further, that all information obtained
by the Purchaser pursuant to this Section 4.14(a) shall be
subject to the Purchaser’s confidentiality obligations set
forth in Section 4.14(c) of this
Agreement.
(b) In order to enable
the Purchaser to sell the Shares under Rule 144 (once Rule 144
becomes available for the resale of securities of the Company),
until the earlier of (i) the date that the Shares cease to be
Registrable Stock (and for no less than 12 months from the
Closing), (ii) the date that is 24 months from the Closing or (iii)
the consummation of a Company Business Combination pursuant to
which the Company is no longer a reporting company under the
Exchange Act, the Company shall use its commercially reasonable
efforts to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange
Act. If the Company at any time is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell
the Shares under Rule 144.
(c) Each party to this
Agreement will hold, and will use commercially reasonable efforts
to cause its respective subsidiaries and their directors, officers,
employees, agents, consultants and advisors to hold, in strict
confidence, unless disclosure to a Governmental Entity is necessary
or appropriate in connection with any necessary regulatory
approval, or request for information or similar process, or unless
compelled to disclose by judicial or administrative process or,
based on the advice of its counsel, by other requirement of law or
the applicable requirements of any Governmental Entity (in which
case, the party permitted to disclose such information shall, to
the extent legally permissible and reasonably practicable, provide
the other party with prior written notice of such permitted
disclosure), all nonpublic records, books, contracts, instruments,
computer data and other data and information (collectively,
“Information”) concerning
the other party hereto furnished to it by such other party or its
representatives pursuant to this Agreement (except to the extent
that such information can be shown to have been (i) previously
known by such party on a nonconfidential basis, (ii) in the public
domain through no fault of such party, or (iii) later lawfully
acquired from other sources by the party to which it was
furnished), and neither party hereto shall release or disclose such
Information to any other person, except its Affiliates, partners,
auditors, attorneys, financial advisors, other consultants and
advisors with the express understanding that such parties will
maintain the confidentiality of the Information and, to the extent
permitted above, to auditors and bank and securities regulatory
authorities; provided,
however, that (1) the
Purchaser is permitted to disclose Information to auditors and bank
and securities regulatory authorities without prior written notice
to the Company in connection with any audit or examination that
does not explicitly reference the Company or this Agreement, and
(2) the Purchaser may identify the Company and the number and value
of the Purchaser’s security holdings in the Company in
accordance with applicable investment reporting and disclosure
regulations or internal policies without prior notice to or consent
from the Company.
4.15 No
Additional Issuances. From the date hereof until the Closing
Date (or the date of any termination of this Agreement in
accordance with its terms), except for the Shares being issued
pursuant to this Agreement, the Company shall not issue or agree to
issue any additional shares of Common Stock, common stock
equivalents or other securities.
4.16 No
Solicitation.
(a) During the period
from the date of this Agreement and continuing until the earlier of
the termination of this Agreement pursuant to its terms and the
Closing, the Company and each Major Shareholder shall not, and
shall cause each Subsidiary not to, and shall direct its respective
employees, agents, officers, directors, representatives and
advisors (collectively, “Representatives”) not to,
directly or indirectly: (i) solicit, initiate, participate in,
enter into or continue discussions, negotiations or transactions
with, or encourage or respond to any inquiries or proposals by, or
provide any information to or otherwise cooperate in any way with,
any Person (other than the Purchaser and its agents,
representatives, advisors) concerning any merger, acquisition,
consolidation, sale of ownership interests and/or assets of the
Company, recapitalization or similar transaction (each, a
“Company Business
Combination”); (ii) enter into any agreement
regarding, continue or otherwise participate in any discussions or
negotiations regarding, or cooperate in any way that would
otherwise reasonably be expected to lead to a Company Business
Combination; or (iii) commence, continue or renew any due
diligence investigation regarding a Company Business Combination.
In addition, the Company and each Major Shareholder shall, and
shall cause its Subsidiaries to, and shall cause their respective
Representatives to, immediately cease any and all existing
discussions or negotiations with any Person with respect to any
Company Business Combination.
(b) Each party shall
promptly (and in no event later than twenty-four (24) hours after
becoming aware of such inquiry, proposal, offer or submission)
notify the other parties if it or, any of its Representatives
receives any inquiry, proposal, offer or submission with respect to
a Company Business Combination, as applicable (including the
identity of the Person making such inquiry or submitting such
proposal, offer or submission), after the execution and delivery of
this Agreement. If either party or its Representatives receive an
inquiry, proposal, offer or submission with respect to a Company
Business Combination, as applicable, such party shall provide the
other parties with a copy of such inquiry, proposal, offer or
submission.
4.17 Resignations
of Directors and Officers; Purchaser’s Director
Nominees.
(a) The Company shall,
at the Closing, deliver or cause to be delivered to the Purchaser
the resignation of (a) the directors of the Company, and (b) such
officers of the Company as previously requested by the Purchaser,
with each such resignation to be effective concurrently with the
Closing.
(b) Within three (3)
days following the date of this Agreement, the Board shall hold a
special meeting of the Board in order to (i) expand the number of
directors on the Board from five (5) directors to (7) directors,
and (ii) prepare a list of new directors of the Board, including
replacement directors each of the existing directors of the Board,
each of whom shall be designated by the Purchaser. The parties
agree that the Company shall cause the notice of Special Meeting of
Shareholders to set forth, and submit for stockholder approval at
the Special Meeting, an expanded board of directors comprising the
individuals designated by the Purchaser in accordance with this
Section
4.17(b).
4.18 Special
Meeting; Company Recommendation; Major Shareholders’
Support.
(a) Within ten (10)
days following of the date of this Agreement, the Company shall
establish a record date (which date shall be mutually agreed with
the Purchaser) and duly call and give notice of a special meeting
of the shareholders of the Company (the “Special Meeting”) in
connection with a vote on the following matters: (i) the adoption
of this Agreement and approval of the transactions contemplated by
the Transaction Documents; (ii) the issuance of Shares; (iii) the
amendment and restatement of the Charter Documents, to among other
things, (A) increase the number of authorized shares of Common
Stock to three hundred million (300,000,000) shares, which shall be
the total amount of capital stock of the Company, (B) rename the
Company to “Ainos, Inc.” or any other corporate name
designated by the Purchaser; and (C) decrease the number of
authorized shares of Preferred Stock to zero (0); (iv) the
expansion of the number of directors on the Board and the election
of directors, as designated by the parties in accordance with
Section 4.17;
and (v) any other proposals the parties deem necessary or desirable
to consummate the transactions contemplated by the Transaction
Documents (collectively, the “Company Shareholder
Matters”). The Company and each Major Shareholder
shall use its best efforts to obtain the approval of the Company
Shareholder Matters at the Special Meeting.
