SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made and entered into as
of September 3, 2004, by and between Nanobac Pharmaceuticals, Incorporated, a
Florida corporation (the "Company"), and Jaytern Associates Inc., a New Jersey
Corporation (the "Purchaser").
1. Subscription. Subject to the terms and conditions contained herein
and in that certain Registration Rights Agreement ("Rights Agreement") form of
Class A Warrant and Class B Warrant (the "Warrants"), all by and between the
Company and Purchaser dated the date hereof (collectively, the "Transaction
Documents"), the Purchaser hereby agrees to purchase from the Company, and the
Company hereby agrees to issue and sell to the Purchaser, a certain number of
shares of the Company's Common Stock (the "Common Stock"), and warrants to
purchase additional shares of Common Stock (the Common Stock and warrants
referred to as the "Securities"), for an aggregate purchase price of up to
$250,000 (the "Purchase Price"). The number of shares issuable to Purchaser (the
"Applicable Number") will equal the Purchase Price, divided by the lesser of:
(a) $0.12, or
(b) fifty-two percent (52%) of the average closing bid price for Common
Stock on the five trading days prior to the date on which the registration
statement (as described in the Registration Rights Agreement) is declared
effective
(the lesser of (a) and (b) being hereinafter referred to as the "Fixed
Price").
Upon execution of this Agreement, Purchaser will be issued Warrants
^exercisable into such number of shares of Common Stock as is equal to 100% of
the Purchase Price paid by Purchaser, divided by the Fixed Price as set forth in
the applicable Warrant. The Common Stock into which the Warrants are exercisable
will have piggyback registration rights, and the Warrants will be transferable.
Unexercised Warrants will expire December 31, 2008 ("Warrant Expiration Date").
^Fifty percent of the Warrants (the "Class A Stock Purchase Warrants") will be
exercisable into Common Stock at a per share price equal to 110% of the lesser
of (a) $0.12; or (b) fifty-two percent (52%) of the average closing bid price
for Common Stock on the five trading days immediately prior to the filing with
the Securities and Exchange Commission ("SEC") of the Registration Statement.
The remaining ^fifty percent of the Warrants (the "Class B Stock Purchase
Warrants") will be exercisable into Common Stock at a per share price equal to
150% of the lesser of (a) $0.12; or (b) fifty-two percent (52%) of the average
closing bid price for Common Stock on the five trading days immediately prior to
the filing with the Securities and Exchange Commission of the Registration
Statement.
The $250,000 Purchase Price will be payable by Purchaser, in two
traunches. The first traunche will be in the amount of $125,000 and shall occur
no later than ^September 1, 2004. The second traunche will be an amount equal to
$125,000 and shall occur ^no later than 5 days ^after the date on which the
registration statement registering the Securities is declared effective by the
SEC. The Company shall deliver to Purchaser the Common Stock and Warrants
pertaining to the first traunche upon execution of this Agreement and payment of
the first traunche and shall deliver the Common Stock and Warrants pertaining to
the second traunche upon payment of the second traunche.
The Purchaser or its designee shall also be entitled to a commission of 5%
of any and all amounts received, directly or indirectly, by the Company and/or
its principals as a consequence of a merger, license or any other similar
arrangement or remuneration as a consequence of the efforts of ^Purchaser or its
designee or agent within 5 days following receipt of such funds. All references
to the "Company" shall include associates, and any individual, corporation,
organization, firm or company, of which the Company is a member, employee,
principal, party to, or from which such it would otherwise benefit financially,
directly or indirectly.
2. Closing. The closing (the "Closing") of the purchase and sale of the
Securities shall take place at the offices of the Company, the Company will
deliver to the Purchaser certificates for the Shares and the warrant agreement
against payment to the Company of the Purchase Price, paid as set forth above,
by wire transfer or other acceptable consideration designated by the Company.
3. Conditions to Obligations of the Purchaser. The Purchaser's
obligation to purchase the Securities at the Closing is subject to the
fulfillment (or waiver by the Purchaser), at or prior to the Closing, of each of
the following conditions:
a. Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company contained in this Agreement and
the other Transaction Documents shall be true and correct in all material
respects at the time of the Closing^.
b. Performance by the Company. The Company shall have duly
performed and complied in all material respects with all agreements and
conditions contained in this Agreement and required to be performed or complied
with by the Company at or prior to the Closing.
c. Nonfulfillment of Conditions. If any of the conditions
specified in Section 3 shall not have been fulfilled at or prior to the Closing,
the Purchaser shall be relieved of all further obligations under this Agreement,
without thereby waiving any other rights the Purchaser may have by reason of
such nonfulfillment.
d. Maximum Exercise. At any point in time, the Purchaser shall
not be entitled to receive shares of common stock if such issuance would result
in beneficial ownership by the Purchaser and its affiliates of more than 4.99%
of the outstanding shares of common stock of the Company on such issue date,
including:
(i) the number of shares of common stock beneficially owned by the
Purchaser and its affiliates, and
(ii) the number of shares of common stock issuable upon the
exercise or conversion of securities owned.
For the purposes of this provision as set forth in the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13d-3 thereunder. Subject to the foregoing, the Purchaser shall not be limited
to aggregate common stock issuances of only 4.99% and aggregate common stock
issuances may exceed 4.99%. The Purchaser may void the issuance limitation
described in this Section upon 61 days prior written notice to the Company. The
Purchaser may allocate which of the equity of the Company deemed beneficially
owned by the Purchaser shall be included in the 4.99% amount described above and
which shall be allocated to the excess above 4.99%.
4. Conditions to Obligations of the Company. The obligations of the
Company to issue and sell the Securities to the Purchaser at the Closing shall
be subject to the fulfillment (or waiver by the Company), at or prior to the
Closing, of each of the following conditions:
^a. Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties made by the Purchaser in this Agreement shall be
true and correct in all material respects when made and at the time of the
Closing.
^b. Performance by the Purchaser. The Purchaser shall have duly
performed and complied in all material respects with all agreements and
conditions contained in this Agreement and required to be performed or complied
with by the Purchaser at or prior to the Closing, including but not limited to
payment to the Company of the Purchase Price in the manner described above for
the Securities in immediately available funds.
