Document:

fs1a4may30ex510v_magnegas.htm

Exhibit 10.5

 

 

STOCK OPTION AGREEMENT

MAGNEGAS CORPORATION

I.              PARTICIPANT.

 

NAME: _________ (the “Participant”)

ADDRESS:

The undersigned Participant is hereby granted an option to purchase Common Stock, par value $0.001 per share (the “Shares”) of MagneGas Corporation, a Delaware corporation (the “Company”), subject to the terms and conditions of this Stock Option Agreement, as follows:

DATE OF GRANT:

VESTING SCHEDULE DATES:

	
Date

	
Number of Shares

	  	  
	  	  
	  	  
	  	  
	  	  
	  	  
	  	  
	  	  
	  	  
	  	  
	  	  
	  	  

  

1

  

 

	 	EXERCISE PRICE PER SHARE:	 
	 	 	 
	 	TOTAL NUMBER OF COMMON SHARES SUBJECT TO OPTION:	 
	 	 	 
	 	TYPE OF OPTION (CHECK ONE): 	__  NON-QUALIFIED 
	 	 	__  QUALIFIED
	 	 	 
	 	TERM/EXPIRATION DATE: 

	 __ years from the Date of Grant unless earlier terminated as provided herein.

 

II.           AGREEMENT.

1.           Grant of Option. The Company's Board of Directors, hereby grants to the Participant an option ("Option") to purchase the number of Shares set forth on first page of this Stock Option Agreement, at the exercise price per Share set forth on the first page of this Stock Option Agreement ("Exercise Price").  The Participant accepts the Option subject to all the terms and provisions of this Agreement. The undersigned Participant hereby accepts as binding, conclusive and final all decisions or interpretations of the Company’s Board of Directors upon any questions arising under this Agreement.

2.           Exercise of Option.

(a)            Right to Exercise. This Option shall be exercisable during its term in accordance with the Vesting Schedule set out on the first page of this Stock Option Agreement and with the applicable provisions of this Stock Option Agreement.

(b)           Vesting Acceleration.

 

This Option shall become immediately fully vested and exercisable in the event of a "Change in Control." For purposes of this Option, a "Change in Control" shall be deemed to occur when, or upon:

(i)            Approval by the shareholders of the Company of a reorganization, merger, consolidation or other form of corporate transaction or series of transactions, in each case, with respect to which persons who were the shareholders of the Company immediately prior to such reorganization, merger or consolidation or other transaction do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company's then outstanding voting securities, in substantially the same proportions as their ownership immediately prior to such reorganization, merger, consolidation or other transaction, or a liquidation or dissolution of the Company, or the sale of all or substantially all of the assets of the Company (unless such reorganization, merger, consolidation or other corporate transaction, liquidation, dissolution or sale is subsequently abandoned); or

 

  

2

  

 

(ii)            Individuals who, as of the date on which the Option is granted hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date on which the Option was granted whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or

(iii)           The acquisition (other than from the Company) by any person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act, of beneficial ownership (within the meaning of Rule 13-d promulgated under the Securities Exchange Act, of 40% or more of either the then outstanding shares of the Company's Common Stock or the combined voting power of the Company's then outstanding voting securities entitled to vote generally in the election of directors (hereinafter referred to as the ownership of a "Controlling Interest") excluding, for this purpose, any acquisitions by (1) the Company or its Subsidiaries, (2) any person, entity or "group" that as of the date on which the Option is granted owns beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a Controlling Interest or (4) any employee benefit plan of the Company or its Subsidiaries.

           (c)                Method of Exercise. This Option shall be exercisable by delivery of an exercise notice as attached as Exhibit A hereto (the "Exercise Notice"), or on such other form authorized by the Board of Directors, that shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company.

               (i)              Cash Exercise.  The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price.

               (ii)             Cashless Exercise.  The Participant may notify the Company in an Exercise Notice of its election to utilize cashless exercise, in which event the Company shall issue to the holder the number of Shares determined as follows:

X = Y [(A-B)/A]  

 

where:  

 

X = the number of Shares to be issued to the Participant.  

 

Y = the number of Options with respect to which this Option is being exercised.  

 

A = the Current Fair Market Value of one Share.  

 

B = the Exercise Price.  

