Document:

ex10_1.htm

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”), dated as of April 18, 2011, is made by and between NanoViricides, Inc., a Nevada corporation (the “Company”), and Seaside 88, LP, a Florida limited partnership (the “Purchaser”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to the Registration Statement (as defined below), the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

1.1           Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

“20-Day VWAP” means the daily volume weighted average of actual trading prices measured in hundredths of cents of the Common Stock of the Company on the Trading Market for the twenty (20) consecutive Trading Days ending on the last Trading Day immediately preceding a Conversion Date.

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.4.

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“Agreement” shall have the meaning ascribed to such term in the introduction hereof, as the same may be amended from time to time.

“Amendment” shall have the meaning ascribed to such term in Section 2.1(a).

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

  

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“Certificate of Designation” means the Certificate of Designation, Rights and Preferences of the Series B Stock as filed with the Secretary of State of the State of Nevada.

“Closing” means the Initial Closing and the Subsequent Closing.

“Closing Dates” means the Initial Closing Date and the Subsequent Closing Date.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

“Common Stock Equivalents” means any securities of the Company or its Subsidiaries that would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Company” shall have the meaning ascribed to such term in the introduction hereof, including any successor or assign thereof.

“Company Counsel” means Tarter Krinsky & Drogin LLP, 1350 Broadway, New York, NY 10018.

“Conversion Date” shall have the meaning ascribed to such term in Section 2.6(a).

“Conversion Shares” means the shares of Common Stock issued or issuable to the Purchaser upon conversion of the Shares.

“Disclosure Schedules” shall have the meaning ascribed to such term in the introduction to Section 3.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Floor” shall mean $0.20 (as the same may be proportionately adjusted in respect of any stock split, stock dividend, combination, recapitalization or the like with respect to the Common Stock).

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

“Initial Closing” means the closing of the purchase and sale of the first 250,000 Shares pursuant to Section 2.2.

 

“Initial Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchaser’s obligations to pay the Subscription Amount for the first tranche of 250,000 Shares and (ii) the Company’s obligations to deliver such 250,000 Shares, in each case, have been satisfied or waived, but in no event later than the third Trading Day following the date hereof.

  

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“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

“Per Share Purchase Price” equals $10.00, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions that occur after the date of this Agreement.

“Per Share Conversion Price” shall be an amount equal to the lower of (i) the daily volume weighted average of actual trading prices (measured in hundredths of cents) during normal trading hours of the Common Stock of the Company on the Trading Market for the ten consecutive Trading Days ending on the last Trading Day immediately preceding a Conversion Date, as reported by Bloomberg Financial Markets, multiplied by 0.85 and (ii) the daily volume weighted average of actual trading prices (measured in hundredths of cents) during normal trading hours of the Common Stock of the Company on the Trading Market for the Trading Day immediately preceding a Conversion Date, as reported by Bloomberg Financial Markets, multiplied by 0.88.

“Permits” shall have the meaning ascribed to such term in Section 3.1(m).

“Person” means an individual, corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Prospectus Supplement” means the supplement or supplements to the base prospectus contained in the Registration Statement to be filed in connection with the sale to the Purchaser, and the resale by the Purchaser, of the Securities.

“Purchaser” shall have the meaning ascribed to such term in the introduction hereof, including any successor or assign thereof.

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.7.

“Registration Statement” means the registration statement of the Company, Commission File No. 333-165221, as the same may amended from time to time, covering the issuance and sale to the Purchaser, and the resale by the Purchaser, of the Securities.

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

  

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“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

“Securities” means the Shares and the Conversion Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Series B Stock” means the shares of Series B Convertible Preferred Stock, $0.001 par value per share, of the Company.

“Shares” means the shares of Series B Stock issued to the Purchaser pursuant to this Agreement.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

“Subscription Amount” shall have the meaning ascribed to such term in Section 2.4(b)(ii).

“Subsequent Closing” means the closing of the purchase and sale of the second 250,000 Shares pursuant to Section 2.3.

