Exhibit 10.1

 

ICAGEN, INC.

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of                      , 2018, by and among Icagen, Inc., a Delaware
corporation with its executive offices located at 4222 Emperor Blvd., Suite 350,
Research Triangle Park, Durham, North Carolina 27703 (the “Company”), and the
investors set forth on the signature pages affixed hereto (each, an “Investor”
and, collectively, the “Investors”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to exemptions from registration under the 1933 Act (as defined below),
the Company desires to issue and sell to each Investor, and each Investor,
severally and not jointly, desires to purchase from the Company, Units (as
defined below) of the Company, as more fully described in this Agreement;

 

WHEREAS, the Investors wish to purchase from the Company, and the Company wishes
to sell and issue to the Investors, upon the terms and conditions stated in this
Agreement, a minimum of ten (10) Units and an aggregate of up to forty (40)
Units (the “Units”), each Unit being offered at a price of $100,000 (One Hundred
Dollars) per Unit and each whole Unit consisting of 28,571 shares of the
Company’s newly issued Series C Convertible Redeemable Preferred Stock (the
“Series C Preferred Shares”) and a seven year warrant (the “Warrant”) to
purchase 28,571 shares of the Company’s common stock, par value $0.001 per share
(the “Common Stock”), at an exercise price of $3.50 per share (the Series C
Preferred Shares and the Warrants being hereinafter referred to as the
“Securities”), upon the terms and conditions set forth in this Agreement;

 

WHEREAS, the Company and each Investor are each executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”),
and/or Rule 506(b) of Regulation D (“Regulation D”) as promulgated by the United
States Securities and Exchange Commission (the “SEC”) under the 1933 Act; and

 

WHEREAS, in connection with the Investors’ purchase of the Units, the Investors
will be subject to certain restrictions on the transfer of the Securities, all
as more fully set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree to the sale and purchase
of the Units as set forth herein.

 

1. Definitions.

 

For purposes of this Agreement, the terms set forth below shall have the
corresponding meanings provided below.

 

“1933 Act” as defined in the recitals above.

 

“1934 Act” means the Securities Exchange Act of 1934, as amended.

 

 

 

 

“Affiliate” shall mean, with respect to any specified Person (as defined below),
(i) if such Person is an individual, the spouse, heirs, executors, or legal
representatives of such individual, or any trusts for the benefit of such
individual or such individual’s spouse and/or lineal descendants, or (ii)
otherwise, another Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Person specified.  As used in this definition, “control” shall mean the
possession, directly or indirectly, of the sole and unilateral power to cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities or by contract or other written instrument.

 

“Blue Sky Application” as defined in Section 5.5(a) hereof.

 

“Business Day” shall mean any day on which banks located in New York City are
not required or authorized by law to remain closed.

 

“Certificate of Designation” the Company’s Certificate of Designation of Powers,
Preferences and Rights of the Series C Convertible Redeemable Preferred Stock.

 

“Claims” as defined in Section 5.5(a) hereof.

 

“Closing” and “Closing Date” as defined in Section 2.2(c) hereof.

 

“Common Stock” as defined in the recitals above.

 

“Company Financial Statements” as defined in Section 4.5(a) hereof.

 

“Company’s Knowledge” means the actual knowledge of the Chief Executive Officer
(as defined in Rule 405 under the 1933 Act), or the knowledge of any fact or
matter which the Chief Executive Officer would reasonably be expected to become
aware of in the course of performing the duties and responsibilities.

 

“Demand Request” as defined in Section 5.1(a) hereof.

 

“First Closing” and “First Closing Date” as defined in Section 2.2(a) hereof.

 

“Liens” means any mortgage, lien, title claim, assignment, encumbrance, security
interest, adverse claim, contract of sale, restriction on use or transfer or
other defect of title of any kind.

 

“Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its Subsidiaries taken as a whole,
(ii) the transactions contemplated hereby or in any of the Transaction Documents
or (iii) the ability of the Company to perform its obligations under the
Transaction Documents (as defined below).

  

“Participating Holders” as defined in Section 5.1(c) hereof.

 

“Person” shall mean an individual, entity, corporation, partnership,
association, limited liability company, limited liability partnership,
joint-stock company, trust or unincorporated organization.

 

“Piggyback Registration” as defined in Section 5.2 hereof.

  

“Proposed Registration” as defined in Section 5.2(a) hereof.

 

2

 

 

“Purchase Price” shall mean an aggregate of up to $4,000,000.

 

“Qualifying PO” shall mean the first firm commitment underwritten public
offering by the Company on or following the date of this Agreement in which
shares of Common Stock are sold for the account of the Company solely for cash
to the public resulting in proceeds to the Company of no less than $8,000,000
(after deduction only of underwriter discounts and commissions) and where the
shares of Common Stock registered under the 1933 Act and sold in such public
offering, are simultaneously listed and commence trading on the Nasdaq Global
Market, the Nasdaq Global Select Market, the Nasdaq Capital Market, the New York
Stock Exchange or the NYSE Market (a “Qualify Market”).

 

“Registrable Securities” shall mean (i) the shares of common stock underlying
the Securities; and (ii) any shares of Common Stock issued upon conversion of
any Series C Preferred Shares; provided, that a security shall cease to be a
Registrable Security upon (A) sale pursuant to a Registration Statement or Rule
144 under the 1933 Act, or (B) such security becoming eligible for sale by the
holder thereof without any restriction pursuant to Rule 144 (including, without
limitation, volume restrictions) and without the need for current public
information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable).

 

“Registration Statement” shall mean any registration statement of the Company
filed under the 1933 Act that covers the resale of any of the Registrable
Securities pursuant to the provisions of this Agreement, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.

 

“Regulation D” as defined in the recitals.

 

“Regulation S” as defined in Section 6.1(i)(E) hereof.

 

“Request Notice” as defined in Section 5.1(a) hereof.

 

“Requesting Holders” as defined in Section 5.1(a) hereof.

 

“Rule 144” as defined in Section 6.1(i)(C) hereof.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“SEC Documents” as defined in Section 4.5 hereof.

 

“Securities” as defined in the recitals above.

 

“Staff” as defined in Section 5.4 hereof.

 

“Subsequent Closing” and “Subsequent Closing Date” as defined in Section 2.2(b)
hereof.

 

  “Subsidiaries” shall mean any corporation or other entity or organization,
whether incorporated or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest or otherwise controls through
contract or otherwise.

 

“Transaction Documents” shall mean this Agreement, the Certificate of
Designation and the Warrant.

 

“Transfer” shall mean any sale, transfer, assignment, conveyance, charge,
pledge, mortgage, encumbrance, hypothecation, security interest or other
disposition, or to make or effect any of the above.

 

3

 

 

“Underwriter” shall mean any entity engaged by the Company to serve as an
underwriter in connection with a registration or offering of securities referred
to in Section 5.

 

“Units” as defined in the recitals above.

 

“Valid Business Reason” as defined in Section 5.1(d) hereof.

 

2. Sale and Purchase of Units.

 

2.1 Subscription for Units by Investors. Subject to the terms and conditions of
this Agreement, on each Closing Date (as hereinafter defined) each Investor
shall severally, and not jointly, purchase, and the Company shall sell and issue
to the Investors, the Unit or Units (include partial Units), in the respective
amounts set forth on the signature pages attached hereto in exchange for the
Purchase Price.

 

2.2 Closings.

 

(a) First Closing. Subject to the terms and conditions set forth in this
Agreement, the Company shall issue and sell to each Investor listed on the
Initial Closing Schedule of Investors annexed hereto on Exhibit A-1, and each
such Investor shall, severally and not jointly, purchase from the Company on the
First Closing Date, such number of Units set forth on the signature pages
attached hereto, which will be reflected opposite such Investor’s name on
Exhibit A-1 (the “First Closing”). The date of the First Closing is hereinafter
referred to as the “First Closing Date.”

