Document:

Unassociated Document

THIS SECURITIES PURCHASE AGREEMENT, dated as of October 28, 2011, is entered into by and between Network 1 Financial Group Inc., member FINRA/SIPC, a Delaware corporation, with headquarters located at 2 bridge Ave Red Bank N.J. 07701 (the “Company”), and H T Ardinger and Son, (the "Purchaser").

RECITALS:

                        WHEREAS, the Company is making a private offering of its Common Stock, $0.02 par value (“Common Stock”) to certain qualified investors on a “best efforts, no minimum basis,” up to $250,000 in gross proceeds;

                        WHEREAS, all the subscriptions for Common Stock received by the Company will be accepted on a rolling basis, meaning that investor subscriptions will be accepted promptly after receipt by the Company, from time to time, and any one investor subscription will not be dependant on any other investor subscriptions being offered or accepted;

                        WHEREAS, the subscription amounts submitted with this form of subscription agreement (“Agreement”) will not be held in escrow before acceptance but deposited into the general deposit accounts of the Company, and therefore, such amounts will be vulnerable to the claims of creditors of the Company, even though the Company has not accepted the subscription;    

           

                        WHEREAS, the Company and the Purchaser are executing and delivering this Agreement in accordance with and in reliance upon the exemption from securities registration for offers and sales (i) in the United States to accredited investors afforded by Rule 506 under Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”), and/or Section 4(2) of the 1933 Act (ii) outside the United States, in compliance with local jurisdictional requirements, to investors that are not U.S. Persons pursuant to Regulation S under the 1933 Act; and

                        WHEREAS, the Company wishes to sell to the Purchaser and the Purchaser wish to buy from the Common Stock subscribed for in this Agreement;

                        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.         AGREEMENT TO PURCHASE; PURCHASE PRICE.

1.1       Purchase; Purchase Requirements; Acceptance.

 

               

            1.1.2    Subscription Agreement and Tender of Payment.  Subject to the terms and conditions of this Agreement, the Purchaser is hereby submitting this subscription to acquire the number of shares of Common Stock set forth on the signature page of this Agreement (“Shares”), at a purchase price of $0.02 per share, and together with the Agreement, is tendering payment to the Company of the subscription amount also set forth on the signature page of this Agreement (“Purchase Price”).[1]  The subscription is irrevocable once submitted to the Company, and the Purchaser hereby agrees to pay to the Company the Purchase Price.  The Purchase Price, pending acceptance by the Company of a subscription, will not be placed in any escrow or other separate account, but placed in an account of the Company.

 

            1.1.3    Investor Questionnaire and Suitability Determination.  Together with the tendered subscription agreement and subscription funds, the Purchaser is tendering a completed “Accredited Investor Questionnaire” in the form attached hereto.[2]  The Purchaser understands that a subscription is not complete until the completed Accredited Investor Questionnaire, signed by Purchaser, is provided to the Company and until the Placement Agent has made a suitability determination that this Private Placement is suitable for Purchaser.

 

            1.1.4    Rolling Acceptance of Subscriptions; Acceptance and Certificates. 

 

From time to time, the Company will accept subscriptions tendered to it, at which time the Purchaser will be considered a holder of the Shares subscribed for in this Agreement.  As promptly as practical, the Company will return a copy of this Agreement to the Purchaser, executed by the Company, together with the Certificates (as defined below) representing the number of shares of Common Stock, for the accepted subscription. 

 

                                                1.1.5    Method of Payment of Subscription Amount.

The Purchase Price shall be payable in United States Dollars, and may be made by personal check, bank check, or wire transfer.  The Purchase Price will not be deemed paid under the terms of this Agreement until the funds are considered good and collected funds into the account into which the funds are paid.  Any costs associated with the failure to make payment of the full Purchase Price, including incoming wire fees assessed against the Company, will be the responsibility of the subscribing Purchaser.

                       

Checks should be made payable to “Network 1 Financial Group Inc.”

 

 

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[1] Purchaser Signature Page is at page 17 of this Agreement.

[2] The Individual Accredited Investor will complete the Questionnaire in Annex I.

The Institutional Accredited Investor will complete the Questionnaire in Annex II.

 

  

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Wire transfers should be sent to:

 

	 	
Account Name:

	
Network 1 Financial Group Inc.

	 	  	  
	 	
ACCOUNT No.:

	
1500801413

	 	  	  
	 	
A/B/A No: 

	026013576
	 	  	  
	 	
BANK:

	
Signature Bank

	 	
 

	71 Broadway
	 	
 

	New York N.Y.

                                                                                                           

1.7       Payment of Commission and Expenses.  The Company will pay to the Broker,[3] after acceptance of subscriptions, for its own account or for the account of other selling Persons, the agreed upon commission described in the Confidential Term Sheet of the Company, dated the 13th day of October, 2011, attached to this Subscription Agreement as Annex III.

