nFORM OF SECURITIES PURCHASE AGREEMENT
EXHIBIT 10.2
nFORM OF SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this
“Agreement”)
is dated as of November 14, 2018, between DropCar, Inc., a Delaware
corporation (the “Company”),
and the purchaser identified on the signature page hereto (the
“Purchaser”).
WHEREAS, subject to the terms and conditions set
forth in this Agreement and pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the
“Securities
Act”) as to the Series K
Warrants (as defined below) and Warrant Shares (as defined below),
the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, securities of the
Company as more fully described in this
Agreement.
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
and the Purchaser 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 have the
meanings set forth in this Section 1.1:
“Acquiring
Person” shall have the
meaning ascribed to such term in Section 4.5.
“Action”
shall have the meaning ascribed to such term in Section
3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under
Rule 405 under the Securities Act.
“Board of
Directors” means the
board of directors of the Company.
“Business
Day” means any day except
any Saturday, any Sunday, any day which is a federal legal holiday
in the United States or any day on which banking institutions in
the State of New York are authorized or required by law or other
governmental action to close.
“Closing”
means the closing of the purchase and sale of the Securities
pursuant to Section 2.1.
“Closing
Date” means the Trading
Day on which all of the Transaction Documents have been executed
and delivered by the applicable parties thereto, and all conditions
precedent to (i) the Purchaser’s obligation to pay the
Subscription Amount and (ii) the Company’s obligations to
deliver the Securities, in each case, have been satisfied or
waived, but in no event later than the third Trading Day following
the date hereof.
“Commission”
means the United States Securities and Exchange
Commission.
“Common
Stock” means the common
stock of the Company, par value $0.0001 per share, and any other
class of securities into which such securities may hereafter be
reclassified or changed.
“Common Stock
Equivalents” means any
securities of the Company or the Subsidiaries which would entitle
the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, right, option,
warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
“Company
Counsel” means Mintz,
Levin, Cohn, Ferris, Glovsky & Popeo, P.C., Chrysler Center,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
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“Evaluation
Date” shall have the
meaning ascribed to such term in Section
3.1(r).
“Exchange
Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as
amended.
“GAAP”
shall have the meaning ascribed to such term in Section
3.1(h).
“Indebtedness”
shall have the meaning ascribed to such term in Section
3.1(z).
“Intellectual Property
Rights” shall have the
meaning ascribed to such term in Section
3.1(o).
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right
of first refusal, preemptive right or other
restriction.
“Material Adverse
Effect” shall have the
meaning assigned to such term in Section
3.1(b).
“Material
Permits” shall have the
meaning ascribed to such term in Section
3.1(m).
“Permitted
Indebtedness” means (i)
any accounts receivable factoring arrangement; (ii) capital lease
obligations and purchase money indebtedness of up to $400,000, in
the aggregate, incurred in connection with the acquisition of
capital assets up to the purchase price of such assets and lease
obligations with respect to newly acquired or leased assets; and
(iii) any asset-backed credit line or similar facility which
does not include the issuance of any
securities.
“Permitted
Lien” means the
individual and collective reference to the following: (A) Liens for
taxes, assessments and other governmental charges or levies not yet
due or Liens for taxes, assessments and other governmental charges
or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment
of the management of the Company) have been established in
accordance with GAAP, (B) Liens imposed by law which were incurred
in the ordinary course of the Company’s business, such as
carriers’, warehousemen’s and mechanics’ Liens,
statutory landlords’ Liens, and other similar Liens arising
in the ordinary course of the Company’s business, and which
(x) do not individually or in the aggregate materially detract from
the value of such property or assets or materially impair the use
thereof in the operation of the business of the Company and its
consolidated Subsidiaries, or (y) are being contested in good faith
by appropriate proceedings, which proceedings have the effect of
preventing for the foreseeable future the forfeiture or sale of the
property or asset subject to such Lien, and (C) Liens incurred
prior to or subsequent to the Closing Date in connection with
Permitted Indebtedness.
“Person”
means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any
kind.
“Proceeding”
means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or
partial proceeding, such as a deposition), whether commenced or
threatened.
“Prospectus”
means the final prospectus filed for the Registration
Statement.
“Prospectus
Supplement” means the
supplement to the Prospectus complying with Rule 424(b) of the
Securities Act that is filed with the Commission and delivered by
the Company to the Purchaser at the Closing in connection with the
issuance of the Series K Warrants and the Warrant
Shares.
“Purchaser
Counsel” means Grushko
& ▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
facsimile: (212) 697–3575, e-mail:
▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
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“Purchaser
Party” shall have the
meaning ascribed to such term in Section 4.8.
“Registration
Statement” means the
effective registration statement with Commission file No.
333-227858 which registers the sale of the Series K Warrants and
the Warrant Shares to the Purchaser.
“Required
Approvals” shall have the
meaning ascribed to such term in Section
3.1(e).
“Rule
144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“Rule
424” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“SEC
Reports” shall have the
meaning ascribed to such term in Section
3.1(h).
“Securities”
means the Series K Warrants and the Warrant
Shares.
“Securities
Act” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
“Series K
Warrants” means,
collectively, the pre-funded Common Stock purchase warrants
delivered to the Purchaser at the Closing in accordance with
Sections 2.1 and 2.2(a) hereof, which Series K Warrants shall be
exercisable immediately, in the form of Exhibit
A attached
hereto.
“Short
Sales” means all
“short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the
location and/or reservation of borrowable shares of Common
Stock).
“Subscription
Amount” means, as to the
Purchaser, the aggregate amount to be paid for the Series K
Warrants purchased hereunder as specified below the
Purchaser’s name on the signature page of this Agreement and
next to the heading “Subscription Amount,” in United
States dollars and in immediately available
funds.
“Subsidiary”
means any subsidiary of the Company as set forth in the SEC
Reports, and shall, where applicable, also include any direct or
indirect subsidiary of the Company formed or acquired after the
date hereof.
“Trading
Day” means a day on which
the principal Trading Market is open for
trading.
“Trading
Market” means any of the
following markets or exchanges on which the Common Stock is listed
or quoted for trading on the date in question: the NYSE MKT, the
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange (or any successors to
any of the foregoing).
“Transaction
Documents” means this
Agreement, the Series K Warrants and any other documents or
agreements executed in connection with the transactions
contemplated hereunder.
“Transfer
Agent” means Issuer
Direct Corporation with a mailing address of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, the current transfer
agent of the Company, and any successor transfer agent of the
Company.
“Transfer Agent
Instruction Letter” means
the instruction letter to the Transfer Agent in the form annexed
hereto as Exhibit B.