 

(b) Subsequent Closing(s). The Company agrees to issue and sell to each Investor
listed on the Subsequent Closing Schedule of Investors, and each such Investor
agrees, severally and not jointly, to purchase from the Company on such
Subsequent Closing Date such number of Units set forth on the signature pages
attached hereto, which will be reflected opposite such Investor’s name on
Exhibit A-2 (a “Subsequent Closing”).  There may be more than one Subsequent
Closing. The date of any Subsequent Closing is hereinafter referred to as a
“Subsequent Closing Date.” Notwithstanding the foregoing, the maximum number of
Units to be sold at the First Closing and all Subsequent Closings shall not
exceed four (4) Units in the aggregate.

 

(c) Closing. The First Closing and any applicable Subsequent Closings are each
referred to in this Agreement as a “Closing.” The First Closing Date and any
Subsequent Closing Dates are sometimes referred to herein as a “Closing Date.”
All Closings shall occur no later than [ ], 2018 at the offices of Gracin &
Marlow, LLP, counsel to the Company, or remotely via the exchange of documents
and signatures.

 

  2.3 Closing Deliveries. At each Closing, the Company shall deliver to the
Investors, against delivery by the Investor of the Purchase Price (as provided
below), duly issued certificates representing the Securities. At each Closing,
each Investor shall deliver or cause to be delivered to the Company the Purchase
Price set forth in its counterpart signature page annexed hereto by paying in
United States dollars via bank, certified or personal check which has cleared
prior to the applicable Closing Date or in immediately available funds, by wire
transfer to the following account:

 

PNC Bank

300 Delaware Avenue

Wilmington, DE 19801

ABA # 031100089

Acct Name: CSC Trust Company of Delaware

Account Number:  5605012373

FFC: Account #79-1849 Icagen Escrow

 

4

 

 

3. Representations, Warranties and Acknowledgments of the Investors.

 

Each Investor, severally and not jointly, represents and warrants to the Company
solely as to such Investor that:

 

3.1 Authorization. The execution, delivery and performance by such Investor of
the Transaction Documents to which such Investor is a party have been duly
authorized and will each constitute the valid and legally binding obligation of
such Investor, enforceable against such Investor in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally.

 

3.2 Purchase Entirely for Own Account. The Securities to be received by such
Investor hereunder will be acquired for such Investor’s own account, not as
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the 1933 Act, and such Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same in
violation of the 1933 Act, without prejudice, however, to such Investor’s right
at all times to sell or otherwise dispose of all or any part of such Securities
in compliance with applicable federal and state securities laws. Nothing
contained herein shall be deemed a representation or warranty by such Investor
to hold the Securities for any period of time.  Such Investor is not a
broker-dealer registered with the SEC under the 1934 Act or an entity engaged in
a business that would require it to be so registered.

 

3.3. Investment Experience. Such Investor acknowledges that the purchase of the
Securities is a highly speculative investment and that it can bear the economic
risk and complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters such that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.

 

3.4 Disclosure of Information. Such Investor has had an opportunity to receive
all information related to the Company, including, but not limited to, the
Company’s relevant SEC Documents via EDGAR, and the Securities requested by it
and to ask questions of and receive answers from the Company regarding the
Company, its business and the terms and conditions of the offering of the
Units.  Neither such inquiries nor any other due diligence investigation
conducted by such Investor shall modify, amend or affect such Investor’s right
to rely on the Company’s representations and warranties contained in this
Agreement.

 

3.5 Restricted Securities. Such Investor understands that the Units, and the
components thereof, are characterized as “restricted securities” under the U.S.
federal securities laws since they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.

 

5

 

 

3.6 Legends. It is understood that, except as provided below, certificates
evidencing the Securities may bear the following or any similar legend:

 

(a)[“NEITHER THIS SECURITY NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS SECURITY HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER OR THE COMPANY
IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.”]

 

[“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE HOLDER OR THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. ANY TRANSFEREE OF THESE
SECURITIES SHOULD CAREFULLY REVIEW THE TERMS HEREIN. THE NUMBER OF SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS
SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 1(a) OF THIS WARRANT.”]

 

(b) If required by the authorities of any state in connection with the issuance
of sale of the Securities, the legend required by such state authority.

 

3.7 Accredited Investor. Such Investor, and if an entity, all equity holders of
such Investor, is an accredited investor as defined in Rule 501(a) of Regulation
D.

 

3.8 No General Solicitation. Such Investor did not learn of the investment in
the Securities as a result of any public advertising or general solicitation.

 

3.9 Brokers and Finders. No Investor will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or any other Investor, for any
commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of such Investor.

 

6

 

  

4. Representations and Warranties of the Company.

 

The Company represents, warrants and covenants to the Investors that:

 

4.1 Organization; Execution, Delivery and Performance.

 

(a) The Company and each of its Subsidiaries, if any, is a corporation or other
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated or organized, with full power and
authority (corporate and other) to own, lease, use and operate its properties
and to carry on its business as and where now owned, leased, used, operated and
conducted.  The Company is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its ownership or
use of property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect.

 

(b) (i) The Company has all requisite corporate power and authority to enter
into and perform the Transaction Documents and to consummate the transactions
contemplated hereby and thereby and to issue the Securities, in accordance with
the terms hereof and thereof; (ii) the execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including without limitation, the issuance of
the Securities) have been duly authorized by the Company’s Board of Directors
and no further consent or authorization of the Company, its Board of Directors,
or its stockholders, is required; (iii) each of the Transaction Documents has
been duly executed and delivered by the Company by its authorized
representative, and such authorized representative is a true and official
representative with authority to sign each such document and the other documents
or certificates executed in connection herewith and bind the Company
accordingly; and (iv) each of the Transaction Documents constitutes, and upon
execution and delivery thereof by the Company will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights and general principles of
equity that restrict the availability of equitable or legal remedies.

 

   4.2 Securities Duly Authorized. The Series C Preferred Shares to be issued to
each such Investor pursuant to this Agreement, when issued and delivered in
accordance with the terms of this Agreement, will be duly and validly issued and
will be fully paid and nonassessable and free from all taxes or Liens with
respect to the issue thereof and shall not be subject to preemptive rights or
other similar rights of stockholders of the Company.  The Warrants to be issued
to each such Investor, when issued in accordance with the terms of this
Agreement, will be legal, valid and binding obligations of the Company
enforceable in accordance with their terms.  The shares of Common Stock issuable
upon conversion of the Series C Preferred Shares and exercise of the Warrants in
accordance with their respective terms and as dividends if any with respect to
the Series C Preferred Shares will be duly and validly issued and fully paid and
non-assessable. Subject to the accuracy of the representations and warranties of
the Investors to this Agreement, the offer and issuance by the Company of the
Securities is exempt from registration under the 1933 Act.

 

7

 

 

4.3 No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby will not: (i) conflict with or result in a
violation of any provision of the Second Restated and Amended Certificate of
Incorporation or By-laws; or (ii) violate or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the Company
or any of its Subsidiaries is a party, except for possible violations, conflicts
or defaults as would not, individually or in the aggregate, have a Material
Adverse Effect; or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which the
Company or its securities are subject) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected. Neither the Company nor any of its
Subsidiaries is in default (and no event has occurred which with notice or lapse
of time or both could put the Company or any of its Subsidiaries in default)
under, and neither the Company nor any of its Subsidiaries has taken any action
or failed to take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party or by which any property or assets of the Company or any of its
Subsidiaries is bound or affected, or for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses
of the Company and its Subsidiaries are not being conducted in violation of any
law, rule ordinance or regulation of any governmental entity, except for
possible violations which would not, individually or in the aggregate, have a
Material Adverse Effect. Except as required under the 1933 Act, the 1934 Act,
and any applicable state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court, governmental agency, regulatory agency, self regulatory organization
or stock market or any third party in order for it to execute, deliver or
perform any of its obligations under this Agreement or to issue and sell the
Securities in accordance with the terms hereof. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof.