“Subsequent Closing Date” means the day 14 weeks subsequent to the Initial Closing Date (or, if any such day is not a Trading Day, then the first day thereafter that is a Trading Day), or such later date when all conditions precedent to (i) the Purchaser’s obligations to purchase the second tranche of 250,000 Shares and (ii) the Seller’s obligations to deliver such 250,000 Shares at the Subsequent Closing have been satisfied or waived, unless this Agreement is earlier terminated pursuant to the terms hereof.

“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the New York Stock Exchange, the NYSE Alternext Exchange, the NYSE Amex, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the Over-The-Counter Bulletin Board (or any successors to any of the foregoing).

  

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“Transaction Documents” means this Agreement and all schedules hereto (including the Disclosure Schedules) and any other documents or agreements executed in connection with the transactions contemplated hereunder.

“Transfer Agent” means Corporate Stock Transfer, Inc., the current transfer agent of the Company, with a mailing address of 3200 Cherry Creek Drive South, Suite 430, Denver, CO 80209 and a facsimile number of (302) 282-5800, and any successor transfer agent of the Company.

ARTICLE II.

PURCHASE AND SALE

2.1           Sale and Issuance of the Series B Stock.

(a)           On or before the Initial Closing Date, the Company shall adopt and file with the Secretary of State of the State of Nevada an Amendment to the Certificate of Designation for the Series B Stock in the form of Exhibit A attached hereto and made a part hereof (the “Amendment”).

(b)           On the terms and subject to the conditions set forth in this Agreement, at each Closing the Purchaser agrees to purchase, and the Company agrees to sell, the applicable number of shares of the Series B Stock at the Per Share Purchase Price.

2.2           Initial Closing.  On the Initial Closing Date, upon the terms and subject to the conditions set forth herein, the Company shall issue and sell to the Purchaser, in book entry form to be maintained by the Company, and the Purchaser shall purchase from the Company, 250,000 shares of Series B Stock at the Per Share Purchase Price.  Upon satisfaction or waiver of the covenants and conditions set forth in Sections 2.4 and 2.5, the Initial Closing shall occur remotely via the exchange of documents and signatures on the Initial Closing Date.

2.3           Subsequent Closing.  On the Subsequent Closing Date, upon the terms and subject to the conditions set forth herein, the Company shall issue and sell to the Purchaser, in book entry form to be maintained by the Company, and the Purchaser shall purchase from the Company, 250,000 shares of Series B Stock at the Per Share Purchase Price.  Upon satisfaction or waiver of the covenants and conditions set forth in Sections 2.4 and 2.5, the Subsequent Closing shall occur remotely via the exchange of documents and signatures on the Subsequent Closing Date.

  

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2.4           Deliveries.

(a)           On or prior to each Closing Date, the Company shall deliver or cause to be delivered to the Purchaser the following:

(i)             solely on the Initial Closing Date, this Agreement duly executed by the Company;

(ii)            solely on the Initial Closing Date, evidence reasonably satisfactory to the Purchaser and its counsel that the Amendment has been filed and is in effect;

(iii)           the opinion of Company Counsel, substantially in the form of Exhibit B hereto;

(iv)           an officer’s certificate of the Company’s Chief Executive Officer or Chief Financial Officer in the form of Exhibit C attached hereto; and

(v)            a certificate evidencing the number of Shares to be purchased by the Purchaser at such Closing, registered in the name of the Purchaser.

(b)           On or prior to each Closing Date, the Purchaser shall deliver or cause to be delivered to the Company the following:

(i)             solely on the Initial Closing Date, this Agreement duly executed by the Purchaser; and

(ii)            funds in United States Dollars in an amount equal to the Per Share Purchase Price multiplied by the number of Shares to be purchased by the Purchaser at such Closing (the “Subscription Amount”), in each case less the amount due the Purchaser for reimbursement of its expenses pursuant to Section 5.2 hereof, by wire transfer to the account as specified in writing by the Company.