(b) The Company shall
include the Company Recommendation in the notice to the
shareholders for the Special Meeting. The board of directors of the
Company shall not (and no committee or subgroup thereof shall)
change, withdraw, withhold, qualify or modify, or publicly propose
to change, withdraw, withhold, qualify or modify, the Company
Recommendation (a “Change in
Recommendation”); provided, that the board of directors
of the Company may make a Change in Recommendation if it determines
in good faith, after consultation with its outside legal counsel,
that a failure to make a Change in Recommendation would reasonably
be expected to constitute a breach by the Company’s board of
directors of its fiduciary obligations to the Company’s
shareholders under applicable Law. The Company agrees that its
obligation to establish a record date for, duly call, give notice
of, convene and hold the Special Meeting for the purpose of seeking
approval of the Company Shareholder Matters shall not be affected
by any Change in Recommendation, and the Company agrees to
establish a record date for, duly call, give notice of, convene and
hold the Special Meeting and submit for the approval of the Company
Shareholder Matters regardless of whether or not there shall have
occurred any Change in Recommendation.
(c) From the date
hereof until any termination of this Agreement in accordance with
its terms, at the Special Meeting (or any meeting of the
stockholders of the Company however called) (or any action by
written consent in lieu of a meeting) or any adjournment thereof,
each Major Shareholder shall vote all shares of Common Stock
beneficially owned by the Major Shareholder (the
“Major Shareholder
Shares”) (or cause them to be voted), or execute
written consents in respect thereof, (i) in favor of the adoption
of the Company Shareholder Matters and the approval of the
transactions contemplated by this Agreement, (ii) against any
action or agreement that would result in a breach of any
representation, warranty, covenant, agreement or other obligation
of the Company in this Agreement, (iii) against any Acquisition
Proposal, and (iv) against any agreement, amendment of the Charter
Documents or other action that is intended or could reasonably be
expected to prevent, impede, interfere with, delay, postpone or
discourage the consummation of the sales of the Shares or the other
transactions contemplated by this Agreement. Any such vote shall be
cast (or consent shall be given) by each Major Shareholder in
accordance with such procedures relating thereto so as to ensure
that it is duly counted, including for purposes of determining that
a quorum is present and for purposes of recording the results of
such vote (or consent).
(d) From the date
hereof until any termination of this Agreement in accordance with
its terms, each Major Shareholder shall not, and shall cause its
Affiliates not to, (i) sell, transfer (including by operation of
law), give, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, gift, pledge,
encumbrance, assignment or other disposition of, any Major
Shareholder Shares, (ii) deposit any Major Shareholder Shares into
a voting trust or grant any proxies or enter into a voting
agreement, power of attorney or voting trust with respect to any
Major Shareholder Shares, or (iii) take any action that would make
any representation or warranty of the Major Shareholder set forth
in this Agreement untrue or incorrect in any material respect or
have the effect of preventing, disabling or materially delaying the
Major Shareholder from performing any of its obligations under this
Agreement.
(e) During the time
period commencing after the Closing and continuing until the
relisting of the Company’s Common Stock as contemplated
pursuant to Section 4.19, the Major
Shareholders shall not,
and shall cause its Affiliates not to, sell, transfer (including by
operation of law), give, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement
or understanding with respect to the sale, transfer, gift, pledge,
encumbrance, assignment or other disposition of, any Major
Shareholder Shares, at a per share price less than twenty four
cents ($0.24) per share of Common Stock.
(f) The Company shall
make all required filings with respect to the transactions
contemplated hereby including the Special Meeting or any written
consent of the Company’s shareholders approving the Company
Shareholder Matters under the Securities Act, the Exchange Act, and
all other applicable federal and state securities Laws and
“blue sky” Laws, including, without limitation, any
proxy statement or information statement required to be prepared in
connection therewith (the “Required Filings”). As
promptly as practicable after the execution of this Agreement, the
Company shall prepare and file with the Commission (i) a proxy
statement on Schedule 14A to the extent it will solicit proxies for
the Special Meeting or (ii) to the extent that it will not solicit
proxies for the Special Meeting or will obtain its shareholder
approval of the Company Shareholder Matters by written consent, an
information statement on Schedule 14C. Each party shall use its
reasonable best efforts to ensure that the information supplied or
to be supplied by such party specifically for inclusion or
incorporation in the Required Filings, at the time any such
Required Filing is filed with the Commission, does not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein not misleading.
(g) Prior to Closing,
each Major Shareholder shall cause any and all Persons Controlled
by such Major Shareholder to execute and deliver to the Purchaser a
joinder agreement (in a form reasonably acceptable to the
Purchaser) whereby such Person agrees to be bound to the terms and
conditions of this Agreement as a Major Shareholder.
4.19 NASDAQ
Trading Market Relisting. After the Closing Date, the
Company, the Purchaser and each Major Shareholder shall each use
their commercially reasonable efforts to cause the Company to be
qualified for the listing requirements to list the shares of the
Company’s Common Stock on one of the following Trading
Markets: the NASDAQ Global Select
Market, the NASDAQ Global Market, or the NASDAQ Capital Market and
to file an application with the Commission and the
applicable NASDAQ Trading Market in connection herewith.
4.20 Additional
Working Capital. Following the Closing Date and at any time
and from time to time prior to the Trading Market relisting of the
Company pursuant to Section 4.19, to the
extent that the Company experiences immediate working capital
needs, the parties will use their commercially reasonable efforts
to enter into an additional agreement whereby the Purchaser will
provide the Company with up to an additional three million U.S.
dollars ($3,000,000) for working capital purposes, in the form of a
loan, or in exchange for additional shares of Common Stock, or
other debt or equity securities.
4.21 Voting
Agreement. Within twelve (12) months following the date of
this Agreement, the Company shall cause each of the principal
shareholders of the Company holding ten percent (10%) or more of
the issued and outstanding capital stock of the Company, to enter
into a voting agreement in which the Purchaser shall have the
authority and power to exercise the voting rights of such
shareholders at subsequent shareholders meetings of the
Company.