 

4.4 Capitalization. As of March 1, 2018, the authorized capital stock of the
Company consist of: (i) 50,000,000 shares of Common Stock, of which
6,720,017shares are issued and 6,393,107 outstanding are outstanding, and (ii)
10,000,000 shares of Preferred Stock of which (1) 400,000 shares are designated
Series A Cumulative Convertible Preferred Stock (the “Series A Preferred
Shares”), (2) 3,000,000 are designated Series B Cumulative Convertible Preferred
Stock (the “Series B Preferred Shares”), and (3) 6,600,000 are undesignated. No
Preferred Stock including the Series A Preferred Shares or the Series B
Preferred Shares are issued and outstanding. The Company has reserved, and at
all times will keep reserved, a sufficient number of shares for issuance upon
the conversion of the Series C Preferred Shares and the exercise of the
Warrants.  Except as described in the SEC Documents, (A) there are no
outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of the Company
or any of its Subsidiaries, or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries; (B) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the 1933 Act (except
for the registration rights provisions contained herein); and (C) there are no
anti-dilution or price adjustment provisions contained in any security issued by
the Company (or in any agreement providing rights to security holders) that will
be triggered by the issuance of the Securities.  All of such outstanding shares
of capital stock are, or upon issuance will be, duly authorized, validly issued,
fully paid and nonassessable.  No shares of capital stock of the Company are
subject to preemptive rights or any other similar rights of the stockholders of
the Company or any Lien imposed through the actions or failure to act of the
Company.

 

8

 

 

4.5 SEC Documents.

 

(a) The Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the 1934 Act (all of the foregoing and all other
documents filed with the SEC prior to the date hereof, including all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to herein as the
“SEC Documents”).  The SEC Documents have been made available to the Investors
via the SEC’s EDGAR system. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. There are not outstanding any unresolved comments of the staff
of the SEC.  As of their respective dates, the financial statements of the
Company included in the SEC Documents (“Company Financial Statements”) complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto. The Company
Financial Statements have been prepared in accordance with United States
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the Company Financial
Statements and SEC Documents, the Company has no liabilities, contingent or
otherwise, other than: (i) liabilities incurred in the ordinary course of
business subsequent to September 30, 2017 (the fiscal period end of the
Company’s most recently-filed periodic report) and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in such
financial statements, which, individually or in the aggregate, are not material
to the financial condition or operating results of the Company. 

 

(b) The shares of Common Stock are not currently traded on any market

 

4.6 Permits; Compliance. The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the “Company Permits”), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since September 30, 2017, neither
the Company nor any of its Subsidiaries has received any notification with
respect to possible conflicts, defaults or violations of applicable laws, except
for notices relating to possible conflicts, defaults or violations, which
conflicts, defaults or violations would not have a Material Adverse Effect.

 

4.7 Litigation. Except as set forth in the SEC Documents, there is no action,
suit, claim, proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company or any of its Subsidiaries, or their respective
businesses, properties or assets or their officers or directors in their
capacity as such, that would have a Material Adverse Effect. The Company is
unaware of any facts or circumstances which might give rise to any of the
foregoing. There has not been, and to the Company’s Knowledge, there is not
pending or contemplated, any investigation by the SEC involving the Company, any
of its Subsidiaries or any current or former director or executive officer of
the Company or any of its Subsidiaries.

 

9

 

  

4.8 No Material Changes.

 

(a) Since September 30, 2017, except as set forth in the SEC Documents, there
has not been:

 

(i) Any material adverse change in the financial condition, operations or
business of the Company from that shown on the Company Financial Statements, or
any material transaction or commitment effected or entered into by the Company
outside of the ordinary course of business;

 

(ii) Any effect, change or circumstance which has had, or could reasonably be
expected to have, a Material Adverse Effect; or

 

(iii) Any incurrence of any material liability outside of the ordinary course of
business.

 

   4.9 No General Solicitation. Neither the Company nor any person participating
on the Company’s behalf in the transactions contemplated hereby has conducted
any “general solicitation,” as such term is defined in Regulation D promulgated
under the 1933 Act, with respect to any of the Securities being offered hereby.

 

4.10 No Integrated Offering. 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 in any security or solicited any offers to buy any security
under circumstances that would require registration under the 1933 Act of the
issuance of the Securities to the Investors. The issuance of the Securities to
the Investors will not be integrated with any other issuance of the Company’s
securities (past, current or future) for purposes of any stockholder approval
provisions applicable to the Company or its securities.

 

4.11 No Brokers. The Company has taken no action which would give rise to any
claim by any person for brokerage commissions, transaction fees or similar
payments relating to this Agreement or the transactions contemplated hereby.

 

4.12 Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to
the Securities as required under Regulation D within fifteen (15) business days
after the First Closing. The Company shall, on or before the Closing Date, take
such action as the Company shall reasonably determine is necessary to qualify
the Securities for sale to the Investors at the applicable Closing pursuant to
this Agreement under applicable securities or “blue sky” laws of the states of
the United States (or to obtain an exemption from such qualification).

 

4.13 Disclosure. The Company confirms that neither it nor any other Person
acting on its behalf has provided any of the Investors or their agents or
counsel with any information that constitutes or could reasonably be expected to
constitute material, non-public information concerning the Company or any of its
Subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Transaction Documents. The Company understands and
confirms that each of the Investors will rely on the foregoing representations
in effecting transactions in securities of the Company. All disclosure provided
to the Investors regarding the Company and its Subsidiaries, their businesses
and the transactions contemplated hereby, including the schedules to this
Agreement, furnished by or on behalf of the Company or any of its Subsidiaries
is true and correct in all material respects and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each press release issued by the
Company or any of its Subsidiaries during the 12 months preceding the date of
this Agreement did not at the time of release 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 the light of the
circumstances under which they are made, not misleading.  No event or
circumstance has occurred or information exists with respect to the Company or
any of its Subsidiaries or its or their business, properties, liabilities,
results of operations or financial conditions, which, under applicable law, rule
or regulation, requires public disclosure at or before the date hereof or
announcement by the Company but which has not been so publicly disclosed. The
Company acknowledges and agrees that no Investor makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.

 

10

 

 

4.14 Intellectual Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service mark registrations, service names, patents, patent rights,
copyrights, original works, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights and all
applications and registrations therefor (“Intellectual Property Rights”)
necessary to conduct their respective businesses as now conducted and as
presently proposed to be conducted.  None of the Company’s or its Subsidiaries’
Intellectual Property Rights have expired, terminated or been abandoned, or are
expected to expire, terminate or be abandoned, within two years from the date of
this Agreement. The Company has no knowledge of any infringement by the Company
or any of its Subsidiaries of Intellectual Property Rights of others. Except as
set forth in the SEC Documents, there is no claim, action or proceeding being
made or brought, or to the Company’s Knowledge, being threatened, against the
Company or any of its Subsidiaries regarding their Intellectual Property Rights.
The Company is not aware of any facts or circumstances which might give rise to
any of the foregoing infringements or claims, actions or proceedings. The
Company and each of its Subsidiaries have taken reasonable security measures to
protect the secrecy, confidentiality and value of all of their Intellectual
Property Rights, except where failure to take such measures would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

 

4.15 Tax Status. Except for occurrences that would not, either individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect,
the Company and each of its Subsidiaries (i) has timely made or filed all
foreign, federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject; (ii) has
timely paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith; and (iii) has set
aside on its books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company and its Subsidiaries know of no basis for any such claim. The Company is
not operated in such a manner as to qualify as a passive foreign investment
company, as defined in Section 1297 of the U.S. Internal Revenue Code of 1986,
as amended.