2.5           Closing Conditions.

(a)           The obligations of the Company hereunder to sell Shares at a Closing are subject to the satisfaction by the Purchaser, or waiver by the Company, of each of the following conditions:

(i)             the representations and warranties of the Purchaser contained herein shall be true and correct as of the Closing Date (unless such representations and warranties speak as of a specific date, in which case they shall be true and correct as of such date);

(ii)            the Purchaser shall have performed and complied with all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date; and

  

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(iii)           the Purchaser shall have delivered the items set forth in Section 2.4(b) of this Agreement applicable for such Closing.

(b)           The obligations of the Purchaser hereunder to acquire Shares at a Closing are subject to the satisfaction by the Company, or waiver by the Purchaser, of each of the following conditions:

(i)             the representations and warranties of the Company contained herein shall be true and correct as of the Closing Date (unless such representations and warranties speak as of a specific date, in which case they shall be true and correct as of such date);

(ii)            the Company shall have performed and complied with all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date;

(iii)           the Company shall have delivered the items set forth in Section 2.4(a) of this Agreement applicable for such Closing;

(iv)           the Company shall have obtained all authorizations, approvals and permits, if any, of any Person required in connection with the lawful issuance and sale of the Shares to the Purchaser at such Closing, and all such authorizations, approvals and permits shall be effective as of such Closing;

(v)           there shall have been no Material Adverse Effect with respect to the Company since the date hereof;

(vi)           the Registration Statement shall be in full force and effect; and

(vii)          from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Purchaser, makes it impracticable or inadvisable to purchase the Shares at the Closing.

2.6           Automatic Conversion of Shares; Conversion Dates; Per Share Conversion Price.

(a)           Each of the Company and Purchaser agrees that, (i) on each of the Initial Closing Date and the Subsequent Closing Date, 40,000 Shares shall automatically convert, without any action on the part of the Purchaser, into shares of Common Stock of the Company, and (ii) on every fourteenth (14th) day after each of the Initial Closing Date and Subsequent Closing Date (or, if such day in not a Trading Day, then the first day thereafter that is a Trading Day) (each, a “Conversion Date”), 40,000 Shares shall automatically convert (or such lesser number of Shares that then remains unconverted), without any action on the part of the Purchaser, into shares of Common Stock of the Company until all of the Shares have been converted, in each case subject to the conditions to conversion set forth herein.

  

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(b)           No conversion shall occur on a Conversion Date unless the following conditions are met:

(i)             the 20-Day VWAP as calculated with respect to such Conversion Date shall equal or exceed the Floor;

(ii)            the Registration Statement shall be in full force and effect; and

(iii)           as of the Conversion Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market, and, at any time prior to the Conversion Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Purchaser, makes it impracticable or inadvisable to sell the Conversion Shares issuable in connection with such conversion.

(c)           For each Conversion Date for which all conditions to conversion have been satisfied, each Share shall be convertible into the number of shares of Common Stock that results from dividing the Per Share Purchase Price by the Per Share Conversion Price in effect at the time of conversion for each Share being converted.  The Per Share Conversion Price shall be subject to adjustment from time to time as provided in the Certificate of Designation.  On each Conversion Date that occurs, the Company shall deliver or cause to be delivered to the Purchaser the number of Conversion Shares issuable on each such Conversion Date, registered in the name of the Purchaser, via the DTC DWAC system, as specified on the signature page hereto.

(d)           If, with respect to any Conversion Date, the Floor is not met or the Registration Statement is not in full force and effect, then no conversion of Shares will occur on such Conversion Date.  With respect to any Conversion Date on which no conversion of Shares occurs due to the failure of the Registration Statement to be in full force and effect, the redemption rights set forth in the Certificate of Designation shall be available to the Purchaser with respect to such Securities.  With respect to any Conversion Date on which no conversion of Shares occurs due to the failure of the Floor to be met, the Shares not converted on such Conversion Date shall be added to the Shares to be converted on the following Conversion Date.

