Exhibit 10.2
 
 
 
 
 
UNIT PURCHASE AGREEMENT
 
 
BY AND AMONG
 
 
MEDOVEX CORPORATION
 
AND
 
THE PURCHASERS PARTY HERETO
 
 
 
 
 

 
 
 
EXHIBITS
TO
UNIT PURCHASE AGREEMENT
 
 
Exhibit A
Schedule of Purchasers
Exhibit B
Form of Warrant
Exhibit C
Form of Subscription Agreement
Exhibit D
Funding Instructions
Exhibit E
Form of Legal Opinion
Exhibit F
Form of Registration Rights Agreement
Exhibit G
Form of Certificate of Designation for Series A Convertible Preferred Stock
 
 
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MEDOVEX CORPORATION
UNIT PURCHASE AGREEMENT
THIS UNIT PURCHASE AGREEMENT (the “Agreement”) is entered into as of the date
set forth on the signature page hereto by and among Medovex Corporation, a
Nevada corporation (the “Company”), and the purchasers identified on Exhibit A
on the date hereof (which purchasers are hereinafter collectively referred to as
the “Purchasers” and each individually as, a “Purchaser”).
BACKGROUND
A. Unless otherwise defined in this Agreement, capitalized terms used in this
Agreement shall have the respective meanings ascribed to such terms in Section
9.
B. The Company is offering Units (as defined below) to a limited number of
persons who qualify as “accredited investors” as defined in Rule 501 of
Regulation D promulgated under the Securities Act (the “Offering”).
 
C. Each Unit shall consist of (a) one share of common stock, par value $0.001
per share, of the Company (“Common Stock”) and (b) one-half of a warrant to
purchase a share of Common Stock (the “Warrant”), at an exercise price per share
equal to $1.50 per share, which Warrant will be exercisable at any time on or
after the date of issuance for a period of five (5) years following the final
closing (the “Final Closing Date”) of the Offering (collectively, the “Units”)
at a price per Unit equal to the lower of (i) the closing bid price for the
Common Stock on the day immediately prior to the Closing, or (ii) $1.20.   
 
D. To the extent that the purchase of Units would result in a purchaser
acquiring beneficial ownership of 4.99% or more of the Company’s then
outstanding Common Stock, such purchaser may elect to purchase, in lieu of the
Common Stock included as part of the Units, shares of our Series A Convertible
Preferred Stock (the “Preferred Stock”), par value $0.001 per share, which are
convertible into shares of Common Stock (the “Conversion Shares”), with such
rights and designations as set forth in the form of Certificate of Designation
of Preferences, Rights and Limitations of Series A Convertible Preferred Stock
attached hereto as Exhibit G, (the “Series A Certificate of Designation”).
 
E. The Units are being offered on a “reasonable efforts” basis in a minimum
amount of $3,000,000 (the “Minimum Offering Amount”), and a maximum amount of
$5,000,000 (the “Maximum Offering Amount”). The Placement Agent agrees to use
reasonable efforts to complete the Offering on or before April 30, 2017.
 
F.  Officers, directors or employees of the Company may offer Units, which shall
be included in, and counted towards, the Minimum and Maximum Offering.
 
G. The Company desires to issue and sell the Units to each Purchaser in one or
more closings (each a “Closing” and collectively the “Closings”) as set forth
herein.
NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, hereby agree as follows:
 
 
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1. SALE AND PURCHASE OF UNITS.
1.1 Authorization of Units. The board of directors of the Company (the “Board of
Directors”) has authorized (i) the sale of up to 5,000,000 Units, each Unit
consisting of (a) a share of common stock, par value $0.001 per share, of the
Company (“Common Stock”) (or Preferred Stock for any Purchasers that elect to
purchase shares of our Preferred Stock in lieu of Common Stock)(which is
determined by dividing the price per Unit by the lower of (i) the closing bid
price for the Common Stock on the day immediately prior to the Closing, or (ii)
$1.20), and (b) one-half of a warrant to purchase a share of Common Stock, at an
exercise price per share equal to $1.50 per share, which warrant will be
exercisable at any time on or after the date of issuance for a period of five
(5) years following the final Closing. From and after the applicable Closing,
the Company shall issue and reserve for issuance the shares of its Common Stock
issuable in such Closing; (i) the shares of Common Stock that may be issued upon
full exercise of the Warrants (the “Warrant Shares”) issued at such Closing,
plus such additional number of Warrant Shares as shall be required to be issued
pursuant to the terms thereof; and (ii) the Conversion Shares to any Purchasers
that elect to purchase preferred stock in lieu of Common Stock, as set forth
herein.
1.2 Initial Sale and Purchase of Units. Subject to the terms and conditions
hereof, and in reliance upon the representations, warranties and covenants
contained herein, at the Initial Closing, the Company shall issue and sell to
each Purchaser, and each Purchaser shall purchase from the Company, the number
of Units set forth opposite such Purchaser’s name on Exhibit A under the
“Initial Units” column, at a purchase price per Unit equal to the lower of (i)
the closing bid price for the Common Stock on the day immediately prior to the
Closing, or (ii) $1.20 (subject to appropriate and proportionate adjustment for
stock dividends payable in shares of, forward or reverse stock splits and other
subdivisions and combinations of, and recapitalizations and like occurrences
with respect to, the Common Stock, the “Per Unit Purchase Price”). The minimum
investment required from each Purchaser is one hundred thousand dollars
($100,000), unless the Company and the Placement Agent agree, in their mutual
discretion, to allow a Purchaser to invest less than one hundred thousand
dollars ($100,000).  Notwithstanding anything herein to the contrary, in the
event that a Purchaser’s subscription to Units would cause such Purchaser’s
beneficial ownership to exceed 4.99% of the issued and outstanding shares of the
Company’s Common Stock, such Purchaser may elect to purchase shares of the
Company Preferred Stock in lieu of the shares of Common Stock to be part of the
Units, which preferred stock shall have such rights and designations as set
forth in Exhibit G hereof.
1.3 Subsequent Sales and Purchases of Units. Subject to the terms and conditions
hereof, and in reliance upon the representations, warranties and covenants
contained herein, at each subsequent Closing, the Company shall issue and sell
to each Purchaser who is identified as a “Subsequent Closing Purchaser” on
Exhibit A, which shall be deemed amended at each such subsequent Closing to add
each such additional Purchaser (each, a “Subsequent Closing Purchaser”), and
each Subsequent Closing Purchaser shall purchase from the Company, the number of
Units set forth opposite such Purchaser’s name on Exhibit A at the Per Unit
Purchase Price.
1.4  Issuance of Warrants. The Warrants shall be in form and substance
substantially the same as the form of Warrant in Exhibit B.
1.5 Placement Agent. Laidlaw & Company (UK) Ltd. (the “Placement Agent”), a New
York, New York-based, registered broker-dealer member FINRA/SIPC, is acting as
the placement agent for the Offering. The Offering will be made on a “reasonable
efforts” basis. The Placement Agent’s principal business address is 546 Fifth
Avenue, New York, New York 10036. The Placement Agent will receive a cash
commission in the amount of ten percent (10%) of the gross proceeds of the
Offering received from investors introduced by the Placement Agent to the
Company (“Laidlaw Investors”), and a cash commission in the amount of five
percent (5%) of the gross proceeds of the Offering received from investors
introduced by the Company, its officers, directors or employees (“Company
Investors”). In addition, the Placement Agent shall be entitled to a
non-allocable expense reimbursement in the amount of two percent (2%) of the
gross proceeds of the Offering. At each closing, the Company will also issue to
the Placement Agent (a) warrants to purchase shares of Common Stock equal to ten
percent (10%) of the securities issued and issuable in the Offering to Laidlaw
Investors, and (b) warrants to purchase shares of Common Stock equal to five
percent (5%) of the securities issued and issuable in the Offering to Company
Investors. The Warrants issued to the Placement Agent will have an exercise
price equal to lowest price per share of the shares or warrants issued or
issuable to investors in the Offering. The Company has also paid the Placement
Agent an activation fee of $12,500 in connection with its engagement for this
offering, and the Company has agreed to reimburse the Placement Agent for its
legal fees up to an amount not to exceed $50,000.
 
 
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1.6 Conversion of Notes. Certain holders of promissory notes (“Notes”)
previously issued by the Company in the aggregate amount of One Million One
Hundred Fifty Thousand Dollars ($1,150,000) have agreed to convert, simultaneous
with the Initial Closing, as defined below, the Notes under the same terms and
conditions set forth in this Agreement (the “Conversion”). The amount of Notes
converted shall not be deemed to be a part of this Offering and shall not be
counted towards the Minimum Offering Amount or the Maximum Offering Amount, and
the Placement Agent shall not be entitled to receive the fees set forth under
Section 1.5 above with respect to the Conversion.
2. CLOSINGS, DELIVERY AND PAYMENT.
2.1 Initial Closing. Subject to the conditions set forth in Section 5 herein,
the initial closing of the sale and purchase of the Units (the “Initial
Closing”), shall take place electronically on such date and at such time as is
agreed between the Company and the Placement Agent (such date the “Initial
Closing Date”); upon the earliest of (1) the sale of the Maximum Offering Amount
or (2) April 30, 2017 (the “Termination Date”).  Subject to the foregoing, at
the Initial Closing, the Company must sell a minimum of $3,000,000 of Units (the
“Initial Units”), and the Company may thereafter sell up to a maximum of
$5,000,000 of Units.
2.2 Subsequent Closings. If the Minimum Offering Amount has been raised prior to
the Termination Date, subject to the conditions set forth in Section 5, each
Subsequent Closing shall take place electronically on such date and at such time
as is agreed between the Company and the Placement Agent (such date the
“Subsequent Closing Date”), in no event later than the Termination Date. Subject
to the foregoing, at Subsequent Closings, the Company may sell up to a maximum
of 0 Units less the number of Units sold in all prior Closings. The Units sold
at the Subsequent Closings are sometimes referred to herein as “Subsequent
Units.”
2.3 Delivery; Payment. At each Closing, subject to the terms and conditions
hereof, the Purchasers will deliver the full amount of the Purchase Price in
cash by wire transfer of immediately available funds in accordance with
instructions attached hereto as Exhibit D, or as the Company shall otherwise
direct and the Company will deliver (1) one (1) certificate registered in such
Purchaser’s name, to purchase such number of shares of Common Stock (or
Preferred Stock for any Purchasers that elect to purchase shares of our
Preferred Stock in lieu of Common Stock) included in the Units purchased by such
Purchaser or Subsequent Closing Purchaser, as the case may be, at such Closing
and (2) one Warrant, registered in such Purchaser’s name to purchase such number
of Warrant Shares included in the Units purchased by such Purchaser or
Subsequent Closing Purchaser, as the case may be, at such Closing. The Company
and the Placement Agent, in their mutual discretion, may allow a Purchaser to
purchase a partial Unit, in which case the Purchaser shall receive a certificate
representing the appropriate number of shares of Common Stock (or Preferred
Stock for any Purchasers that elect to purchase shares of our Preferred Stock in
lieu of Common Stock) included in such partial Unit and a Warrant for the
appropriate number of corresponding Warrant Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Placement Agent and each of the
Purchasers that the statements made in this Section 3, except as qualified in
the disclosure schedules referenced herein and attached hereto (the
“Schedules”), are true and correct on the date hereof, as of the Initial Closing
and shall be true and correct as of each Subsequent Closing, except as qualified
by any updated Schedules delivered at the Subsequent Closing in accordance with
Section 5.1.1 herein, all of which qualifications in the Schedules attached
hereto and updated Schedules delivered at the Subsequent Closing shall be deemed
to be representations and warranties as if made hereunder. The Schedules shall
be arranged to correspond to the numbered paragraphs contained in this Section
3, and the disclosure in any paragraph of the Schedules shall qualify other
subsections in Section 3 only to the extent that it is readily apparent from a
reading of the disclosure that such disclosure is applicable to such other
subsections. For purposes of this Section 3, “knowledge” shall mean the personal
knowledge of any of the Company’s officers or directors or what they would have
known upon having made reasonable inquiry.