^5. Representations and Warranties of the Company. The Company represents and
warrants to the Purchaser as follows:
^a. Corporate Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
its incorporation and has all requisite corporate power and authority to enter
into this Agreement and the other Transaction Documents, to own or lease its
properties^, to carry on its business as presently conducted^ and to implement
the Transactions contemplated herein;
^b. Authorization. This Agreement, the other Transaction Documents and the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement ^and the other
Transaction Documents have been duly executed and delivered by the Company, and
are the legal, valid and binding obligations of the Company, enforceable against
it in accordance with their terms;
c. ^No Conflict or Violation. ^The execution and delivery of this
Agreement^ and the consummation of the transactions contemplated hereby, will
not (a) violate, conflict with or result in a breach of or constitute a default
under any provision of the Certificate of Incorporation or Bylaws of the
Company, any financing agreement, indenture or material agreement; (b) violate,
conflict with or result in a breach of or constitute a default under any
judgment, order, decree, rule or regulation of any court or governmental agency
to which the Company is subject; or (c) violate, conflict with or result in a
breach of any applicable rule or regulation of any federal, state, local or
other governmental authority.
^d. Stock. The Securities to be issued to the Purchaser pursuant to this
Agreement are duly authorized and, when issued and paid for in accordance with
the terms of this Agreement, will be validly issued, fully paid and
nonassessable.
^e. Registration Statement. The Company intends to file a Registration
Statement pursuant to the Rights Agreement.
f. No violation of the Securities Laws and Regulations. The
transactions contemplated by this Agreement comply with applicable securities
laws and regulations.
g. Accuracy. The Company's representations and warranties shall be true
and accurate in all material respects on the date hereof.
h. Reliance. The Company understands and acknowledges that the
Purchaser is relying on the Company's representations and warranties in the
Transaction Documents in connection with the Transaction transactions
contemplated hereby
6. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company that:
^a. Authorization. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of ^New Jersey and has
all requisite power and authority to execute and deliver this Agreement and to
subscribe for and purchase the Securities hereunder. This Agreement and the
transactions contemplated hereby and thereby have been duly authorized by all
necessary ^corporate action on the part of the Purchaser. This Agreement has
been duly executed and delivered by the Purchaser, and is the legal, valid and
binding obligations of the Purchaser, enforceable against it in accordance with
their terms.
^b. No Conflict or Violation. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate, conflict with or result in a breach of or constitute a default
under any provision of the ^certificate of incorporation or the bylaws of the
Purchaser, any financing agreement, indenture or material agreement, (b)
violate, conflict with or result in a breach of or constitute a default under
any judgment, order, decree, rule or regulation of any court or governmental
agency to which the Purchaser is subject or (c) violate, conflict with or result
in a breach of any applicable rule or regulation of any federal, state, local or
other governmental authority.
^c. Access to Information; Investigation. The Purchaser made, either
alone or together with its advisors (if any), such independent investigation of
the Company, its management and related matters as the Purchaser deemed to be,
or such advisors (if any) have advised to be, necessary or advisable in
connection with an investment in the Securities. The Purchaser and its advisors
(if any) have received all information and data that the Purchaser and such
advisors (if any) believe to be necessary in order to reach an informed decision
as to the advisability of an investment in the Shares.
^d. Information Regarding the Purchaser. The Purchaser is (a) not an
"underwriter" within the meaning of the Securities Act of 1933 or otherwise, and
(b) not otherwise acting as a placement agent, broker or dealer in connection
with its acquisition of the Securities. ^
e.^ Investment Intent. Such Purchaser is acquiring the Securities as
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Purchaser's right, subject to the provisions of this
Agreement, at all times to sell or otherwise dispose of all or any part of such
Securities 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. ^Such Purchaser does not have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.
^f. Purchaser Status. At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and on each date on which it
exercises any Warrants or receives any shares of Common Stock it will be, an
"accredited investor" as defined in Rule 501(a) under the Securities Act.
^Purchaser has not been formed solely for the purpose of acquiring the
Securities. ^Purchaser is not a registered broker-dealer under Section 15 of the
Exchange Act.
^g. Experience of such Purchaser. ^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 Securities, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.
^h. General Solicitation. ^Purchaser is not purchasing the Securities as
a result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
^i. Reliance on Representations and Warranties of the Purchaser. The
Purchaser understands and acknowledges that the Company is relying on the
representations and warranties made by the Purchaser in this ^Section 6 in
connection with the transactions contemplated hereby.
^7. Indemnification. Each party (the "Indemnifying Party") will indemnify and
hold the other parties and their directors, officers, shareholders, partners,
employees and agents (each, an "Indemnified Party") harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation ("Damages") that any such
Indemnified Party may suffer or incur as a result of ^a breach of any of the
representations, warranties, covenants or agreements made by the Indemnifying
Party in this Agreement. If any action shall be brought against any Indemnified
Party in respect of which indemnity may be sought pursuant to this Agreement,
such Indemnified Party shall promptly notify the Indemnifying Party in writing,
and the Indemnifying Party shall have the right to assume the defense thereof
with counsel of its own choosing. Any Indemnified Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such separate counsel shall be at the
expense of such Indemnified Party except to the extent that (i) the employment
thereof has been specifically authorized by the Indemnifying Party in writing,
(ii) the Indemnifying Party has failed after a reasonable period of time to
assume such defense and to employ counsel or (iii) in such action there is, in
the reasonable opinion of such separate counsel, a ^conflict of interest on any
material issue between the position of the Indemnifying Party and the position
of such Indemnified Party. The Indemnifying Party will not be liable to any
Indemnified Party under this Agreement (i) for any settlement made by an
Indemnified Party effected without the Indemnifying Party's prior written
consent, which consent shall not be unreasonably withheld or delayed; or (ii) to
the extent, but only to the extent that ^Damages result from any Indemnified
Party's breach of any of the representations, warranties, covenants or
agreements made by the Purchasers in this Agreement.