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“Warrant
Shares” means the shares
of Common Stock issuable upon exercise of the Series K
Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions
set forth herein, the Company agrees to sell, and the Purchaser
agrees to purchase, an aggregate of $1,000,000.00 of Series K
Warrants. The Purchaser shall deliver to the clearing account
designated by the Company immediately available funds equal to the
Purchaser’s Subscription Amount as set forth on the signature
page hereto executed by the Purchaser and the Company shall deliver
to the Purchaser the Series K Warrants as determined pursuant to
Section 2.2(a), and the Company and the Purchaser shall deliver the
other items set forth in Section 2.2 deliverable at the Closing.
Upon satisfaction of the covenants and conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of
Company Counsel or such other location as the parties shall
mutually agree.
2.2 Deliveries.
(a) On
or prior to the Closing Date, the Company shall deliver or cause to
be delivered to the Purchaser the following:
(i) this
Agreement duly executed by the Company;
(ii)
a Series K Warrant registered in the name of the Purchaser to
purchase up to 1,666,666 shares of Common Stock with an exercise
price of $0.01 per share, subject to adjustment
therein;
(iii) the
Prospectus and Prospectus Supplement (which may be delivered in
accordance with Rule 172 under the Securities Act);
and
(iv) the Transfer Agent Instruction
Letter.
(b) On
or prior to the Closing Date, the Purchaser shall deliver or cause
to be delivered to the Company, as applicable, the
following:
(i) this
Agreement duly executed by the Purchaser; and
(ii) the
Purchaser’s Subscription Amount, which will be wired to the
account designated by the Company in writing.
2.3 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with the
Closing, unless waived by the Company, are subject to the following
conditions being met:
(i) the
accuracy in all material respects (or, to the extent
representations or warranties are qualified by materiality or
Material Adverse Effect, in all respects) when made and on the
Closing Date of the representations and warranties of the Purchaser
contained herein (unless as of a specific date therein in which
case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of the Purchaser required to
be performed at or prior to the Closing Date shall have been
performed in all material respects; and
(iii) the
delivery by the Purchaser of the items set forth in Section 2.2(b)
of this Agreement.
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(b) The
obligations of the Purchaser hereunder in connection with the
Closing, unless waived by the Purchaser, are subject to the
following conditions being met:
(i) the
accuracy in all material respects (or, to the extent
representations or warranties are qualified by materiality or
Material Adverse Effect, in all respects) when made and on the
Closing Date of the representations and warranties of the Company
contained herein (unless as of a specific date therein in which
case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed
in all material respects;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and
(v) from
the date hereof to the Closing Date, trading in the Common Stock
shall not have been suspended by the Commission or the
Company’s principal Trading Market, and, at any time from the
date hereof prior to the Closing Date, trading in securities
generally as reported by Bloomberg L.P. shall not have been
suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium
have been declared either by the United States or New York State
authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the
reasonable judgment of the Purchaser, makes it impracticable or
inadvisable to purchase the Securities at the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company.
Except as disclosed in the SEC Reports, the Company hereby makes
the following representations and warranties to the Purchaser as of
the Closing Date:
(a) Subsidiaries.
All of the direct and indirect subsidiaries of the Company are as
disclosed in the SEC Reports. Except as set forth in the SEC
Reports, the Company owns, directly or indirectly, a majority of
the capital stock or other equity interests of each Subsidiary free
and clear of any Liens, other than Permitted Liens, subject to
restrictions under applicable laws, and all of the issued and
outstanding shares of capital stock 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 of the Subsidiaries 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,
with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries 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 have
or reasonably be expected to result in: (i) a material adverse
effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results
of operations, assets, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole,
or (iii) a material adverse effect on the Company’s ability
to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or
(iii), a “Material Adverse
Effect”) and no
Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.
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(c) Authorization;
Enforcement. The Company has
the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Agreement and the
other Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of
this Agreement and each of the other Transaction Documents by the
Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required
by the Company, the Board of Directors or the Company’s
stockholders in connection herewith or therewith other than in
connection with the Required Approvals. This Agreement and each
other Transaction Document to which it is a party has been (or upon
delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will
constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited
by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by
applicable law.
(d) No
Conflicts. The execution,
delivery and performance by the Company of this Agreement and the
other Transaction Documents to which it is a party, the issuance
and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not
(i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, (ii) conflict
with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the
Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other enforceable commitment to
which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or
affected, or (iii) subject to the Required Approvals, conflict with
or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be
expected to result in a Material Adverse
Effect.
(e) Filings,
Consents and Approvals. Except
as disclosed in the SEC Reports, the Company is not required to
obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or
other Person in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.4 of this
Agreement, (ii) the filing with the Commission of the Prospectus
Supplement, (iii) application(s) to each applicable Trading Market
for the listing of the Warrant Shares for trading thereon in the
time and manner required thereby, (iv) the filing of Form D with
the Commission and such filings as are required to be made under
applicable state securities laws, and (v) such consents, waivers
and authorizations that shall be obtained prior to Closing
(collectively, the “Required
Approvals”).
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(f) Issuance
of the Securities; Registration. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction
Documents or imposed by applicable securities laws. The Warrant
Shares, when issued in accordance with the terms of the Series K
Warrants, will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents
or imposed by applicable securities laws. The Company has reserved
from its duly authorized capital stock the maximum number of shares
of Common Stock for issuance of all Warrant Shares. The Company has
prepared and filed the Registration Statement in conformity with
the requirements of the Securities Act, which became effective
on November 9, 2018 (the “Effective
Date”), including the
Prospectus, and such amendments and supplements thereto as may have
been required to the date of this Agreement in connection with the
sale of the Series K Warrants and shares underlying the Series K
Warrants. The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued by the
Commission and no proceedings for that purpose have been instituted
or, to the knowledge of the Company, are threatened by the
Commission. The Company, if required by the rules and regulations
of the Commission, shall file the Prospectus with the Commission
pursuant to Rule 424(b) in relation to the sale of the Series K
Warrants and shares underlying the Series K Warrants. At the time
the Registration Statement and any amendments thereto became
effective, at the date of this Agreement and at the Closing Date,
the Registration Statement and any amendments thereto conformed and
will conform in all material respects to the requirements of the
Securities Act and did not and will 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 the Prospectus and any amendments or
supplements thereto, at time the Prospectus or any amendment or
supplement thereto was issued and at the Closing Date, conformed
and will conform in all material respects to the requirements of
the Securities Act and did not and will not contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not
misleading.
(g) Capitalization.
The capitalization of the Company is as set forth in the SEC
Reports. The number of shares of Common Stock issued and
outstanding as of the date hereof is 8,883,511. The Company has not issued any capital stock
since its most recently filed periodic report under the Exchange
Act, other than pursuant to the exercise of employee stock
options under the Company’s stock incentive plans, the
issuance of shares of Common Stock to employees pursuant to the
Company’s employee stock purchase plans, pursuant to the
conversion and/or exercise of Common Stock Equivalents outstanding
as of the date of the most recently filed periodic report under the
Exchange Act or as otherwise disclosed in the SEC Reports. No
Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. There are
no outstanding options, warrants, scrip rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe
for or acquire, any shares of Common Stock or the capital stock of
any Subsidiary, or material contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common
Stock Equivalents or capital stock of any Subsidiary. The issuance
and sale of the Securities will not obligate the Company or any
Subsidiary to issue shares of Common Stock or other securities to
any Person (other than the Purchaser) and will not result in a
right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities.