 
 
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3.1 Organization, Good Standing and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under the corporate and
general laws of the State of Nevada. Each of the Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each of the Company and its Subsidiaries has all
requisite corporate power and authority to own and operate its properties and
assets. Neither the Company nor any Subsidiary is in violation nor 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 its Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation in each jurisdiction set forth on
Schedule 3.1, except where failure to be so qualified or in good standing, as
the case may be, could not 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, prospects or condition (financial or otherwise) of the Company and its
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.
3.2 Subsidiaries. The SEC Reports include a true and complete list of each of
the Subsidiaries and their respective jurisdictions of organization. Except as
set forth on Schedule 3.2, neither the Company nor any Subsidiary owns or
controls any ownership interest or profits interest in any other corporation,
limited liability company, limited partnership or other entity. The Company
owns, directly or indirectly, all of the capital stock or other equity interests
of each Subsidiary free and clear of any Liens, 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.. Except as set forth on Schedule 3.2,
neither the Company nor any Subsidiary is a participant in any joint venture,
partnership or similar arrangement.
3.3 Authorization; Enforcement. The Company has the requisite corporate 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 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 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.
3.4 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 understanding 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.
 
 
 
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3.5 Filings, Consents and Approvals. Except for NASDAQ approval, 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.
 
3.6 Issuance of the Securities. The Units, the shares of Common Stock and the
Warrants 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. The
Warrant Shares and the Conversion Shares, when issued in accordance with the
terms of the Warrants and the Series A Certificate of Designation, 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. The Company has reserved from its duly authorized capital
stock a number of shares of Common Stock for issuance of the Warrant Shares and
the Conversion Shares on the date hereof.
 
3.7 Capitalization. The capitalization of the Company is as set forth on
Schedule 3.7 hereto. Schedule 3.7 includes the number of shares of Common Stock
and Preferred Stock owned beneficially, and of record, by affiliates of the
Company as of the date hereof. Except as disclosed on the Schedule 3.7 and the
SEC Reports, there are no outstanding securities of the Company or any
Subsidiary which contain any right of first refusal, preemptive right, right of
participation, or any similar right. 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. Except as a result
of the purchase and sale of the Securities, and except as set forth in the SEC
Reports, 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 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. The issuance and sale of the
Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchasers) 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. There are no
proxies, stockholder agreements, or any other agreements between the Company or
any Subsidiary and any securityholder of such entity or, to the knowledge of the
Company, among any securityholders of the Company or any Subsidiary, including
agreements relating to the voting, transfer, redemption or repurchase of any
securities of such entity. Neither the Company nor any Subsidiary has any
outstanding shareholder purchase rights or “poison pill” or any similar
arrangement in effect giving any person the right to purchase any equity
interest in such entity upon the occurrence of certain events. All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable, have been issued in 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. 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. Except as required by law, including any federal
securities rules and regulations, there are no restrictions upon the voting or
transfer of any of the shares of capital stock of the Company or any Subsidiary
pursuant to its Organizational Documents or other governing documents or any
agreement or other instruments to which the Company or any Subsidiary is a party
or by which it is bound.
 

 
 
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3.8 Shell Company Status; SEC Reports; Financial Statements. The Company was
never a “shell” company as described in Rule 144(i)(1) under the Securities Act.
The Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it under the Securities Exchange Act ,
including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials and any
amendments filed through the date hereof, including the exhibits thereto and
documents incorporated by reference therein, 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. The 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. The financial statements (the “Financial Statements”) of the
Company included in its Form 10-K dated April 14, 2016 for the year ended
December 31, 2015 and Form 10-Q dated November 17, 2016 for the quarter ending
September 30, 2016 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 footnotes thereto except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its Subsidiaries as
of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject to normal, immaterial, year-end audit
adjustments. There is no transaction, arrangement, or other relationship between
the Company or any Subsidiary and an unconsolidated or other off balance sheet
entity that is not disclosed in its financial statements that should be
disclosed in accordance with GAAP and that would be reasonably likely to have a
Material Adverse Effect.
3.9 Absence of Liabilities. Except as set forth in the SEC Reports or on
Schedule 3.9 hereto, since the Balance Sheet Date (hereinafter defined): (i)
there has been no event, occurrence or development that has had or that could
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 and (B) 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 for the issuance of the Securities contemplated by this Agreement or as
set forth in the SEC Reports 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. Except as set forth in the SEC
Reports or on Schedule 3.9, neither the Company nor any Subsidiary is a
guarantor or indemnitor of any liability of any other Person.
For purposes of this Section 3.9, is September 30, 2016 is referred to as the
“Balance Sheet Date”.
3.10 Agreements; Action.
3.10.1. Disclosure. Except as set forth on Schedule 3.10.1 , the SEC Reports
include exhibits consisting of all of the following Contracts to which the
Company and its Subsidiaries or any of their respective properties or assets are
a party or otherwise bound (each a “Material Contract”):
(a) Contracts not made in the ordinary course of business;
 
 
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(b) each Contract pursuant to which (x) the Company or any Subsidiary is granted
rights to, or ownership in, any Intellectual Property (as defined below) by any
other Person (excluding “shrink wrap” licenses for generally available,
commercial, off-the-shelf Software that has not been modified), (y) the Company
or any Subsidiary purchases components, raw materials, equipment, instruments,
and other supplies and machinery that are material to the Company’s or any
Subsidiary’s businesses, or supplies any other Person with any components, raw
materials, equipment, instruments, and other supplies and machinery, or (z) the
Company or any Subsidiary grants another person rights to, or ownership in, any
Intellectual Property;
(c) Contracts relating to the manufacture or production of any of the Products;
(d) Contracts among one or more stockholders of the Company or any Subsidiary
which by their respective terms require performance after the date hereof;
(e) Contracts or commitments involving future expenditures, actual or potential,
in excess of $150,000 after the date hereof;
(f) Contracts or commitments for the performance of services for the Company or
any Subsidiary by a third party which has a term of one (1) year or more and
involves expenditures by the Company or any Subsidiary of $150,000 or more;
(g) Contracts or commitments relating to commission arrangements with any other
Person;
(h) Contracts (A) to employ, engage or terminate executive officers and other
Contracts with present or former executive officers or directors of the Company
which by their respective terms require performance after the date hereof, or
(B) that will result in the payment of, or the creation of any Liability on the
part of the Company or any Subsidiary to pay, any severance, termination,
“golden parachute,” or other similar payments to any present or former executive
officers or directors of the Company or any Subsidiary following termination of
employment or engagement or otherwise;
(i) any lease under which any Subsidiary is either lessor or lessee of personal
property requiring annual lease payments (including rent and any other charges)
in excess of $150,000, and any lease under which any Subsidiary is either lessor
or lessee of any real property, including any Real Property Lease;
(j) promissory notes, loans, agreements, indentures, evidences of indebtedness,
letters of credit, guarantees, or other instruments relating to an obligation to
pay in excess of $150,000, whether the Company or any Subsidiary shall be the
borrower, lender or guarantor thereunder (excluding credit provided by the
Company or any Subsidiary in the ordinary course of business to purchasers of
its products or services and obligations to pay vendors in the ordinary course
of business and consistent with past practice);
(k) Contracts containing covenants limiting the freedom of the Company or any
Subsidiary to engage in any activity anywhere in the world;
(l) Contracts between the Company or any Subsidiary and any United States
federal, state or local government or any foreign government, or any
Governmental or Regulatory Authority, or any agency or department thereof, or
with any educational institution or part thereof;
(m) any power of attorney granted by the Company or any Subsidiary in favor of
any Person;
 
 
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(n) Contracts pertaining to any material joint ventures, partnerships or similar
arrangements;
(o) any Contract or other arrangement with an Affiliate; and
(p) any Contract not otherwise required to be listed pursuant to Subsections (a)
– (s) above and with respect to which the consequences of a default, non-renewal
or termination could reasonably be expected to have a Material Adverse Effect in
the absence of a replacement Contract or arrangement therefor.
3.10.2. The Company has provided or made available, either through access to the
SEC Reports or otherwise upon request, true and complete copies, of all of the
Material Contracts to the Purchasers. Each of the Material Contracts is (a) in
full force and effect, (b) a valid and binding obligation of, and is enforceable
in accordance with its terms against the Company or the applicable Subsidiary
that is party thereto and, to the knowledge of the Company, each of the other
parties thereto, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium or other law affecting the enforcement of creditors’
rights generally or by general equitable principles, (c) except for those
Material Contracts disclosed pursuant to Section 3.10.1(a) and identified as
such, was made in the ordinary course of business, and (d) contains no provision
or covenant prohibiting or limiting the ability of the Company or any Subsidiary
to operate its business in the manner in which it is currently operated.
3.10.3. To the best of the Company’s knowledge, each of the Company and its
Subsidiaries has in all material respects performed the obligations required to
be performed by it to date under each Material Contract to which it is a party
and is not in default or breach thereof, and no event or condition has occurred,
whether with or without the passage of time or the giving of notice, or both,
that would constitute such a breach or default. Neither the Company nor any
Subsidiary or any other party to any Material Contract has provided any notice
to the other party or to the Company or any Subsidiary, as applicable, of its
intent to terminate, withdraw its participation in, or not renew any such
Material Contract. Neither the Company nor its Subsidiaries has, and to the
knowledge of the Company, no other party to any Material Contract has,
threatened to terminate, withdraw from participation in, or not renew any such
Material Contract. To the knowledge of the Company, no other party to any
Material Contract is in breach or default under any provision thereof, and no
event or condition has occurred, whether with or without the passage of time or
the giving of notice, or both, that would constitute such a breach or default.
3.10.4. No Consent of any party to any Material Contract is required in
connection with the transactions contemplated by this Agreement and the other
Transaction Documents.
3.10.5. The execution, delivery and performance of this Agreement and the other
Transaction Documents do not and will not (a) result in or give to any Person
any right of termination, non-renewal, cancellation, withdrawal, acceleration or
modification in or with respect to any Material Contract, (b) result in or give
to any Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under any such Material Contract or (c)
result in the creation or imposition of any Liability or any Encumbrances upon
the Intellectual Property or any assets of the Company or any Subsidiary under
the terms of any such Material Contract.
3.10.6. Except as disclosed in the SEC Reports, neither the Company nor any
Subsidiary or any representative thereof is a party to any binding Contract or
has engaged in the past twelve (12) months in any discussions regarding, and is
not a party to or otherwise bound by any Contract in respect of, (a) any
purchase, lease, license or other acquisition of any other Person, whether by
equity purchase, merger, consolidation, reorganization or otherwise, or all or
substantially all of the assets of any other Person, or the entering into by the
Company or any Subsidiary of any share exchange with any other Person, (b) any
change of control transaction with respect to the Company or its Subsidiaries,
or (c) liquidation with respect to the Company or any Subsidiary.
3.11 Changes. Except as set forth on Schedule 3.11, or as disclosed in the SEC
Reports, or where the occurrence of any of the following events would not have a
Material Adverse Effect, since September 30, 2016 there has not been:

 
 
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3.11.1. any effect, event, condition or circumstance (including, without
limitation, the initiation of any litigation or other legal, regulatory or
investigative proceeding) against the Company that individually or in the
aggregate, with or without the passage of time, the giving of notice, or both,
has had or could reasonably be expected to have a Material Adverse Effect;
3.11.2. any resignation or termination of any director, officer or key employee
of the Company or any Subsidiary, and neither the Company nor any Subsidiary has
received notification of any impending resignation from any such Person;
3.11.3. any material change in the contingent obligations of the Company or any
Subsidiary by way of guaranty, endorsement, indemnity, warranty or otherwise;
3.11.4. any material damage, destruction or loss adversely affecting the assets,
properties, business, financial condition or prospects of the Company and its
Subsidiaries taken as a whole, whether or not covered by insurance;
 
3.11.5. any waiver by the Company or any Subsidiary of a valuable right or of
any debt;
 
3.11.6. any development, event, change, condition or circumstance that
constitutes, whether with or without the passage o time or the giving of notice
or both, a default under any outstanding debt obligation of the Company or any
Subsidiary;
3.11.7. any change in any compensation arrangement or agreement with any
employee, consultant, officer, director or stockholder of the Company or any
Subsidiary that would increase the cost of any such agreement or arrangement to
the Company or any Subsidiary by more than $10,000 in each instance;
3.11.8. any labor organization activity of the employees of the Company or any
Subsidiary;
3.11.9. any declaration or payment of any dividend or other distribution of the
assets of the Company or any Subsidiary;
3.11.10. any change in the accounting methods or practices followed by the
Company or any Subsidiary; or
3.11.11. any Contract or commitment made by the Company or any Subsidiary to do
any of the foregoing.
3.12 Title to Properties and Assets; Liens, etc. Except where a violation of
this Section 3.12 could reasonably be expected to have a Material Adverse
Effect, the Company and each Subsidiary has good and marketable title to the
properties and assets it owns, and the Company and each Subsidiary has a valid
license in all properties and assets licensed by it, including the properties
and assets reflected as owned in the most recent balance sheet included in the
Financial Statements all as described in the SEC Reports, and has a valid
leasehold interest in its leasehold estates, in each case subject to no
Encumbrance, other than those resulting from Taxes which have not yet become
delinquent or those of the lessors of leased property or assets. All facilities,
machinery, equipment, fixtures, vehicles and other properties owned, leased or
used by the Company or any Subsidiary are in good operating condition and
repair, ordinary wear and tear excepted and are fit and usable for the purposes
for which they are being used. Each of the Company and its Subsidiaries is in
compliance with all terms of each lease to which it is a party or is otherwise
bound.