 

4.16 Acknowledgement Regarding Investors’ Trading Activity. It is understood and
acknowledged by the Company that (i) following the public disclosure of the
transactions contemplated by the Transaction Documents in accordance with the
terms thereof, none of the Investors have been asked by the Company or any of
its Subsidiaries to agree, nor has any Investor agreed with the Company or any
of its Subsidiaries, to desist from effecting any transactions in or with
respect to (including, without limitation, purchasing or selling, long and/or
short) any securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold any of the Securities for any
specified term; (ii) any Investor, and counterparties in “derivative”
transactions to which any such Investor is a party, directly or indirectly,
presently may have a “short” position in the Common Stock which was established
prior to such Investor’s knowledge of the transactions contemplated by the
Transaction Documents; and (iii) each Investor shall not be deemed to have any
affiliation with or control over any arm’s length counterparty in any
“derivative” transaction. The Company further understands and acknowledges that
following the public disclosure of the transactions contemplated by the
Transaction Documents, one or more Investors may engage in hedging and/or
trading activities at various times during the period that the Securities are
outstanding, and such hedging and/or trading activities, if any, can reduce the
value of the existing stockholders’ equity interest in the Company both at and
after the time the hedging and/or trading activities are being conducted. The
Company acknowledges that such aforementioned hedging and/or trading activities
do not constitute a breach of this Agreement or any other Transaction Document
or any of the documents executed in connection herewith or therewith.

 

11

 

 

4.17 Shell Company Status. The Company was never a “shell issuer”, as defined in
Rule 144(i)(1), promulgated under the 1933 Act.

 

4.18 Investment Company Act Status. The Company and its subsidiaries are not,
and after giving effect to the offering and sale of the Units and the
application of the proceeds thereof will not be, required to register as an
“investment company” as such term is defined in the Investment Company Act of
1940, as amended.

 

5. Registration Rights.

 

5.1  Demand Registration.

 

(a) Request by Holders. If the Company receives at any time commencing nine (9)
months following the closing of a Qualifying PO, a written request (a “Demand
Request”) from Investors (the “Requesting Holders”) that hold at least fifty
percent (50%) of the Registrable Securities then outstanding, that the Company
register the Common Stock into which the Registrable Securities is convertible,
then the Company shall, within 20 days after receipt of such Demand Request,
give written notice of such request (“Request Notice”) to GPB Debt Holdings II,
LLC (“GPB”) and all holders of Registrable Securities.  Each Demand Request
shall (x) specify the number of shares of Common Stock that the Requesting
Holders intend to sell or dispose of; (y) state the intended method or methods
of sale or disposition of the Common Stock; and (z) specify the expected price
range (net of underwriting discounts and commissions) acceptable to the
Requesting Holders to be received for such Common Stock.  Following receipt of a
Demand Request, if GPB in its sole discretion consents to the Demand Request,
the Company shall:

 

(1) cause to be filed, as soon as practicable, but in any event within 150 days
of the date of delivery to the Company of the Demand Request, a Registration
Statement covering such shares of Common Stock which the Company has been so
requested to register by the Requesting Holders and other holders of Registrable
Securities who request to the Company that their securities be registered within
20 days of the mailing of the Request Notice, providing for the registration
under the 1933 Act of such securities to the extent necessary to permit the
disposition of such securities in accordance with the intended method of
distribution specified in such Demand Request;

 

(2) use its best efforts to have such Registration Statement declared effective
by the SEC as soon as practicable thereafter; and

 

(3) refrain from filing any other Registration Statements, other than pursuant
to a Registration Statement on Form S-4 or S-8 (or similar or successor forms),
with respect to any other securities of the Company until such date which is 120
days following effectiveness of the Registration Statement filed in response to
the Demand Request.

 

12

 

 

(b) Selection of Underwriters; Priority for Demand Registrations. In the event
the Requesting Holders intend to distribute the securities covered by the Demand
Request by means of an underwriting, they shall so advise the Company as part of
the Demand Request and the Company shall include such information in the Request
Notice. The managing underwriter for such underwriting shall be one or more
reputable nationally recognized investment banks selected by Requesting Holders
owning a majority of the securities included in such Registration Statement
subject to the approval of the Company, which approval shall not be unreasonably
withheld, delayed or conditioned.  In such event, the right of any holder of
Registrable Securities to include such holder’s securities in such registration
shall be conditioned upon such holder’s participation in such underwriting and
the inclusion of such holder’s securities in the underwriting to the extent
provided in this Section 5.1.  All holders of Registrable Securities proposing
to distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter(s) selected for
such underwriting.

 

(c) Notwithstanding any other provision of this Section 5.1, if the managing
underwriter of an underwritten public offering determines and advises the
Company in writing that the inclusion of all securities proposed to be included
by the Company and any other holders of Company securities requesting inclusion
of their securities in the underwritten public offering other than the holders
of Registrable Securities that are participating in the public offering (the
“Participating Holders”) would materially and adversely interfere with the
successful marketing of the securities, then the Company and the other holders
of Company’s securities shall not be permitted to include any securities in
excess of the amount, if any, of securities which the managing underwriter of
such underwritten public offering shall reasonably and in good faith agree in
writing to include in such public offering in addition to the amount of
securities to be registered for accounts of the Participating Holders. If the
managing underwriter concludes that less than all of the securities which the
Participating Holders propose to include in the offering can be successfully
sold in the offering, the managing underwriter will be obligated to include in
such Registration Statement, as to each Participating Holder, only that portion
of the securities such Participating Holder has requested be registered equal to
the ratio which such Participating Holder’s requested securities bears to the
total number of securities requested to be included in such Registration
Statement by all Participating Holders who have requested that their securities
be included in such Registration Statement.

 

(d) Limitations on Demand Registrations. The Company may delay making a filing
of a Registration Statement or taking action in connection therewith by not more
than 60 days after receipt of the Demand Request if the Company provides a
written certificate signed by the Chief Executive Officer of the Company to the
holders of Registrable Securities, prior to the time it would otherwise have
been required to file such Registration Statement or take such action pursuant
to this Section 5.1, stating that the Board of Directors of the Company has
determined in good faith that it would be seriously detrimental to the Company
and its stockholders if such Registration Statement (or an amendment thereto)
were filed and such Registration Statement (or amendment) were to become
effective, or remain effective for the time otherwise required for such
Registration Statement to remain effective, because such action either would (A)
materially adversely affect a significant financing, acquisition, disposition,
merger or other material transaction; (B) require premature disclosure of
material information that the Company has a bona fide business purpose for
preserving as confidential; or (C) render the Company unable to comply with
requirements under the 1933 Act or the 1934 Act (each, a “Valid Business
Reason”) and that it is therefore essential to defer the filing of the
Registration Statement; provided, however, that such right to delay a Demand
Request shall be exercised by the Company not more than once in any 12 month
period and the Company shall only have the right to delay a Demand Request so
long as such Valid Business Reason exists, and during such time the Company may
not file a Registration Statement for securities to be issued and sold for its
own account or for that of anyone other than the holders of the Registrable
Securities.

 

(e) The Company shall only be obligated to effect two (2) Demand Requests
pursuant to this Section 5.1.