^8. Amendments and Waivers. This Agreement may be amended and the observance
of any provision hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of each party to be bound thereby. No provision of this Agreement shall
be deemed to have been waived, unless such waiver is contained in a written
notice given to the party claiming such waiver, and no such waiver shall be
deemed to be a waiver of any other or further obligation or liability of the
party or parties in whose favor the waiver was given.
^9. Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by the Purchaser or by the
Company in connection with the transactions contemplated by this Agreement shall
survive the Closing Date and shall remain in full force and effect for three
years thereafter. All covenants and agreements contained in this Agreement shall
survive the Closing Date indefinitely until, by their respective terms, they are
no longer operative. No claims shall be made after the date on which the
applicable representation or warranty upon which such claim was based ceases to
survive pursuant to this Section; provided, however, that the expiration of any
representation or warranty under this Section shall not affect any claim made in
good faith prior to the date of such expiration.
^10. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto.
^11. Notices. All notices, requests, demands and other communications
given hereunder (collectively, "Notices") shall be in writing and delivered
personally or by overnight courier to the parties at the following addresses or
sent by telecopier or telex, with confirmation received, to the telecopy
specified below:
If to the Company, at:
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ESQ.
SICHENZIA ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
1065 Avenue of the Americas, ▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
tel: ▇▇▇-▇▇▇-▇▇▇▇
fax:▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
If to the Purchaser, at:
Jaytern Associates Inc.
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
All Notices shall be deemed delivered when actually received if delivered
personally or by overnight courier, sent by telecopier or telex (promptly
confirmed in writing), addressed as set forth above. Each of the parties shall
hereafter notify the other in accordance with this Section, of any change of
address or telecopy number to which notice is required to be mailed.
8. Governing Law; Enforcement. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Florida applicable to contracts made in that state, without giving effect to the
conflicts of laws principles thereof. ^Any action arising out of this Agreement
shall be brought in any court of the United States located in the State of
Florida or in Florida state court, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of any federal
court located in the State of Florida or any Florida state court in the event
any dispute arises out of this Agreement or any of the transactions contemplated
by this Agreement, (b) agrees that it will not attempt to deny such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than a
federal or state court sitting in the State of Florida.
9.^^ Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
^10. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall constitute one and the same instrument.
^11. Entire Agreement. This Agreement and the ^other Transaction
Documents constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede all prior negotiations, agreements and
understandings, whether written or oral, of the parties.
^12. No Third-Party Rights. This Agreement is not intended, and shall not
be construed, to create any rights in any parties other than the Company and the
Purchaser and no person shall assert any rights as third-party beneficiary
hereunder.
^13. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to affect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
NANOBAC PHARMACEUTICALS, INCORPORATED
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
----------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
Title: Director
AYTERN ASSOCIATES INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of September 3, 2004, between
Jaytern Associates Inc., a New Jersey Corporation ("Holder"), and Nanobac
Pharmaceuticals, Incorporated, a corporation incorporated under the laws of the
State of Florida (the "Company").
WHEREAS, simultaneously with the execution and delivery of this Agreement,
the Holder is purchasing from the Company, pursuant to a Subscription Agreement
dated the date hereof (the "Subscription Agreement"), shares of the Company's
Common Stock (the "Common Shares"), and a Class A and B Warrants exercisable to
purchase additional shares of the Company's Common Stock (collectively, this
Agreement and the foregoing documents are referred to as the "Transaction
Documents") (terms not defined herein shall have the meanings ascribed to them
in the Subscription Agreement); and
WHEREAS, the Company desires to grant to the Holder the registration
rights set forth herein with respect to the shares of Common Stock issued
pursuant to the Subscription Agreement and with respect to the shares of Common
Stock issuable upon exercise of the Class A and B Warrants (the "Warrant
Shares") (hereinafter the Common Shares and the Warrant Shares shall be referred
to collectively as the "Securities" of the Company).
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term "Registrable
Security" means the Securities until (i) the Registration Statement has been
declared effective by the SEC, and all Securities have been disposed of pursuant
to the Registration Statement, (ii) all Securities have been sold under
circumstances under which all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act ("Rule 144") are met,
(iii) all Securities have been otherwise transferred to holders who may trade
such Securities without restriction under the Securities Act, and the Company
has delivered a new certificate or other evidence of ownership for such
Securities not bearing a restrictive legend or (iv) such time as, in the opinion
of counsel to the Company, all Securities may be sold without any time, volume
or manner limitations pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act. The term "Registrable Securities" means any
and/or all of the securities falling within the foregoing definition of a
"Registrable Security." In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the Common Stock, such adjustment shall be deemed to be made in the definition
of "Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Agreement.
Section 2. Restrictions on Transfer. The Holder acknowledges and
understands that prior to the registration of the Securities as provided herein,
the Securities are "restricted securities" as defined in Rule 144 promulgated
under the Act. The Holder understands that no disposition or transfer of the
Securities may be made by Holder in the absence of (i) an opinion of counsel to
the Holder that such transfer may be made without registration under the
Securities Act or (ii) such registration.
With a view to making available to the Holder the benefits of Rule 144
under the Securities Act or any other similar rule or regulation of the SEC that
may at any time permit the Holder to sell securities of the Company to the
public without registration ("Rule 144"), the Company agrees to:
(a) comply with the provisions of paragraph (c) of Rule 144; and
(b) file with the SEC in a timely manner all reports and other
documents required to be filed by the Company pursuant to Sections 13 or 15(d)
under the Exchange Act; and, if at any time it is not required to file such
reports but in the past had been required to or did file such reports, it will,
upon the request of any Holder, make available other information as required by,
and so long as necessary to permit sales of, its Registrable Securities pursuant
to Rule 144.
Section 3. Registration Rights With Respect to the Securities.