4.22 Restrictions
on Post-Closing Stock Splits and Company Sales Below FMV.
During the time period commencing after the Closing and continuing
until the relisting of the Company’s Common Stock as
contemplated pursuant to Section 4.19, the Company
shall not (a) split, combine, or reclassify any of its capital
stock, or (b) issue or agree to issue any additional shares of
Common Stock, common stock equivalents or other securities at a
per-share-price (determined on an as converted basis) less than
eighty percent (80%) of the six (6)-month Trading Day
per-share-price average for such security.
4.23 Registration
Rights.
(a) Registration
of Shares. Following the Closing Date, the Company shall, as
promptly as reasonably practicable, (i) file with the Commission
(A) a resale shelf registration statement under the Securities Act
on Form S-3 (or any successor short form registration involving a
similar amount of disclosure) or if then ineligible to use any such
form, then any other available form of registration statement, or
(B) pursuant to Rule 424(b) under the Securities Act, a prospectus
supplement that shall be deemed to be part of an existing shelf
registration statement in accordance with Rule 430B under the
Securities Act, in each case for a public offering of the Shares
received by the Purchaser (the “Registrable Stock”) to be
made on a continuous basis pursuant to Rule 415 under the
Securities Act (the “Registration Statement”)
and, in the case of clause (A) above, use commercially reasonable
efforts to cause the Registration Statement to become effective
within 180 days after the Closing Date, (ii) use commercially
reasonable efforts to cause the Registration Statement to remain
effective until the earlier of (1) the date when all Registrable
Stock covered by the Registration Statement has been sold or (2)
the date when all Registrable Stock covered by the Registration
Statement first becomes eligible for sale pursuant to Rule 144
under the Securities Act without volume limitation or other
restrictions on transfer thereunder, and (iii) use its reasonable
best efforts to prepare and file with the Commission any required
amendments to the Registration Statement and the prospectus
(including any prospectus supplement) used in connection therewith
(“Shelf
Prospectus”). Notwithstanding the foregoing, the
Company shall have no obligation to register or to maintain the
effectiveness of the Registration Statement after all Registrable
Stock covered by the Registration Statement first becomes eligible
for sale pursuant to Rule 144 under the Securities Act without
volume limitation or other restrictions on transfer thereunder. In
the event that the filing deadline contemplated by this
Section 4.23(a)
shall occur during a trading “blackout” period under
the Company’s securities trading policies, then the Company
shall not be required to file the Registration Statement
contemplated by this Section 4.23(a) until such
“blackout” period is no longer applicable. In addition,
the Company may postpone for a reasonable period of time, not to
exceed 60 days, the filing of a Registration Statement contemplated
by this Section
4.23(a) if the Company, in its reasonable good faith
judgment (after consultation with its legal advisors), has
determined that the offer and sale or other disposition of
Registrable Stock pursuant to the Registration Statement would
require public disclosure by the Company of material nonpublic
information that the Company is not otherwise obligated to
disclose, provided, however, that the Company shall file such
Registration Statement as soon as reasonably practicable following
the lapsing or expiration of the circumstances that led the Company
to delay such filing.
(b) Suspension
of Registration. (i) Upon the issuance by the Commission of
a stop order suspending the effectiveness of the Registration
Statement or the initiation of any legal proceeding with respect to
the Registration Statement under Section 8(d) or 8(e) of the
Securities Act, or (ii) if the Registration Statement or Shelf
Prospectus shall contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading (including,
in any such case, as a result of the non-availability of financial
statements), (iii) the Company, in its reasonable good faith
judgment, has determined that the offer and sale or other
disposition of Registrable Stock would require public disclosure by
the Company of material nonpublic information that is not included
in the Registration Statement and that immediate disclosure of such
information would be materially detrimental to the Company, or (iv)
upon the occurrence or existence of any other development, event,
fact, situation or circumstance relating to the Company that, in
the judgment of a majority of the board of directors of the
Company, makes it appropriate to suspend the availability of the
Registration Statement and/or Shelf Prospectus, (A)(1) in the case
of clause (ii) above, and subject to clauses (iii) and (iv) above,
the Company shall as promptly as reasonably practicable prepare and
file a post-effective amendment to such Registration Statement or a
supplement to the related Shelf Prospectus, as applicable, so that
such Registration Statement or Shelf Prospectus, as applicable,
does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and subject to
clause (iii) above, in the case of a post-effective amendment to
the Registration Statement, use commercially reasonable efforts to
cause it to become effective as promptly as reasonably practicable,
and (2) in the case of clause (i) above, use commercially
reasonable efforts to cause such stop order to be lifted, and (B)
the Company shall give notice to the Purchaser that the
availability of such Registration Statement or Shelf Prospectus is
suspended (a “Deferral Notice”) and,
upon receipt of any Deferral Notice, the Purchaser agrees that it
shall not sell any Registrable Stock pursuant to the Registration
Statement or Shelf Prospectus until the Purchaser is notified by
the Company of the effectiveness of the post-effective amendment to
the Registration Statement provided for in clause (A) above, or
until it is notified in writing by the Company that the Shelf
Prospectus may be used. In connection with any development, event,
fact, situation or circumstance covered by clause (iii) above, the
Company shall be entitled to exercise its rights pursuant to this
Section 4.23(b) to
suspend the availability of the Registration Statement and Shelf
Prospectus for no more than an aggregate of 60 days in the
aggregate in any one year period.
(c) Registration
Expenses. In connection with the performance of its
obligations under this Section 4.23(b), the Company
shall pay all registration fees under the Securities Act, all
printing expenses and all fees and disbursements of the
Company’s legal counsel, the Company’s independent
registered public accounting firm and any other persons retained by
the Company, and any other expenses incurred by the Company. The
Purchaser shall pay any discounts, commissions and transfer taxes,
if any, attributable to the sale of Registrable Stock and any other
expenses (including the fees and expenses of other advisors and
agents, if any) incurred by it; provided, however, that the Company
shall pay the reasonable and documented out-of-pocket legal fees
and expenses of the Purchaser under this Section
4.23(b).