 

13

 

 

5.2 Piggyback Registrations.

 

(a) Right to Include Securities. Each time after the date hereof that the
Company proposes for any reason to register any of its Common Stock under the
1933 Act, either for its own account or for the account of a stockholder or
stockholders exercising demand registration rights (other than under a
registration statement on Form S-8 or S-4 or for the account of GPB) (a
“Proposed Registration”), the Company shall promptly give written notice of such
Proposed Registration to all of the holders of Registrable Securities (which
notice shall be given not less than 30 days prior to the expected effective date
of the Company’s Registration Statement) and shall offer such holders the right
to request inclusion of any of such holder’s securities in the Proposed
Registration; provided, however, that the holders of Registrable Securities
shall have no right to include securities in a registration statement relating
either to the sale of securities to employees of the Company pursuant to a stock
option, stock purchase or similar plan or a Rule 145 transaction.  No
registration pursuant to this Section 5 shall relieve the Company of its
obligation to register securities pursuant to a Demand Request, as contemplated
by Section 5.1 hereof.  The rights to piggyback registration may be exercised an
unlimited number of occasions. 

 

(b) Piggyback Procedure. Each Holder of Registrable Securities shall have ten
(10) days from the date of receipt of the Company’s notice referred to in
Section 5.1 above to deliver to the Company a written request specifying the
number of securities such holder intends to sell and such holder’s intended
method of disposition.  Any holder of Registrable Securities shall have the
right to withdraw such holder’s request for inclusion of such holder’s
securities in any Registration Statement pursuant to this Section 5.2 by giving
written notice to the Corporation of such withdrawal.  Subject to Section 5.2(c)
below, the Company shall use its best efforts to include in such Registration
Statement all such securities so requested to be included therein; provided,
however, that the Company may at any time withdraw or cease proceeding with any
such Proposed Registration if it shall at the same time withdraw or cease
proceeding with the registration of all other shares of Common Stock originally
proposed to be registered.

 

(c) Priority for Piggyback Registration. Notwithstanding any other provision of
this Section 5, if the managing underwriter of an underwritten public offering
determines and advises the Company and the Participating Holders in writing that
the inclusion of all securities proposed to be included by the Participating
Holders of securities in the underwritten public offering would materially and
adversely interfere with the successful marketing of the Company’s securities,
then the Participating Holders shall not be permitted to include any securities
in excess of the amount, if any, of securities which the managing underwriter of
such underwritten public offering shall reasonably and in good faith agree in
writing to include in such public offering in addition to the amount of
securities to be registered for the account of the Company.  The Company will be
obligated to include in such Registration Statement, as to each Participating
Holder, only that portion of the securities such Participating Holder has
requested be registered equal to the product of (i) the total number of
securities which the managing underwriter agrees to include in the public
offering for the account of all Participating Holders and (ii) the ratio which
such Participating Holder’s requested securities bears to the total number of
securities requested to be included in such Registration Statement by all
Participating Holders who have requested that their securities be included in
such Registration Statement.  It is acknowledged by the parties hereto that
pursuant to the foregoing provision, the securities to be included in a
registration initiated by the Company shall be allocated:

 

(1) first, to the Company; and

 

(2) second, to the others requesting registration of securities of the Company.

 

(d) Underwritten Offering. In the event the Proposed Registration by the Company
is, in whole or in part, an underwritten public offering of securities of the
Company, any notice from the Company to the Holders under this Section 5 shall
offer the Holders the right to include any Registrable Securities covered by the
Proposed Registration in the underwriting on the same terms and conditions as
the shares, if any, otherwise being sold through underwriters under such
registration. The managing underwriter for any Proposed Registration that
involves an underwritten public offering shall be one or more reputable
nationally recognized investment banks selected by the Company.

 

14

 

 

The rights contained in this Section 5 shall terminate on the date that all
Registrable Securities may be sold without restriction pursuant to Rule 144
(including without limitation, volume restriction and without the need for
current public information requested by Rule 144(c)(1) (or Rule 144 (i) (2), if
applicable).

 

5.3 Expenses. All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company, whether or not
any Registrable Securities are sold pursuant to the Registration Statement.  The
fees and expenses referred to in the foregoing sentence shall include, without
limitation (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
trading market on which the Common Stock is then listed for trading and (B) in
compliance with applicable state securities or Blue Sky laws; (ii) processing
expenses, including, but not limited to, printing expenses, messenger, telephone
and delivery expenses and customary marketing expenses; (iii) fees and
disbursements of counsel and independent public accountants for the Company;
(iv) fees and disbursements of one counsel to the Participating Holders as a
group with respect to the registration rights described in this Agreement.

 

5.4 Offering. In the event the staff of the SEC (the “Staff”) or the SEC seeks
to characterize any offering pursuant to a Registration Statement filed pursuant
to this Agreement as constituting an offering of securities by, or on behalf of,
the Company, or in any other manner, such that the Staff or the SEC do not
permit such Registration Statement to become effective and used for resales in a
manner that does not constitute such an offering and that permits the continuous
resale at the market by the holders of Registrable Securities (or as otherwise
may be acceptable to such holder) without being named therein as an
“underwriter,” then the Company shall reduce the number of shares to be included
in such Registration Statement until such time as the Staff and the SEC shall so
permit such Registration Statement to become effective as aforesaid. In making
such reduction, the Company shall (i) reduce, and if necessary, eliminate, in
order (A) any Registrable Securities that are not Securities or then; (B) any
Registrable Securities that are not Securities, then (ii) if necessary, reduce
the number of shares to be included by all Investors on a pro rata basis (based
upon the number of Registrable Securities otherwise required to be included for
each Investor) unless the inclusion of shares by a particular Investor or a
particular set of Investors are resulting in the Staff or the SEC’s “by or on
behalf of the Company” offering position, in which event the shares held by such
Investor or set of Investors shall be the only shares subject to reduction (and
if by a set of Investors on a pro rata basis by such Investors or on such other
basis as would result in the exclusion of the least number of shares by all such
Investors).  In addition, in the event that the Staff or the SEC requires any
Investor seeking to sell securities under a Registration Statement filed
pursuant to this Agreement to be specifically identified as an “underwriter” in
order to permit such Registration Statement to become effective, and such
Investor does not consent to being so named as an underwriter in such
Registration Statement, then, in each such case, the Company shall reduce the
total number of Registrable Securities to be registered on behalf of such
Investor, until such time as the Staff or the SEC does not require such
identification or until such Investor accepts such identification and the manner
thereof. Notwithstanding anything else to the foregoing, any reduction pursuant
to this paragraph will first reduce all securities that are not Registrable
Securities. In the event of any reduction in Registrable Securities pursuant to
this paragraph, an affected Investor shall have the right to require, upon
delivery of a written request to the Company signed by such Investor, the
Company to file a registration statement within 30 days of such request (subject
to any restrictions imposed by Rule 415 promulgated by the SEC under the 1933
Act or required by the Staff or the SEC) for resale by such Investor in a manner
acceptable to such Investor, and the Company shall following such request cause
to be and keep effective such registration statement in the same manner as
otherwise contemplated in this Agreement for registration statements hereunder,
in each case until such time as (i) all Registrable Securities held by such
Investor have been registered and sold pursuant to an effective Registration
Statement in a manner acceptable to such Investor; (ii) all Registrable
Securities may be resold by such Investor without restriction (including,
without limitation, volume limitations) pursuant to Rule 144 (taking account of
any Staff position with respect to “affiliate” status) and without the need for
current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if
applicable); or (iii) such Investor agrees to be named as an underwriter in any
such Registration Statement in a manner acceptable to such Investor as to all
Registrable Securities held by such Investor and that have not theretofore been
included in a Registration Statement under this Agreement (it being understood
that the special demand right under this sentence may be exercised by an
Investor multiple times and with respect to limited amounts of Registrable
Securities in order to permit the resale thereof by such Investor as
contemplated above).