(a) The Company will (i) prepare and file a registration
statement on Form ▇-▇, ▇▇▇▇ ▇-▇, Form S-3 or Form SB-2 to register a sufficient
number of shares of Common Stock to accommodate a $250,000 purchase of Common
Stock, and to register the shares of Common Stock into which the Warrants are
exercisable into (the "Registration Statement") within forty-five days from the
date on which the Company receives from the Holder an aggregate of $250,000 (the
"Initial Filing Date"), and (ii) use its best efforts to have the registration
statement declared effective within 90 days following the Initial Filing Date,
and thereafter to cause the registration statement to remain effective through
December 31, 2008, and in the case of Warrants, through the Warrant Expiration
Date. If the registration statement is not effective within 165 days from the
Initial Filing Date, then the Company shall refund to Holder an amount equal to
one percent (1%) of $125,000 (the "Purchase Price") g on the 166th day. For each
further thirty day period thereafter until the registration statement is
effective, the Company shall refund to Holder an amount equal to one percent
(.5%) of the Purchase Price on the 31st day of each such period; provided
however, the maximum refund to the Holder pursuant to this section shall be
$12,500. Notwithstanding the Company's payment of any refunds to Purchaser,
Purchaser shall still be entitled to (a) an adjustment to the Purchase Price and
the purchase of additional shares of Common Stock if the calculation of Fixed
Price pursuant to Section 1 is less than $.12 per share and (b) the shares of
Common Stock shall constitute the fully paid and nonassessable shares of the
Common Stock of the Company.
(b) The Company will maintain the Registration Statement or
post-effective amendment filed under this Section 3 hereof effective under the
Securities Act until the earlier of (ii) the date that all of the Securities
have been sold pursuant to the Registration Statement, (ii) the date the Holders
thereof receive an opinion of counsel to the Company, which counsel shall be
reasonably acceptable to the Holder, that the Securities may be sold under the
provisions of Rule 144 without limitation as to volume, (iii) all Securities
have been otherwise transferred to holders who may trade such shares without
restriction under the Securities Act, and the Company has delivered a new
certificate or other evidence of ownership for such securities not bearing a
restrictive legend, or (iv) all Securities may be sold without any time, volume
or manner limitations pursuant to Rule 144(k) or any similar provision then in
effect under the Securities Act in the opinion of counsel to the Company, which
counsel shall be reasonably acceptable to the Holder (the "Effectiveness
Period").
(c) All fees, disbursements and out-of-pocket expenses and
costs incurred by the Company in connection with the preparation and filing of
the Registration Statement under subparagraph 3(a) and in complying with
applicable securities and Blue Sky laws (including, without limitation, all
attorneys' fees of the Company) shall be borne by the Company. The Holder shall
bear the cost of brokerage discounts, fees and commissions, if any, applicable
to any future sales it may cause of the Registrable Securities. The Holder and
its counsel shall be provided with and shall have a reasonable period, not to
exceed three (3) Trading Days, to review the proposed Registration Statement or
any amendment thereto, prior to filing with the SEC, and the Company shall
provide each Holder with copies of any comment letters received from the SEC
with respect thereto within two (2) Trading Days of receipt thereof. The Company
shall make reasonably available for inspection by each Holder, any underwriter
participating in any disposition pursuant to the Registration Statement, and any
attorney, accountant or other agent retained by such Holder or any such
underwriter all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by such Holder or any such underwriter, attorney, accountant or agent
in connection with the Registration Statement, in each case, as is customary for
similar due diligence examinations; provided, however, that all records,
information and documents that are designated in writing by the Company, in good
faith, as confidential, proprietary or containing any material non-public
information shall be kept confidential by such Holder and any such underwriter,
attorney, accountant or agent (pursuant to an appropriate confidentiality
agreement in the case of any such Holder or agent), unless such disclosure is
made pursuant to judicial process in a court proceeding (after first giving the
Company an opportunity promptly to seek a protective order or otherwise limit
the scope of the information sought to be disclosed) or is required by law, or
such records, information or documents become available to the public generally
or through a third party not in violation of an accompanying obligation of
confidentiality; and provided further that, if the foregoing inspection and
information gathering would otherwise disrupt the Company's conduct of its
business, such inspection and information gathering shall, to the maximum extent
possible, be coordinated on behalf of the Holder and the other parties entitled
thereto by one firm of counsel designated by and on behalf of the Holder and
other parties. The Company shall qualify any of the securities for sale in such
states as such Holder reasonably designates and shall furnish indemnification in
the manner provided in Section 6 hereof. However, the Company shall not be
required to qualify in any state which will require an escrow or other
restriction relating to the Company and/or its affiliates or the sellers, or
which will require the Company to qualify to do business in such state or
require the Company to file therein any general consent to service of process.
The Company at its expense will supply the Holder with copies of the
Registration Statement and the prospectus included therein and other related
documents in such quantities as may be reasonably requested by the Holder.
(d) The Company shall not be required by this Section 3 to
include the Holder's Securities in any Registration Statement which is to be
filed if, in the opinion of counsel for both the Holder and the Company (or,
should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Holder and the Company) the
proposed offering or other transfer for which such registration is requested is
exempt from applicable federal and state securities laws and would result in all
purchasers or transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the Securities Act.
(e) No provision contained herein shall preclude the Company
from selling securities pursuant to any Registration Statement in which it is
required to include Securities pursuant to this Section 3. It is the
understanding of the Holder that the Company may undertake a firm commitment
underwritten public offering (the "Public Offering"). In the event that the
registration statement for the Public Offering is filed on or before the Initial
Filing Date (which date may be extended to no later than thirty (30) days after
the Initial Filing Date by the managing underwriter of the Public Offering),
then Holder agrees that in lieu of the Registration Statement required by this
Agreement, the Company shall include Holder's Registrable Securities as a
selling securityholder in the Public Offering registration statement, but not as
part of the underwritten offering. The Public Offering registration statement
will be kept effective (at least as to Holder's Registrable Securities) for the
period otherwise required herein. Holder shall agree to such "lockup" as may be
required by the underwriters of the Public Offering, provided that under no
circumstances shall Holder be required to agree to any lockup of more than 75%
of its Registrable Securities (allocated proportionately among the Common Shares
and Warrant Shares), and as to such locked-up Registrable Securities, such
lock-up shall not exceed ^90 days from the effective date of the Public Offering
registration statement. Notwithstanding the foregoing, Holder shall not be
required to enter into any lock-up agreement: (i) that is more restrictive than
any lock-up agreement required of the the Company's insiders and controlling
shareholders or (ii) unless the the Company's insiders and controlling
shareholders are also required to do so. If the Public Offering is abandoned, or
the underwriters of the Public Offering require a lock-up from Holder which is
more severe than that set forth above, then the Company shall again be obligated
to file the Registration Statement called for by this Agreement for Holder's
benefit, and shall so file within 15 business days of such event.