 
 
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3.13 Intellectual Property.
3.13.1. The Company or the applicable Subsidiary is the owner or licensee of all
Owned Intellectual Property and all Licensed Intellectual Property as described
in its SEC Reports (collectively, the “Intellectual Property”). Except as set
forth on Schedule 3.13.1 and identified as such, neither the Company nor any
Subsidiary has licensed any Intellectual Property to any Person. All of the
registrations and applications for registration of the Intellectual Property are
valid, subsisting and in full force and effect, and all actions and payments
necessary for the maintenance and continuation of such Intellectual Property
have been taken or paid on a timely basis. The Company and its Subsidiaries owns
or possesses sufficient legal rights to use all of the Intellectual Property and
the exclusive right to use all Owned Intellectual Property and all Licensed
Intellectual Property as being licensed to the Company and its Subsidiaries.
3.13.2. To the knowledge of the Company, the business as currently conducted and
as proposed to be conducted by the Company and its Subsidiaries has not and will
not constitute any infringement of the Intellectual Property rights of any other
Person which could reasonably be expected to have a Material Adverse Effect. To
the knowledge of the Company, the development of Product candidates and the use,
manufacture or sale of the Company’s Products based on the Intellectual Property
does not, and will not, infringe the Intellectual Property rights of any third
Person. To the knowledge of the Company, no employee or agents of the Company or
any Subsidiary have misappropriated the Intellectual Property rights of any
Person.
3.13.3. Except as set forth on Schedule 3.13.3 or in the SEC Reports, there are
no outstanding options or other rights to acquire any Intellectual Property. To
the knowledge of the Company, each licensor of the Licensed Intellectual
Property is the sole and exclusive owner of such Licensed Intellectual Property
and has the sole and exclusive right and authority to grant licenses to such
Licensed Intellectual Property.
3.13.4. Except as set forth on Schedule 3.13.4 or in the SEC Reports, neither
the Company nor any Subsidiary has received any written communications alleging
or suggesting that it has violated or, by conducting its business as currently
conducted or proposed to be conducted, would infringe or misappropriate any of
the Intellectual Property rights of any other Person.
3.13.5. It is not necessary to the business of the Company or any Subsidiary, as
currently conducted or as proposed to be conducted, to utilize any inventions,
trade secrets or proprietary information of any of its employees, agents,
developers, consultants or contractors made prior to their employment by or
service to such entity, except for inventions, trade secrets or proprietary
information that have been assigned or licensed to the Company or any
Subsidiary.
 
3.13.6. Except as disclosed in the SEC Reports, since the date of the Company’s
incorporation, there has not been any sale, assignment or transfer of any
material Intellectual Property or other material intangible assets of the
Company by the Company or any Subsidiary.
3.13.7. To the knowledge of the Company, no Intellectual Property is subject to
any interference, reissue, reexamination, opposition or cancellation proceeding
or any other Legal Proceeding or subject to or otherwise bound by any
outstanding Order or Contract (other than in the case of any Licensed
Intellectual Property, the Contract pursuant to which the Company licenses the
rights to such Licensed Intellectual Property) that restricts in any manner the
use, transfer or licensing thereof by the Company or any Subsidiary or may
affect the validity, use or enforceability of such Intellectual Property.
Neither the Company nor any Subsidiary has any knowledge of any fact or
circumstance that would render any portion of the Intellectual Property invalid
or unenforceable.
 
 
 
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3.13.8. Except where the failure to comply with this Section 3.13.8 could not be
reasonably expected to have a Material Adverse Effect, each current and former
officer, employee, agent, developer, consultant and contractor who (a) has had
or has access to any confidentiality of the trade secrets of the Intellectual
Property; and (b) contributed to or participated in the creation and/or
development of the Intellectual Property either: (i) is a party to a “work made
for hire” agreement under which the Company or any Subsidiary is deemed to be
the original owner/author of all right, title and interest in the Intellectual
Property created or developed by such Person; or (ii) has executed an assignment
or an agreement to assign in favor of the Company or any Subsidiary of all such
Person’s right, title and interest in the Intellectual Property.
 
3.13.9. The execution and delivery of this Agreement and the other Transaction
Documents and consummation of the transactions contemplated hereby and thereby
will not result in the breach of, or create on behalf of any third party the
right to terminate or modify, any license, sublicense, agreement or permission:
(a) relating to or affecting any Intellectual Property; or (b) pursuant to which
the Company or any Subsidiary is granted a license or otherwise authorized to
use any third party Intellectual Property.
 
3.13.10. Except as set forth in the SEC Reports or on Schedule 3.13.10, to the
knowledge of the Company, no Person is infringing, violating, misappropriating
or making unauthorized use of any of the Intellectual Property. Neither the
Company nor any Subsidiary have enforced and taken such commercially reasonable
steps as are necessary to protect and preserve all rights in the Intellectual
Property against the infringement, violation, misappropriation and unauthorized
use thereof by any Person. Each of the Company or the Subsidiary has the right
to: (a) bring actions for past, present and future infringement, dilution,
misappropriation or unauthorized use of any Intellectual Property owned or
licensed by such entity, injury to goodwill associated with the use of any such
Intellectual Property, unfair competition or trade practices violations of and
other violation of such Intellectual Property; and (b) with respect to the
Intellectual Property owned exclusively by the Company or any Subsidiary,
receive all proceeds from the foregoing set forth in subsection (a) hereof,
including, without limitation, licenses, royalties income, payments, claims,
damages and proceeds of suit.
3.14 Compliance with Other Instruments. Except as set forth in the SEC Reports
or on Schedule 3.14, 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 could not have or
reasonably be expected to result in a Material Adverse Effect.
3.15 Litigation. Except as set forth in the SEC Reports or on Schedule 3.15,
there is no Legal Proceeding pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary or any investigation of the
Company or any Subsidiary, nor is the Company aware of any fact that would make
any of the foregoing reasonably likely to arise. Neither the Company nor any
Subsidiary is a party or subject to the provisions of any Order. Except as set
forth in the SEC Reports or on Schedule 3.15, there is no Legal Proceeding by
the Company or any Subsidiary currently pending or that the Company or any
Subsidiary intends to initiate. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Order 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 any current or former director or officer of
the Company.

 
 
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3.16 Tax Returns and Payments.
3.16.1. Except as set forth in the SEC Reports or on Schedule 3.16.1, the
Company and each Subsidiary has filed all Tax Returns required to be filed by
it, and each such entity has timely paid all Taxes owed (whether or not shown on
any Tax Return). All such Tax Returns were complete and correct, and such Tax
Returns correctly reflected the facts regarding the income, business, assets,
operations, activities, status and other matters of such entity and any other
information required to be shown thereon. The Company and each Subsidiary has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any Employee, creditor, independent
contractor, shareholder, member or other third party. The Company and each
Subsidiary has established adequate reserves for all Taxes accrued but not yet
payable. No deficiency assessment with respect to or proposed adjustment of the
Company and/or any Subsidiaries Taxes is pending or, to the knowledge of the
Company, threatened. There is no tax lien (other than for current Taxes not yet
due and payable), imposed by any taxing authority, outstanding against the
assets, properties or the business of the Company or any Subsidiary.
3.16.2. Neither the Company nor any Subsidiary has agreed to make any adjustment
under Section 481(a) of the Internal Revenue Code of 1986, as amended (the
“Code”) (or any corresponding provision of state, local or foreign tax law) by
reason of a change in accounting method or otherwise, and neither the Company
nor any Subsidiary will be required to make any such adjustment as a result of
the transactions contemplated by this Agreement. Neither the Company nor any
Subsidiary has been or is a party to any tax sharing or similar agreement.
Neither the Company nor any Subsidiary is or has ever been a party to any joint
venture, partnership, limited liability company, or other arrangement or
Contract which could be treated as a partnership for federal income tax
purposes. Neither the Company nor any Subidiary is or has ever been a “United
States real property holding corporation” as that term is defined in Section 897
of the Code.
3.17 Employees.
3.17.1. (a) Neither the Company nor any Subsidiary has, or has ever had any,
collective bargaining agreements with any of its employees; (b) there is no
labor union organizing activity pending or, to the knowledge of the Company,
threatened with respect to the Company or any Subsidiary; (c) no employee has or
is subject to any agreement or Contract to which the Company or any Subsidiary
is a party (including, without limitation, licenses, covenants or commitments of
any nature) regarding his or her employment or engagement; (d) to the best of
the Company’s knowledge, no employee is subject to any Order that would
interfere with his or her duties to the Company or any Subsidiary or that would
conflict with the businesses the Company or any Subsidiary as currently
conducted and as proposed to be conducted; (e) no employee is in violation of
any term of any employment contract, proprietary information agreement or any
other agreement relating to the right of any such Person to be employed by, or
to contract with, the Company or any Subsidiary; (f) to the best of the
Company’s knowledge, the continued employment by the Company or any Subsidiary
of its present employees, and the performance of their respective duties to such
entity, will not result in any violation of any term of any employment contract,
proprietary information agreement or any other agreement relating to the right
of any such individual to be employed by, or to contract with, the Company or
any Subsidiary, and neither the Company nor any Subsidiary has received any
written notice alleging that such violation has occurred; (g) no Employee or
consultant has been granted the right to continued employment by or service to
the Company or any Subsidiary or to any compensation following termination of
employment with or service to the Company or any Subsidiary; and (h) neither the
Company nor any Subsidiary has any present intention to terminate the employment
or engagement or service of any officer or any significant employee or
consultant
3.17.2. Except as set forth in the SEC Reports or on Schedule 3.17.1, there are
no outstanding or, to the knowledge of the Company, threatened claims against
the Company or any Subsidiary or any Affiliate (whether under federal or state
law, under any employment agreement, or otherwise) asserted by any present or
former employee or consultant of the Company or any Subsidiary. Neither the
Company nor any Subsidiary is in violation of any law or Requirement of Law
concerning immigration or the employment of persons other than U.S. citizens.

 
 
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3.18 Pension and Other Employee Benefit Plans.
3.18.1. There are set forth or identified in the SEC Reports or in Schedule
3.18.1 all of the plans, funds, policies, programs and arrangements sponsored or
maintained by the Company or any Subsidiary on behalf of any employee or former
employee of the Company or any Subsidiary (or any dependent or beneficiary of
any such Employee or former employee) with respect to (a) deferred compensation
or retirement benefits; (b) severance or separation from service benefits (other
than those required by law); (c) incentive, performance, stock, share
appreciation or bonus awards; (d) health care benefits; (e) disability income or
wage continuation benefits; (f) supplemental unemployment benefits; (g) life
insurance, death or survivor’s benefits; (h) accrued sick pay or vacation pay;
or (i) any other material benefit offered under any arrangement constituting an
“employee benefit plan” within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) and not excepted by
Section 4 of ERISA (the foregoing being collectively called “Employee Benefit
Plans”). Schedule 3.18.1 sets forth all such Employee Benefit Plans subject to
the provisions of Section 412 of the Code as well as any “multi-employer plans”
within the meaning of Section 3(37) of ERISA or Section 4001(a)(3) of ERISA.
Except as set forth on Schedule 3.18.1, the transactions contemplated by this
Agreement will not result in any payment or series of payments by the
Purchasers, the Company or any Subsidiary of an “excess parachute payment”
within the meaning of Section 280G of the Code or any other severance, bonus or
other payment on account of such transactions. Except as set forth on Schedule
3.18.1, none of the Employee Benefit Plans is under investigation or audit by
the United States Department of Labor, the Internal Revenue Service or any other
Governmental or Regulatory Authority.
3.18.2. Except as set forth in the SEC Reports or on Schedule 3.18.2, (a) the
Company and each Subsidiary has complied with its obligations under all
applicable Requirements of Law including, without limitation, of ERISA and the
Code with respect to such Employee Benefit Plans and all other arrangements that
provide compensation or benefits to any Employee and the terms thereof, whether
or not such person is directly employed by the Company or any Subsidiary and (b)
there are no pending or, to the knowledge of the Company, threatened actions or
claims for benefits by any Employee, other than routine claims for benefits in
the ordinary course of business. No Employee Benefit Plan provides any benefits
to any former employees.
3.18.3. All Employee Benefit Plans that are intended to meet the requirements of
Section 401(a) of the Code have been determined by the Internal Revenue Service
to meet such requirements and have at all times operated in compliance with such
requirements.
3.18.4. All employment Taxes, premiums for employee benefits provided through
insurance, contributions to Employee Benefit Plans, and all other compensation
and benefits to which employees are entitled, have been timely paid or provided
as applicable, and there is no liability for any such payments, contributions or
premiums.
 