 

15

 

 

5.5 Indemnification.

 

(a) Indemnification by the Company. The Company will indemnify and hold harmless
each Investor, each Participating Holder and each holder of Registrable Shares
and its officers, directors, members, shareholders, partners, representatives,
employees and agents, successors and assigns, and each other person, if any, who
controls such Investor, Participating Holder or holder of Registrable Shares
within the meaning of the 1933 Act, against any losses, obligations, claims,
damages, liabilities, contingencies, judgments, fines, penalties, charges, costs
(including, without limitation, court costs, reasonable attorneys’ fees and
costs of defense and investigation), amounts paid in settlement or expenses,
joint or several, (collectively, “Claims”) incurred in investigating, preparing
or defending any action, claim, suit, inquiry, proceeding, investigation or
appeal taken from the foregoing by or before any court or governmental,
administrative or other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a party thereto, to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof; (ii) any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by the
Company filed in any state or other jurisdiction in order to qualify any or all
of the Registrable Securities under the securities laws thereof (any such
application, document or information herein called a “Blue Sky Application”);
(iii) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
(iv) any violation by the Company or its agents of any rule or regulation
promulgated under the 1933 Act applicable to the Company or its agents and
relating to action or inaction required of the Company in connection with such
registration; or (v) any failure to register or qualify the Registrable
Securities included in any such Registration Statement in any state where the
Company or its agents has affirmatively undertaken or agreed in writing that the
Company will undertake such registration or qualification on an Investor’s
behalf and will reimburse such Investor, Participating Holder or holder of
Registrable Shares and each such officer, director or member and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Claim or action;
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by such
Investor, Participating Holder or holder of Registrable Shares or any such
controlling person in writing specifically for use in such Registration
Statement or Prospectus.

 

(b) Indemnification by the Investors. Each Investor, Participating Holder and
each holder of Registrable Shares agrees, severally but not jointly, to
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors, officers, employees, stockholders, partner,
representatives and each person who controls the Company (within the meaning of
the 1933 Act) against any Claims resulting from any untrue statement of a
material fact or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or preliminary prospectus or amendment or
supplement thereto or necessary to make the statements therein not misleading,
to the extent, but only to the extent that such untrue statement or omission is
contained in any information furnished in writing by such Investor to the
Company specifically for inclusion in such Registration Statement or Prospectus
or amendment or supplement thereto. In no event shall the liability of an
Investor be greater in amount than the dollar amount of the proceeds (net of all
expense paid by such Investor in connection with any claim relating to this
Section 5.5 and the amount of any damages such Investor has otherwise been
required to pay by reason of such untrue statement or omission) received by such
Investor upon the sale of the Registrable Securities included in the
Registration Statement giving rise to such indemnification obligation.

 

16

 

 

(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party
has agreed to pay such fees or expenses; (b) the indemnifying party shall have
failed to assume the defense of such claim or employ counsel reasonably
satisfactory to such person; or (c) in the reasonable judgment of any such
person entitled to indemnification hereunder, based upon written advice of its
counsel, a conflict of interest exists between such person and the indemnifying
party with respect to such claims (in which case, if the person notifies the
indemnifying party in writing that such person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such claim on behalf of such person); and
provided, further, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice shall
materially adversely affect the indemnifying party in the defense of any such
claim or litigation.  It is understood that the indemnifying party shall not, in
connection with any proceeding in the same jurisdiction, be liable for fees or
expenses of more than one separate firm of attorneys at any time for all such
indemnified parties.  No indemnifying party will, except with the consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation.

 

(d) Contribution. If for any reason the indemnification provided for in the
preceding paragraphs (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such Claim in such proportion as is
appropriate to reflect the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations.  No
person guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the 1933 Act shall be entitled to contribution from any person not
guilty of such fraudulent misrepresentation.  In no event shall the contribution
obligation of a holder of Registrable Securities be greater in amount than the
dollar amount of the proceeds (net of all expenses paid by such holder in
connection with any claim relating to this Section 5.5 and the amount of any
damages such holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission) received by it upon
the sale of the Registrable Securities giving rise to such contribution
obligation.

17

 

  

5.6 Cooperation by Participating Holder. Each Participating Holder shall furnish
to the Company or the Underwriter, as applicable, such information regarding the
Investor and the distribution proposed by it as the Company may reasonably
request in connection with any registration or offering referred to in this
Section 5. Each Participating Holder shall cooperate as reasonably requested by
the Company in connection with the preparation of the registration statement
with respect to such registration, and for so long as the Company is obligated
to file and keep effective such registration statement, shall provide to the
Company, in writing, for use in the registration statement, all such information
regarding the Investor and its plan of distribution of the Securities included
in such registration as may be reasonably necessary to enable the Company to
prepare such registration statement, to maintain the currency and effectiveness
thereof and otherwise to comply with all applicable requirements of law in
connection therewith.

 

6. Transfer Restrictions.

 

6.1 Transfer or Resale. Each Investor understands that:

 

Except as provided in the registration rights provisions set forth above, the
sale or resale of all or any portion of the Securities has not been and is not
being registered under the 1933 Act or any applicable state securities laws, and
all or any portion of the Securities may not be transferred unless:

 

(1) the Securities are sold pursuant to an effective registration statement
under the 1933 Act;

 

(2) the Investor shall have delivered to the Company a customary opinion of
counsel that shall be in form, substance and scope reasonably acceptable to the
Company, to the effect that the Securities to be sold or transferred may be sold
or transferred pursuant to an exemption from such registration;

 

(3) the Securities are sold or transferred to an “affiliate” (as defined in Rule
144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”)) of the
Investor who agrees to sell or otherwise transfer the Securities only in
accordance with this Section 6.1 and who is an Accredited Investor;

 

(4) the Securities are sold pursuant to Rule 144; or

 

(5) the Securities are sold pursuant to Regulation S under the 1933 Act (or a
successor rule) (“Regulation S”);

 

and, in each case, the Investor shall have delivered to the Company, at the cost
of the Company, a customary opinion of counsel, in form, substance and scope
reasonably acceptable to the Company. Notwithstanding the foregoing or anything
else contained herein to the contrary, the Securities may be pledged as
collateral in connection with a bona fide margin account or other lending
arrangement.

 

6.2 Transfer Agent Instructions. If an Investor provides the Company with a
customary opinion of counsel, that shall be in form, substance and scope
reasonably acceptable to the Company, to the effect that a public sale or
transfer of such Securities may be made without registration under the 1933 Act
and such sale or transfer is effected, the Company shall permit the transfer and
promptly instruct its transfer agent to issue one or more certificates, free
from restrictive legend, in such name and in such denominations as specified by
such Investor. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Investors, by vitiating the intent
and purpose of the transactions contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 6.2 may be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section 6.2, that the Investors
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate transfer, without the necessity
of showing economic loss and without any bond or other security being required.

 

18

 

 

6.3 Lock-Up. Each Investor hereby agrees not to sell or otherwise transfer, make
any short sale of, grant any option for the purchase of, or enter into any
hedging or similar transaction with the same economic effect as a sale, of any
Common Stock (or other securities) of the Company held by the Investor (other
than Registrable Securities owned by the Investor covered by the Proposed
Registration) during the 180-day period following the effective date of an
underwritten public offering of securities of the Company (including, without
limitation, to accommodate regulatory restrictions on (i) the publication or
other distribution of research reports and (ii) analyst recommendations and
opinions, including, but not limited to, the restrictions contained in NASD Rule
2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments
thereto) (the “Lock-Up Period”); provided, that substantially all current
holders, including all officers, directors and 5% holders, of the Company’s
voting securities are bound by the same requirement during the Lock-Up Period.
The obligations described in this Section 6.3 shall not apply to a registration
relating solely to employee benefit plans on Form S-l or Form S-8 or similar
forms that may be promulgated in the future, or a registration relating solely
to a transaction on Form S-4 or similar forms that may be promulgated in the
future. The Company may impose stop-transfer instructions and may stamp each
certificate with a legend as substantially set forth below with respect to the
shares of Common Stock subject to the foregoing restriction until the end of
such 180-day period. To effect the above, the Investor agrees to execute a
market stand-off agreement with the underwriters in the offering in customary
form consistent with the provisions of this Section 6.3.