(d) Purchaser’s
Obligations. The Purchaser (i) shall furnish to the Company
such information as is required to be included under the Securities
Act in the Registration Statement (or any amendment or supplement
thereto) or any Shelf Prospectus, (ii) shall comply with the
prospectus delivery requirements under the Securities Act in
connection with the sale or other distribution of Registrable Stock
pursuant to the Registration Statement, and (iii) shall report to
the Company all sales or other distributions of Registrable Stock
pursuant to the Registration Statement.
(e) Indemnification
and Contribution by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify,
defend and hold harmless the Purchaser, the officers, directors,
agents, partners, members, managers, stockholders, affiliates and
employees of the Purchaser, each person who controls the Purchaser
(within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, partners,
members, managers, stockholders, agents and employees of each such
controlling person, to the fullest extent permitted by applicable
law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable costs
of preparation and investigation and reasonable attorneys’
fees) and expenses (collectively, “Damages”), as incurred,
that arise out of or are based upon (i) any untrue or alleged
untrue statement of a material fact contained in any Registration
Statement, any Shelf Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus,
or arising out of or relating to any omission or alleged omission
to state a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Shelf Prospectus
or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, or (ii)
any violation or alleged violation by the Company of the Securities
Act, the Exchange Act or any state securities law or any rule or
regulation thereunder, in connection with the performance of its
obligations under this Section 4.23, except to the
extent, but only to the extent, that such untrue statements,
alleged untrue statements, omissions or alleged omissions are based
solely upon information regarding the Purchaser furnished in
writing to the Company by the Purchaser expressly for use therein,
or to the extent that such information relates to the Purchaser or
the Purchaser’s proposed method of distribution of
Registrable Stock and was reviewed and approved in writing by the
Purchaser expressly for use in the Registration Statement, such
Shelf Prospectus or such form of Shelf Prospectus or in any
amendment or supplement thereto or, (B) to the extent that any such
Damages arise out of the Purchaser’s (or any other
indemnified person’s) failure to send or give a copy of the
Shelf Prospectus or supplement (as then amended or supplemented),
if required, pursuant to Rule 172 under the Securities Act (or any
successor rule) to the persons asserting an untrue statement or
alleged untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the
sale of Registrable Stock to such person if such statement or
omission was corrected in such Shelf Prospectus or supplement. The
Company shall notify the Purchaser promptly of the institution,
threat or assertion of any proceeding arising from or in connection
with the transactions contemplated by this Section 4.23 of which the
Company is aware. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of an
indemnified party and shall survive the transfer of the Registrable
Stock by the Purchaser. If the indemnification provided for in this
Section 4.23(e)
from the Company is unavailable to an indemnified party hereunder
in respect of any Damages, the Company, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Damages, in
such proportion as is appropriate to reflect the relative fault of
the Company and indemnified party in connection with the actions
which resulted in such Damages, as well as any other relevant
equitable considerations. 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
obligations of the Company and the Purchaser under this
Section 4.23(e)
shall survive the completion of any offering or sale of Registrable
Stock pursuant to any Registration Statement. Each Major
Shareholder shall be jointly and severally responsible with the
Company for the indemnification and contribution obligations
provided in this Section
4.23.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions Precedent to the
Obligations of the Purchaser to Purchase Shares. The
obligation of the Purchaser to acquire the Shares at the Closing is
subject to the fulfillment to the Purchaser’s satisfaction,
on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by the
Purchaser:
(a) Representations and Warranties.
The representations and warranties of the Company contained herein
shall be true and correct as of the date when made and as of the
Closing Date, as though made on and as of such date, except for
such representations and warranties that expressly speak as of a
specific date.
(b) Performance. The Company shall
have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with
by it at or prior to the Closing.
(c) No Injunction. No statute,
rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any
court or Governmental Entity of competent jurisdiction, nor shall
there have been any regulatory communication, that prohibits the
consummation of any of the transactions contemplated by the
Transaction Documents or restricts the Purchaser or any of the
Purchaser’s Affiliates from owning or voting any of the
Shares in accordance with the terms hereof (including if the
Purchaser determines that a filing needs to be made with CFIUS for
the transactions contemplated hereby, such filing has been approved
by CFIUS).
(d) Consents. The Company shall
have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary for consummation of
the purchase and sale of the Shares, all of which shall be and
remain so long as necessary in full force and effect.
(e) Company Deliverables. The
Company shall have delivered the Company Deliverables in accordance
with Section 2.2(a).
(f) Termination. This Agreement
shall not have been terminated as to the Purchaser in accordance
with Section 6.15
herein.
(g) Material
Adverse Effect. No Material
Adverse Effect shall have occurred since the date of this
Agreement.
(h) No
Change in Control. The Company
shall not have agreed to enter into or entered into (i) any
agreement or transaction in order to raise capital, or (ii) any
transaction that resulted in, or would result in if consummated, a
“change in control” of the Company, in each case, other
than in connection with the transactions contemplated by the
Transaction Documents.
(i) Shareholder
Approval. At the Special
Meeting (including any adjournments thereof) or an action by
written consent of the majority of the Company’s
shareholders, the Company Shareholder Matters shall have been duly
adopted by the shareholders of the Company in accordance with the
Charter Documents, applicable Law, and applicable Trading Market
rules and regulations (the “Shareholder
Approval”).
5.2 Conditions Precedent to the
Obligations of the Company to sell the Shares. The
Company’s obligation to sell and issue the Shares to the
Purchaser at the Closing is subject to the fulfillment to the
satisfaction of the Company on or prior to the Closing Date of the
following conditions, any of which may be waived by the
Company:
(a) Representations and Warranties.
The representations and warranties made by the Purchaser in
Section 3.3
hereof shall be true and correct as of the date when made, and as
of the Closing Date as though made on and as of such date, except
for representations and warranties that expressly speak as of a
specific date.
(b) Performance. The Purchaser
shall have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied
with by the Purchaser at or prior to the Closing Date.
(c) No Injunction. No statute,
rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction, nor
shall there have been any regulatory communication, that prohibits
the consummation of any of the transactions contemplated by the
Transaction Documents (including if the Purchaser determines that a
filing needs to be made with CFIUS for the transactions
contemplated hereby, such filing has been approved by
CFIUS).
(d) Purchaser Deliverables. The
Purchaser shall have delivered its Purchaser Deliverables in
accordance with Section 2.2(b).
(e) Termination. This Agreement
shall not have been terminated as to the Purchaser in accordance
with Section 6.15
herein.