(e)           In connection with each conversion on a Conversion Date, the Company shall provide irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, via the DWAC DTC system, the number of Conversion Shares to be issued to the Purchaser at each such Conversion Date, registered in the name of the Purchaser as specified on the signature page hereto.

  

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2.7           Ownership Limitation.  In no event, as a result of any conversion or otherwise, shall the Purchaser own, beneficially or of record, more than 4.99% of the issued and outstanding Common Stock of the Company immediately after such conversion or other event.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1           Representations and Warranties of the Company.  Except as set forth in the corresponding section of the disclosure schedules delivered concurrently herewith (the “Disclosure Schedules”), which Disclosure Schedules may be updated in connection with the Subsequent Closing and which shall be deemed a part hereof and shall qualify any representation made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to the Purchaser:

(a)           Subsidiaries.  All of the direct and indirect Subsidiaries of the Company are set forth on Schedule 3.1(a).  The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase such securities.  If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.

(b)           Organization and Qualification.  Each of the Company and its Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and its Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a material adverse effect on (i) the legality, validity or enforceability of any Transaction Document, (ii) the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”).  No Action has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

  

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(c)           Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of this Agreement and each of the other Transaction Documents to which it is a party by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith other than in connection with the Required Approvals (as defined below).  Each Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with its terms, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d)           No Conflicts.  The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, and the consummation by the Company of the transactions contemplated hereby and thereby (including without limitation the issuance and sale of the Securities), do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected, except in the case of clause (ii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

(e)           Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.3 of this Agreement, and (ii) such filings, if any, as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

  

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(f)           Issuance of the Securities.  The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Shares on each Conversion Date, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Shares.  The issuance by the Company to the Purchaser, and the resale by the Purchaser, of the Securities have been registered under the Securities Act and all of the Conversion Shares when delivered will be freely transferable and tradable on the Trading Market by the Purchaser without restriction (other than any restrictions arising solely from an act or omission of the Purchaser).  The Registration Statement is effective and available for the issuance or resale of the Securities thereunder and the Company has not received any notice that the Commission has issued or intends to issue a stop-order with respect to the Registration Statement or that the Commission otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened in writing to do so.  The “Plan of Distribution” section under the Registration Statement as supplemented by the Prospectus Supplement permits the issuance and sale or resale of the Securities, including the Conversion Shares.

(g)           Capitalization.  The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof.  The Company has not issued any capital stock since its most recently filed periodic or current report under the Exchange Act, other than (i) in payment for goods or services, (ii) pursuant to the Company’s employee compensation agreements, (iii) upon the exercise of employee stock options under the Company’s stock option plans, (iv) to employees pursuant to the Company’s employee stock purchase plans and (v) pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act.  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  Except as a result of the purchase and sale of the Securities or as set forth on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.  The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities.  All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  There are no stockholder agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

  

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(h)           SEC Reports; Financial Statements.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) and any notices, reports or other filings pursuant to applicable requirements of the Trading Market, on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports and notices, reports or other filings pursuant to applicable requirements of the Trading Market prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The Company has never been an issuer subject to Rule 144(i) under the Securities Act.  The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements (i) have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and (ii) fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(i)           Material Changes; Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans.  The Company does not have pending before the Commission any request for confidential treatment of information.  Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or development has occurred or exists, or is reasonably expected to occur or exist, with respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.

  

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(j)           Litigation.  There is no claim, action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties or assets before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign, and including without limitation an informal investigation or partial proceeding, such as a deposition) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any Subsidiary, nor any director or officer thereof (in his or her capacity as such), is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company (in his or her capacity as such).  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act and, to the Company’s knowledge, no proceeding for such purpose is pending before or threatened by the Commission.

(k)           Labor Relations.  No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which dispute could reasonably be expected to result in a Material Adverse Effect.  None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good.  No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.  The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

  

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(l)           Compliance.  Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree, or order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

(m)           Regulatory Permits.  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local and foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports (“Permits”), except where the failure to possess such Permits could not reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary has received any notice of Actions relating to the revocation or modification of any Permit.