(f) If at any time or from time to time after the effective
date of the Registration Statement, the Company notifies the Holder in writing
of the existence of a Potential Material Event (as defined in Section 3(h)
below), the Holder shall not offer or sell any Securities or engage in any other
transaction involving or relating to Securities, from the time of the giving of
notice by fax with confirmed receipt with respect to a Potential Material Event
until such Holder receives written notice from the Company that such Potential
Material Event either has been disclosed to the public or no longer constitutes
a Potential Material Event; provided, however, that the Company may not so
suspend the right to such holders of Securities for more than twenty (20) days
in the aggregate (or such greater period, not to exceed 90 days in the aggregate
annually, as may be required to prepare and file audited financial statements of
a company or business acquired) during any twelve month period, during the
periods the Registration Statement is required to be in effect. If a Potential
Material Event shall occur prior to the date the Registration Statement is
filed, then the Company's obligation to file the Registration Statement shall be
delayed without penalty for not more than twenty (20) days (or such greater
period, not to exceed 90 days in the aggregate, as may be required to prepare
and file audited financial statements of a company or business acquired). The
Company must give Holder notice in writing at least two (2) Trading Days prior
to the first day of the blackout period.
(g) "Potential Material Event" means any of the following:
(a) the possession by the Company of material information not ripe for
disclosure in a registration statement as determined in good faith by the Chief
Executive Officer or the Board of Directors of the Company that disclosure of
such information in the Registration Statement would be detrimental to the
business and affairs of the Company; or (b) any material engagement or activity
by the Company which would, in the good faith determination of the Chief
Executive Officer or the Board of Directors of the Company, be adversely
affected by disclosure in a registration statement at such time, which
determination shall be accompanied by a good faith determination by the Chief
Executive Officer or the Board of Directors of the Company that the Registration
Statement would be materially misleading absent the inclusion of such
information.
Section 4. Cooperation with Company. Holder will cooperate with the
Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company (which shall
include all information regarding the Holder and proposed manner of sale of the
Registrable Securities required to be disclosed in the Registration Statement)
and executing and returning all documents reasonably requested in connection
with the registration and sale of the Registrable Securities and entering into
and performing its obligations under any underwriting agreement, if the offering
is an underwritten offering, in usual and customary form, with the managing
underwriter or underwriters of such underwritten offering. Nothing in this
Agreement shall obligate the Holder to consent to be named as an underwriter in
the Registration Statement. The obligation of the Company to register the
Registrable Securities shall be absolute and unconditional as to those
Securities which the SEC will permit to be registered without naming the Holder
as an underwriter.
Section 5. Registration Procedures. If and whenever the Company is
required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Act, the Company shall (except as
otherwise provided in this Agreement), as expeditiously as possible, subject to
the Holder's assistance and cooperation as reasonably required:
(a) (i) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Act with respect to the sale or other
disposition of all securities covered by such registration statement whenever
the Holder of such Registrable Securities shall desire to sell or otherwise
dispose of the same (including prospectus supplements with respect to the sales
of securities from time to time in connection with a registration statement
pursuant to Rule 415 promulgated under the Act) and (ii) take all lawful action
such that each of (A) the Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, not misleading and (B) the Prospectus forming part
of the Registration Statement, and any amendment or supplement thereto, does not
at any time during the Registration Period include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) (i) prior to the filing with the SEC of any Registration
Statement (including any amendments thereto) and the distribution or delivery of
any prospectus (including any supplements thereto), provide draft copies thereof
to the Holder and reflect in such documents all such comments as the Holder (and
its counsel) reasonably may propose respecting the Selling Shareholders and Plan
of Distribution sections (or equivalents) and (ii) furnish to each Holder such
numbers of copies of a prospectus including a preliminary prospectus or any
amendment or supplement to any prospectus, as applicable, in conformity with the
requirements of the Act, and such other documents, as Holder may reasonably
request in order to facilitate the public sale or other disposition of the
securities owned by such Holder;
(c) register and qualify the Registrable Securities covered by the
Registration Statement under such other securities or blue sky laws of such
jurisdictions as the Holder shall reasonably request (subject to the limitations
set forth in Section 3(d) above), and do any and all other acts and things which
may be necessary or advisable to enable Holder to consummate the public sale or
other disposition in such jurisdiction of the securities owned by Holder, except
that the Company shall not for any such purpose be required to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified or to file therein any general consent to service of process;
(d) list such Registrable Securities on the Pink Sheets, OTC
Bulletin Board, if required, or the American Stock Exchange, other national
securities exchange, the NASDAQ National Market or the NASDAQ Small-Cap Market,
on which the Common Stock of the Company is then listed, if the listing of such
Registrable Securities is then permitted under the rules of such exchange or
NASDAQ;
(e) notify each Holder of Registrable Securities covered by the
Registration Statement, at any time when a prospectus relating thereto covered
by the Registration Statement is required to be delivered under the Act, of the
happening of any event of which it has knowledge as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and the Company
shall prepare and file a curative amendment under Section 5(a) as quickly as
commercially possible;
(f) as promptly as practicable after becoming aware of such event,
notify each Holder who holds Registrable Securities being sold (or, in the event
of an underwritten offering, the managing underwriters) of the issuance by the
SEC of any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time and take all lawful action
to effect the withdrawal, recession or removal of such stop order or other
suspension;
(g) cooperate with the Holder to facilitate the timely preparation
and delivery of certificates for the Registrable Securities to be offered
pursuant to the Registration Statement and enable such certificates for the
Registrable Securities to be in such denominations or amounts, as the case may
be, as the Holder reasonably may request and registered in such names as the
Holder may request; and, within three Trading Days after a Registration
Statement which includes Registrable Securities is declared effective by the
SEC, deliver and cause legal counsel selected by the Company to deliver to the
transfer agent for the Registrable Securities (with copies to the Holder whose
Registrable Securities are included in such Registration Statement) an
appropriate instruction and, to the extent necessary, an opinion of such
counsel;
(h) take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Holder of their Registrable
Securities in accordance with the intended methods therefor provided in the
prospectus which are customary for issuers to perform under the circumstances;
(i) in the event of an underwritten offering, promptly include or incorporate in
a Prospectus supplement or post-effective amendment to the Registration
Statement such information as the managing underwriter reasonably agrees should
be included therein and to which the Company does not reasonably object and make
all required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after it is notified of the matters to be included or
incorporated in such Prospectus supplement or post-effective amendment; and
(j) maintain a transfer agent and registrar for its Common Stock.