All of the outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and nonassessable, have
been issued in material compliance with all federal and state
securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe
for or purchase securities. No further approval or authorization of
any stockholder, the Board of Directors or others is required for
the issuance and sale of the Securities. Except as disclosed in the
SEC Reports, there are no stockholders agreements, voting
agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or,
to the knowledge of the Company, between or among any of the
Company’s stockholders.
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(h) SEC
Reports; Financial Statements.
The Company has filed all reports, schedules, forms, statements and
other documents required to be filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the two years preceding the date hereof
(the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, and any prospectus,
prospectus supplement, amendment or supplement filed in relation
thereto, together with the Prospectus and the Prospectus
Supplement, being collectively referred to herein as the
“SEC
Reports”) on a timely
basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The latest audited financial statements of the Company
included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of
the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied
on a consistent basis during the periods involved
(“GAAP”),
except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP and are subject to
normal, immaterial year-end audit adjustments, and fairly present
in all material respects the financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(i) Material
Changes; Undisclosed Events, Liabilities or
Developments. Except as set
forth in the SEC Reports, since the date of the latest financial
statements included within the SEC Reports, (i) there has been no
event, occurrence or development that has had or that would
reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past
practice, (B) transaction expenses incurred in connection with the
Transaction Documents, and (C) liabilities not required to be
reflected in the Company’s financial statements pursuant to
GAAP or disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting, (iv) the Company
has not declared or made any dividend or distribution of cash or
other property to its stockholders or purchased, redeemed or made
any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing
Company stock option plans. Except as may be set forth in the SEC
Reports, the Company does not have pending before the Commission
any request for confidential treatment of information. Except for
the issuance of the Securities contemplated by this Agreement, no
event, liability, fact, circumstance, occurrence or development has
occurred or exists or is reasonably expected to occur or exist with
respect to the Company or its Subsidiaries or their respective
businesses, properties, operations, assets or financial condition
that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed on or prior to
the date that this representation is made.
(j) Litigation.
Except as set forth in the SEC Reports, there is no action, suit,
inquiry, notice of violation, proceeding or investigation pending
or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an
“Action”)
that would, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect, nor
to the knowledge of the Company is there any reasonable basis for
any such Action that would, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, to the
Company’s knowledge, 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. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or, to the
knowledge of the Company, any current or former director or officer
of the Company. The Commission has not issued any stop order or
other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.
8
(k) Labor
Relations. No labor dispute
exists or, to the knowledge of the Company, is imminent with
respect to any of the employees of the Company, which would
reasonably be expected to result in a Material Adverse Effect.
Except as disclosed in the SEC Reports, none of the Company’s
or its Subsidiaries’ employees is a member of a union that
relates to such employee’s relationship with the Company or
such Subsidiary, and neither the Company nor any of its
Subsidiaries is a party to a collective bargaining agreement, and
the Company and its Subsidiaries believe that their relationship
with their employees, taken together, are good. To the knowledge of
the Company, no executive officer of the Company or any Subsidiary,
is, or is now expected by the Company to be, in violation of any
material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition
agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party which could reasonably be
expected to result in a Material Adverse Effect, and the continued
employment of each such executive officer does not subject the
Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters. The Company and its Subsidiaries are
in compliance with all applicable U.S. federal, state, local and
foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours,
except where the failure to be in compliance would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(l) 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 notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it
is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is
in violation of any judgment, decree or order of any court,
arbitrator or other governmental authority or (iii) is or has been
in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign,
federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as
would not have or reasonably be expected to result in a Material
Adverse Effect.
(m) Regulatory
Permits. The Company and the
Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective
businesses as actually conducted and as described in the SEC
Reports, except where the failure to possess such permits would not
reasonably be expected to result in a Material Adverse Effect
(“Material
Permits”), and neither
the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any
Material Permit.
(n) Title
to Assets. The Company and the
Subsidiaries have good and marketable title in fee simple to all
real property owned by them and good and marketable title in all
tangible personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except for Permitted Liens. Any real property
and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases
with which the Company and the Subsidiaries are in compliance,
except where non-compliance would not reasonably be expected to
result in a Material Adverse Effect.
(o) Intellectual
Property.
(i)
The
term “Intellectual Property Rights”
includes:
1.
the
name of the Company, all fictional business names, trading names,
registered and unregistered trademarks, service marks, and
applications (collectively, “Marks”);
2.
all
patents and patent applications (collectively,
“Patents”);
3.
all
copyrights in both published works and unpublished works
(collectively, “Copyrights”);
4.
all
rights in mask works (collectively, “Rights in Mask
Works”); and
5.
all
know-how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans,
drawings, and blue prints (collectively, “Trade
Secrets”);
owned,
used, or licensed by the Company as licensee or
licensor.
9
(ii) Agreements.
The SEC Reports contain a complete and accurate list of all
material contracts relating to the Company’s Intellectual
Property Rights to which the Company is a party or by which the
Company is bound, except for any license implied by the sale of a
product and perpetual, paid-up licenses for commonly available
software programs with a value of less than $10,000 under which the
Company is the licensee. There are no outstanding and, to the
Company’s knowledge, no threatened disputes or disagreements
with respect to any such agreement.
(iii) Know-How
Necessary for the Business. To
the Company’s knowledge: the Company’s Intellectual
Property Rights are all those necessary for the operation of the
Company’s businesses as it is currently conducted or as
represented, in writing, to the Purchaser to be conducted. To the
Company’s knowledge, the Company is the owner of all right,
title, and interest in and to each of the Intellectual Property
Rights, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims, and has the right
to use all of the Intellectual Property Rights, subject in each
case to Permitted Liens. To the Company’s knowledge, no
employee of the Company has entered into any contract that
restricts or limits in any way the scope or type of work in which
the employee may be engaged or requires the employee to transfer,
assign, or disclose information concerning his work to anyone other
than of the Company.
(iv) Know-How
Necessary for the Business. To
the extent the Company owns any Patents: (A) the SEC Reports
contain a complete and accurate list of all of the Company’s
Patents; (B) the Company is the owner of all right, title and
interest in and to each of the Patents, free and clear of all Liens
and other adverse claims other than Permitted Liens; (C) all of the
issued Patents are currently in compliance with formal legal
requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), are valid and
enforceable, and, except as set forth in the SEC Reports, are not
subject to any maintenance fees or taxes or actions falling due
within ninety days after the Closing Date; (D) no Patent has been
or is now involved in any interference, reissue, reexamination, or
opposition proceeding; and (E) to the Company’s knowledge:
(1) there is no potentially interfering patent or patent
application of any third party, and (2) no Patent is infringed or
has been challenged or threatened in any way. To the
Company’s knowledge, none of the products manufactured and
sold, nor any process or know-how used, by the Company infringes or
is alleged to infringe any patent or other proprietary right of any
other Person.