 

 

  

3

  

 

As used herein, Current Fair Market Value of one Share shall mean, as of any particular date: (a) the volume weighted average of the closing sales prices of the Common Stock for such day on all domestic securities exchanges on which the Common Stock may at the time be listed; (b) if there have been no sales of the Common Stock on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Stock on all such exchanges at the end of such day; (c) if on any such day the Common Stock is not listed on a domestic securities exchange, the closing sales price of the Common Stock as quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association for such day; or (d) if there have been no sales of the Common Stock on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Stock quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the business day immediately prior to the day as of which "Current Fair Market Value" is being determined; provided, that if the Common Stock is listed on any domestic securities exchange, the term "Business Day" as used in this sentence means Business Days on which such exchange is open for trading. If at any time the Common Stock is not listed on any domestic securities exchange or quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association, the "Current Fair Market Value" of the Common Stock shall be the fair market value per share as determined in good faith by the Board of Directors of the Company, unless the Participant shall purchase such shares in conjunction with an underwritten public offering of Common Stock pursuant to a registration statement filed under the Securities Act of 1933 as amended (the “Securities Act”), in which case the Current Fair Market Value shall be the price at which the Common Stock is sold to the public in such offering.

 

No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise complies with applicable laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Participant on the date on which the Option is exercised with respect to such Shares.

3.           Method of Payment. Payment of the aggregate Exercise Price shall be by cash, or in any manner otherwise permitted by the Board of Directors.

4.           Restrictions on Exercise. This Option may not be exercised if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any applicable law. This Option may not be exercised by anyone other than the Participant.

5.           Non-Transferability of Option. The Option granted hereby is not transferable otherwise than by will or under the applicable laws of descent and distribution, and during the lifetime of the Participant the Option shall be exercisable only by the Participant, or the Participant’s guardian or legal representative. In addition, the Option shall not be assigned, negotiated, pledged or hypothecated in any way (whether by operation of law or otherwise), and the Option shall not be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, negotiate, pledge or hypothecate the Option, or in the event of any levy upon the Option by reason of any execution, attachment or similar process contrary to the provisions hereof, the Option shall immediately become null and void. The terms of this Stock Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Participant.

 

  

4

  

 

6.          Term of Option.

(a)               Generally. This Option may be exercised only within the term set forth on the first page of this Stock Option Agreement, and may be exercised during such term only in accordance with the terms of this Option.

(b)               Termination of Participant. Without limiting the generality of Section 6(a), if Participant is Terminated for any reason (including non-renewal of Participant’s employment agreement with the Company) except for death, Disability, "cause" (defined below) or “without cause”, then for a period of ninety (90) days after the Termination Date Participant may exercise this Option but only to the extent that such Option is vested and would have otherwise been exercisable upon the Termination Date. If Participant is Terminated because of Disability then this Option may be exercised for a period of twelve (12) months after the Termination Date but only to the extent that such Option would have been exercisable by Participant (or Participant's legal representative or authorized assignee) on the Termination Date. If Participant is Terminated because of Death then this Option shall immediately vest in full and may be exercised for a period of twelve (12) months after the Death of the Participant. If Participant is Terminated for cause, all options will immediately terminate and shall be of no further force or effect. If Participant is Terminated without cause, all options shall immediately vest in full and may be exercised for a period of twelve (12) months after Termination of the Participant.

For purposes of this Option Agreement, "cause" shall mean (i) conviction of a felony, or a misdemeanor where imprisonment is imposed, (ii) commission of any any of theft, fraud, or falsification of any employment or company records in any material way, (iii) Participant’s failure or inability to perform any material reasonable assigned duties after written notice from the Company of, and reasonable opportunity to cure, such failure or inability, or (iv) material breach of Participant’s Employment Agreement with the Company which breach is not cured within ten (10) days following written notice of such breach.

7.           Notices. Any notice under this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Company, to the Company’s principal office, and, in the case of the Participant, to the Participant’s last permanent address as shown on the Company’s records, subject to the right of either party to designate some other address at any time hereafter in a notice satisfying the requirements of this Section.

 

  

5

  

 

8.           No Rights of Stockholders. Neither the Participant nor any personal representative (or beneficiary) shall be, or shall have any of the rights and privileges of, a stockholder of the Company with respect to any Shares purchasable or issuable upon the exercise of the Option, in whole or in part, prior to the date of exercise of the Option.

9.           Entire Agreement; Governing Law. This Stock Option Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant's interest except by means of a writing signed by the Company and Participant. This Agreement is governed by the internal substantive laws of the State of Delaware.