Section 6. This Section not used.
Section 7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Holder
and each person, if any, who controls such Holder within the meaning of the
Securities Act ("Distributing Holder") against any losses, claims, damages or
liabilities, joint or several (which shall, for all purposes of this Agreement,
include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees) (collectively, "Damages"), to
which the Distributing Holder may become subject, under the Securities Act or
otherwise, insofar as Damages (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, or any related preliminary
prospectus, final prospectus or amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that the Company will not be liable in any
such case to the extent that any such Damages is caused by an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, preliminary prospectus, final prospectus or amendment or
supplement thereto in reliance upon, and in conformity with, written information
furnished to the Company by the Distributing Holder, specifically for use in the
preparation of such Registration Statement. This Section 7(a) shall not inure to
the benefit of any Distributing Holder with respect to any person asserting such
loss, claim, damage or liability who purchased the Registrable Securities which
are the subject thereof if the Distributing Holder failed to send or give (in
violation of the Securities Act or the rules and regulations promulgated
thereunder) a copy of the prospectus contained in such Registration Statement to
such person at or prior to the written confirmation to such person of the sale
of such Registrable Securities, where the Distributing Holder was obligated to
do so under the Securities Act or the rules and regulations promulgated
thereunder. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) Distributing Holder agrees that it will indemnify and hold
harmless the Company, and each officer, director of the Company or person, if
any, who controls the Company within the meaning of the Securities Act, against
Damages to which the Company or any such officer, director or controlling person
may become subject under the Securities Act or otherwise, insofar as Damages (or
actions in respect thereof) are caused by (i) any untrue statement or alleged
untrue statement of any material fact or (ii) the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading contained in the
Registration Statement, or any related preliminary prospectus, final prospectus
or amendment or supplement thereto, that has been furnished by Distributing
Holder in writing to the Company specifically for use in the preparation such
documents. This indemnity agreement will be in addition to any liability which
the Distributing Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 7, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified party
except to the extent of actual prejudice demonstrated by the indemnifying party.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, assume the defense
thereof, subject to the provisions herein stated and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 7 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless the indemnifying party shall not
pursue the action to its final conclusion. The indemnified party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed the
defense of the action with counsel reasonably satisfactory to the indemnified
party; provided that if the indemnified party is the Distributing Holder, the
fees and expenses of such counsel shall be at the expense of the indemnifying
party if (i) the employment of such counsel has been specifically authorized in
writing by the indemnifying party, or (ii) the named parties to any such action
(including any impleaded parties) include both the Distributing Holder and the
indemnifying party and the Distributing Holder shall have been advised by such
counsel that there may be one or more legal defenses available to the
indemnifying party different from or in conflict with any legal defenses which
may be available to the Distributing Holder (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the Distributing Holder, it being understood, however, that the indemnifying
party shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable only for the reasonable
fees and expenses of one separate firm of attorneys for the Distributing Holder,
which firm shall be designated in writing by the Distributing Holder). No
settlement of any action against an indemnified party shall be made without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.
Section 8. Contribution. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 8 hereof but is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 7 hereof provide
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any indemnified party, then the Company and the
applicable Distributing Holder shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable costs
of defense and investigation and all reasonable attorneys' fees), in either such
case (after contribution from others) on the basis of relative fault as well as
any other relevant equitable considerations. The relative fault shall be
determined by the opinion of a court of competent jurisdiction by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the applicable
Distributing Holder on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Holder agree that it
would not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section 8. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section 8 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. 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.
Notwithstanding any other provision of this Section 8, in no event shall
any (i) Holder be required to undertake liability to any person under this
Section 8 for any amounts in excess of the dollar amount of the proceeds to be
received by such Holder from the sale of such Holder's Registrable Securities
(after deducting any fees, discounts and commissions applicable thereto)
pursuant to any Registration Statement under which such Registrable Securities
are to be registered under the Securities Act.
Section 9. Notices. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a Trading Day during normal business hours where such notice is to
be received), or the first Trading Day following such delivery (if delivered
other than on a Trading Day during normal business hours where such notice is to
be received) or (b) on the second Trading Day following the date of mailing by
reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company, at:
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ESQ.
SICHENZIA ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
1065 Avenue of the Americas, ▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
tel: ▇▇▇-▇▇▇-▇▇▇▇
fax:▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
If to the Purchaser, at:
Jaytern Associates Inc.
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
With copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇ Salburg
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Either party hereto may from time to time change its address or facsimile
number for notices under this Section 9 by giving prior written notice of such
changed address or facsimile number to the other party hereto.
Section 10. Assignment. This Agreement is binding upon and inures to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns. The rights granted the Holder under this Agreement may be
assigned to any purchaser of substantially all of the Registrable Securities (or
the rights thereto) from Holder, as otherwise permitted by the Subscription
Agreement. In the event of a transfer of the rights granted under this
Agreement, the Holder agrees that the Company may require that the transferee
comply with reasonable conditions as determined in the discretion of the
Company.
Section 11. Additional Covenants of the Company. The Company agrees that
at such time as it meets all the requirements for the use of Securities Act
Registration Statement on Form S-3 it shall file all reports and information
required to be filed by it with the SEC in a timely manner and take all such
other action so as to maintain such eligibility for the use of such form.
Section 12. Counterparts/Facsimile. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but all of
which, when together shall constitute but one and the same instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other party. In lieu of the original, a facsimile
transmission or copy of the original shall be as effective and enforceable as
the original.
Section 13. Remedies. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
Section 14. Conflicting Agreements. The Company shall not enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the holders of Registrable Securities in this Agreement or otherwise
prevents the Company from complying with all of its obligations hereunder.