 

7. Conditions to Closing of the Investors.

 

The obligation of each Investor hereunder to purchase the Securities at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for each
Investor’s sole benefit and may be waived by such Investor at any time in its
sole discretion by providing the Company with prior written notice thereof:

 

7.1 Representations, Warranties and Covenants. The representations and
warranties of the Company shall be true and correct in all material respects as
of the date when made and as of the Closing Date as though originally made at
that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct in all material respects as of such date)
and the Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required to be performed,
satisfied or complied with by the Company at or prior to the Closing Date. Each
Investor shall have received a certificate, executed by the Chief Executive
Officer of the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by such Investor in
the form reasonably acceptable to such Investor.

 

7.2 Consents. The Company shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the sale of the
Securities.

 

7.3 Closing Deliverables. The Company shall have duly executed and delivered to
each Investor each of the following:

 

(i) this Agreement duly executed by the Company;

 

(ii) the Warrant duly executed by the Company;

 

19

 

 

(iii)  transfer agent instructions from the Company pursuant to Section 6.2;

 

(iv) an Officer’s Certificate of the Company certifying as to the
representations, warranties and covenants in this Agreement and the conditions
set forth in Section 7.1 above;

 

(v) a Secretary’s Certificate of the Company in form and substance reasonably
satisfactory to the Investors; and

 

(vi) Good standing certificates as of a recent date evidencing the good standing
of the Company and each Subsidiary in its jurisdiction of organization;

 

7.4 No Material Adverse Effect. Since the date of first execution of this
Agreement, no event or series of events shall have occurred that reasonably
would have or result in a Material Adverse Effect.

 

7.5 No Prohibition. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits
the consummation of any of the transactions contemplated by the Transaction
Documents.

 

7.6 Other Documents. The Company shall have delivered to such Investor such
other documents, instruments or certificates relating to the transactions
contemplated by this Agreement as such Investor or its counsel may reasonably
request.

 

8. Conditions to Closing of the Company.

 

The obligations of the Company to effect the transactions contemplated by this
Agreement with each Investor are subject to the fulfillment at or prior to each
Closing Date of the conditions listed below.

 

8.1 Representations and Warranties. The representations and warranties made by
such Investor in Section 3 shall be true and correct in all material respects at
the time of Closing as if made on and as of such date.

 

8.2 Corporate Proceedings. All corporate and other proceedings required to be
undertaken by such Investor in connection with the transactions contemplated
hereby shall have occurred and all documents and instruments incident to such
proceedings shall be reasonably satisfactory in substance and form to the
Company.

 

8.3 Closing Deliverables. On or prior to the Initial Closing, each Investor
shall deliver or cause to be delivered to the Company the following:

 

(i) this Agreement duly executed by the Investor; and

 

(ii) the Purchase Price.

 

20

 

 

 

9. Miscellaneous.

 

9.1 Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party) or electronic mail; or (iii) one (1) Business Day after deposit
with an overnight courier service with next day delivery specified, in each
case, properly addressed to the party to receive the same.  The addresses,
facsimile numbers and e-mail addresses for such communications shall be:

 

The Company:

 

Icagen, Inc.

4222 Emperor Blvd., Suite 350
Research Triangle Park,

Durham, North Carolina 27703

Telephone: (919) 941-5206

Facsimile: (919) 941-0813

Attention: Richard Cunningham

Chief Executive Officer

Email: rcunningham@icagen.com

With a copy to:

 

Gracin & Marlow, LLP

The Chrysler Building

405 Lexington Avenue, 26th Floor

New York, New York 10174

Telephone: (212) 907-6457

Facsimile: (212) 208-4657

Attention: Leslie Marlow, Esq.

Email: lmarlow@gracinmarlow.com

 

 

The Investors:

 

As per the contact information provided on the signature pages hereof.

 

9.2 Survival of Representations and Warranties. Each party hereto covenants and
agrees that the representations and warranties of such party contained in this
Agreement shall survive the Closing. Each Investor shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.

 

9.3 Indemnification.

 

(a) The Company agrees to indemnify and hold harmless each Investor and its
Affiliates and their respective directors, officers, employees and agents from
and against any and all losses, claims, damages, liabilities and expenses
(including without limitation reasonable attorney fees and disbursements and
other expenses incurred in connection with investigating, preparing or defending
any action, claim or proceeding, pending or threatened and the costs of
enforcement thereof) (collectively, “Losses”) to which such Person may become
subject as a result of any breach of representation, warranty, covenant or
agreement made by or to be performed on the part of the Company under the
Transaction Documents, and will reimburse any such Person for all such amounts
as they are incurred by such Person.

 

(b) Promptly after receipt by any Investor (the “Indemnified Person”) of notice
of any demand, claim or circumstances which would or might give rise to a claim
or the commencement of any action, proceeding or investigation in respect of
which indemnity may be sought pursuant to Section 9.4, such Indemnified Person
shall promptly notify the Company in writing and the Company shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Person, and shall assume the payment of all fees and expenses;
provided, however, that the failure of any Indemnified Person so to notify the
Company shall not relieve the Company of its obligations hereunder except to the
extent that the Company is materially prejudiced by such failure to notify.  In
any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless: (i) the Company and the Indemnified Person
shall have mutually agreed to the retention of such counsel; or (ii) in the
reasonable judgment of counsel to such Indemnified Person representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them.  The Company shall not be liable for any
settlement of any proceeding effected without its written consent, which consent
shall not be unreasonably withheld, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Company shall indemnify and
hold harmless such Indemnified Person from and against any loss or liability (to
the extent stated above) by reason of such settlement or judgment. Without the
prior written consent of the Indemnified Person, which consent shall not be
unreasonably withheld, the Company shall not affect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Person from all liability arising out of such proceeding.

 

21

 

 

9.4 Entire Agreement. This Agreement contains the entire agreement between the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements and understandings of the parties, oral and written, with
respect to the subject matter contained herein.

 

9.5 Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and,
except for persons entitled to indemnification pursuant to Section 5.5, is not
for the benefit of, nor may any provision hereof be enforced by, any other
person.

 

9.6 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and assigns. Neither the Company
nor any Investor shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other. Notwithstanding the
foregoing, but subject to the provisions of Section 6.1 hereof, any Investor
may, without the consent of the Company, assign its rights hereunder to any
person that purchases Units or the shares or warrants included therein or
issuable upon conversion or exercise thereof or as dividends with respect to the
Series C Preferred Shares in a private transaction from an Investor or to any of
its “affiliates,” as that term is defined under the 1934 Act or any subsequent
person acquiring such Units or shares in accordance herewith.

 

9.7 Most Favored Nation. While any of the Securities remain outstanding, the
Company shall not enter into any public or private offering of its securities
(including securities convertible into shares of Common Stock) with any
individual or entity (an “Other Investor”) that has the effect of establishing
rights or otherwise benefiting such Other Investor in a manner more favorable in
any material respect to such Other Investor than the rights and benefits
established in favor of the Investor by this Agreement or the Series C Preferred
Shares or Warrant unless, in any such case, the Investor has been provided with
written notice (the “Company Notice”) and no less than 10 days to exercise the
right, but not the obligation, to exchange all of the Securities held by it (and
its rights and obligations hereunder) for an equivalent amount of the securities
to be sold to, and the rights and obligations to be established with, the Other
Investor, based on the purchase price paid by Investor under this Agreement for
the Securities so exchanged, except that Investor shall retain (i) a more
favorable Warrant exercise price of the Other Investor and (ii) a senior
liquidation preference to the Other Investor. In order to exercise such right,
an Investor shall send the Company a written notice of its exercise (the
“Investor Notice”). If the Investor Notice is not received by the Company within
ten (10) days of Investor’s receipt of the Company Notice, the rights under this
Section shall terminate with respect to such offering of the Company’s
securities. Notwithstanding the foregoing, this Section 9.8 shall not include:
(i) securities issued in an underwritten public offering by the Company
(including any warrants issued to the underwriters); (ii) the issuance and/or
sale of securities by the Company in connection with a business acquisition,
joint venture or partnership; (iii) the issuance by the Company of shares of
common stock upon the exercise of a stock option or warrant or the conversion of
a security outstanding on the date hereof; (iv) the issuance of securities by
the Company as compensation; and (v) the issuance of securities by the Company
under agreements already in place and disclosed to Investors as of the date of
this Agreement.