10.          No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A PARTICIPANT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE PARTICIPANT'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

Participant represents that he is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Participant has reviewed this Option in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Participant further agrees to notify the Company upon any change in his or her residence address.

(signature page follows)

 

 

  

6

  

 

	PARTICIPANT	 	MAGNEGAS CORPORATION	 
	 	 	 	 	 
	
 

	 	By:	
 

	 
	

(SIGNATURE)

	 	 	
 

	 
	
 

	 	 	
 

	 

 

[Signature Page to Stock Option Agreement]

 

 

  

7

  

 

EXHIBIT A

EXERCISE NOTICE

Magnegas Corporation

Attention: Stock Option Administrator

1.           Exercise of Option. Effective as of today, ___________, ____, the undersigned ("Participant") hereby elects to exercise Participant's option to purchase ________ shares of the Common Stock (the "Shares") of Magnegas Corporation (the "Company") under and pursuant to the Stock Option Agreement dated _______, ­­­____ (the "Option Agreement").

2.           Delivery of Payment.  Please check one.

__________         Participant herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement.

__________         Participant hereby elects to utilize the cashless exercise provision of the Option Agreement.

3.           Representations of Participant. Participant acknowledges that Participant has received, read and understood the Option Agreement and agrees to abide by and be bound by their terms and conditions.

4.           Rights as Shareholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares shall be issued to the Participant as soon as practicable after the Option is exercised.

5.           Tax Consultation. Participant understands that Participant may suffer adverse tax consequences as a result of Participant's purchase or disposition of the Shares. Participant represents that Participant has consulted with any tax consultants Participant deems advisable in connection with the purchase or disposition of the Shares and that Participant is not relying on the Company for any tax advice.

6.           Successors and Assigns. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon Participant and his or her heirs, executors, administrators, successors and assigns.

 

  

A-1

  

7.           Withholding Taxes. There may be a regular federal income tax liability upon the exercise of this Option. Participant will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If Participant is an employee, the Company will be required to withhold from Participant’s compensation or collect from Participant and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

 

8.           Governing Law. This Exercise Notice is governed by the internal substantive laws of the state of Delaware.

9.           Entire Agreement. The Option Agreement is incorporated herein by reference. This Exercise Notice and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant's interest except by means of a writing signed by the Company and Participant.

 

	Submitted by:	 	Accepted by:	 
	 	 	 	 
	PARTICIPANT	 	MAGNEGAS CORPORATION	 
	 	 	 	 	 
	
 

	 	By:	
 

	 
	

Signature

	 	 	
 

	 
	
 

	 	 	
 

	 
	 	 	Title:	 	 
	Print Name	 	 	 	 

A-2SECURITIES PURCHASE AGREEMENT

SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of July 18, 2012, between ACCELPATH, INC., a Delaware corporation (“ACLP”), and Southridge Partners II LP, a  Delaware limited partnership (“Purchaser”).

WHEREAS, Purchaser and ACLP are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”);

WHEREAS, Purchaser desires to purchase and ACLP desires to issue, upon the terms and conditions set forth in this Agreement, a convertible promissory note of ACLP in consideration for the payment of $100,000.00 in cash; and

NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.

PURCHASE AND SALE OF CONVERTIBLE PROMISSORY NOTE.

a.

Purchase of Convertible Promissory Note(s).  On the Closing Date (as defined below) ACLP shall issue and deliver to Purchaser, and Purchaser shall purchase from ACLP a duly executed 5% convertible promissory note in the principal amount of $100,000.00 (the “Note”) in consideration of $100,000.00 in cash (the “Purchase Price”).  

b.

Closing Date.  Subject to the satisfaction (or waiver) of the conditions thereto set forth in Section 5 and Section 6 below, the date and time of the sale of a Note pursuant to this Agreement (the “Closing Date”) shall be 12:00 noon New York City Time on the date agreed to by the Parties.  The Closing Date shall be July 18, 2012 or such other mutually agreed upon time (the “Closing”). 

c.

Form of Payment.  On the Closing Date, (i) Purchaser shall pay the Purchase Price in United States dollars by wire transfer of immediately available funds to an account designated in writing by ACLP for such purpose, against delivery of the Note, and (ii) ACLP shall deliver to Purchaser the Note duly executed on behalf of ACLP, against delivery of the Purchase Price.

2.