(v) Trademarks.
To the extent the Company owns any Marks: (A) the SEC Reports
contain a complete and accurate list and summary description of all
Marks; (B) the Company is the owner of all right, title, and
interest in and to each of the Marks, free and clear of all Liens
and other adverse claims other than Permitted Liens; (C) all Marks
that have been registered with the United States Patent and
Trademark Office are currently in compliance with all formal legal
requirements (including the timely post-registration filing of
affidavits of use and incontestability and renewal applications),
are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety days after the
Closing Date; (D) except as set forth in the SEC Reports, no ▇▇▇▇
has been or is now involved in any opposition, invalidation, or
cancellation and, to the Company’s knowledge, no such action
is threatened with respect to any of the Marks and (E) to the
Company’s knowledge: (1) there is no potentially interfering
trademark or trademark application of any third party, and (2) no
▇▇▇▇ is infringed or has been challenged or threatened in any way.
To the Company’s knowledge, none of the Marks used by the
Company infringes or is alleged to infringe any trade name,
trademark, or service ▇▇▇▇ of any third party.
10
(vi) Copyrights.
To the extent the Company owns any Copyrights: (A) the SEC Reports
contain a complete and accurate list of all Copyrights; (B) the
Company is the owner of all right, title, and interest in and to
each of the Copyrights, free and clear of all Liens and other
adverse claims other than Permitted Liens; (C) except as set forth
in the SEC Reports, all the Copyrights have been registered and are
currently in compliance with formal requirements, are valid and
enforceable, and are not subject to any maintenance fees or taxes
or actions falling due within ninety days after the date of the
Closing; (D) no Copyright is infringed or, to the
Company’s knowledge, has been challenged or threatened in any
way; (E) to the Company’s knowledge, none of the subject
matter of any of the Copyrights infringes or is alleged to infringe
any copyright of any third party or is a derivative work based on
the work of a third party; and (F) all works encompassed by
the Copyrights have been marked with the proper copyright
notice.
(vii) Trade
Secrets. With respect to each
Trade Secret of the Company, the documentation relating to such
Trade Secret is current, accurate, and sufficient in detail and
content to identify and explain it and to allow its full and proper
use without reliance on the knowledge or memory of any individual.
The Company has taken all reasonable precautions to protect the
secrecy, confidentiality, and value of its Trade Secrets. The
Company has good title and an absolute (but not necessarily
exclusive) right to use the Company’s Trade Secrets subject
to Permitted Liens. The Company’s Trade Secrets are not part
of the public knowledge or literature, and, to the Company’s
knowledge, have not been used, divulged, or appropriated either for
the benefit of any Person (other than the Company) or to the
detriment of the Company. Except as set forth in the SEC Reports,
no Trade Secret of the Company is subject to any adverse claim or
has been challenged or threatened in any way.
(p) Insurance.
The Company and the Subsidiaries are currently insured by insurers
of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which the Company and the Subsidiaries are engaged.
Neither the Company nor any Subsidiary believes that it will not be
able to acquire insurance coverage at a reasonable cost as may be
necessary to continue its business without a significant increase
in cost.
(q) Transactions
With Affiliates and Employees.
Except as set forth in the SEC Reports, none of the officers or
directors of the Company or any Subsidiary and, to the knowledge of
the Company, none of the employees of the Company or any Subsidiary
is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, providing for the
borrowing of money from or lending of money to or otherwise
requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any entity in which
any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for (i)
payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements
under any stock or equity incentive plan of the
Company.
11
(r) ▇▇▇▇▇▇▇▇-▇▇▇▇▇;
Internal Accounting Controls.
The Company and the Subsidiaries are in material compliance with
any and all applicable requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 that are effective as of the date hereof, and any and all
applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof and as of the
Closing Date. The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries 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 disclosure
controls and procedures of the Company and the Subsidiaries as of
the end of the period covered by the 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 internal control over
financial reporting (as such term is defined in the Exchange Act)
of the Company and its Subsidiaries that have materially affected,
or is reasonably likely to materially affect, the internal control
over financial reporting of the Company and its
Subsidiaries.
(s) Certain
Fees. Except as set forth in
the Prospectus Supplement, no brokerage or finder’s fees or
commissions are or will be payable by the Company or any Subsidiary
to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. To the
knowledge of the Company, the Purchaser shall have no obligation
with respect to any fees or with respect to any claims made by or
on behalf of other Persons for fees of a type contemplated in this
Section that may be due in connection with the transactions
contemplated by the Transaction Documents.
(t) Investment
Company. The Company is not,
and is not an Affiliate of, and immediately after receipt of
payment for the Securities, will not be or be an Affiliate of, an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company shall
conduct its business in a manner so that it will not become an
“investment company” subject to registration under the
Investment Company Act of 1940, as amended.
(u) Registration
Rights. No Person has any right
to cause the Company or any Subsidiary to effect the registration
under the Securities Act of any securities of the Company or any
Subsidiary.
(v) Listing
and Maintenance Requirements.
The Common Stock is listed on the Nasdaq Capital Market under the
symbol “DCAR.” Except as set forth in the SEC Reports,
the Company has not, in the 12 months preceding the date hereof,
received notice from any Trading Market on which the Common Stock
is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of
such Trading Market.
(w) Application of
Takeover Protections. The
Company’s Board of Directors has approved the Transaction
Documents under Section 203(a)(1) of the General Corporation Law of
the State of Delaware (the “DGCL”)
in order to render the restrictions on “business
combinations” (as defined in Section 203 of the DGCL)
inapplicable to the execution, delivery or performance of the
Transaction Documents, including without limitation as a result of
the Company’s issuance of the Securities and the
Purchaser’s ownership of the Securities.
(x) Disclosure.
Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf
has provided the Purchaser or its agents or counsel with any
information that it believes constitutes or might constitute
material, non-public information which is not otherwise disclosed
in the Prospectus Supplement. The Company understands and confirms
that the Purchaser will rely on the foregoing representation in
effecting transactions in securities of the Company. 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 as of the date made 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. The Company acknowledges and agrees that no
Purchaser makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 hereof.
12
(y)
No Integrated
Offering. Assuming the accuracy
of the Purchaser’s representations and warranties set forth
in Section 3.2, neither the Company, nor, to the knowledge of the
Company, any of its Affiliates, nor any Person acting on its or, to
the knowledge of the Company, their behalf has, directly or
indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would
cause this offering of the Securities by the Company to be
integrated with prior offerings by the Company for purposes of (i)
the Securities Act which would require the registration of any such
securities under the Securities Act, or (ii) any applicable
shareholder approval provisions of any Trading Market on which any
of the securities of the Company are listed or
designated.