Section 15. Headings. The headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida. Any disputes
arising under this Agreement shall be brought in any state or federal court in
Florida having jurisdiction of the subject matter.
Section 17. Severability. If any provision of this Agreement shall for any
reason be held invalid or unenforceable, such invalidity or unenforceablity
shall not affect any other provision hereof and this Agreement shall be
construed as if such invalid or unenforceable provision had never been contained
herein.
Section 18. Capitalized Terms. All capitalized terms not otherwise defined
herein shall have the meaning assigned to them in the Subscription Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed, on the day and year first above written.
NANOBAC PHARMACEUTICALS, INCORPORATED
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
-----------------------------
Its: Director
----------------------------
Jaytern Associates Inc.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Its: President
-----------------------------
FORM OF WARRANT
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED UPON
ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT") OR APPLICABLE STATE SECURITIES LAWS (THE "STATE
ACTS") AND SHALL NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER HAS
BEEN REGISTERED UNDER THE SECURITIES ACT AND STATE ACTS, OR AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS IS AVAILABLE, THE AVAILABILITY OF WHICH MUST BE
ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
CLASS A STOCK PURCHASE WARRANT
1.
2. Warrant No. Number of Shares:
NANOBAC PHARMACEUTICALS, INCORPORATED
COMMON STOCK, NO PAR VALUE PER SHARE
VOID AFTER 5:00 P.M. EASTERN TIME
ON DECEMBER 31, 2004, 2008
This Warrant is issued to Jaytern Associates, Inc.("Holder") by Nanobac
Pharmaceuticals, Incorporated, a Delaware corporation (hereinafter with its
successors called the "Company"), pursuant to that Subscription Agreement
("Subscription Agreement") and Registration Rights Agreement ("Registration
Rights Agreement") both dated September 3, 2004 and executed by the Company and
Holder. Unless otherwise defined herein , capitalized terms shall have the
meanings ascribed to them in the Subscription Agreement.
For value received and subject to the terms and conditions hereinafter set out,
Holder is entitled to purchase from the Company at an initial purchase price of
110% of the lesser of (i) $0.12 per share; or (ii) 52% of the average closing
bid price for the common shares on the five days immediately prior to the filing
of a registration statement with the SEC, __________________________ [to be
completed on the next business day after such calculation] fully paid and
nonassessable shares of common stock, no par value per share ("Common Shares")
of the Company. Such purchase price per Common Share, adjusted from time to time
as provided herein, is referred to as the "Purchase Price."
1. 1.The Holder may exercise this Warrant, in whole or in part,
upon surrender of this Warrant, with the exercise form annexed hereto duly
executed, at the office of the Company, or such other office as the Company
shall notify the Holder in writing, together with a certified or bank cashier's
check payable to the order of the Company in the amount of the Purchase Price
times the number of Common Shares being purchased.
2. The person or persons in whose name or names any certificate
representing Common Shares is issued hereunder shall be deemed to have become
the holder of record of the Common Shares represented thereby as of the close of
business on the date on which this Warrant is exercised with respect to such
shares, whether or not the transfer books of the Company shall be closed. Until
such time as this Warrant is exercised or terminates, the Purchase Price payable
and the number and character of securities issuable upon exercise of this
Warrant are subject to adjustment as hereinafter provided.
3. Unless previously exercised, this Warrant shall expire at 5:00 p.m.
Eastern Time, On December 31, 2008 and shall be void thereafter or can be
extended at the Company's discretion ("Expiration Date").
4. The Company covenants that it will at all times reserve and keep
available a number of its authorized Common Shares, free from all preemptive
rights, which will be sufficient to permit the exercise of this Warrant. The
Company further covenants that such shares as may be issued pursuant to the
exercise of this Warrant will, upon issuance, be duly and validly issued, fully
paid and nonassessable and free from all taxes, liens, and charges.
5. If the Company subdivides its outstanding Common Shares, by split-up
or otherwise, or combines its outstanding Common Shares, the Purchase Price then
applicable to shares covered by this Warrant shall forthwith be proportionately
decreased in the case of a subdivision, or proportionately increased in the case
of a combination.
6. If (a) the Company reorganizes its capital, reclassifies its capital
stock, consolidates or merges with or into another corporation (but only if the
Company is not the surviving corporation and no longer has more than a single
shareholder) or sells, transfers or otherwise disposes of all or substantially
all its property, assets, or business to another corporation, and (b) pursuant
to the terms of such reorganization, reclassification, merger, consolidation, or
disposition of assets, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock, or other securities or property of
any nature whatsoever (including warrants or other subscription or purchase
rights) in addition to or in lieu of common stock of the successor or acquiring
corporation ("Other Property"), are to be received by or distributed to the
holders of Common Shares, then (c) Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same number of shares of common
stock of the successor or acquiring corporation and Other Property receivable
upon such reorganization, reclassification, merger, consolidation, or
disposition of assets as a holder of the number of Common Shares for which this
Warrant is exercisable immediately prior to such event. At the time of such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation shall expressly assume the due
and punctual observance and performance of each and every covenant and condition
of this Warrant to be performed and observed by the Company and all the
obligations and liabilities hereunder, subject to such modifications as may be
deemed appropriate (as determined by resolution of the Board of Directors of the
Company) in order to adjust the number of shares of the common stock of the
successor or acquiring corporation for which this Warrant is exercisable. For
purposes of this section, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock, or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this section shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations, or disposition of
assets.
7. If a voluntary or involuntary dissolution, liquidation or winding up
of the Company (other than in connection with a merger or consolidation of the
Company) is at any time proposed during the term of this Warrant, the Company
shall give written notice to the Holder at least thirty days prior to the record
date of the proposed transaction. The notice shall contain: (1) the date on
which the transaction is to take place; (2) the record date (which must be at
least thirty days after the giving of the notice) as of which holders of the
Common Shares entitled to receive distributions as a result of the transaction
shall be determined; (3) a brief description of the transaction; (4) a brief
description of the distributions, if any, to be made to holders of the Common
Shares as a result of the transaction; and (5) an estimate of the fair market
value of the distributions. On the date of the transaction, if it actually
occurs, this Warrant and all rights existing under this Warrant shall terminate.