ARTICLE VI
MISCELLANEOUS
6.1 Fees and Expenses. Other than
as set forth in the Transaction Documents, the parties hereto shall
be responsible for the payment of all expenses incurred by them in
connection with the preparation and negotiation of the Transaction
Documents and the consummation of the transactions contemplated
hereby. The Company shall pay all Transfer Agent fees, stamp Taxes
and other Taxes and duties levied in connection with the sale and
issuance of the Shares to the Purchaser.
6.2 Entire Agreement. The
Transaction Documents, together with the exhibits and schedules
thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior
agreements, understandings, discussions and representations, oral
or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further
consideration, the Company and the Purchaser will execute and
deliver to the other such further documents as may be reasonably
requested in order to give practical effect to the intention of the
parties under the Transaction Documents.
6.3 Notices. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of (a) the date of transmission,
if such notice or communication is delivered via facsimile or
e-mail (provided the sender receives a machine-generated
confirmation of successful facsimile transmission or e-mail
notification or confirmation of receipt of an e-mail transmission)
at the facsimile number or e-mail address specified in this
Section 6.3
prior to 5:00 p.m., Amarillo, Texas time, on a Trading Day,
(b) the next Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the
facsimile number specified in this Section 6.3 on a day that
is not a Trading Day or later than 5:00 p.m., Amarillo, Texas time,
on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier
service with next day delivery specified, or (d) upon actual
receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as
follows:
If to the
Company:
Amarillo
Biosciences, Inc.
Amarillo, Texas
79110
Attention: Stephen
T. Chen, Chief Executive Officer
Telephone:
(626)407-2570
Facsimile:
(806)376-9301
Email:
stcacts@amarbio.com;
stcacts49@gmail.com
With a copy
to:
Amarillo
Biosciences, Inc.
Attention: John
Junyong Lee, Esq.
468
North Camden Drive, 2nd Floor
Beverly
Hills, California 90210
Telephone:
(213)300-5220
Facsimile:
(213)607-3105
Email:
junylee@gmail.com
If to the
Purchaser:
Ainos,
Inc.
P.O. Box 31119
Grand Pavilion, Hibiscus Way, 802 West Bay Road
Grand
Cayman, KY1-1205 Cayman Islands
Attention: Tsai
Chun Hsien, President
Telephone:
+886-37-581999
Facsimile:
+886-37-583335
Email:
et@tcnt.tw
With a copy
to:
Squire Patton Boggs
(US) LLP
555
South Flower Street, 31st Floor
Los
Angeles, California 90071
Attention: James L.
Hsu, Esq.
Telephone: +1 (213)
689-5170
Facsimile: +1 (213)
623-4581
Email:
james.hsu@squirepb.com
達盛國際法律事務所
Da Sheng International Law Firm
100台北市中正區愛國東路22號9樓之15
9F.-1.,
No.22, Aigou E. Rd., Zhongzheng District, Taipei 100, Taiwan
(R.O.C)
Attention: Jenny
Chiu 邱琇偵
律師,
Esq.
Telephone:
+886-920053805
Facsimile:
+886-2-23923866
Email:
chiujenny1@gmail.com
or such
other address as may be designated in writing hereafter, in the
same manner, by such Person.
6.4 Amendments; Waivers; No Additional
Consideration. No amendment or waiver of any provision of
this Agreement will be effective with respect to any party unless
made in writing and signed by an officer or a duly authorized
representative of such party. No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair
the exercise of any such right.
6.5 Construction. The headings
herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the
provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against any party. This Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction
Documents.
6.6 Successors and Assigns. The
provisions of this Agreement shall inure to the benefit of and be
binding upon the parties and their successors and permitted
assigns. This Agreement, or any rights or obligations hereunder,
may not be assigned by the Company without the prior written
consent of the Purchaser. The Purchaser may assign its rights
hereunder in whole or in part to any (a) Affiliate of the
Purchaser, or (b) Person to whom the Purchaser assigns or transfers
the Shares in compliance with the Transaction Documents and
applicable Law, provided
that such transferee shall agree in writing to be bound, with
respect to the transferred Shares, by the terms and conditions of
this Agreement that apply to the Purchaser.
6.7 No Third-Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by,
any other Person, other than Indemnified Persons.
6.8 Governing Law. This Agreement
will be governed by and construed in accordance with the laws of
the State of Delaware applicable to contracts made and to be
performed entirely within such State. Each party agrees that all
Proceedings concerning the interpretations, enforcement and defense
of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or
its respective Affiliates, employees or agents) may be commenced on
an exclusive basis in the courts of the State of Delaware and the
United States District Courts located in the city of Wilmington
(the “Delaware
Courts”). Each party hereto hereby irrevocably submits
to the non-exclusive jurisdiction of the Delaware Courts for the
adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees
not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such Delaware Courts,
or that such Proceeding has been commenced in an improper or
inconvenient forum. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in
any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this
Agreement 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.
6.9 Survival. The representations,
warranties, agreements, and covenants contained herein shall
survive the Closing and the delivery of the Shares as follows: (a)
the representations and warranties of the Company and each Major
Shareholder set forth in Sections 3.1(a),
3.1(b),
3.1(c),
3.1(d),
3.1(e),
3.1(f),
3.1(g),
3.1(i),
3.1(s),
3.1(w),
3.1(cc),
3.1(ff),
3.1(hh),
3.1(kk),
3.1(gg),
3.1(rr) and
3.2 shall survive
indefinitely, (b) the representations and warranties of the Company
set forth in Sections 3.1(j),
3.1(m),
3.1(ss) shall
survive for the applicable statute of limitations, and (c) all
other representations and warranties of the Company set forth in
Section 3.1
shall survive for a period of twenty-four (24) months following the
Closing and the delivery of the Shares. The representations and
warranties of the Purchaser set forth in Section 3.3 shall not
survive the Closing.
6.10 Execution.
This Agreement may be executed in two (2) or more counterparts, all
of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being
understood that the parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile
transmission, or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.
6.11 Severability.
If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Agreement shall not in
any way be affected or impaired thereby and the parties will
attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this
Agreement.