3.19 Real Property. Neither the Company nor any Subsidiary has any interest in
any real estate, except that the Company and its Subsidiaries lease the
properties described in the SEC Reports or on Schedule 3.19 (the “Leased Real
Property”). The Leased Real Property is adequate for the operations of each of
the Company and its Subsidiaries’ businesses as currently conducted and as
contemplated to be conducted. True and complete copies of the lease agreements
(the “Real Property Leases”) pertaining to the Leased Real Property have been
delivered or made available to the Placement Agent. Except as set forth in the
SEC Reports or Schedule 3.19, the Company and each Subsidiary has paid all
amounts due from it, and is not in default under any of the Real Property Leases
and there exists no condition or event, which, with the passage of time, giving
of notice or both, would reasonably be expected to give rise to a default under
or breach of the Real Property Leases.
 
 
 
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3.20 Permits; Regulatory.
3.20.1 No Regulatory Approval or Consent of, or any designation, declaration or
filing with, any Governmental or Regulatory Authority or any other Person is
required in connection with the valid execution, delivery and performance of
this Agreement and the other Transaction Documents (including, without
limitation, the issuance of the Units), except such Regulatory Approvals,
Consents, designations, declarations or filings that have been duly and validly
obtained or filed, or with respect to any filings that must be made after the
Initial Closing or the Subsequent Closing as will be filed in a timely manner.
The Company and each Subsidiary has all franchises, Permits, licenses and any
similar authority necessary for the conduct of its business as now being
conducted, including, without limitation, the Food and Drug Administration
(“FDA”) of the U.S. Department of Health and Human Services all as described in
the SEC Reports. 
3.20.2 To the best of the Company’s knowledge, all manufacturing and production
operations conducted by the Company or (or by third parties on behalf of the
Company and its Subsidiaries including, without limitation, any manufacturing or
production being done by any third party in connection with any feasibility,
preclinical, clinical or other study, test or trial for or on behalf of the
Company or any Subsidiary or any such study, test or trial that is being
sponsored by the Company or any Subsidiary or in which the Company or any
Subsidiary or any of the Company and its Subsidiaries’ Products is
participating), if any, relating to the manufacture or production of the
Products are being conducted in compliance with all applicable Requirements of
Law including to the extent mandated by relevant regulatory agencies, without
limitation, current Good Manufacturing Practices or similar foreign
requirements.
3.20.3 Neither the Company nor any Subsidiary or, to the knowledge of the
Company, any other Person has received (a) any reports of inspection
observations, (b) any establishment inspection reports or (c) any warning
letters or any other documents from the FDA or any other Governmental or
Regulatory Authority relating to the Products and/or arising out of the conduct
of any Subsidiary or any Person which has conducted or is conducting any
feasibility, preclinical, clinical or other study, test or trial for or on
behalf of the Company or any Subsidiary or any such study, test or trial that is
being sponsored by the Company or any Subsidiary or in which any of the
Company’s or any Subsidiary’s Products is participating that assert a material
violation or material non-compliance with any applicable Requirements of Law
(including, without limitation, those of the FDA).
3.21 Environmental and Safety Laws. Neither the Company nor any Subsidiary has
caused or allowed, or contracted with any party for, the generation, use,
transportation, treatment, storage or disposal of any Hazardous Substances in
connection with the operation of its business or otherwise, except in compliance
with all applicable Environmental Laws. To the best of the Company’s knowledge,
the Company and each Subsidiary and the operation of their respective businesses
are in compliance with all applicable Environmental Laws. To the best of the
Company’s knowledge, all of the Leased Real Property and all other real property
which the Company or any Subsidiary occupy (the “Premises”) is in compliance
with all applicable Environmental Laws and Orders or directives of any
Governmental or Regulatory Authority having jurisdiction under such
Environmental Laws, including, without limitation, any Environmental Laws or
Orders or directives with respect to any cleanup or remediation of any release
or threat of release of Hazardous Substances. Each of the Company and its
Subsidiaries and the operation of their respective businesses are and have been
in compliance with all applicable Environmental Laws. To the knowledge of the
Company, there have occurred no and there are no events, conditions,
circumstances, activities, practices, incidents, or actions that may give rise
to any common law or statutory liability, or otherwise form the basis of any
Legal Proceeding, any Order, any remedial or responsive action, or any
investigation or study involving or relating to the Company or any Subsidiary,
based upon or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling, or the emission, discharge,
release or threatened release into the environment, of any pollutants,
contaminants, chemicals, or industrial, toxic or Hazardous Substance. To the
knowledge of the Company, (a) there is no asbestos contained in or forming a
part of any building, structure or improvement comprising a part of any of the
Leased Real Property, (b) there are no polychlorinated byphenyls (PCBs) present,
in use or stored on any of the Leased Real Property, and (c) no radon gas or the
presence of radioactive decay products of radon are present on, or underground
at any of the Leased Real Property at levels beyond the minimum safe levels for
such gas or products prescribed by applicable Environmental Laws. Each of the
Company and its Subsidiaries has obtained and is maintaining in full force and
effect all necessary Permits, licenses and approvals required by all
Environmental Laws applicable to the Premises and the business operations
conducted thereon, and is in compliance with all such Permits, licenses and
approvals. Neither the Company nor any Subsidiary has caused or allowed a
release, or a threat of release, of any Hazardous Substance onto, at or near the
Premises, and, to the knowledge of the Company, neither the Premises nor any
property at or near the Premises has ever been subject to a release, or a threat
of release, of any Hazardous Substance.

 
 
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3.22 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, except where the failure to possess such permits could
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
all as described in the SEC Reports.
3.23 Offering Valid. Assuming the accuracy of the representations and warranties
of the Purchasers contained in the subscription agreements entered into by each
Purchaser in connection with this Agreement, the offer, sale and issuance of the
Units will be exempt from the registration requirements of the Securities Act of
1933, as amended (the “Securities Act”), and will be exempt from registration
and qualification under applicable state securities laws.
3.24 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 any of
the Purchasers or their agents or counsel with any information that it believes
constitutes or might constitute material, non-public information. The Company
understands and confirms that the Purchasers 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 Purchasers
regarding the Company and its Subsidiaries, their respective businesses and the
transactions contemplated hereby, is, as of each Closing Date, true and correct
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 press
releases disseminated by the Company during the twelve months preceding the date
of this Agreement taken as a whole do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made and when 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.
3.25 Minute Books. A copy of all minutes of all meetings of directors and
stockholders and all actions by written consent without a meeting by the
directors and stockholders sinceJanuary 1, 2015, has been made available to the
Placement Agent in a virtual data room and accurately reflect all actions taken
by the directors (and any committee of the directors) and stockholders with
respect to all transactions referred to in such minutes.
3.26 Insurance. Schedule 3.28 sets forth a list of all policies or binders of
fire, casualty, liability, product liability, worker’s compensation, vehicular
or other insurance held by the Company and its Subsidiaries concerning its
assets and/or its businesses (specifying for each such insurance policy the
insurer, the policy number or covering note number with respect to binders, and
each pending claim thereunder of more than $5,000). Such policies and binders
are valid and in full force and effect. Neither the Company nor any Subsidiary
is in default with respect to any provision contained in any such policy or
binder or has failed to give any notice or present any claim of which it has
notice under any such policy or binder in a timely fashion. Neither the Company
nor any Subsidiary has received or given a notice of cancellation or non-renewal
with respect to any such policy or binder. None of the applications for such
policies or binders contain any material inaccuracy, and all premiums for such
policies and binders have been paid when due. Neither the Company nor any
Subsidiary has knowledge of any state of facts or the occurrence of any event
that could reasonably be expected to form the basis for any claim against it not
fully covered by the policies referred to on Schedule 3.28. No Subsidiary has
received written notice from any of their respective insurance carriers that any
insurance premiums will be materially increased after the applicable Closing
Date or that any insurance coverage listed on Schedule 3.28 will not be
available after such Closing Date on substantially the same terms as now in
effect.
3.27 Investment Company Act. Neither the Company nor any Subsidiary is an
“investment company”, or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended.
 
 
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3.28 Foreign Payments; Undisclosed Contract Terms.
3.28.1. To the knowledge of the Company, neither the Company nor any Subsidiary
has made any offer, payment, promise to pay or authorization for the payment of
money or an offer, gift, promise to give, or authorization for the giving of
anything of value to any Person in violation of the Foreign Corrupt Practices
Act of 1977, as amended and the rules and regulations promulgated thereunder.
3.28.2. To the knowledge of the Company, there are no understandings,
arrangements, agreements, provisions, conditions or terms relating to, and there
have been no payments made to any Person in connection with any agreement,
Contract, commitment, lease or other contractual undertaking of the Company or
any Subsidiary which are not expressly set forth in such contractual
undertaking.
3.29 No Broker. Other than commissions (including fees, expenses and warrants)
payable to the Placement Agent as described herein, neither the Company nor any
Subsidiary has employed any broker or finder, or incurred any liability for any
brokerage or finder’s fees in connection with the sale of the Units, or the
Common Stock and Warrants underlying the Units pursuant to this Agreement or the
other Transaction Documents.
3.30 Compliance with Laws. Neither the Company nor any Subsidiary is in
violation of, or in default under, any Requirement of Law applicable to such
Subsidiary, or any Order issued or pending against such Subsidiary or by which
the Company’s or such Subsidiary’s properties are bound, except for such
violations or defaults that have not had, and could not reasonably be expected
to have, a Material Adverse Effect.
3.31 No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 4, neither the Company, nor
any of its affiliates, nor any Person acting on its or 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 any of the shares of Common Stock, Warrants, Warrant Shares,
Preferred Stock and Conversion Shares (collectively, the “Securities”) 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.
3.32 Application of Takeover Protections. The Company and the Board of Directors
have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to
the Purchasers as a result of the Purchasers and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation as a result of the Company’s issuance of the
Securities and the Purchasers’ ownership of the Securities.
3.33 No General Solicitation. Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Securities by any form of
general solicitation or general advertising. The Company has offered the
Securities for sale only to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.
3.34 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 the Foreign Corrupt Practices Act of 1977, as amended.
 
 
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3.35 Stock Option Plans. Except as set forth in the SEC Reports or on Schedule
3.37, each stock option or stock issuance granted by the Company under the
Company’s stock incentive plan was granted (i) in accordance with the terms of
the Company’s stock incentive plan and (ii) such options had an exercise price
at least equal to the fair market value of the Common Stock on the date such
stock option would be considered granted under GAAP and applicable law. No stock
option granted under the Company’s stock option plan has been backdated. The
Company has not knowingly granted, and there is no and has been no Company
policy or practice to knowingly grant, stock options prior to, or otherwise
knowingly coordinate the grant of stock options with, the release or other
public announcement of material information regarding the Company or its
Subsidiaries or their financial results or prospects.
3.36 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”).
3.37 U.S. Real Property Holding Corporation. The Company is not and has never
been a U.S. real property holding corporation within the meaning of Section 897
of the Internal Revenue Code of 1986, as amended, and the Company shall so
certify upon Purchaser’s request.
3.38 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.
3.39 Bad Actor Disqualification
(a) No Disqualification Events. With respect to Securities to be offered and
sold hereunder in reliance on Rule 506 under the Securities Act ("Regulation D
Securities"), none of the Company, any of its predecessors, any affiliated
issuer, any director, executive officer, other officer of the Company
participating in the offering, any beneficial owner of 20% or more of the
Company's outstanding voting equity securities, calculated on the basis of
voting power, nor any promoter (as that term is defined in Rule 405 under the
Securities Act) connected with the Company in any capacity at the time of sale
(each, an "Issuer Covered Person" and, together, "Issuer Covered Persons") is
subject to any of the "Bad Actor" disqualifications described in Rule
506(d)(1)(i) to (viii) under the Securities Act (a "Disqualification Event"),
except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The
Company has exercised reasonable care to determine whether any Issuer Covered
Person is subject to a Disqualification Event. The Company has complied, to the
extent applicable, with its disclosure obligations under Rule 506(e), and has
furnished to the Placement Agent and the Subscriber a copy of any disclosures
provided thereunder.
(b) Other Covered Persons. The Company is not aware of any person that (i) has
been or will be paid (directly or indirectly) remuneration for solicitation of
purchasers in connection with the sale of the Securities and (ii) who is subject
to a Disqualification Event.
(c) Notice of Disqualification Events. The Company will notify the Placement
Agent in writing of (i) any Disqualification Event relating to any Issuer
Covered Person and (ii) any event that would, with the passage of time, become a
Disqualification Event relating to any Issuer Covered Person, prior to any
Closing of this Offering.
3.40 [RESERVED].
 