(n)           Title to Assets.  The Company and the Subsidiaries have good and marketable title to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

(o)           Patents and Trademarks.  The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described in the SEC Reports as necessary or material for use in connection with their respective businesses and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement.  Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate, misappropriate or infringe upon the rights of any Person.  To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.  The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all items of intellectual property (whether owned or licensed), except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

  

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(p)           Insurance.  The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged.  Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

(q)           Transactions With Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

(r)           Sarbanes-Oxley; Internal Accounting Controls.  The Company is and shall be as of each Closing Date in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof and thereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of such Closing Date.  The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

  

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(s)           Certain Fees.  Except for a fee payable to Midtown Partners & Co., LLC, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.  The Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated herein that may be due in connection with the transactions contemplated by the Transaction Documents.

(t)           Investment Company.  The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

(u)           Listing and Maintenance Requirements. The Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act, nor has the Company received any notification that the Commission is contemplating terminating such registration.  The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company does not comply with the listing or maintenance requirements of such Trading Market.  The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The issuance and sale of the Shares hereunder does not contravene the rules and regulations of the Trading Market.

(v)           Application of Takeover Protections.  The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) and the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of the Purchaser and the Company fulfilling their respective obligations or exercising their respective rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchaser’s ownership of the Securities.

(w)           Effective Registration Statement.  The Registration Statement has been declared effective by the Commission and remains effective as of the date hereof and the Company knows of no reason why the Registration Statement will not continue to remain effective for the foreseeable future.  The Company is eligible to use Form S-3 registration statements for the issuance of securities.

  

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(x)           Disclosure.  The Company confirms that neither it nor any other Person acting on its behalf (as such term is used in Regulation FD) has provided the Purchaser or its agents or counsel with any information that constitutes or might reasonably be expected to constitute material, non-public information except insofar as the existence and terms of the proposed transactions hereunder may constitute such information.  The Company understands and confirms that the Purchaser will rely on the foregoing representation in effecting transactions in securities of the Company.  All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(y)           Solvency.  Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Shares hereunder: (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs, taking into account the particular capital requirements of the business conducted by the Company and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid.  The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).  The Company has no knowledge of any facts or circumstances that lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the last Closing Date hereunder.

(z)           Tax Status.  Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary (i) has made or filed all income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all 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 or of any Subsidiary know of no basis for any such claim.

  

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(aa)          Acknowledgment Regarding the Purchaser’s Acquisition of the Securities.  The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby.  The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by the Purchaser or its representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchaser’s acquisition of the Securities.  The Company further represents to the Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby and thereby by the Company and its representatives.

(bb)         Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent (if any) in connection with the placement of the Securities.

(cc)          Stock Option Plans.  Each stock option granted by the Company under the Company’s stock option plans was granted (i) in accordance with the terms of the applicable Company stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law.  No stock option granted under any of the Company’s stock option plans has been backdated.  The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.

3.2           Representations and Warranties of the Purchaser.  The Purchaser makes the following representations and warranties to the Company:

(a)           Organization; Authority.  The Purchaser is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Florida, with full right, power and authority to enter into and to consummate the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of this Agreement and the other Transaction Documents to which it is a party by the Purchaser and performance by the Purchaser of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Purchaser and no such further action is required.  Each Transaction Document to which the Purchaser is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

  

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(b)           Experience of The Purchaser.  The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.  The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

(c)           Short Sales.  The Purchaser has not directly or indirectly executed any Short Sales or other hedging transactions in the securities of the Company through the date hereof.

The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect the Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1           No Transfer Restrictions.  Certificates evidencing the Securities shall not contain any legend restricting their transferability by the Purchaser.  The Company shall cause its counsel to issue a legal opinion to the Company’s Transfer Agent if required by the Transfer Agent to effect a transfer of any of the Securities; such opinion shall be provided by the Company’s counsel at no expense to the Purchaser.