PURCHASER’S REPRESENTATIONS AND WARRANTIES.  Purchaser represents and warrants to ACLP that:

a.

Accredited Purchaser; Investment Purpose.  Purchaser represents that it is an “Accredited Investor” as defined in Regulation D under the Securities Act of 1933.  Purchaser is purchasing the Note for its own account for investment purposes only and not with a view toward, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1993 Act and applicable state securities laws; provided, however, that by making the representations herein, Purchaser does not agree to hold the Note for any minimum or other specific term and reserves the right to dispose of the Note at any time

1

in accordance with or pursuant to a registration statement or an exemption under the 1933 Act and applicable state securities laws.

b.

Reliance on Exemptions.  Purchaser understands that the Note is being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that ACLP is relying upon the truth and accuracy of, and Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Note.

c.

Information.   Purchaser and its advisors, if any, have been furnished with materials relating to the business, finances and operations of ACLP and materials relating to the offer and sale of the Note which have been requested by Purchaser or its advisors.  Neither such inquiries nor any other due diligence investigation conducted by Purchaser or any of its advisors or representatives shall modify, amend or affect Purchaser’s right to rely on ACLP’s representations and warranties contained in Section 3 below.  Purchaser understands that its investment in the Note involves a significant degree of risk.

d. 

 Governmental Review.  Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Note.

e.

Transfer or Resale.  Purchaser understands that (i) the sale or resale of the Note and any underlying conversion shares of common stock has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Note may not be transferred unless (a) the Note and Common Stock issuable upon conversion of the Note (“Conversion Shares”) are sold pursuant to an effective registration statement under the 1933 Act, (b) the Note and the Conversion Shares are sold or transferred pursuant to an exemption from such registration, (c) the Note and the Conversion Shares are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”)) of Purchaser who agrees to sell or otherwise transfer the Note only in accordance with this Section 2(e) and who is an Accredited Investor, or (d) (i) the Note and the Conversion Shares are sold pursuant to Rule 144, if such Rule is available;  and (ii) any sale of such Note and the Conversion Shares made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such Note and the Conversion Shares under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder.

f.

Legends.  Purchaser understands that the Note and the Conversion shares shall bear a restrictive legend in the following form:

“NEITHER THIS SECURITY NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THE SECURITIES ARE RESTRICTED

2

AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION OR SAFE HARBOR THEREFROM.”

g.

Authorization; Enforcement.  This Agreement has been duly and validly authorized by Purchaser.  This Agreement has been duly executed and delivered on behalf of Purchaser, and this Agreement constitutes a valid and binding agreement of Purchaser enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies or by other equitable principles of general application.  

i.

No Brokers. Purchaser has taken no action which would give rise to any claim by any person for brokerage commissions, finder’s fees or similar payments relating to this Agreement or the transactions contemplated hereby.

3.

REPRESENTATIONS AND WARRANTIES OF ACLP.  ACLP represents and warrants to Purchaser that:

a.

Authorization; Enforcement.  (i) ACLP has all requisite corporate power and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby and to sell the Note, in accordance with the terms hereof, (ii) the execution and delivery of this Agreement by ACLP and the consummation by it of the transactions contemplated hereby (including without limitation, the sale of the Note to Purchaser) have been duly authorized by ACLP and no further consent or authorization of ACLP or its shareholders is required, (iii) this Agreement has been duly executed and delivered by ACLP, and (iv) this Agreement constitutes a legal, valid and binding obligation of ACLP enforceable against ACLP in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies or by other equitable principles of general application.

b.

[RESERVED] 

c.

No Conflicts.  The execution, delivery and performance of this Agreement by ACLP and the consummation by ACLP of the transactions contemplated hereby (including, without limitation, the sale of the Note to Purchaser) will not (i) conflict with or result in a violation of any provision of its certificate of formation or other organizational documents, 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, note, bond, indenture or other instrument to which ACLP is a party, 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 ACLP is subject) applicable to ACLP or by which any property of ACLP are bound or affected.  Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable federal and state securities laws, ACLP is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental

3

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 in accordance with the terms hereof.  Except for filings that may be required under applicable federal and state securities laws in connection with the issuance and sale of the Note, all consents, authorizations, orders, filings and registrations which ACLP is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof.

d.

No Brokers. ACLP has taken no action which would give rise to any claim by any person for brokerage commissions, finder’s fees or similar payments relating to this Agreement or the transactions contemplated hereby.

e.