 

22

 

 

9.8 Public Disclosures. The Company shall (i) on or before 8:30 a.m., New York
time, on the fourth (4th) Business Day after the date of the First Closing under
this Agreement issue a press release (the “Press Release”) disclosing the
material terms of the transactions contemplated by the Transaction Documents and
(ii) on or before 8:30 a.m., New York time, within four (4) Business Days after
the date of this Agreement, file a Current Report on Form 8-K describing all the
material terms of the transactions contemplated by the Transaction Documents in
the form required by the 1934 Act and attaching all the material Transaction
Documents (including, without limitation, this Agreement (and all schedules to
this Agreement) (including all attachments, the “Form 8-K Filing”). From and
after the issuance of the Press Release, the Company shall have disclosed all
material, non-public information (if any) delivered to any of the Investors by
the Company in connection with the transactions contemplated by the Transaction
Documents. Neither the Company nor any Investor shall issue any press releases
or any other public statements with respect to the transactions contemplated
hereby; provided, however, the Company shall be entitled, without the prior
approval of any Investor, to make the Press Release and any other press release
or other public disclosure with respect to such transactions (A) in substantial
conformity with the Form 8-K Filing and contemporaneously therewith and (B) as
is required by applicable law and regulations (provided that in the case of
clause (A) each Investor shall be consulted by the Company in connection with
any such press release or other public disclosure prior to its release). Unless
required by law or regulation, without the prior written consent of the
applicable Investor (which may be granted or withheld in such Investor’s sole
discretion), the Company shall not disclose the name of such Investor in any
filing (other than the Form 8-K Filing, any Registration Statement registering
the Securities and any other filing as is required by applicable law and
regulations), announcement, release or otherwise.

 

9.9 Binding Effect; Benefits. This Agreement and all the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; nothing in this Agreement,
expressed or implied, is intended to confer on any persons other than the
parties hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.

 

9.10 Amendment; Waivers. All modifications, amendments or waivers to this
Agreement shall require the written consent of each of (i) the Company and
(ii) a majority-in-interest of the Investors (based on the number of Securities
purchased hereunder).

 

9.11 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
conflict of law provisions thereof, and the parties hereto.

 

9.12 Arbitration. Each Investor and the Company agree that they shall resolve
all disputes, controversies and differences which may arise between them, out of
or in relation to or in connection with this Agreement, after discussion in good
faith attempting to reach an amicable solution.  Provided that such disputes,
controversies and differences remain unsettled after discussion between the
parties, both parties agree that those unsettled matter(s) shall be finally
settled by arbitration in New York, New York in accordance with the latest Rules
of the American Arbitration Association. Such arbitration shall be conducted by
three arbitrators appointed as follows: each party will appoint one arbitrator
and the appointed arbitrators shall appoint a third arbitrator.  If within
thirty (30) days after confirmation of the last appointed arbitrator, such
arbitrators have failed to agree upon a chairman, then the chairman will be
appointed by the American Arbitration Association.  The decision of the tribunal
shall be final and may not be appealed.  The arbitral tribunal may, in its
discretion award fees and costs as part of its award. Judgment on the arbitral
award may be entered by any court of competent jurisdiction, including any court
that has jurisdiction over either party or any of their assets.  At the request
of any party, the arbitration proceeding shall be conducted in the utmost
secrecy subject to a requirement of law to disclose.  In such case, all
documents, testimony and records shall be received, heard and maintained by the
arbitrators in secrecy, available for inspection only by any party and by their
attorneys and experts who shall agree, in advance and in writing, to receive all
such information in secrecy.

 

23

 

 

9.13 Further Assurances. Each party hereto shall do and perform or cause to be
done and performed all such further acts and shall execute and deliver all such
other agreements, certificates, instruments and documents as any other party
hereto reasonably may request in order to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the transactions
contemplated hereby.

 

9.14 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which taken together
shall constitute one and the same instrument.  This Agreement may also be
executed via facsimile, which shall be deemed an original.

 

  9.15 Independent Nature of Investors. The obligations of each Investor under
this Agreement or other transaction document are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in any
way for the performance of the obligations of any other Investor under this
Agreement or any other transaction document.  Each Investor shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.  The decision of each Investor to purchase Securities pursuant to
this Agreement has been made by such Investor independently of any other
Investor and independently of any information, materials, statements or opinions
as to the business, affairs, operations, assets, properties, liabilities,
results of operations, condition (financial or otherwise) or prospects of the
Company which may have been made or given by any other Investor or by any agent
or employee of any other Investor, and no Investor or any of its agents or
employees shall have any liability to any other Investor (or any other person)
relating to or arising from any such information, materials, statements or
opinions.  Nothing contained herein or in any other transaction document, and no
action taken by any Investor pursuant hereto or thereto, shall be deemed to
constitute the Investors as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Investors are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by this Agreement.  Except as otherwise provided in
this Agreement or any other transaction document, each Investor shall be
entitled to independently protect and enforce its rights arising out of this
Agreement or out of the other transaction documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. Each Investor has been represented by its own
separate legal counsel in connection with the transactions contemplated hereby.

  

[Signature page follows]

 

24

 

 

IN WITNESS WHEREOF, the undersigned Investors and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first above
written.

 

ICAGEN, INC.       By:       Name:   Richard Cunningham   Title:   Chief
Executive Officer  

 

INVESTORS:

 

The Investors executing the Signature Page in the form attached hereto as Annex
A and delivering the same to the Company or its agents shall be deemed to have
executed this Agreement and agreed to the terms hereof.

  

25

 

 

Annex A

Securities Purchase Agreement

Investor Counterpart Signature Page

 

The undersigned, desiring to: (i) enter into this Securities Purchase Agreement
dated as of March __, 2018 (the “Agreement”), with the undersigned, Icagen,
Inc., a Delaware corporation (the “Company”), in or substantially in the form
furnished to the undersigned and (ii) purchase the Units as set forth below,
hereby agrees to purchase such Units from the Company as of the Closing and
further agrees to join the Agreement as a party thereto, with all the rights and
privileges appertaining thereto, and to be bound in all respects by the terms
and conditions thereof.  The undersigned specifically acknowledges having read
the representations in the Agreement Section entitled “Representations,
Warranties and Acknowledgments of the Investors,” and hereby represents that the
statements contained therein are complete and accurate with respect to the
undersigned as an Investor.

 

All Investors:

 

Address:  _______________________________

 

________________________________________

 

________________________________________

 

Telephone No.: ___________________________

 

Facsimile No.: ____________________________

 

Email Address: ___________________________

 

Name of Investor:

 

If an entity:

 

Print Name of Entity:

 

 

_______________________________________

By:

Name:

Title:

 

If an individual:

 

Print Name:  ____________________________

 

Signature:  ______________________________

 

If joint individuals:

 

Print Name:  _____________________________

 

Signature:  ______________________________

 

The Investor hereby elects to purchase ____________ Units (to be completed by
Investor) at a purchase price of $100,000 (One Hundred Thousand Dollars) per
Unit under the Securities Purchase Agreement at a total Purchase Price of
$__________ (to be completed by Investor)

  

26

 

 

Exhibit A-1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27

 

 

Exhibit A-2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28