(z) Solvency.
Based on the consolidated financial condition of the Company as of
the Closing Date, after giving effect to the receipt by the Company
of the proceeds from the sale of the Securities hereunder, (i) the
fair saleable value of the assets of the Company and its
Subsidiaries taken as a whole exceeds the amount that will be
required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent
liabilities) of the Company and its Subsidiaries as they mature,
(ii) the assets of the Company and its Subsidiaries do not
constitute unreasonably small capital to carry on its business as
now conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of
the business conducted by the Company and its Subsidiaries,
consolidated and projected capital requirements and capital
availability thereof, and (iii) the current cash flow of the
Company and its Subsidiaries, together with the proceeds the
Company would receive, were they to liquidate all of their assets,
after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of their
liabilities when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts
as they mature (taking into account the timing and amounts of cash
to be payable on or in respect of its debt). The SEC Reports set
forth as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this
Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in
excess of $400,000 (other than trade accounts payable incurred in
the ordinary course of business), (y) all guaranties, endorsements
and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the
Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business; and (z) the present value of any lease payments
in excess of $400,000 due under leases required to be capitalized
in accordance with GAAP. The Company is not in default with respect
to any Indebtedness.
(aa) Tax
Status. Except as disclosed in
the SEC Reports and except for matters that would not, individually
or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i)
has made or filed all required United States federal, state and
local income and all foreign income and franchise tax returns,
reports and declarations required by any jurisdiction to which it
is subject, (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations and
(iii) has set aside on its books provision reasonably adequate for
the payment of all material taxes for periods subsequent to the
periods to which such returns, reports or declarations apply.
Except as disclosed in the SEC Reports, there are no unpaid taxes
in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company or of any
Subsidiary know of no reasonable basis for any such
claim.
(bb) Foreign
Corrupt Practices. Neither the
Company nor any Subsidiary, nor to the knowledge of the Company or
any Subsidiary, any agent or other person acting on behalf of the
Company or any Subsidiary, has (i) directly or indirectly, used any
funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political
activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic
political parties or campaigns from corporate funds, (iii) failed
to disclose fully any contribution made by the Company or any
Subsidiary (or made by any person acting on its behalf of which the
Company is aware) which is in violation of law, or (iv) violated in
any material respect any provision of FCPA.
(cc)
Accountants.
The Company’s accounting firm is EisnerAmper LLP. To the
knowledge and belief of the Company, such accounting firm is
registered with the Public Company Accounting Oversight Board and
shall express its opinion with respect to the financial statements
to be included in the Company’s Annual Report for the fiscal
year ending December 31,
2018.
13
(dd) Acknowledgment
Regarding Purchaser’s Purchase of
Securities. 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 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 Securities. The Company further represents to the
Purchaser that the Company’s decision to enter into this
Agreement and the other Transaction Documents has been based solely
on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
(ee) Acknowledgement
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein
to the contrary notwithstanding (except for Sections 3.2(f) and
4.11 hereof), it is understood and acknowledged by the Company
that: (i) the Purchaser has not been asked by the Company to agree,
nor has the Purchaser agreed, to desist from purchasing or selling,
long and/or short, securities of the Company, or
“derivative” securities based on securities issued by
the Company or to hold the Securities for any specified term; (ii)
past or future open market or other transactions by the Purchaser,
specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing
of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded
securities; (iii) the Purchaser, and counter-parties in
“derivative” transactions to which any the Purchaser is
a party, directly or indirectly, presently may have a
“short” position in the Common Stock, and (iv) the
Purchaser shall not be deemed to have any affiliation with or
control over any arm’s length counter-party in any
“derivative” transaction. The Company further
understands and acknowledges that (y) the Purchaser may engage in
hedging activities in accordance with all applicable laws at
various times during the period that the Securities are
outstanding, including, without limitation, during the periods that
the value of the Warrant Shares deliverable with respect to
Securities are being determined, and (z) such hedging activities
(if any) could reduce the value of the existing stockholders'
equity interests in the Company at and after the time that the
hedging activities are being conducted. The Company
acknowledges that such aforementioned hedging activities do not
constitute a breach of any of the Transaction
Documents.
(ff) Regulation
M Compliance. The Company
has not, and to its 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 Securities, (ii) sold, bid for, purchased, or, paid any
compensation for soliciting purchases of, any of the Securities, or
(iii) paid or agreed to pay to any Person any compensation for
soliciting another to purchase any other securities of the Company,
other than, in the case of clauses (ii) and (iii), as set forth in
the Prospectus Supplement.
(gg) Office
of Foreign Assets Control.
Neither the company nor any Subsidiary nor, to the Company's
knowledge, any director, officer, agent, employee or affiliate 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”).
(hh) Money
Laundering. The operations of
the Company and its Subsidiaries are and have been conducted at all
times in compliance with applicable financial record-keeping and
reporting requirements of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, applicable money laundering
statutes and applicable rules and regulations thereunder
(collectively, the “Money Laundering
Laws”), and no Action,
suit or Proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any
Subsidiary with respect to the Money Laundering Laws is pending or,
to the knowledge of the Company or any Subsidiary,
threatened.
3.2 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 (unless as of a specific date therein, in which case they
shall be accurate as of such date):
14
(a) Organization;
Authority. The Purchaser is
either an individual or an entity duly incorporated or formed,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power
and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of the Transaction Documents
and performance by the Purchaser of the transactions contemplated
by the Transaction Documents have been duly authorized by all
necessary corporate, partnership, limited liability company or
similar action, as applicable, on the part of the Purchaser. Each
Transaction Document to which it is a party has been duly executed
by the Purchaser, and when delivered by the Purchaser in accordance
with the terms hereof, will constitute the valid and legally
binding obligation of the Purchaser, enforceable against it in
accordance with its terms, except: (i) as limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(b) Understandings
or Arrangements. The Purchaser
is acquiring the Securities as principal for its own account and
has no direct or indirect arrangement or understandings with any
other persons to distribute or regarding the distribution of such
Securities (this representation and warranty not limiting the
Purchaser’s right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable
federal and state securities laws). The Purchaser is acquiring the
Securities hereunder in the ordinary course of its
business.
(c) Purchaser
Status. At the time the
Purchaser was offered the Securities, it was, and as of the date
hereof it is, and on each date on which it exercises any Series K
Warrants, it will be either: (i) an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7) or (a)(8) under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule
144A9a) under the Securities Act. The Purchaser is not required to
be registered as a broker-dealer under Section 15 of the Exchange
Act.
(d) 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 Securities, 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 Securities
and, at the present time, is able to afford a complete loss of such
investment.