4.2           Furnishing of Information; Public Information.  As long as the Purchaser owns any Securities, the Company covenants to use its best efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Section 15(d) of the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.  As long as the Purchaser owns Securities that are “restricted securities” as that term is defined in Rule 144 that it has held for less than one year in accordance with Rule 144(d), if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchaser and make publicly available in accordance with Rule 144(c) such information as is required for the Purchaser to sell the Securities.  The Company further covenants that it will undertake its best efforts to take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act, including without limitation, within the requirements of the exemption provided by Rule 144.

4.3           Securities Laws Disclosure; Publicity.  The Company shall timely issue and file a Current Report on Form 8-K and press release disclosing the material terms of the transactions contemplated hereby, and including the Transaction Documents as exhibits to such Current Report on Form 8-K, in each case reasonably acceptable to the Purchaser and its counsel.   From and after the issuance of such press release, the Company shall have publicly disclosed all material, non-public information delivered to the Purchaser by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents, in connection with the transactions contemplated by the Transaction Documents.  The Company and the Purchaser shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor the Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the other party.

  

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4.4           Shareholder Rights Plan.  No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that the Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchaser.

4.5           Non-Public Information.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide the Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto the Purchaser shall have executed a written agreement with the Company regarding the confidentiality and use of such information.  The Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

4.6           Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital and general corporate purposes and shall not use such proceeds for: (a) the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business consistent with prior practice), (b) the redemption of any Common Stock or Common Stock Equivalents, (c) the settlement of any outstanding litigation or (d) in violation of the Foreign Corrupt Practices Act of 1977, as amended, or any rules or regulations of the Office of Foreign Assets Control of the U.S. Treasury Department.

4.7           Indemnification of the Purchaser.  Subject to the provisions of this Section 4.7, the Company will indemnify and hold the Purchaser, Seaside 88 Advisors, LLC, and their respective directors, officers, shareholders, members, partners, employees, agents and Affiliates (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Affiliate, each Person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of the Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of the Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings the Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities laws or any conduct by the Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to such Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents.  The indemnification required by this Section 4.7 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred.  The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others, and any liabilities the Company may be subject to pursuant to law.

  

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4.8           Listing of Common Stock.  The Company shall use best efforts to maintain the listing or quotation (as applicable) of the Common Stock on its current Trading Market, and concurrently with the Initial Closing the Company shall apply to list or quote the maximum number of Conversion Shares on such Trading Market and promptly secure the listing of all of such Conversion Shares on such Trading Market.  The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Conversion Shares, and will take such other action as is necessary to cause all of the Conversion Shares to be listed or quoted on such other Trading Market as promptly as possible.  The Company will then take all action reasonably necessary to continue the listing or quotation and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

  

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4.9           Stockholder Approval.  The Company shall not issue Conversion Shares to the Purchaser if such issuance would require stockholder approval pursuant to applicable rules of the Trading Market unless and until such stockholder approval is obtained.

4.10          Certain Transactions.  The Purchaser covenants that neither it, nor any Affiliate acting on its behalf, will execute any Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending on the Subsequent Closing Date.

4.11          Delivery of Securities After Closing.  The Company shall deliver, or cause to be delivered, the Shares purchased by the Purchaser at a Closing to the Purchaser within three (3) Trading Days of the applicable Closing Date.

ARTICLE V.

MISCELLANEOUS

5.1           Termination.  This Agreement may be terminated by the Purchaser by written notice to the Company if the Initial Closing has not been consummated on or before April [15], 2011; provided, however, that such termination will not affect the right of any party to sue for any breach by the other party.

5.2           Fees and Expenses. Except as otherwise set forth in this Agreement and as set forth in this Section 5.2, each party shall pay the fees and expenses of its own advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all stamp and other taxes and duties levied in connection with the delivery of the Securities.  Notwithstanding the foregoing, at the Initial Closing the Company shall reimburse the Purchaser for the fees and expenses of its counsel, White White & Van Etten PC, in an amount equal to $25,000 and at the Subsequent Closing the Company shall reimburse the Purchaser for the fees and expenses of its counsel, White White & Van Etten PC, in an amount equal to $6,250.  Such legal fees may be withheld by the Purchaser from the applicable Subscription Amount to be paid for the Shares purchased at the Initial Closing and Subsequent Closing.