 
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3.41 Transactions with Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge
of the Company, none of the employees of the Company 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, 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 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 option plan of the Company.
3.42 Sarbanes-Oxley; Internal Accounting Controls. The Company is in material
compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are
applicable to it as of the Closing Date. Except as disclosed in the SEC Reports,
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. Except as disclosed in the SEC
Reports, the Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the Commission’s rules and forms. The Company’s
certifying officers have evaluated the effectiveness of the Company’s disclosure
controls and procedures as of the end of the period covered by the Company’s
most recently filed periodic report under the Exchange Act (such date, the
“Evaluation Date”). The Company presented in its most recently filed periodic
report under the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no changes in the Company’s internal control over financial reporting (as
such term is defined in the Exchange Act) that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
3.43 Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the SEC is contemplating
terminating such registration. Except as set forth in Schedule 3.43, 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. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.
3.44 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 of the Company, 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), compensation paid to the Company’s placement agent in connection with the
placement of the Securities.
3.45 DTC Status. The Company’s transfer agent, Interwest Transfer Company, Inc.,
(the “Transfer Agent”) is a member participant of the Depository Trust Company
Automated Securities Transfer Program. The Company's Common Stock is currently
eligible for transfer pursuant to the Depository Trust Company Automated
Securities Transfer Program. As of the date of the Agreement, the Company’s
securities are currently trading on NASDAQ under the symbols “MDVX” and “MDVXW”.
 
 
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3.46 OFAC. Neither the Company nor any Subsidiary or, to the Company’s
knowledge, any director, officer, agent, employee, Affiliate or person acting on
behalf of any Subsidiary, is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”); and the Company will not directly or indirectly use the
proceeds of the sale of the Units, or lend, contribute or otherwise make
available such proceeds to any joint venture partner or other person or entity,
towards any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any
other country sanctioned by OFAC or for the purpose of financing the activities
of any person currently subject to any U.S. sanctions.
3.47 Registration Rights. Except as set forth on Schedule 3.47 and in the SEC
Reports and as required pursuant to the Registration Rights Agreement, neither
the Company nor any Subsidiary is under any obligation, or has granted any
rights that have not been terminated, to register any of such Subsidiary’s
currently outstanding securities or any of its securities that may hereafter be
issued.
3.48 Material Non-Public Information. Except with respect to the transactions
contemplated hereby that will be publicly disclosed, neither the Company nor any
Subsidiary has provided any Purchaser with any information that such Subsidiary
believes constitutes material non-public information.
3.49 Right to Receive Additional Shares. Except as set forth on Schedule 3.49
and in the SEC Reports or in connection with the Units issued in this Offering,
no existing shareholder of the Company has any right to cause the Company to
issue additional shares of Common Stock (the “Existing Right Issuances”) to such
shareholder.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each of the Purchasers hereby severally, and not jointly, represents and
warrants to the Company that each such Purchaser’s representations and
warranties in such Purchaser’s subscription agreement (each a “Subscription
Agreement” and collectively, the “Subscription Agreements”) entered into in
connection with this Agreement, in form and substance substantially the same as
the form of Subscription Agreement in Exhibit C are true and correct as of their
respective Closing, and such representations and warranties are deemed repeated
as if contained herein.
5. CONDITIONS TO THE CLOSING.
5.1 Conditions to Purchasers’ Obligations at the Closings. The obligations of
the Purchasers to consummate the transactions contemplated herein to be
consummated at the Initial Closing and of each Subsequent Closing, as the case
may be, are subject to the satisfaction, on or prior to the date of such
Closing, of the conditions set forth below and applicable thereto, which
satisfaction shall be determined, or may be waived in writing, the Purchasers or
Subsequent Closing Purchasers, as the case may be, who have subscribed for at
least a majority of the Units to be purchased at such Closing.
5.1.1. Representations and Warranties; Performance of Obligations. Each of the
representations and warranties of the Company contained herein shall be true and
correct on and as of the Initial Closing Date. As of the Initial Closing, the
Company shall have performed and complied with the covenants and provisions of
this Agreement required to be performed or complied with by it at or prior to
the Initial Closing Date. As to the Subsequent Closings, each of the
representations and warranties of the Company contained herein shall be true and
correct on and as of the Subsequent Closing Date, as qualified by any updated
Schedules delivered at least five (5) days in advance of the Subsequent Closing
to the Subsequent Closing Purchasers participating in the Subsequent Closing. As
to the Subsequent Closings, the Company shall have performed and complied with
the covenants and provisions of this Agreement and the other Transaction
Documents required to be performed or complied with by it at or prior to the
Subsequent Closing Date. At each Closing, the Purchasers participating in such
Closing shall have received certificates of the Company dated as of the date of
such Closing, signed by the president or chief executive officer of the Company,
certifying as to the fulfillment of the conditions set forth in this Section 5.1
and the truth and accuracy of the representations and warranties of the Company
contained herein (as qualified by the most recently delivered Schedules) as of
the Initial Closing Date and, as to each Subsequent Closing, the Subsequent
Closing Date.
 
 
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5.1.2. Issuance in Compliance with Laws. The sale and issuance of the Units
shall be legally permitted by all laws and regulations to which any of the
Purchasers and the Company are subject.
5.1.3. Filings, Consents, Permits, and Waivers. The Company and the Purchasers
shall have made all filings and obtained any and all Consents, Permits, waivers,
and Regulatory Approvals necessary for consummation of the transactions
contemplated by the Agreement and the other Transaction Documents, except for
such filings as are not due to be made until after the applicable Closing.
5.1.4. Reservation of the Common Stock, Warrant Shares and Conversion Shares.
From and after the Initial Closing and any Subsequent Closing, the Common Stock,
Warrant Shares and Conversion Shares, which were the subject of such Closing
shall have been duly authorized and reserved for issuance by the Board of
Directors.
5.1.5. Conversion Procedures. Each of the form of Notice of Conversion included
in the Series A Certificate of Designation set forth the totality of the
procedures required of the Subscribers in order to convert the Preferred Stock.
No legal opinion, other information or instructions shall be required of the
Subscribers to convert their Preferred Stock (other than customary 144
representation letters if such Preferred Stock are to be sold in reliance upon
the exemption provided by to Rule 144). The Company shall honor conversions of
the Preferred Stock and shall deliver the Conversion Shares in accordance with
the terms, conditions and time periods set forth in the Series A Certificate of
Designation.
5.1.6. Registration Rights Agreement. Concurrently with the issuance of the
Units occurring at the Initial Closing, the Registration Rights Agreement,
substantially in the form attached hereto as Exhibit F (the “Registration Rights
Agreement”), shall have been executed and delivered by the Company and each
Purchaser.
5.1.7. Lock-Up Agreements. Each of (a) the officers and directors of the
Company, (b) any stockholder of the Company owning 7.5% or more (giving effect
to the conversion or exercise of all convertible securities held by each such
stockholder) of the issued and outstanding Common Stock as of the date of such
Closing (but not including any Purchaser of Units), (c) any other controlling
persons, (d) the Placement Agent, and (e) each Purchaser of Units in the
Offering, shall have executed a form of lock-up agreement reasonably
satisfactory to the Placement Agent and the Company whereby each such Person
agrees not sell or otherwise transfer any shares of the Company owned by such
Person until the date that is ninety (90) days following the effective date of
the Registration Statement (as defined in the Registration Rights Agreement).
5.1.8. Legal Opinion. At each Closing, the Placement Agent and the Purchasers or
the Subsequent Closing Purchasers, as the case may be, shall have received a
legal opinion addressed to each of them, dated as of such Closing Date,
substantially in the form attached hereto as Exhibit E from Sichenzia Ross
Ference Kesner LLP.
5.1.9. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closings and all documents
and instruments incident to such transactions shall be reasonably satisfactory
in substance and form to the Purchasers or the Subsequent Closing Purchasers, as
the case may be, and their counsel, and the Purchasers or the Subsequent Closing
Purchasers, as the case may be, and their counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
5.1.10. Proceedings and Litigation. No action, suit or proceeding shall have
been commenced by any Person against any party hereto seeking to restrain or
delay the purchase and sale of the Units or the other transactions contemplated
by this Agreement or any of the other Transaction Documents.

 
 
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5.1.11. No Material Adverse Effect. Since the date hereof, there shall not have
occurred any effect, event, condition or circumstance (including, without
limitation, the initiation of any litigation or other legal, regulatory or
investigative proceeding) that individually or in the aggregate, with or without
the passage of time, the giving of notice, or both, that has had, or could
reasonably be expected to have, a Material Adverse Effect or which could
adversely affect the Company’s ability to perform its respective obligations
under this Agreement or any of the other Transaction Documents.
5.1.12. Updated Disclosures. As to the Subsequent Closings, the Company must
have delivered to the Purchasers an updated set of schedules in accordance with
Section 5.1.1 and such updated schedules do not reveal any information or the
occurrence, since the Initial Closing Date, of any effect, event, condition or
circumstance, which individually, or in the aggregate, has had or could
reasonably be expected to have, a Material Adverse Effect and do not include any
state of facts that occur as a result of the breach by the Company of any of its
obligations under this Agreement or any of the other Transaction Documents.
5.1.13. Payment of Purchase Price. As to the Initial Closing, each Purchaser
shall have delivered to the Company the total purchase price to be paid for such
Purchaser’s Initial Units, in the amount set forth opposite such Purchaser’s
name on Exhibit A, which shall be no less than $100,000 in aggregate gross
proceeds. As to each Subsequent Closing, each Subsequent Closing Purchaser shall
have delivered to the Company the total purchase price to be paid for such
Subsequent Closing Purchaser’s Subsequent Units.
5.1.14. Delivery of Documents at the Initial Closing. The Company shall have
executed and delivered the following documents, on or prior to the Initial
Closing Date:
(a) Certificates. Certificates representing the Common Stock or Preferred Stock
to be purchased and sold on the Initial Closing Date;
(b) Warrants: An executed Warrant, in substantially the form of Exhibit B for
the Warrants to be issued on the Initial Closing Date;
(c) Legal Opinion. The legal opinion required by Section 5.1.6 hereof;
(d) Secretary’s Certificate. A certificate of the Secretary of the Company
(i)attaching and certifying as to the Company’s Certificate of Incorporation
(the “Certificate”), (ii) attaching and certifying as to the Bylaws of the
Company in effect at the Initial Closing, (iii) attaching and certifying as to
copies of resolutions by the Board of Directors of the Company authorizing and
approving this Agreement and the other Transaction Documents and the
transactions contemplated hereby (collectively, the “Minutes”); and (iv)
certifying as to the incumbency of the officers of the Company executing this
Agreement and the other Transaction Documents.
5.1.15. Delivery of Documents at the Subsequent Closing. At any Subsequent
Closing, the Company shall deliver, or shall cause to be delivered to the
Subsequent Closing Purchasers the following documents, to be held in escrow
pending the completion of such Subsequent Closing:
(a) Certificates. Certificates representing the Common Stock to be purchased and
sold on the Subsequent Closing Date bearing the legends required to be placed on
such certificates pursuant to the Transaction Documents;
(b) Warrants: An executed Warrant, in substantially the form of Exhibit B for
the Warrants to be issued on the Subsequent Closing Date;
(c) Compliance Certificate. The certificate required by Section 5.1.15(e) hereof
certifying that all representations and warranties made by the Company as of the
Subsequent Closing Date are true, complete and correct as of the Subsequent
Closing Date, as qualified by the updated Schedules delivered pursuant to
Section 5.1.1 and that all covenants in this Agreement and the other Transaction
Documents required to be performed by the Company prior to the Subsequent
Closing Date have been so performed;
 