No Other Representations. Except as specifically set forth herein, ACLP makes no representations or warranties with respect its financial status, earnings, assets, liabilities, corporate status or any other matter.

4.

COVENANTS.

a.

Best Efforts.  The parties shall use their commercially reasonable best efforts to satisfy timely each of the conditions described in Section 5 and Section 6 of this Agreement.

b.

Financial Reporting.

Subsequent to Closing Date, ACLP will take no action which would adversely affect the tacking for the benefit of the Purchaser holding period under Rule 144.  ACLP shall make all commercially reasonable best efforts to keep public information available, as those terms are understood and defined in Rule 144 and file with the SEC in a timely manner all quarterly and annual reports required of ACLP under the Exchange Act.

c.

Reservation of Shares.  The Company shall instruct its transfer agent to reserve at least 14,000,000 shares of its Common Stock for issuance to Purchaser upon conversion of the Note and shall provide Purchaser with copy of such letter (“Transfer Agent Instruction Letter”).

5.

CONDITIONS TO COMPANY’S OBLIGATION TO SELL.  The obligation of ACLP hereunder to sell and deliver the Note to Purchaser at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for ACLP’s sole benefit and may be waived by ACLP at any time in its sole discretion:

a.

Purchaser shall have executed this Agreement and delivered the same to ACLP.

b.

Purchaser shall have delivered the Purchase Price in accordance with Section 1(b) above.

c.

The representations and warranties of Purchaser shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at

4

that time (except for representations and warranties that speak as of a specific date), and Purchaser shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by Purchaser at or prior to the Closing Date.

d.

No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

6.

CONDITIONS TO PURCHASER’S OBLIGATION TO PURCHASE.  The obligation of Purchaser hereunder to purchase the Note 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 Purchaser’s sole benefit and may be waived by Purchaser at any time in its sole discretion.

a.

ACLP shall have executed this Agreement and delivered the same to Purchaser.

b.

ACLP shall have delivered to Purchaser duly executed Note (in such denominations as Purchaser shall reasonably request) in accordance with Section 1(b) above.

c.

The representations and warranties of ACLP shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and ACLP shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by ACLP at or prior to the Closing Date.

d.

No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

7.

GOVERNING LAW; MISCELLANEOUS.  

a.

Governing Law; Jurisdiction.  THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITH SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.  THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN THE CITY OF NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. 

5

BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING.  NOTHING HEREIN SHALL AFFECT ANY PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  THE PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER.  THE PARTIES HEREBY WAIVE A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

b.

Counterparts; Signatures by Facsimile.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.  This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. 

c.

Headings.  The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

d.

Severability.  In the event that any provision of this Agreement is invalid or enforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

e.

Entire Agreement; Amendments.  This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither ACLP nor Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.

f.

Notices.  Any notices required or permitted to be given under the terms of this Agreement shall be sent by certified or registered mail (return receipt requested) or delivered personally or by courier (including a recognized overnight delivery service) or by facsimile and shall be effective five days after being placed in the mail, if mailed by regular United States mail, or upon receipt, if delivered personally or by courier (including a recognized overnight delivery service) or by facsimile, in each case addressed to a party.  The addresses for such communications shall be:

If to ACLP:

352A Christopher Avenue

Gaithersburg, MD 20879

Attention: President

6

Phone:

Facsimile:

If to Purchaser:

Southridge Partners II LP

90 Grove Street, Ste 206

Ridgefield CT 06877

Tel: 203-431-8300

Fax: 203-431-8301

Email:

Each party shall provide notice to the other party of any change in address.

g.

Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.  Neither ACLP nor Purchaser shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other.  Notwithstanding the foregoing, subject to Section 2(e), Purchaser may assign its rights hereunder to any person that purchases the Note or any Conversion Shares in a private transaction from Purchaser or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of ACLP.

h.

Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.  

i.

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

j.

No Strict Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

7

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

				
	 
	ACCELPATH, INC.

	 

	 
	 
	 
	 

	 
	Name:

	/s/Shekhar Wadekar

	 

	 
	Title:

	Chief Executive Officer

	 

	 
	 
	 
	 

	 
	SOUTHRIDGE PARTNERS II LP

	 

	 
	 
	 
	 

	 
	Name:

	/s/ Henry Sargent

	 

	 
	Title:

	 
	 

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00206-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00206-of-00352.parquet"}]]