(e) Access
to Information. The Purchaser
has been furnished with or has had access to the ▇▇▇▇▇ Website of
the Commission to the Company’s filings made with the
Commission during the period from the date that is two years
preceding the date hereof through the tenth business day preceding
the Closing Date in which the Purchaser purchases Securities
hereunder, including but not limited to the Risk Factors section of
the Company’s Current Report on Form 8-K/A filed on April 2,
2018, which includes financial statements for the fiscal year
ended December 31, 2017 and the Registration Statement (referred to
collectively as the “SEC
Reports”). The Purchaser
is not deemed to have any knowledge of any information not included
in the Reports unless such information is delivered in the manner
described in the next sentence. In addition, the Purchaser may have
received in writing from the Company such other information
concerning its operations, financial condition and other matters as
the Purchaser has requested, identified thereon as OTHER WRITTEN
INFORMATION (such other information is collectively, the
“Other Written
Information”), and
considered all factors the Purchaser deems material in deciding on
the advisability of investing in the Securities. The Purchaser was
afforded (i) the opportunity to ask such questions as the Purchaser
deemed necessary of, and to receive answers from, representatives
of the Company concerning the merits and risks of acquiring the
Securities; (ii) the right of access to information about the
Company and its financial condition, results of operations,
business, properties, management and prospects sufficient to enable
the Purchaser to evaluate the Securities; 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
acquiring the Securities.
15
(f) Certain
Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, the Purchaser has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Purchaser, executed any purchases or
sales, including Short Sales, of the securities of the Company
during the period commencing as of the time that the Purchaser
first received a written term sheet of the offering from the
Company setting forth the material terms of the transactions
contemplated hereunder and ending immediately prior to the
execution hereof. Notwithstanding the foregoing, in the case of the
Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of the
Purchaser’s assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio
managers managing other portions of the Purchaser’s assets,
the representation set forth above shall only apply with respect to
the portion of assets managed by the portfolio manager that made
the investment decision to purchase the Securities covered by this
Agreement. Other than to other Persons party to this Agreement, the
Purchaser has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the
foregoing, for avoidance of doubt, nothing contained herein shall
constitute a representation or warranty, or preclude any actions,
with respect to the identification of the availability of, or
securing of, available shares to borrow in order to effect Short
Sales or similar transactions after the Closing
Date.
(g) Survival.
The foregoing representations and warranties shall survive the
Closing Date.
The Company acknowledges and agrees that the representations
contained in this Section 3.2 shall not modify, amend or affect the
Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of
the transaction contemplated hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a)
The Securities may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration
statement or Rule 144, to the Company or to an Affiliate of a
Purchaser or in connection with a pledge as contemplated in Section
4.1(b), the Company may require the transferor thereof to provide
to the Company, at the Company’s expense, an opinion of
counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of such
transfer, any such transferee shall agree in writing to be bound by
the terms of this Agreement and shall have the rights and
obligations of a Purchaser under this Agreement and the other
Transaction Documents. In connection with any transfer of
Securities made in compliance with applicable law pursuant to an
effective registration statement or Rule 144, the Company shall, at
the Company’s expense, cause its counsel to issue a legal
opinion to the Transfer Agent promptly if required by the Transfer
Agent to affect the removal of the legend.
(b) The
Company acknowledges and agrees that the Purchaser may from time to
time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or
all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act and who agrees to be bound by the provisions of
this Agreement and, if required under the terms of such
arrangement, the Purchaser may transfer pledged or secured
Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the Purchaser’s
expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the
Securities.
(c) The
Series K Warrants and Warrant Shares shall be issued free of
legends.
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4.2 Furnishing
of Information. Until the
earliest of the time that (i) the Purchaser owns no Securities,
(ii) the Series K Warrants have expired, or (iii) five years after
the Closing Date, the Company covenants to maintain the
registration of the Common Stock under Section 12(b) or 12(g) of
the Exchange Act and 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 even if the Company is not then
subject to the reporting requirements of the Exchange
Act.
4.3 Integration.
The Company shall not 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 would be integrated with the
offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of such
subsequent transaction.
4.4 Securities
Laws Disclosure; Publicity. The
Company shall by 9:00 a.m. (New York City time) on the first
Trading Day immediately following the Closing Date, issue a press
release disclosing the material terms of the transactions
contemplated hereby, and shall file with the Commission a Current
Report on Form 8-K or other report, including the Transaction
Documents as exhibits thereto, within the time period required by
the Exchange Act. If the Company fails to timely make such press
release, the Purchaser shall be entitled to issue its own press
release with the same information. From and after the issuance of
such press release, the Company represents to the Purchaser that it
shall have publicly disclosed all material, non-public information
delivered to the Purchaser by the Company or any of its
Subsidiaries, or any of their respective officers, directors,
employees or agents prior to the Closing Date. The Company
understands and confirms that the Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the
Company. The Company and the Purchaser shall consult with each
other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor the
Purchaser shall issue any such press release nor otherwise make any
such public statement without the prior consent of the Company,
with respect to any press release of the Purchaser, or without the
prior consent of the Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld or
delayed, except if such disclosure is required by law, in which
case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company shall not publicly
disclose the name of the Purchaser, or include the name of the
Purchaser in any filing with the Commission or any regulatory
agency or Trading Market unless the name of the Purchaser is
already included in the body of the Transaction Documents, without
the prior written consent of the Purchaser, except (a) as required
by federal securities law in connection with the filing of final
Transaction Documents with the Commission and (b) to the extent
such disclosure is required by law or Trading Market regulations,
in which case the Company shall provide the Purchaser with prior
notice of such disclosure permitted under this clause
(b).
4.5 Shareholder
Rights Plan. No claim will be
made or enforced by the Company or, with the consent of the
Company, any other Person, that the Purchaser is an
“Acquiring
Person” under any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company,
or that the Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement
between the Company and the Purchaser.
4.6 Non-Public
Information. Except with
respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company covenants
and agrees that neither it, nor any other Person acting on its
behalf will provide the Purchaser or its agents or counsel with any
information that constitutes, or the Company reasonably believes
constitutes, material non-public information, unless prior thereto
the Purchaser shall have entered into a written agreement with the
Company regarding the confidentiality and use of such information.
The Company understands and confirms that the Purchaser shall be
relying on the foregoing covenant in effecting transactions in
securities of the Company.
4.7 Use
of Proceeds. The Company will
use the net proceeds from the sale of the Securities hereunder for
general corporate purposes and working capital purposes. The
Company shall not use such proceeds: (a) for the satisfaction of
any portion of the Company’s debt (other than payment of
trade payables in the ordinary course of the Company’s
business and prior practices), (b) for the redemption of any common
stock or common stock equivalents except for any Company right of
repurchase that may be applicable to exercised stock options, (c)
for the settlement of any outstanding litigation (except for
payments pursuant to settlement agreements entered into prior to
the date hereof and disclosed in the SEC Reports or (d) in
violation of FCPA or OFAC regulations.