8. In no event shall any fractional Common Share of the Company be
issued upon any exercise of this Warrant. If, upon exercise of this Warrant as
an entirety, the Holder would, except as provided in this Section 8, be entitled
to receive a fractional Common Share, then the Company shall issue the next
higher number of full Common Shares, issuing a full share with respect to such
fractional share. If this Warrant is exercised at one time for less than the
maximum number of Common Shares purchasable upon the exercise hereof, the
Company shall issue to the Holder a new warrant of like tenor and date
representing the number of Common Shares equal to the difference between the
number of shares purchasable upon full exercise of this Warrant and the number
of shares that were purchased upon the exercise of this Warrant.
9. No adjustments in the Purchase Price shall be required pursuant to
Section 7 or 8 unless an adjustment made thereunder would require an increase or
decrease of at least five cents in such price; provided however, that any
adjustments which by reason of this Section 9 are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
10. Whenever the Purchase Price is adjusted, as herein provided, the
Company shall promptly deliver to the Holder a certificate setting forth the
Purchase Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment.
11. If at any time prior to the expiration or exercise of this Warrant,
the Company shall pay any dividend or make any distribution upon its Common
Shares or shall make any subdivision or combination of, or other change in its
Common Shares, the Company shall cause notice thereof to be mailed, first class,
postage prepaid, to Holder at least thirty full business days prior to the
record date set for determining the holders of Common Shares who shall
participate in such dividend, distribution, subdivision, combination or other
change. Such notice shall also specify the record date as of which holders of
Common Shares who shall participate in such dividend or distribution are to be
determined. Failure to give such notice, or any defect therein, shall not affect
the legality or validity of any dividend or distribution.
12. The Company will maintain a register containing the names and
addresses of the Holder and any assignees of this Warrant. Holder may change its
address as shown on the warrant register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be delivered by confirmed facsimile or
telecopy or by a recognized overnight courier, addressed to Holder at the
address shown on the warrant register.
13. This Warrant has not been registered under the Securities Act of
1933, as amended (the "Securities Act"), or any state securities laws ("State
Acts") or regulations in reliance upon exemptions under the Securities Act, and
exemptions under the State Acts. Subject to compliance with the Securities Act
and State Acts, this Warrant and all rights hereunder are transferable in whole
or in part, at the office of the Company at which this Warrant is exercisable,
upon surrender of this Warrant together with the assignment hereof properly
endorsed.
14. In case this Warrant shall be mutilated, lost, stolen, or destroyed,
the Company may issue a new warrant of like tenor and denomination and deliver
the same (a) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (b) in lieu of any Warrant lost,
stolen, or destroyed, upon receipt of evidence satisfactory to the Company of
the loss, theft or destruction of such Warrant (including a reasonably detailed
affidavit with respect to the circumstances of any loss, theft, or destruction)
and of indemnity with sufficient surety satisfactory to the Company.
15. Unless a current registration statement under the Securities Act,
shall be in effect with respect to the securities to be issued upon exercise of
this Warrant, the Holder, by accepting this Warrant, covenants and agrees that,
at the time of exercise hereof, and at the time of any proposed transfer of
securities acquired upon exercise hereof, the Company may require Holder to make
such representations, and may place such legends on certificates representing
the Common Shares issuable upon exercise of this Warrant, as may be reasonably
required in the opinion of counsel to the Company to permit such Common Shares
to be issued without such registration.
16. The Company has granted the Holder piggy back registration rights,
for the Common Stock underlying the Warrant.
17. For so long as a registration statement covering the shares
underlying this Warrant is effective, the closing bid price for the Company's
Common Stock exceeds 50% of the exercise price of this Warrant for 30 days and
the average daily trading volume for such 30 days exceeds the number of
Warrants, then the Company shall have the right to compel the Holder to exercise
the Warrants, upon written notice. In the event the Holder does not exercise
such Warrants upon notice then the Warrant shall expire on the 30th trading day
after such notice is given.
18. This Warrant does not entitle Holder to any of the rights of a
stockholder of the Company.
19. Nothing expressed in this Agreement and nothing that may be implied
from any of the provisions hereof is intended, or shall be construed, to confer
upon, or give to, any person or corporation other than the parties to this
Agreement any covenant, condition, stipulation, promise, or agreement contained
herein, and all covenants, conditions, stipulations, promises and agreements
contained herein shall be for the sole and exclusive benefit of the parties
hereto and their respective successors and assigns.
20. The provisions and terms of this Warrant shall be construed in
accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company on
this 3d day of September , 2004.
NANOBAC PHARMACEUTICALS, INCORPORATED
By:__________________________________
Print name and title
FORM OF EXERCISE CLASS A WARRANT FOR STOCK PURCHASE
Date: ____________________
To: NANOBAC PHARMACEUTICALS, INCORPORATED
The undersigned hereby subscribes for _______ shares of common stock of
Nanobac Pharmaceuticals, Incorporated covered by this Warrant and hereby
delivers $___________ in full payment of the purchase price thereof. The
certificate(s) for such shares should be issued in the name of the undersigned
or as otherwise indicated below:
----------------------------
Signature:
----------------------------
Printed Name
----------------------------
Name for Registration, if different
----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇, ▇▇▇▇▇ and Zip Code
----------------------------
Social Security Number
ASSIGNMENT
For Value Received, the undersigned hereby sells, assigns and transfers
unto the assignee(s) set forth below the within Warrant certificate, together
with all right, title and interest therein, and hereby irrevocably constitutes
and appoints ___________________________________ attorney, to transfer the said
Warrant on the books of the within-named Company with respect to the number of
Common Shares set forth below, with full power of substitution in the premises.
Social Security or
Name(s) of other Identifying No. of
Assignee(s) Number(s) of Assignee(s) Address Shares
----------- ------------------------ ------- --------
Dated: ______________________________
-----------------------------------
Signature
NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF
THE WARRANT IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT,
OR ANY CHANGE WHATSOEVER.
-----------------------------------
Print Name and Title