 
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(d) Legal Opinion. A bringdown of the legal opinion required by Section 5.1.6
hereof; and
(e) Secretary’s Certificate. A Certificate of the Secretary of the Company (i)
certifying that the resolutions by the Board of Directors of the Company
authorizing and approving this Agreement and the other Transaction Documents
delivered at the Initial Closing have not been modified in any way or rescinded
and are otherwise in effect as of the Subsequent Closing, (ii) certifying as to
the incumbency of the officers of the Company executing any documents
contemplated by this Agreement to be executed and delivered by the Company at
the Subsequent Closing, and (iii) attaching and certifying as to (iii) the
Certificate as in effect at the Subsequent Closing, and (iv) the Bylaws of the
Company in effect at the Subsequent Closing.
5.2 Conditions to Obligations of the Company at the Closings. The obligation of
the Company to consummate the transactions contemplated herein to be consummated
at the Initial Closing or the Subsequent Closing, as the case may be, is subject
to the satisfaction, on or prior to the date of such Closing of the conditions
set forth below and applicable thereto, any of which may be waived in writing by
the Company:
5.2.1. Representations and Warranties; Performance of Obligations. Each of the
representations and warranties of the Purchasers contained herein shall be true
and correct on and as of the Initial Closing Date. As of the Initial Closing
Date, the Purchasers shall have performed and complied with the covenants and
provisions of this Agreement required to be performed or complied with by them
at or prior to the Initial Closing Date. As to the Subsequent Closing, each of
the representations and warranties of the Purchaser(s) contained herein shall be
true and correct on and as of the Subsequent Closing Date. As to the Subsequent
Closing, the Subsequent Closing Purchaser(s) shall have performed and complied
with the covenants and provisions of this Agreement required to be performed and
complied with by them at or prior to the Subsequent Closing Date.
5.2.2. Proceedings and Litigation. No action, suit or proceeding shall have been
commenced by any Governmental Authority against any party hereto seeking to
restrain or delay the purchase and sale of the Units or the other transactions
contemplated by this Agreement.
5.2.3. Qualifications. All Permits, if any, that are required in connection with
the lawful issuance and sale of the Units pursuant to this Agreement shall be
obtained and effective as of the Initial Closing or Subsequent Closing, as
applicable.
6. COVENANTS OF THE PARTIES.
6.1 Commercially Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, the parties to this Agreement shall use
their respective good faith commercially reasonable efforts to take, or cause to
be taken, without any party being obligated to incur any material internal costs
or make any payment or payments to any third party or parties which,
individually or in the aggregate, are material and are not otherwise legally
required to be made, all actions, and to do or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable for such party to consummate and make effective, in the most
expeditious manner practicable, each Closing and the other transactions
contemplated hereunder.
6.2 Post-Closing Filings. In connection with each Closing, the Company and the
Purchasers, if applicable, agree to file all required forms or filings under
applicable securities laws.
6.3 Transfer Restrictions.
6.3.1 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 promulgated
under the Securities Act, to the Company or to an Affiliate of a Purchaser, the
Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the Company,
the form and substance of which 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 transfer, any
such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement.
 
 
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6.3.2 The Purchaser agrees to the imprinting, so long as is required by this
Section 6.1, of a legend on any of the Securities, including the Warrant Shares
and the Conversion Shares, substantially in the following form:
[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
6.3.3 Certificates evidencing the shares of Common Stock and the Warrant Shares
and Conversion Shares shall be eligible for removal of the restrictive legend
set forth in Section 6.1.2 hereof, (a) following any sale of such shares of
Common Stock, Warrant Shares, or Conversion Shares pursuant to Rule 144, or (b)
if such shares of Common Stock, Warrant Shares, or Conversion Shares are
eligible for sale under Rule 144, without the requirement for the Company to be
in compliance with the current public information required under Rule 144 as to
such shares of Common Stock, Warrant Shares and Conversion Shares and without
volume or manner-of-sale restrictions, (c) following any sale of such shares of
Common Stock, Warrant Shares, or Conversion Shares, pursuant to the plan of
distribution in an effective registration statement (in compliance with any
prospectus delivery requirements), or (d) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission) (the
“Removal Date”).  The Company shall cause its counsel to issue a legal opinion
to the Transfer Agent promptly after the Removal Date if required by the
Transfer Agent to effect the removal of the legend hereunder as permitted by
applicable law then in effect. The Company agrees that following the Removal
Date, it will, no later than five (5) trading days following the delivery by a
Purchaser to the Company or the Transfer Agent of a certificate representing
shares of Common Stock, Warrant Shares, or Conversion Shares, as the case may
be, issued with a restrictive legend, together with any reasonable
certifications requested by the Company, the Company’s counsel or the Transfer
Agent (such fifth (5th) trading day, the “Legend Removal Date”), deliver or
cause to be delivered to such Purchaser a certificate representing such shares
that is free from all restrictive and other legends. The Company may not make
any notation on its records or give instructions to the Transfer Agent that
enlarge the restrictions on transfer set forth in this Section 6. Certificates
for shares of Common Stock, Warrant Shares, and Conversion Shares subject to
legend removal hereunder shall be transmitted by the Transfer Agent to the
Purchaser by crediting the account of the Purchaser’s prime broker with the
Depository Trust Company System as directed by such Purchaser if the Transfer
Agent is then a participant in such system and the Company is eligible to use
such system and as directed by such Purchaser if either (i) there is an
effective registration statement permitting the resale of such shares of Common
Stock, Warrant Shares or Conversion Shares by the Purchaser (and the Purchaser
provides the Company or the Company’s counsel with any requested certifications
with respect to future sales of such shares) or (ii) the shares are eligible for
resale by the Purchaser under Rule 144, without the requirement for the Company
to be in compliance with the current public information required under Rule 144
as to such shares of Common Stock, Warrant Shares and Conversion Shares and
without volume or manner-of-sale restrictions.
6.3.4 In addition to any other rights available to a Purchaser, if the Company
fails to deliver to a Purchaser unlegended Warrant Shares or Conversion Shares
as required pursuant to this Agreement and after the Legend Removal Date such
Purchaser, or a broker on such Purchaser’s behalf, purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by such Purchaser of the Warrant Shares or Conversion Shares that such
Purchaser was entitled to receive from the Company (a “Buy-In”), then the
Company shall promptly pay in cash to such Purchaser (in addition to any
remedies available to or elected by such Purchaser) the amount by which (a) such
Purchaser’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased exceeds (b) the aggregate purchase price
of
 
 
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the Warrant Shares or Conversion Shares delivered to the Company for reissuance
as unlegended shares (which amount shall be paid as liquidated damages and not
as a penalty). For example, if a Purchaser purchases shares of Common Stock
having a total purchase price of $11,000 to cover a Buy-In with respect to
Common Stock or Warrant Shares or Conversion Shares delivered to the Company for
reissuance as unlegended shares having an aggregate purchase price of $10,000,
the Company shall be required to pay the Purchaser $1,000, plus interest. The
Purchaser shall provide the Company written notice indicating the amounts
payable to the Purchaser in respect of the Buy-In. For purposes of this
Agreement, the “purchase price” of a (a) share of Common Stock shall be $___ per
share, and (b) Warrant Share shall be the Exercise Price (as defined in the
Warrants).
6.3.5 In addition to such Purchaser’s other available remedies, the Company
shall pay to such Purchaser, in cash, as partial liquidated damages and not as a
penalty, for each $1,000 of Warrant Shares or Conversion Shares (based on the
Exercise Price of such Warrant Shares or Conversion Shares, as the case may be)
delivered for removal of the restrictive legend, $10 per trading day (increasing
to $20 per trading day five (5) trading days after such damages have begun to
accrue)) for each trading day after the fifth (5th) trading day following the
Legend Removal Date until such certificate is delivered without a legend.
Nothing herein shall limit such Purchaser’s right to pursue actual damages for
the Company’s failure to deliver certificates representing any Securities as
required by the Transaction Documents, and such Purchaser shall have the right
to pursue all remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief.
6.4 Furnishing of Information; Public Information. For so long as any Purchaser
holds any Securities, or if earlier, for a period of twenty-four (24) months
following the Termination Date the Company covenants to file all annual and
quarterly periodic reports with the SEC pursuant to Section 15(d) of the
Exchange Act or alternatively, if registered under Section 12(b) or 12(g) of the
Exchange Act, 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 such annual and
quarterly reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. Unless the Securities owned by such Purchaser
shall have been registered for resale, if at any time during the period
commencing from the date that is 6 months after the date hereof and ending 24
months following the Termination Date the Company shall fail for any reason to
satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available
remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, by reason of any such delay in or reduction of its
ability to sell the Securities, an amount in cash equal to two percent (2.0%) of
the pro-rata portion of such Purchaser’s Purchase Price attributable to the
unsold Warrant Shares or Conversion Shares on the day of a Public Information
Failure and on every thirtieth (30th) day (prorated for periods totaling less
than thirty (30) days) thereafter until the earlier of (A) the date such Public
Information Failure is cured and (B) such time that such public information is
no longer required for the Purchasers to transfer their shares of Common Stock,
Warrant Shares and Conversion Shares pursuant to Rule 144. The payments to which
a Purchaser shall be entitled pursuant to this Section 6.2 are referred to
herein as “Public Information Failure Payments”. Public Information Failure
Payments shall be paid on the earlier of (Y) the last day of the calendar month
during which such Public Information Failure Payments are incurred, and (Z) the
third (3rd) business day after the event or failure giving rise to the Public
Information Failure Payments is cured. Nothing herein shall limit such
Purchaser’s right to pursue actual damages for the Public Information Failure,
and such Purchaser shall have the right to pursue all remedies available to it
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief. Notwithstanding anything herein to the
contrary, the maximum payment hereunder shall not exceed twelve (12%) percent of
such Purchaser’s Purchase Price. As long as any Purchaser owns Securities, if
the Company is not required to file reports pursuant to such laws, it will
prepare and furnish to the Purchasers and make publicly available in accordance
with Rule 144(c) such information as is required for the Purchasers to sell the
Securities under Rule 144. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, to the extent
required from time to time to enable such person to sell such Securities without
registration under the Securities Act within the requirements of the exemption
provided by Rule 144.
 
 
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6.2 Listing of Securities. The Company agrees, (i) if the Company applies to
have the Common Stock traded on any other trading market, it will include in
such application the Warrant Shares and Conversion Shares of each Purchaser, and
will take such other action as is necessary or desirable to cause such Common
Stock and any Warrant Shares and Conversion Shares to be listed on such other
trading market as promptly as possible, and (ii) it will take all action
reasonably necessary to continue the listing and trading of its Common Stock on
a Trading Market (as defined in the Warrant) and will comply in all material
respects with the Company’s reporting, filing and other obligations under the
bylaws or rules of any such Trading Market (as defined in the Warrant).
6.3 Reservation of Shares. From and after the Initial Closing and any Subsequent
Closing, the Company shall at all times thereafter while the Common Stock and
Warrants which were purchased and sold at such Closing are outstanding maintain
a reserve from its duly authorized shares of Common Stock of a number of shares
of Common Stock sufficient to allow for the issuance of Common Stock, Warrant
Shares and Conversion Shares, which were the subject of such Closing.
6.4 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 cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement securities. If a replacement
certificate or instrument evidencing any securities is requested due to a
mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
6.5 Securities Laws; Publicity. The Company shall by 8:30 a.m. (New York City
time) on the trading day immediately, following a Closing hereunder, file a
Current Report on Form 8-K disclosing the material terms of the transactions
contemplated hereby and including the Transaction Documents as exhibits thereto
to the extent required by law. The Company shall not publicly disclose the name
of Purchaser, or include the name of any Purchaser in any filing with the SEC or
any regulatory agency or trading market, without the prior written consent of
Purchaser, except: (a) as required by federal securities law in connection with
the filing of final Transaction Documents (including signature pages thereto)
with the SEC and (b) to the extent such disclosure is required by law, in which
case the Company shall provide the Purchaser with prior notice of such
disclosure permitted under this clause (b).
6.6 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D promulgated under the
Securities Act 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
Securities 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 any Purchaser.
6.7 Equal Treatment of Purchasers. No consideration (including any modification
of any Transaction Document) shall be offered or paid to any person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties to
the Transaction Documents.
6.8 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 Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands and
confirms that Purchaser shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.
 