6.12 Replacement
of Shares. If any certificate or instrument evidencing any
of the Shares is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for
and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company and the Transfer
Agent of such loss, theft or destruction and the execution by the
holder thereof of a customary lost certificate affidavit of that
fact and an agreement to indemnify and hold harmless the Company
and the Transfer Agent for any losses in connection therewith or,
if required by the Transfer Agent, a bond in such form and amount
as is required by the Transfer Agent. The applicants for a new
certificate or instrument under such circumstances shall also pay
any reasonable third party costs associated with the issuance of
such replacement such Shares. If a replacement certificate or
instrument evidencing any of the Shares is requested due to a
mutilation thereof, the Company may require delivery of such
mutilated certificate or instrument as a condition precedent to any
issuance of a replacement.
6.13 Remedies.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the
Purchaser and the Company may be entitled to specific performance
under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing
sentence and hereby agree to waive in any action for specific
performance of any such obligation (other than in connection with
any action for a temporary restraining order) the defense that a
remedy at law would be adequate.
6.14 Payment
Set Aside. To the extent that the Company makes a payment or
payments to the Purchaser pursuant to any Transaction Document or
the Purchaser enforces or exercises its rights thereunder, and such
payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
6.15 Termination.
(a) This Agreement may
be terminated and the sale and purchase of the Shares abandoned at
any time prior to the Closing:
(i) by the written
consent of the Company and the Purchaser;
(ii) by
the Purchaser upon written notice to the Company, if the Closing
has not been consummated on or prior to 11:59 p.m., Eastern Time,
on the Outside Date; provided, however, that the right to terminate
this Agreement under this Section 6.15(a)(ii) shall
not be available to the Purchaser if its failure to comply with its
obligations under this Agreement has been the cause of or resulted
in the failure of the Closing to occur on or before such
time;
(iii) by
the Purchaser or the Company, upon written notice to the other
party, in the event that any Governmental Entity shall have issued
any order, decree or injunction or taken any other action
restraining, enjoining or prohibiting any of the transactions
contemplated by this Agreement and such order, decree, injunction
or other action shall have become final and
nonappealable;
(iv) by
the Purchaser, upon written notice to the Company, if (A) there has
been a breach of any representation, warranty, covenant or
agreement made by the Company or any Major Shareholder in this
Agreement, or any such representation or warranty shall have become
untrue after the date of this Agreement, in each case such that a
closing condition in Section 5.1(a) or
Section 5.1(b)
would not be satisfied or (B) there has been a Material Adverse
Effect since the date of the Agreement and such event,
circumstance, change or occurrence shall be incapable of being
cured within fifteen (15) days after such event, circumstance,
change or occurrence;
(v) by the Company,
upon written notice to the Purchaser, if there has been a breach of
any representation, warranty, covenant or agreement made by the
Purchaser in this Agreement, or any such representation or warranty
shall have become untrue after the date of this Agreement, in each
case such that a closing condition in Section 5.1(a) or
Section 5.1(b)
would not be satisfied with respect to the Purchaser;
(vi) by
the Purchaser, if the Company directly or indirectly effects,
causes to be effected, or enters into any definitive agreement to
effect any transaction with a third-party with respect to an
Acquisition Proposal or that would reasonably be expected to result
in a “change in control” of the Company;
(vii) by
the Purchaser if, prior to the Special Meeting (including any
adjournments thereof), the Company’s Board shall have made a
Change in Recommendation; or
(viii) by
the Purchaser or the Company if, at the Special Meeting (including
any adjournments thereof), the Company Shareholder Matters are not
duly adopted by the shareholders of the Company by the requisite
vote under applicable Law and the Charter Documents.
(b) Nothing in this
Section 6.15
shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement
or the other Transaction Documents or to impair the right of any
party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction
Documents. Upon a termination in accordance with this Section 6.15, the Company
and the Purchaser shall not have any further obligation or
liability (including arising from such termination) to the
other.
6.16 Rescission
and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions
of) the Transaction Documents, whenever the Purchaser exercises a
right, election, demand or option under a Transaction Document and
the Company does not timely perform its related obligations within
the periods therein provided, then the Purchaser may rescind or
withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and
rights.
6.17 Adjustments
in Common Stock Numbers and Prices. In the event of any
stock split, subdivision, dividend or distribution payable in
shares of Common Stock (or other securities or rights convertible
into, or entitling the holder thereof to receive directly or
indirectly shares of Common Stock), combination or other similar
recapitalization or event occurring after the date hereof and prior
to the Closing, each reference in any Transaction Document to a
number of shares or a price per share shall be deemed to be amended
to appropriately account for such event.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE
PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto
have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first
indicated above.
|
AMARILLO
BIOSCIENCES, INC.
By: /s/ Stephen T.
Chen__________________
Name:
Stephen T. Chen
Title:
President Chief Executive Officer, and Chief Financial
Officer
AINOS,
INC.
By: /s/ Tsai Chun Hsien
__________________
Name:
Tsai Chun Hsien
Title:
President
MAJOR SHAREHOLDERS:
/s/ Stephen T.
Chen
Stephen
T. Chen, individually and as Trustee of
Stephen
T. Chen and Virginia M. Chen Living Trust, dated April 12,
2018
/s/ Virginia M.
Chen
Virginia M. Chen,
individually and as Trustee of
Stephen
T. Chen and Virginia M. Chen Living Trust, dated April 12,
2018
/s/ Hung Lan Lee, by Shih-Hsein Kuo as
attorney-in-fact
Hung
Lan Lee
|
[Signature
Page to Securities Purchase Agreement]
EXHIBITS
A:
Form of
Company’s Legal Opinion
B:
Form of
Company’s Secretary’s Certificate
C:
Form of
Company’s Officer’s Certificate
D:
Form of
Purchaser’s Officer’s Certificate
E:
Form of Patent
Assignment
EXHIBIT A
Form of
Company’s Legal Opinion
1.
The Company has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Texas.
2.
The Company has the
corporate power and authority to execute and deliver and to perform
its obligations under the Transaction Documents, including, without
limitation, to issue the Shares.
3.
Each of the
Transaction Documents has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution
and delivery by the Purchaser, each of the Transaction Documents
constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its
terms.
4.
The execution and
delivery by the Company of each of the Transaction Documents and
the performance by the Company of its obligations under such
agreements, including its issuance and sale of the Shares, do not
and will not: (a) result in any violation of the Restated
Certificate of Formation or Bylaws of the Company, (b) require any
consent, approval, license or exemption by, order or authorization
of, or filing, recording or registration by the Company with any
federal or state governmental authority which has not been received
or made, (c) violate any court order, judgment or decree, if any,
(d) violate or conflict with, or result in any contravention of,
any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which
the Company is subject or by which any property or asset of the
Company is bound or affected, or (e) result in a breach of, or
constitute a default under, any Material Contract.