5.3           Entire Agreement.  The Transaction Documents, together with the schedules thereto (including the Disclosure Schedules), contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.4           Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile or electronic mail at the facsimile number or electronic mail address set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or electronic mail at the facsimile number or electronic mail address set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto or as otherwise provided by written notice delivered in compliance with this Section 5.4 by the addressee to the other party.

  

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5.5           Amendments; Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

5.6           Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

5.7           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser (other than by merger).  The Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Company.

5.8           No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8.

5.9           Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  The parties hereby waive all rights to a trial by jury.  If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

5.10          Survival.  The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

5.11          Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

  

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5.12          Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.

5.13          Replacement of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction.  The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

5.14          Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever the Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then the Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

5.15          Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchaser and the Company will be entitled to specific performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

5.16          Payment Set Aside.  To the extent that the Company makes a payment or payments to the Purchaser pursuant to any Transaction Document or the Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

  

24

  

5.17          Construction.  The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto.

*           *           *

  

25

  

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

	  NanoViricides, Inc.	  	
Address for Notice:

	 	  	  	  
	 	  	  	  
	By:	 	  	
135 Wood Street

	 	
Name:

	  	
Suite 205

	 	
Title:

	  	
West Haven, CT 06516

	 	  	  	
Attention:

	 	  	  	
Fax: (203)

	 	  	  	  
	 	  	  	  
	  With a copy (which shall not constitute notice) to:	  	
Tarter, Krinsky & Drogin LLP

	 	  	  	
1350 Broadway

	 	  	  	
New York, NY 10018

	 	  	  	
Attention: Peter Campitiello, Esq.

	 	  	  	
Fax: (212) 216-8001

	 	  	  	  
	Seaside 88, LP	  	
Address for Notice:

	 	  	  	  
	By:  Seaside 88 Advisors, LLC	  	  
	 	  	  	
2700 North Ocean Drive

	By:	 	  	
Suite 1903A

	 	
Name: William J. Ritger

	  	
Singer Island, FL 33404

	 	
Title:  Manager

	  	
Attention:  William J. Ritger and

	 	  	  	
Denis M. O’Donnell, M.D.

	 	  	  	
Fax:  866-358-6721

	 	  	  	  
	With a copy (which shall not constitute notice) to:	  	
White White & Van Etten PC

	 	  	  	
55 Cambridge Parkway

	 	  	  	
Cambridge, MA 02142

	 	  	  	
Attention:  David A. White, Esq.

	 	  	  	
Fax:  617-225-0205

DWAC Instructions:

DTC # - 0571

Account number - G53-1348923

 

 26Unassociated Document

AMENDED AND RESTATED PROMISSORY NOTE

 

	$1,037,727.08	 	 	Savannah, Georgia
	 	 	 	December 31, 2010

 

This Amended and Restated Promissory Note (this "Promissory Note") is made and entered into as of the 31st day of December 2010 by MIT HOLDING, INC., a Delaware corporation ("Maker"), in favor of GLOBANK CORP., a Nevada corporation ("Holder"), and amends and restates that certain Promissory Note dated July 29, 2008 made by Maker in favor of Holder in the original principal amount of Five Hundred Thousand and No/100 Dollars ($500,000.00) (the "Original Note").

 

FOR VALUE RECEIVED, Maker promises to pay to the order of Holder, at P.O. Box 4534, Lancaster, California 93539, or at such other address as Holder may designate from time to time hereafter, the principal sum of One Million Thirty-Seven Thousand Seven Hundred Twenty-Seven and Eight Hundredths Dollars ($1,037,727.08), plus interest at a rate of Fourteen and Nine-Tenths Percent (14.9%) per annum, in lawful money of the United States of America.

 

1.           Termination of Original Note.  Upon execution of this Promissory Note, the Original Note shall be marked cancelled and returned by Holder to Maker and shall be of no further force or effect; provided, however, this Promissory Note is an amendment to the Original Note and is not intended as a novation thereof or of the debt evidenced thereby.