 
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6.9 Use of Proceeds. The Company shall use the net proceeds from the sale of the
Securities hereunder for working capital purposes and shall not use the proceeds
for (a) 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) the redemption of any Common Stock or Common Stock
Equivalents or (c) the settlement of any outstanding litigation.
6.10 Commercially Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, the parties to this Agreement shall use
their respective good faith commercially reasonable efforts to take, or cause to
be taken, without any party being obligated to incur any material internal costs
or make any payment or payments to any third party or parties which,
individually or in the aggregate, are material and are not otherwise legally
required to be made, all actions, and to do or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable for such party to consummate and make effective, in the most
expeditious manner practicable, each Closing and the other transactions
contemplated hereunder.
7. INDEMNIFICATION AND EXPENSES.
 
7.1 The Company Indemnification. The Company shall indemnify and hold harmless
each Purchaser and any of such Purchaser’s affiliates and any Person which
controls, is controlled by, or under common control with (within the meaning of
the Securities Act) such Purchaser or any such Affiliate, and each of their
respective directors and officers, and the successors and assigns and executors
and estates of any of the foregoing (each, an “Indemnified Party”, and
collectively, the “Indemnified Parties”) from and against all Indemnified Losses
imposed upon, incurred by, or asserted against any of the Indemnified Parties
resulting from, relating to or arising out of:
 
7.1.1. any representation or warranty made in this Agreement or any of the other
Transaction Documents or in any certificate or other instrument delivered by or
on behalf of the Company not being true and correct in any material respect when
made;
7.1.2. any breach or non-fulfillment of any covenant or agreement to be
performed by the Company under this Agreement or the other Transaction
Documents;
7.1.3. any third party action or claim against any Indemnified Party arising out
of any misrepresentation or breach described in Section 7.1.1 or Section 7.1.2;
or
7.1.4. any third party action or claim relating in any way to the Indemnified
Party’s status as a security holder of the Company, as a Person which controls,
is controlled by or under common control with (within the meaning of the
Securities Act) any such Indemnified Party or as a director or officer of any of
the foregoing (including, without limitation, any and all Indemnifiable Losses
arising under the Securities Act, the Securities Exchange Act of 1934, as
amended, or similar securities law, or any other Requirements of Law or
otherwise, which relate directly or indirectly to the registration, purchase,
sale or ownership of any securities of the Company or to any fiduciary
obligation owed with respect thereto), including, without limitation, in
connection with any action or claim relating to any action taken or omitted to
be taken or alleged to have been taken or omitted to have been taken by such
Indemnified Party as a security holder; provided that the Company shall not be
obligated to indemnify or hold harmless any Indemnified Party under this Section
7.1.4 against any Indemnified Losses resulting from or arising out of any such
action or claim if it has been adjudicated by a final and non-appealable
determination of a court or other trier of fact of competent jurisdiction that
such Indemnified Losses were the result of (a) a breach of such Indemnified
Party’s fiduciary duty, (b) any action or omission made by the Indemnified Party
in bad faith, (c) such Indemnified Party’s willful misconduct, or (d) any
criminal action on the part of such Indemnified Party.
7.2 Attorneys’ Fees and Expenses.  If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement or
any Transaction Document, the prevailing party shall be entitled to reasonable
attorneys’ fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled as determined by such court, equity
or arbitration proceeding.
 
 
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8. MISCELLANEOUS.
8.1 Governing Law; Submission to Jurisdiction; Waiver of Trial by Jury. This
Agreement shall be governed in all respects by the laws of the State of New
York without regard to the conflict of laws principles of the State of New York
or any other jurisdiction. No suit, action or proceeding with respect to this
Agreement or any of the Transaction Documents may be brought in any court or
before any similar authority other than in a court of competent jurisdiction in
the State of New York and the parties hereby submit to the exclusive
jurisdiction of such courts for the purpose of such suit, proceeding or
judgment. Each of the parties hereto hereby irrevocably waives any right which
it may have had to bring such an action in any other court, domestic or foreign,
or before any similar domestic or foreign authority and agrees not to claim or
plead the same. Each of the parties hereto hereby irrevocably and
unconditionally waives trial by jury in any legal action or proceeding in
relation to this Agreement or any of the Transaction Documents and for any
counterclaim therein.
8.2 Survival of Representations and Warranties. The representations and
warranties made by the Company and the Purchasers herein at each Closing shall
survive such Closing for a period of twelve (12) months. All statements
contained in any certificate or other instrument delivered by or on behalf of
any party to this Agreement, pursuant to or in connection with the transactions
contemplated by this Agreement or any of the other Transaction Documents shall
be deemed to be representations and warranties made by such party as of the date
of such certificate or other instrument.
8.3 Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of each other party. Notwithstanding the foregoing (a) any Purchaser may
assign or transfer, in whole or, from time to time, in part, the right to
purchase all or any portion of the Units to one or more of its Affiliates
(subject to Affiliate qualification as an Accredited Investor) and (b) from and
after the Initial Closing Date, any Purchaser or other holder of Common Stock
may assign, pledge or otherwise transfer, in whole or from time to time in part,
its rights hereunder to any Person who acquires any interest in any Common Stock
and (c) any Purchaser may assign or transfer any of its rights or obligations
under this Agreement, in whole or from time to time in part, to the Company or
any other Purchaser or any Affiliate of any other Purchaser. As a condition of
any transfer pursuant to this Section 8.3, the transferee must agree in writing
for the benefit of all parties to this Agreement (which writing shall be in form
and substance reasonably acceptable to all parties to this Agreement) to be
bound by the terms and conditions of this Agreement and all other Transaction
Documents with respect to any Common Stock being transferred hereunder.
8.4 Entire Agreement. This Agreement, the Exhibits and Schedules hereto, the
other Transaction Documents and each of the Exhibits delivered pursuant thereto
constitute the full and entire understanding and agreement between the parties
hereto with regard to the subject matter hereof and thereof and no party hereto
shall be liable or bound to any other party hereto in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
8.5 Severability. If any provision of the Agreement is held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
8.6 Amendment and Waiver. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
the Company and the Purchasers (and, to the extent of any assignment under
Section 8.3 hereof, their respective permitted assigns and any permitted assigns
thereof) holding a majority of the voting power of the then outstanding Common
Stock, Warrant Shares and Conversion Shares purchased under this Agreement held
by such holders.
 
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8.7 Delays or Omissions. No delay or omission to exercise any right, power or
remedy accruing to any party, upon any breach, default or noncompliance by
another party under this Agreement, the other Transaction Documents, shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach, default or noncompliance, or any acquiescence therein, or of
or in any similar breach, default or noncompliance thereafter occurring. Any
waiver or approval of any kind or character on any Purchaser’s part of any
breach, default or noncompliance under this Agreement, the other Transaction
Documents or any waiver on such party’s part of any provisions or conditions of
the Agreement, the other Transaction Documents, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, the other Transaction Documents, or
otherwise afforded to any party, shall be cumulative and not alternative.
8.8 Notices. All notices, requests, demands and other communications given or
made in accordance with the provisions of this Agreement shall be addressed (i)
if to a Purchaser, at such Purchaser’s address, fax number or email address, as
furnished to the Company on the signature page below or as otherwise furnished
to the Company by the Purchaser in writing, or (ii) if to the Company, to the
attention of the President at such address, fax number or email address
furnished to the Purchasers on the signature page below or as otherwise
furnished by the Company in writing, and shall be made or sent by a personal
delivery or overnight courier, by registered, certified or first class mail,
postage prepaid, or by facsimile or electronic mail with confirmation of
receipt, and shall be deemed to be given on the date of delivery when made by
personal delivery or overnight courier, 48 hours after being deposited in the
U.S. mail, or upon confirmation of receipt when sent by facsimile or electronic
mail. Any party may, by written notice to the other, alter its address, number
or respondent, and such notice shall be considered to have been given three (3)
days after the overnight delivery, airmailing, faxing or sending via e-mail
thereof.
8.9 Expenses. The Company shall pay all costs and expenses that it incurs with
respect to the preparation, negotiation, execution, delivery and performance of
this Agreement, including, without limitation, any costs and expenses of its
counsel. The Company shall pay the reasonable fees and expenses of independent
counsel for the Placement Agent with respect to the negotiation and execution of
this Agreement and the other Transaction Documents in accordance with the terms
of the Company’s agreement with the Placement Agent.
8.10 Titles and Subtitles. The titles of the sections and subsections of the
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
8.11 Counterparts; Execution by Facsimile Signature. This Agreement may be
executed in any number of counterparts (including execution by facsimile), each
of which shall be an original, but all of which together shall constitute one
instrument. This Agreement may be executed by facsimile signature(s) which shall
be binding on the party delivering same, to be followed by delivery of
originally executed signature pages.
8.12 Acknowledgment. Any investigation or other examination that may have been
made at any time by or on behalf of a party to whom representations and
warranties are made in this Agreement or in any other Transaction Documents
shall not limit, diminish, supersede, act as a waiver of, or in any other way
affect the representations, warranties and indemnities contained in this
Agreement and the other Transaction Documents, and the respective parties may
rely on the representations, warranties and indemnities made to them in this
Agreement and the other Transaction Documents irrespective of and
notwithstanding any information obtained by them in the course of any
investigation, examination or otherwise, whether before or after any Closing.
8.13 Publicity. Except as otherwise required by law or applicable stock exchange
rules, no announcement or other disclosure, public or otherwise, concerning the
transactions contemplated by this Agreement shall be made, either directly or
indirectly, by any party hereto which mentions another party (or parties) hereto
without the prior written consent of such other party (or parties), which
consent shall not be unreasonably withheld, delayed or conditioned.
8.14 No Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
Liabilities under or by reason of this Agreement.
 
 
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8.15 Pronouns. All pronouns contained herein, and any variations thereof, shall
be deemed to refer to the masculine, feminine or neutral, singular or plural, as
to the identity of the parties hereto may require.
9. DEFINITIONS.
As used in this Agreement, the following terms shall have the meanings herein
specified:
9.1 “Affiliate” shall mean, with respect to any Person specified: (i) any Person
that directly or indirectly through one or more intermediaries controls, is
controlled by or under common control with the Person specified; (ii) any
director, officer, or Subsidiary of the Person specified; and (iii) the spouse,
parents, children, siblings, mothers-in-law, fathers-in law, sons-in-law,
daughters-in-law, brothers-in-law, and sisters-in-law of the Person specified,
whether arising by blood, marriage or adoption, and any Person who resides in
the specified Person’s home. For any director, officer, or Subsidiary of the
Person specified. For purposes of this definition and without limitation to the
previous sentence, (x) “control” (including, with correlative meanings, the
terms “controlled by” and “under common control with”) of a Person means the
power, direct or indirect, to direct or cause the direction of management and
policies of such Person, whether through ownership of voting securities, by
contract or otherwise, and (y) any Person beneficially owning, directly or
indirectly, more than ten percent (10%) or more of any class of voting
securities or similar interests of another Person shall be deemed to be an
Affiliate of that Person.
9.2 “Agreement” shall have the meaning set forth in the preamble to this
Agreement.
 
9.3 “Balance Sheet Date” shall have the meaning set forth in Section 3.9.
9.4 “Budget” shall have the meaning set forth in Section 3.21.
9.5 “Certificate” shall have the meaning set forth in Section 5.1.13.
9.6 “Closing” shall mean the Initial Closing or the Subsequent Closing, as
applicable.
9.7 “Code” shall have the meaning set forth in Section 3.16.2.
9.8 “Closing Date” shall mean the Initial Closing Date or the Subsequent Closing
Date, as applicable.
9.9 “Common Stock” shall have the meaning set forth in the preamble to this
Agreement.
9.10 “Common Stock Equivalents” shall 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, rights,
options, warrants 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.
9.11 “Company” shall have the meaning set forth in the preamble to this
Agreement.
9.12 “Consents” shall mean any consents, waivers, approvals, authorizations, or
certifications from any Person or under any Contract, Organizational Document or
Requirement of Law, as applicable.
9.13 “Contracts” shall mean any indentures, indebtedness, contracts, leases,
agreements, instruments, licenses, undertakings and other commitments, whether
written or oral.
9.14 “Conversion Shares” shall have the meaning set forth in the preamble to
this Agreement.
 