5.
As of the date
hereof, the authorized capital stock of the Company consists of
100,000,000 shares of Common Stock, par value $0.01 per share, and
10,000,000 shares of Preferred Stock, par value $0.01 per share.
Immediately upon the Closing (after giving effect to the sale and
issuance of the Shares at the Closing in accordance with the
Securities Purchase Agreement), the authorized capital stock of the
Company consists of (i) 300,000,000 shares of Common Stock, par
value $0.01, [141,116,351] of which are issued and outstanding as
of the Closing and [5,109,617] of which are reserved for issuance
pursuant to warrants, convertible notes or options and (ii) [no
shares of Preferred Stock shall be authorized].
6.
The Shares being
delivered to the Purchaser pursuant to the Securities Purchase
Agreement have been duly and validly authorized and, when issued,
delivered and paid for as contemplated in the Securities Purchase
Agreement, will be duly and validly issued, fully paid and
non-assessable, and free of any preemptive right or similar rights
contained in the Company’s Restated Certificate of Formation
or Bylaws.
7.
As of the date
hereof, the holders of shares of Common Stock are not entitled to
preemptive rights arising solely by operation of (i) the Governing
Documents or (ii) the Texas Corporations Laws.
8.
No consent,
approval, authorization or order of, or filing with, any
governmental agency or body or any court is required in connection
with the execution, delivery or performance of the Transaction
Documents by the Company, or in connection with the issuance or
sale of the Shares by the Company to the Purchaser, except (i) the
filing with the Commission of one or more Registration Statements
in accordance with the requirements of this Agreement, (ii) filings
required by applicable state securities laws, (iii) the filing of a
Notice of Sale of Securities on Form D with the Commission under
Regulation D of the Securities Act of 1933, as amended, (iv) the
filing of any requisite notices and/or application(s) to the Nasdaq
Capital Market for the issuance and sale of the Shares and the
listing of the Shares for trading thereon in the time and manner
required thereby, (v) the Required Filings required in accordance
with Section 4.18
of the Purchase Agreement, (vi) the Stockholder Approval, and (vii)
those that have been made or obtained prior to the date
hereof.
9.
It is not necessary
in connection with the offer and sale of the Shares to the
Purchaser under the Securities Purchase Agreement to register the
Shares under the Securities Act of 1933, as amended, assuming the
accuracy of the representations and warranties of the Purchaser in
the Securities Purchase Agreement.
10.
To our actual
knowledge, there is no litigation or any governmental proceeding
involving the Company, pending or threatened, that challenges the
validity or enforceability of the Securities Purchase Agreement, or
seeks to enjoin the performance of the Securities Purchase
Agreement by the Company.
EXHIBIT B
Form of
Company's Secretary’s Certificate
The
undersigned hereby certifies that [he][she] is the duly elected,
qualified and acting Corporate Secretary of Amarillo Biosciences,
Inc., a Texas corporation (the “Company”), and that as
such [he][she] is authorized to execute and deliver this
certificate in the name and on behalf of the Company and in
connection with the Securities Purchase Agreement, dated as of
December 24, 2020, by and between the Company and Ainos, Inc.,
a Cayman Islands corporation (the “Securities Purchase
Agreement”), and further certifies in [his][her]
official capacity, in the name and on behalf of the Company, the
items set forth below. Capitalized terms used but not otherwise
defined herein shall have the meaning set forth in the Securities
Purchase Agreement.
1.
Attached hereto as
Exhibit A is a
true, correct and complete copy of the resolutions duly adopted by
the Board at a meeting held on December [_], 2020, which
represent all of the resolutions approving the transactions
contemplated by the Securities Purchase Agreement and the issuance
of the Shares. Such resolutions have not in any way been amended,
modified, revoked or rescinded, have been in full force and effect
since their adoption to and including the date hereof and are now
in full force and effect.
2.
Attached hereto as
Exhibit B is a
true, correct and complete copy of the Restated Certificate of
Formation the Company, together with all amendments thereto
currently in effect, and no action has been taken to further amend,
modify or repeal such Restated Certificate of Formation, the same
being in full force and effect in the attached form as of the date
hereof.
3.
Attached hereto as
Exhibit C is a
true, correct and complete copy of the Bylaws of the Company,
together with all amendments thereto currently in effect, and no
action has been taken to further amend, modify or repeal such
Bylaws, the same being in full force and effect in the attached
form as of the date hereof.
4.
Each person listed
below has been duly elected or appointed to the position(s)
indicated opposite his name and is duly authorized to sign the
Securities Purchase Agreement and each of the Transaction Documents
on behalf of the Company, and the signature appearing opposite such
person’s name below is such person’s genuine
signature.
Name
|
Position
|
Signature
|
|
|
|
|
|
Stephen
T. Chen
|
President,
CEO, and CFO
|
_________________________
|
|
John
Junyong Lee
|
Secretary
|
_________________________
|
|
|
|
|
IN
WITNESS WHEREOF, the undersigned has hereunto set her hand as of
this [__] day of [______], 2021.
|
______________________________
John
Junyong Lee
Secretary
|
I,
Stephen T. Chen, the President and Chief Executive Officer of the
Company, hereby certify that John Junyong Lee is the duly elected,
qualified and acting Secretary of the Company and that the
signature set forth above is his true signature.
|
______________________________
Stephen
T. Chen
President
and Chief Executive Officer
|
EXHIBIT C
Form of
Company’s Officer’s Certificate
The
undersigned, the President, Chief Executive Officer and Chief
Financial Officer of Amarillo Biosciences, Inc., a Texas
corporation (the “Company”), pursuant to
Section 2.2(a)(vi) of the Securities Purchase Agreement, dated
as of December 24, 2020, by and between the Company and Ainos,
Inc., a Cayman Islands corporation (the “Securities Purchase
Agreement”), hereby represents, warrants and certifies
as follows (capitalized terms used but not otherwise defined herein
shall have the meaning set forth in the Securities Purchase
Agreement):
1. The
representations and warranties of the Company contained in the
Securities Purchase Agreement are true and correct as of the date
when made and as of the Closing Date, as though made on and as of
such date, except for such representations and warranties that
expressly speak as of a specific date.