 

2.           Payment of Principal and Interest.  Principal and interest due hereunder shall be payable as follows:

 

(a)           Thirty five (35) monthly payments of One Thousand Dollars ($1000.00) principal together with accrued interest in accordance with the attached amortization schedule beginning February 1, 2011, and continuing on the first day of each calendar month thereafter until December 1, 2013; and

 

(b)           A balloon payment of all unpaid principal and accrued but unpaid interest due under this Promissory Note shall be payable on January 1, 2014 (the "Due Date").

 

Upon receipt of each monthly installment, Holder shall apply all amounts received first to accrued but unpaid interest and the remainder to principal.

 

3.           Method of Payment.  Maker shall pay each monthly installment to Holder by automatic bank draft to an account designated by Holder.  Maker shall execute any and all documents necessary to authorize such bank draft and payment.

 

4.           Late Fees.  If Maker pays a monthly installment to Holder after the third (3rd) business day of the month when the payment is due, Maker will pay Holder a ten percent (10%) late fee.

 

5.           Pre-payment.  Maker shall have the right to pay all or any portion of this Note at any time before the Due Date, without penalty or interest.

 

  

Page 1 of 3

  

 

6.           Event of Default.  The failure to pay any installment of principal or interest when due, or a default under any other obligation from Maker to Holder, shall be an "Event of Default" hereunder.

 

7.           Remedies.  Upon the occurrence of an Event of Default, Holder hereof may, at its option, do any one or more of the following:

 

(a)           Declare the entire balance of principal, together with all accrued interest, immediately due and payable.

 

(b)           Exercise any other remedy available at law or in equity.

 

All such remedies are cumulative, and may be exercised concurrently or separately.  The exercise of any or all of the above remedies notwithstanding, Maker shall be and shall remain liable for the full performance of all of its duties and obligations under this Promissory Note and for any and all amounts due and owing to Holder hereunder.

 

8.           Non-Waiver.  No delay or failure on the part of Holder in the exercise of any right or remedy hereunder shall operate as a waiver thereof nor as an acquiescence in any Event of Default, nor shall any simple or partial exercise by Holder of any right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy.

 

9.           Venue, Jurisdiction and Choice of Law.  Venue for any and all legal proceedings in connection with this Promissory Note shall be in Savannah, Georgia.  For purposes of any and all legal proceedings in connection with this Promissory Note, Maker hereby acknowledges that all federal and state courts in Savannah, Georgia, may exercise personal jurisdiction over Maker, and Maker hereby submits, consents and waives any objection to personal jurisdiction in all state and federal courts in Savannah, Georgia.  This Promissory Note shall be governed by and construed and enforced in accordance with the laws of the State of Georgia.

 

10.         Attorneys' Fees.  Maker promises to pay all costs and expenses, including reasonable attorneys' fees, incurred in the collection and enforcement of this Promissory Note, whether or not suit is filed.

 

11.         Severability.  Wherever possible each provision of this Promissory Note shall be interpreted in such manner as to be effective and valid, but if any provision hereof shall be prohibited by law or be otherwise invalid, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Promissory Note.

 

12.         Assignment.  Holder may assign or transfer this Promissory Note, in whole or in part, at any time and from time to time prior to the payment by Maker of all of its obligations hereunder.  In order to effect any such assignment, Holder shall give Maker written notice of the name and address of such assignee.

 

13.         Headings.  The headings and titles used in this Promissory Note are intended solely for identification and not for any substantive purpose, and no heading or title shall in any way limit or extend the provisions hereof.

 

  

Page 2 of 3

  

 

IN WITNESS WHEREOF, Maker has duly executed and delivered this Amended and Restated Promissory Note the day and year first above written.

 

	 	 
MAKER:

	 
	 	 	 
	 	 
MIT HOLDING, INC

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	 
Name:

	 
	 	 	 
Title:

	 

 

 

  

Page 3 of 3

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