17
4.8 Indemnification
of Purchaser. Subject to the
provisions of this Section 4.8, the Company will indemnify and hold
the Purchaser and its directors, officers, shareholders, members,
partners, employees and agents (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 or
employees (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 persons (each, a
“Purchaser
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 that any the Purchaser Party may suffer
or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or
(b) any action instituted against the Purchaser Parties in any
capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of the Purchaser
Party, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of
the Purchaser Party’s representations, warranties or
covenants under the Transaction Documents or any agreements or
understandings the Purchaser Party may have with any such
stockholder or any violations by the Purchaser Party of state or
federal securities laws or any conduct by the Purchaser Party which
constitutes fraud, gross negligence, willful misconduct or
malfeasance). If any action shall be brought against the Purchaser
Party in respect of which indemnity may be sought pursuant to this
Agreement, the Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense
thereof with counsel of its own choosing reasonably acceptable to
the Purchaser Party. The Purchaser 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 counsel shall be
at the expense of the Purchaser Party except to the extent that (i)
the employment thereof has been specifically authorized by the
Company in writing, (ii) the Company 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
counsel, a material conflict on any material issue between the
position of the Company and the position of the Purchaser Party, in
which case the Company shall be responsible for the reasonable fees
and expenses of no more than one such separate counsel. The Company
will not be liable to the Purchaser Party under this Agreement (y)
for any settlement by a Purchaser Party effected without the
Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (z) to the extent, but only to
the extent that a loss, claim, damage or liability is attributable
to the Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by the
Purchaser Party in this Agreement or in the other Transaction
Documents or (B) any conduct by the Purchaser Party which
constitutes gross negligence or willful misconduct. The
indemnification required by this Section 4.8 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or are
incurred. The indemnity agreements contained herein shall be in
addition to any cause of action or similar right of the Purchaser
Party against the Company or others and any liabilities the Company
may be subject to pursuant to law.
4.9 Reservation
of Common Stock. As of the date
hereof, the Company has reserved for the Purchaser and the Company
shall continue to reserve and keep available at all times, free of
preemptive rights, a sufficient number of shares of Common Stock
for the Purchaser for the purpose of enabling the Company to issue
the Warrant Shares issuable upon complete exercise of the Series K
Warrants (such amount being the “Required
Minimum”). If, on any
date, the number of authorized but unissued (and otherwise
unreserved) shares of Common Stock is less than the Required
Minimum on such date (an “Authorized Share
Failure”), then the Board
of Directors shall use commercially reasonable efforts to amend the
Company’s certificate of incorporation to increase the number
of authorized but unissued shares of Common Stock to at least the
Required Minimum at such time, as soon as possible and in any event
not later than the 60th day
after such date. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than sixty
(60) days after the occurrence of such Authorized Share Failure,
the Company shall hold a meeting of its stockholders for the
approval of an increase in the number of authorized shares of
Common Stock. In connection with such meeting, the Company shall
provide each stockholder with a proxy statement and shall use its
commercially reasonable efforts to solicit its stockholders'
approval of such increase in authorized shares of Common Stock and
to cause its board of directors to recommend to the stockholders
that they approve such proposal. Notwithstanding the foregoing, if
any such time of an Authorized Share Failure, the Company is able
to obtain the written consent of a majority of the shares of its
issued and outstanding Common Stock to approve the increase in the
number of authorized shares of Common Stock without soliciting its
stockholders, the Company may satisfy this obligation by obtaining
such consent and submitting for filing with the Commission an
Information Statement on Schedule 14C. Calculations hereunder with
reference to Warrant Shares will be made assuming exercise of the
Series K Warrants on a cash basis.
18
4.10 Listing
of Common Stock. The Company
hereby agrees to use commercially reasonable efforts to maintain
the listing or quotation of the Common Stock on the Trading Market
on which it is currently listed, and prior to or concurrently with
the Closing, the Company shall apply to list or quote all of the
Warrant Shares on such Trading Market and promptly secure the
listing of all of the Warrant Shares on such Trading Market prior
to Closing. The Company further agrees, if the Company applies to
have the Common Stock traded on any other Trading Market, it will
then include in such application all of the Warrant Shares, and
will take such other action as is necessary to cause all of the
Warrant Shares to be listed or quoted on such other Trading Market
as promptly as possible. The Company will then use commercially
reasonable efforts to continue the listing or quotation and trading
of its Common Stock on a Trading Market until the later of (i) the
five year anniversary of the Closing Date and (ii) the date no
Series K Warrants are outstanding and will comply in all respects
with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market until such later
date.
4.11 Certain
Transactions and Confidentiality. The Purchaser covenants that neither it nor any
Affiliate acting on its behalf or pursuant to any understanding
with it will execute any purchases or sales, including Short Sales
of any of the Company’s securities during the period
commencing with the execution of this Agreement and ending at such
time that the transactions contemplated by this Agreement are first
publicly announced pursuant to the initial press release as
described in Section 4.4. The Purchaser covenants that until
such time as the transactions contemplated by this Agreement are
publicly disclosed by the Company pursuant to the initial press
release as described in Section 4.4, the Purchaser will maintain
the confidentiality of the existence and terms of this
transaction. Notwithstanding the foregoing and
notwithstanding anything contained in this Agreement to the
contrary, the Company expressly acknowledges and agrees that (i) no
Purchaser makes any representation, warranty or covenant hereby
that it will not engage in effecting transactions in any securities
of the Company after the time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial
press release as described in Section 4.4, (ii) no Purchaser shall
be restricted or prohibited from effecting any transactions in any
securities of the Company in accordance with applicable securities
laws from and after the time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial
press release as described in Section 4.4 and (iii) no Purchaser
shall have any duty of confidentiality or duty not to trade in the
securities of the Company to the Company or its Subsidiaries after
the issuance of the initial press release as described in Section
4.4. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of the
Purchaser’s assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio
managers managing other portions of the Purchaser’s assets,
the covenant set forth above shall only apply with respect to the
portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this
Agreement.
4.12 Exercise
Procedures. The form of
Notice of Exercise included in the Series K Warrants set forth the
totality of the procedures required of the Purchaser in order to
exercise the Series K Warrants. No additional legal opinion, other
information or instructions shall be required of the Purchaser to
exercise its Series K Warrants. Without limiting the preceding
sentences, no ink-original Notice of Exercise shall be required,
nor shall any medallion guarantee (or other type of guarantee or
notarization) of any Notice of Exercise form be required in order
to exercise the Series K Warrants. The Company shall honor
exercises of the Series K Warrants and shall deliver Warrant Shares
in accordance with the terms, conditions and time periods set forth
in the Transaction Documents.
4.13 Acknowledgment
of Dilution. The Company
acknowledges that the issuance of the Securities may result in
dilution of the outstanding shares of Common Stock, which dilution
may be substantial under certain market conditions. The
Company further acknowledges that its obligations under the
Transaction Documents, including, without limitation, its
obligation to issue the Warrant 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 may have
against the Purchaser and regardless of the dilutive effect that
such issuance may have on the ownership of the other stockholders
of the Company.