2. The
Company has performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied
with by it at or prior to the Closing.
IN WITNESS WHEREOF, the undersigned have
executed this certificate this [__] day of [_____],
2021.
|
______________________________
Stephen
T. Chen
President
and Chief Executive Officer
|
EXHIBIT
D
Form of
Purchaser’s Officer’s Certificate
The
undersigned, the President and Chief Executive Officer of Ainos,
Inc., a Cayman Islands corporation (the “Purchaser”), pursuant to
Section 2.2(b)(vi) of the Securities Purchase Agreement, dated
as of December 24, 2020, by and between the Company and
Purchaser (the “Securities Purchase
Agreement”), hereby represents, warrants and certifies
as follows (capitalized terms used but not otherwise defined herein
shall have the meaning set forth in the Securities Purchase
Agreement):
1. The
representations and warranties of the Purchaser contained in the
Securities Purchase Agreement are true and correct as of the date
when made and as of the Closing Date, as though made on and as of
such date, except for such representations and warranties that
expressly speak as of a specific date.
2. The
Company has performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied
with by it at or prior to the Closing.
IN WITNESS WHEREOF, the undersigned have
executed this certificate this [__] day of [_______],
2021.
|
______________________________
Name:
Tsai Chun Hsien
President
and Chief Executive Officer
|
EXHIBIT E
Form of
Patent Assignment
This
Patent Assignment (this “Patent Assignment”) is
made and effective as of [______], 2021 (the “Effective Date”) by
Ainos, Inc., a Cayman Islands corporation having a principal place
of business at 31119 Grand Pavilion, Hibiscus Way, 802 West Bay
Road, Grand Cayman, KY1-1205 Cayman Islands (“Assignor”). Capitalized
terms used and not otherwise defined herein that are defined in the
Purchase Agreement (as defined below) shall have the meanings given
to such terms in the Purchase Agreement.
RECITALS
WHEREAS, Assignor is the sole owner of
all rights, title and interest in and to the patents, patent
applications, and patent license agreement set forth in
Schedule A
attached hereto (collectively, the “Patent
Assets”);
WHEREAS, Assignor and Amarillo
Biosciences, Inc., a Texas corporation having a principal place of
business at 4134 Business Park Drive, Amarillo, Texas 79110
(“Assignee”), have entered
into that certain Securities Purchase Agreement, dated as of
December 24, 2020, by and among Assignee, Assignor, and each of the
Major Shareholders named therein (the “Securities Purchase
Agreement”); and
WHEREAS, it is a condition to closing
the transactions contemplated by the Securities Purchase Agreement
that Assignor execute and deliver this Patent Assignment to
Assignee in connection with the sale, transfer and conveyance by
Assignor to Assignee of Assignor’s right, title and interest
to the Patent Assets pursuant to Sections 2.1(d) and
2.2(b)(iii) the Securities Purchase Agreement.
NOW, THEREFORE, IN CONSIDERATION of the
good and valuable consideration that Assignor receives under the
Securities Purchase Agreement, the receipt and sufficiency of which
consideration Assignor hereby acknowledges:
1. Assignor
hereby sells, assigns, transfers and conveys to Assignee, the
entire worldwide right, title and interest of Assignor (a) in, to
and under the Patent Assets (including without limitation, rights
to damages and payments for past, present and future infringements
or misappropriations), and all continuations, divisionals,
substitutions, reexaminations, post-opposition foreign counterpart
patents and applications, reissues and extensions thereof, if any,
existing on the Effective Date; and (b) in, to and under all rights
to apply in any or all countries of the world for patents,
certificates of inventions or other governmental grants on the
Patent Assets, including the right to apply for patents pursuant to
the International Convention for the Protection of Industrial
Property or pursuant to any other convention, treaty, agreement or
understanding.
2. Assignor
hereby authorizes and requests the applicable governmental
agencies, whose duty it is to issue patents and applications as
aforesaid, to record Assignee as the owner of the Patent Assets, to
the same extent as held by Assignor, and to issue all Letters
Patent for such Patent Assets in the name of Assignee, as assignee
of the entire right, title and interest in, to and under the Patent
Assets.
3. Assignor
hereby covenants and agrees to cooperate as commercially reasonable
(and at Assignee’s expense) with Assignee to enable Assignee
to exercise all the right, title and interest conveyed herein. Such
cooperation by Assignor shall include executing any petitions,
oaths, specifications, declarations or other papers, and any other
assistance reasonably necessary for perfecting in Assignee the
right, title and interest herein conveyed.
4. Assignor
hereby covenants and agrees that if Assignor after the Effective
Date receives any business revenues in connection with the Patent
Assets, Assignor will promptly so advise Assignee, will segregate
and hold such business revenues in trust for the benefit of
Assignee and will promptly deliver such funds to an account or
accounts designated by Assignee.
5. Assignor
hereby represents and warrants that Assignor has not entered and
will not enter into any assignment, contract or understanding that
would result in the assignment of less than the entire right, title
and interest to the Patent Assets assigned hereby.
6. The
terms and covenants of this Patent Assignment shall inure to the
benefit of Assignee, its successors, assigns and other legal
representatives, and shall be binding upon Assignor, its
successors, assigns, and legal representatives.
7. This
Patent Assignment shall be governed by the internal law of Taiwan,
R.O.C., without regard to conflict of law principles that would
result in the application of any law other than the law of Taiwan,
R.O.C.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE
PAGE FOLLOWS]
IN WITNESS WHEREOF, Assignor has caused this Patent
Assignment to be executed on its behalf by its duly authorized
officer as of the Effective Date.
SCHEDULE A
PATENT ASSETS
Owned Patents
A GAS
SENSOR AND MANUFACTURE METHOD THEREOF
|
Taiwan Patent No.: I565944
|
MEDICAL
VENTILATOR CAPABLE OF ANALYZING INFECTION AND BACTERIA OF PNEUMONIA
VIA GAS IDENTIFICATION
|
Taiwan Patent No.: I565945
|
GAS
DETECTOR
|
Taiwan Patent No.: D183554
|
Licensed Patents
MEDICAL
VENTILATOR CAPABLE OF ANALYZING INFECTION AND BACTERIA OF PNEUMONIA
VIA GAS IDENTIFICATION
|
Japan Patent No.: JP 6392811 B2
|
GAS
DETECTOR
|
China Patent No.: CN 304042244 S
|