 
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9.15 “Copyrights” shall mean all copyrights, copyrightable works, mask works and
databases, including, without limitation, any computer software (object code and
source code), Internet web-sites and the content thereof, and any other works of
authorship, whether statutory or common law, registered or unregistered, and
registrations for and pending applications to register the same including all
reissues, extensions and renewals thereto, and all moral rights thereto under
the laws of any jurisdiction.
 
9.16 “Employee” shall have the meaning set forth in Section 3.17.1.
9.17 “Employee Benefit Plans” shall have the meaning set forth in
Section 3.18.1.
9.18 “Encumbrances” shall mean any security interests, liens, encumbrances,
pledges, mortgages, conditional or installment sales Contracts, title retention
Contracts, transferability restrictions and other claims or burdens of any
nature whatsoever.
9.19 “Environmental Laws” shall mean any Federal, state or local law or
ordinance or Requirement of Law or regulation pertaining to the protection of
human health or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Sections 9601, et seq., the Emergency Planning and Community Right-to-Know Act,
42 U.S.C. Sections 11001, et seq., and the Resource Conservation and Recovery
Act, 42 U.S.C. Sections 6901, et seq.
9.20 “ERISA” shall have the meaning set forth in Section 3.18.1.
9.21 “FDA” shall have the meaning set forth in Section 3.22.1.
9.22 “Financial Statements” shall have the meaning set forth in Section 3.8.
9.23 “Governmental or Regulatory Authority” shall mean any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the government of the United States or of any foreign country, any state or any
political subdivision of any such government (whether state, provincial, county,
city, municipal or otherwise).
9.24 “Hazardous Substances” shall mean oil and petroleum products, asbestos,
polychlorinated biphenyls, urea formaldehyde and any other materials classified
as hazardous or toxic under any Environmental Laws.
9.25 “Indemnified Losses” shall mean all losses, Liabilities, obligations,
claims, demands, damages, penalties, settlements, causes of action, costs and
expenses arising out of any third party claim or action against an Indemnified
Party, including, without limitation, the actual costs paid in connection with
an Indemnified Party’s investigation and evaluation of any claim or right
asserted against such Indemnified Party and all reasonable attorneys’, experts’
and accountants’ fees, expenses and disbursements and court costs including,
without limitation, those incurred in connection with the Indemnified Party’s
enforcement of the indemnification provisions of Section 7 of this Agreement.
9.26 “Indemnified Party” shall have the meaning set forth in Section 7.1.
9.27 “Initial Closing” shall have the meaning set forth in Section 2.1.
9.28 “Initial Closing Date” shall have the meaning set forth in Section 2.1.
9.29 “Initial Units” shall have the meaning set forth in Section 1.2.
9.30 “Leased Real Property” shall have the meaning set forth in Section 3.19.

 
 
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9.31 “Legal Proceeding” shall mean any action, suit, arbitration, claim or
investigation by or before any Governmental or Regulatory Authority, any
arbitration or alternative dispute resolution panel, or any other legal,
administrative or other proceeding.
9.32 “Liabilities” shall mean all obligations and liabilities including, without
limitation, direct or indirect indebtedness, guaranties, endorsements, claims,
losses, damages, deficiencies, costs, expenses, or responsibilities, in any of
the foregoing cases, whether fixed or unfixed, known or unknown, asserted or
unasserted, choate or inchoate, liquidated or unliquidated, or secured or
unsecured.
9.33 “Licensed Intellectual Property” shall mean all Copyrights, Patents,
Trademarks, technology rights and licenses, trade secrets, know-how, inventions,
methods, techniques and other intellectual property any one or more Entities
have or has the right to use in connection with its business or their respective
businesses, as applicable, pursuant to license, sublicense, agreement or
permission.
9.34 “Material Adverse Effect” shall have the meaning set forth in Section 3.1.
9.35 “Material Contract” shall have the meaning set forth in Section 3.10.1.
9.36 “Order” shall mean any judgment, order, writ, decree, stipulation,
injunction or other determination whatsoever of any Governmental or Regulatory
Authority, arbitrator or any other Person whose finding, ruling or holding is
legally binding or is enforceable as a matter of right (in any case, whether
preliminary or final and whether voluntarily imposed or consented to).
9.37 “Organizational Documents” shall mean, with respect to any Person, such
Person’s articles or certificate of incorporation, by-laws or other governing or
constitutive documents, if any.
9.38 “Owned Intellectual Property” shall mean all Copyrights, Patents,
Trademarks, technology, trade secrets, know-how, inventions, methods, techniques
and other intellectual property owned by the Company or any of its Subsidiaries.
9.39 “Patents” shall mean patents and patent applications (including, without
limitation, provisional applications, utility applications and design
applications), including, without limitation, reissues, patents of addition,
continuations, continuations-in-part, substitutions, additions, divisionals,
renewals, registrations, confirmations, re-examinations, certificates of
inventorship, extensions and the like, any foreign or international equivalent
of any of the foregoing, and any domestic or foreign patents or patent
applications claiming priority to any of the above.
9.40 “Permits” shall mean all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises, rights, Orders,
qualifications and similar rights or approvals granted or issued by any
Governmental or Regulatory Authority relating to the Business.
9.41 “Per Unit Purchase Price” shall have the meaning set forth in Section 1.2.
9.42 “Person” shall mean any individual, corporation, partnership, firm, joint
venture, association, limited liability company, limited liability partnership,
joint-stock company, trust, unincorporated organization or Governmental or
Regulatory Authority.
9.43 “Placement Agent” shall mean Laidlaw & Company (UK) Ltd.
9.44           “Preferred Stock” shall have the meaning set forth in the
preamble to this Agreement.
9.45 “Premises” shall have the meaning set forth in Section 3.23.
9.46 “Products” shall have the meaning set forth in Section 3.10.1(c)
 
 
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9.47 “Purchase Price” shall mean the “Total Purchase Price Amount” set forth in
Exhibit A for each respective Purchaser.
9.48 “Purchasers” and “Purchaser” shall have the meaning set forth in the
preamble to this Agreement.
9.49 “Real Property Leases” shall have the meaning set forth in Section 3.19.
9.50 "Registration Rights Agreement” shall have the meaning set forth in Section
5.1.5.
9.51 “Regulatory Approvals” shall mean all Consents from all Governmental or
Regulatory Authorities.
9.52 “Requirement of Law” shall mean any provision of law, statute, treaty,
rule, regulation, ordinance or pronouncement having the effect of law, and any
Order.
9.53 “Schedules” shall have the meaning set forth in the preamble to Section 3.
9.54 “SEC” shall mean Securities and Exchange Commission.
9.55 “SEC Reports” shall have the meaning set forth in Section 3.8.
9.56 “Securities” shall have the meaning set forth in Section 3.33.
9.57 “Securities Act” shall have the meaning set forth in Section 3.25.
9.58 “Subsequent Closing” shall mean the funding which occurs on the Subsequent
Closing Date.
9.59 “Subsequent Closing Date” shall have the meaning set forth in Section 2.2.
9.60 “Subsequent Closing Purchaser” shall have the meaning set forth in Section
1.3.
9.61 “Subsidiaries” and “Subsidiary” shall mean, with respect to any Person
(including the Company), any corporation, partnership, association or other
business entity of which more than 50% of the issued and outstanding stock or
equivalent thereof having ordinary voting power is owned or controlled by such
Person, by one or more Subsidiaries or by such Person and one or more
Subsidiaries of such Person.
9.62 “Suppliers” shall have the meaning set forth in Section 3.20.2.
9.63 “Tax Returns” shall mean any declaration, return, report, estimate,
information return, schedule, statements or other document filed or required to
be filed in connection with the calculation, assessment or collection of any
Taxes or, when none is required to be filed with a taxing authority, the
statement or other document issued by, a taxing authority.
9.64 “Taxes” shall mean (i) any tax, charge, fee, levy or other assessment
including, without limitation, any net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, payroll, employment,
social security, unemployment, excise, estimated, stamp, occupancy, occupation,
property or other similar taxes, including any interest or penalties thereon,
and additions to tax or additional amounts imposed by any federal, state, local
or foreign Governmental or Regulatory Authority, domestic or foreign or (ii) any
Liability for the payment of any taxes, interest, penalty, addition to tax or
like additional amount resulting from the application of Treasury Regulation
§1.1502-6 or comparable Requirement of Law.
 
 
 
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9.65 “Trademarks” shall mean trademarks, service marks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
uniform resource locators (URLs), domain names, trade dress, any other names and
locators associated with the Internet, other source of business identifiers,
whether registered or unregistered and whether or not currently in use, and
registrations, applications to register and all of the goodwill of the business
related to the foregoing.
9.66 “Transaction Documents” shall mean this Agreement, the Subscription
Agreements, the Warrant, the Registration Rights Agreement and all other
documents, certificates and instruments executed and delivered at any Closing.
9.67 “Units” shall have the meaning set forth in the preamble to this Agreement.
9.68 “Warrant Shares” shall have the meaning set forth in Section 1.1.
 
[SIGNATURES ON FOLLOWING PAGES]
 
 
-35-

 
 
 
IN WITNESS WHEREOF, the parties hereto have executed this Unit Purchase
Agreement as of January ___, 2017.
 
COMPANY:
 
MEDOVEX CORPORATION
 
 
By: _____________________________
Name:
Title:
 
Address:
 
Tel:
Fax:  
email:
 
 
 
 
 
PURCHASERS:
 
The Purchasers set forth on Exhibit A to the Agreement have executed a
Subscription Agreement with the Company which provides, among other things, that
by executing the Subscription Agreement each Purchaser is deemed to have
executed the UNIT PURCHASE AGREEMENT in all respects and is bound to purchase
the Units set forth in such Subscription Agreement and Exhibit A to the
Agreement.

 

 
-36-

 

 
Company Disclosure Schedules
 
3.1
The Company is incorporated in the State of Nevada. The Company is qualified to
do business in the State of Georgia, Minnesota and Florida.
 
3.2
Not applicable
 
3.7
Capitalization Table
 
 
Description
 
 
Amount
 
 
Common Stock Issued and Outstanding
 
 
14,855,238
 
 
Preferred Stock Issued and Outstanding
 
 
0
 
 
Stock Options (issued)
 
 
1,456,811
 
 
Stock Options (unissued)
 
 
193,189
 
 
Warrants
 
 
3,506,281
 

 
3.9
Not applicable
 
3.10.1
Not applicable
 
3.11
Not applicable
 
3.13.1
Not applicable
 
3.13.3
Not applicable
 
3.13.4
Not applicable
 
3.13.10
Not applicable
 
3.14
Not applicable
 
3.15
Not applicable
 
3.16.1
Not applicable
 
3.17.1
Not applicable
 
3.18.1
Not applicable
 
3.18.2
Not applicable
 
3.19
Not applicable
 
 
-37-

 
 
3.28
The Company maintains D&O and blanket insurance coverage (general liability,
property, auto, umbrella, workers comp) through Travelers Insurance Co.
 
3.37
Not applicable
 
3.43
On August 30, 2016, the Company received a NASDAQ deficiency letter that the
Company was not in compliance with the stockholder’s equity requirement for
continued listing on NASDAQ. 
 
3.47
Not applicable
 
3.48
Not applicable
 
 
 
 
-38-

 
 
EXHIBIT A
 
SCHEDULE OF PURCHASERS
 
Initial Closing
 
Name of Purchaser
Initial Units
Common
 Stock
Preferred Stock (in lieu of Common Stock)
Warrant Shares
Total Purchase
Price Amount
 
 
 
 
 
$
 
 
 
 
 
TOTAL: $

 
Subsequent Closing
Name of Subsequent Closing Purchaser
Subsequent Units
Common
 Stock
Preferred Stock (in lieu of Common Stock)
Warrant Shares
Total Purchase
Price Amount
 
 
 
 
 
TOTAL: $

 
 
-39-

 

EXHIBIT B
FORM OF WARRANT
 
 
 
-40-

 
 
EXHIBIT C
FORM OF SUBSCRIPTION AGREEMENT
 
 
 
-41-

 

EXHIBIT D
FUNDING INSTRUCTIONS
 
 
 
-42-

 

EXHIBIT E
FORM OF LEGAL OPINION
 
 
 
 
-43-

 
 
EXHIBIT F
FORM OF REGISTRATION RIGHTS AGREEMENT
 
 
 
 
-44-