19
4.14 Form
D; Blue Sky Filings. The
Company agrees to timely file a Form D with respect to the Series K
Warrants and Warrant Shares as required under Regulation D and to
provide a copy thereof, promptly upon request of the Purchaser. The
Company shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for, or to
qualify the Series K Warrants and Warrant Shares for, sale to the
Purchaser at the Closing under applicable securities or “Blue
Sky” laws of the states of the United States, and shall
provide evidence of such actions promptly upon request of the
Purchaser.
ARTICLE V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by the Purchaser by written notice
to the Company if the Closing has not been consummated on or before
November 21, 2018.
5.2 Fees
and Expenses. Except as
expressly set forth in the Transaction Documents, each party shall
pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery
and performance of this Agreement; provided,
however,
the Company agrees to pay legal fees of $15,000 to Purchaser Counsel incurred in connection with the
negotiation, execution and delivery of the Transaction Documents.
The Company shall pay all Transfer Agent fees, stamp taxes and
other similar taxes and duties levied in connection with the
delivery of any Securities to the Purchaser.
5.3 Entire
Agreement. The Transaction
Documents, together with the exhibits and schedules thereto, the
Prospectus and the Prospectus Supplement, contain the entire
understanding of the parties with respect to the subject matter
hereof and thereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents,
exhibits and schedules.
5.4 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, (iv) transmitted by hand
delivery, telegram, or facsimile, or (v) transmitted via electronic
mail, in each case 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 business day during normal
business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to
be received), (b) on the second business day following the date of
mailing by express courier service, fully prepaid, addressed to
such address, or upon actual receipt of such mailing, whichever
shall first occur or (c) on the date sent by e-mail of a PDF
document (with confirmation of transmission) if sent during normal
business hours of the recipient, and on the next Business Day if
sent after normal business hours of the recipient. The addresses
for such communications shall be: (i) if to the Company, to:
DropCar, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Chief Executive Officer, E-mail:
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇, with a copy by electronic mail only to (which
shall not constitute notice) Company Counsel, and (ii) if to the
Purchaser, to: the address and fax number indicated on the
signature page hereto, with an additional copy by electronic mail
only (which shall not constitute notice) to Purchaser
Counsel.
5.5 Amendments;
Waivers. No provision of this
Agreement may be waived, modified, supplemented or amended except
in a written instrument signed, in the case of an amendment, by the
Company and holders of at least a majority of the Warrant Shares
(without regard to any restriction or limitation on the exercise of
the Series K Warrants contained therein) or, in the case of a
waiver, by the party against whom enforcement of any such waived
provision is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of
any such right. Any amendment effected in accordance with
accordance with this Section 5.5 shall be binding upon the
Purchaser and holder of Securities and the
Company.
20
5.6 Headings.
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.
5.7 Successors
and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign
this Agreement or any rights or obligations hereunder without the
prior written consent of the Purchaser (other than by merger). The
Purchaser may assign any or all of its rights under this Agreement
to any Person to whom the Purchaser assigns or transfers any
Securities, provided that such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the
“Purchaser.”
5.8 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, except as otherwise set forth in Section 4.8 and this
Section 5.8.
5.9 Governing
Law. All questions concerning
the construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and
enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal 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, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough
of Manhattan 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 Action or Proceeding, any claim that it
is not personally subject to the jurisdiction of any such court,
that such Action or Proceeding is improper or is an inconvenient
venue for such Proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such Action or Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to
it under this Agreement 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 other manner permitted by
law. If any party shall commence an Action or Proceeding to enforce
any provisions of the Transaction Documents, then, in addition to
the obligations of the Company under Section 4.8, the prevailing
party in such Action or Proceeding shall be reimbursed by the
non-prevailing party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation,
preparation and prosecution of such Action or
Proceeding.
5.10 Survival.
The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities at the Closing for
the applicable statute of limitations.
5.11 Execution.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to each 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 or
“.pdf” signature page were an original
thereof.
5.12 Severability.
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
commercially reasonable 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.
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5.13 Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) any of the other 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; provided, however,
that in the case of a rescission of an exercise of a Series K
Warrant, the Purchaser shall be required to return any shares of
Common Stock subject to any such rescinded exercise notice
concurrently with the return to the Purchaser of the aggregate
exercise price paid to the Company for such shares and the
restoration of the Purchaser’s right to acquire such shares
pursuant to the Purchaser’s Series K Warrant (including,
issuance of a replacement warrant certificate evidencing such
restored right).
5.14 Replacement
of Securities. If any
certificate or instrument evidencing any Securities is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon surrender and
cancellation thereof (in the case of mutilation), or in lieu of and
substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft, destruction or mutilation and of the ownership of
such Security. The applicant for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party
costs (including customary indemnity) associated with the issuance
of such replacement Securities.
5.15 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 will be entitled to specific performance
under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations contained in the Transaction
Documents and hereby agree to waive and not to assert in any Action
for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.16 Payment
Set Aside. To the extent that
the Company makes a payment or payments to the Purchaser pursuant
to any Transaction Document or a 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.
5.17 Liquidated
Damages. The Company’s
obligations to pay any partial liquidated damages or other amounts
owing under the Transaction Documents is a continuing obligation of
the Company and shall not terminate until all unpaid partial
liquidated damages and other amounts due thereunder have been paid
notwithstanding the fact that the instrument or security pursuant
to which such partial liquidated damages or other amounts are due
and payable shall have been canceled.
5.18 Saturdays,
Sundays, Holidays, etc. If the last or
appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business Day, then
such action may be taken or such right may be exercised on the next
succeeding Business Day.
5.19 Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock that occur after the
date of this Agreement.
5.20 WAIVER
OF JURY TRIAL. IN
ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND
INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY.
5.21 Equitable
adjustment. Trading volume
amounts, price/volume amounts and similar figures in the
Transaction Documents shall be equitable adjusted (but without
duplication) to offset the effect of stock splits, similar events
and as otherwise described in this Agreement and the Series K
Warrants.
(Signature Pages Follow)
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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.
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Address for
Notice:
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E-mail:
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By:__________________________________________
Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title:
Chief Executive Officer
With a
copy to (which shall not constitute notice):
Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Chrysler
Center
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
E-mail:
▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇;
▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
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[PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE
AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.
Name of Purchaser: Alpha Capital Anstalt
Signature of Authorized Signatory of Purchaser:
____________________________________________________________________
Name of Authorized Signatory: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title of Authorized Signatory: Director
Address for Notice to Purchaser and for Delivery of Securities to
Purchaser:
Alpha Capital Anstalt
c/o LH Financial Services Corp.
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Subscription Amount: $
983,332.94
Series K Warrant Shares (pre-funded warrants):
1,666,666
EIN Number, if applicable, will be provided under separate
cover
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