 

1.8       Certain Definitions.       As used herein, each of the following terms has the meaning set forth below, unless the context otherwise requires:

 

"1933 Act" means the Securities Act of 1933.

 

"1934 Act" means the Securities Act of 1934.

 

“Affiliate” means, with respect to a specific Person referred to in the relevant provision, another Person who or which controls or is controlled by or is under common control with such specified Person.

 

"Broker" means Network 1 Financial Securities, Inc., as the exclusive selling agent of the Common Stock offered by the Company.         

 

“Certificates” means the stock certificate(s) representing the Shares for which subscriptions have been accepted by the Company, duly executed by the Company in the name of the Purchaser.

 

“Closing Date” means the date of the closing of the purchase and sale of the Shares to which this subscription agreement relates, as provided herein.       

 

“Company Control Person” means each director, executive officer, promoter, and such other Persons as may be deemed in control of the Company pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.                

 

“Holder” means the Person holding the relevant Securities at the relevant time.

 

 “Material Adverse Effect” means an event or combination of events, which individually or in the aggregate, would reasonably be expected to (x) adversely affect the legality, validity or enforceability of the Subscription Agreement, (y) have or result in a material adverse effect on the results of operations, assets, or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole, and as described in the Placement Memorandum, (z) adversely impair the Company's ability to perform fully on a timely basis its obligations under any of the Subscription Agreement.

 

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[3] Commissions will not be paid to a Broker if he/she is a Control Person of the Company/Issuer.

 

  

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“Person” means any living person or any entity, such as, but not necessarily limited to, a corporation, partnership or trust.

 

“Purchaser Control Person” means each director, executive officer, promoter, and such other Persons as may be deemed in control of the relevant Purchaser pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.

 

“Securities” means the Common Stock and the Shares subject to this Agreement, as the context indicates.           

 

“State of Incorporation” means Delaware.

 

	
2.         PURCHASER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION.

 

The Purchaser represents and warrants to, and covenants and agrees with, the Company as follows:

(a)        Without limiting Purchaser's right to sell the Shares pursuant to sell any of the Securities in compliance with the 1933 Act, the Purchaser is purchasing the Securities and will be acquiring the Shares for its own account for investment only and not with a view towards the public sale or distribution thereof and not with a view to or for sale in connection with any distribution thereof.

 

(b)        The Purchaser is (i) an “accredited investor” as that term is defined in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of Rule 501(a)(3), (ii) experienced in making investments of the kind described in this Agreement and the Placement Memorandum, (iii) able, by reason of the business and financial experience of its officers (if an entity) and professional advisors (who are not affiliated with or compensated in any way by the Company or any of its Affiliates or selling agents), to protect its own interests in connection with the transactions described in this Agreement and the Placement Memorandum, and (iv) able to afford the loss of the entire Purchase Price.

 

(c)        All subsequent offers and sales of the Securities by the Purchaser shall be made pursuant to a registration of the Shares under the 1933 Act or pursuant to an exemption from registration.  The Purchaser understands that the Company has no obligation to take any action to register the Shares with the United States or any state authority for the resale or transfer of the Shares by any Purchaser, now or in the future.

 

(d)        The Purchaser understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of the 1933 Act and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Securities.

 

  

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(e)        The Purchaser and its advisors, if any, have been furnished with the all additional materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Purchaser. The Purchaser and its advisors, if any, have been afforded the opportunity to ask questions of the Company and have received complete and satisfactory answers to any such inquiries.

 

(f)         The Purchaser understands that its investment in the Securities is an investment in a company that involves a high degree of risk.  The Purchaser understands that the investment in the Securities may not provide any return and a return, if any, is likely to be well in the future.

 

(g)        The Purchaser hereby represents that, in connection with its purchase of the Securities, it has not relied on any statement or representation by the Company or any of its officers, directors and employees or any of its attorneys or agents, except as specifically set forth in this Agreement.

 

(h)        The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities.

 

(i)         This Agreement to which the Purchaser is a party, and the transactions contemplated thereby, have been duly and validly authorized, executed and delivered on behalf of the Purchaser and are valid and binding agreements of the Purchaser enforceable in accordance with their respective terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors' rights generally.

 

(j)         The Purchaser has taken no action which would give rise to any claim by any Person for brokerage commissions and expense, other than Network 1 Financial Securities, Inc., Broker's fees or similar payments by the Company relating to this Agreement or the transactions contemplated hereby.  The Company shall have no obligation with respect to such fees and expenses or with respect to any claims made by or on behalf of other Persons for fees and expenses of a type contemplated in this paragraph that may be due in connection with the transactions contemplated hereby.  The Purchaser shall indemnify and hold harmless each of the Company, its employees, officers, directors, agents, and partners, and their respective Affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorney's fees) and expenses suffered in respect of any such claimed or existing fees and expenses, as and when incurred.

 

(k)        The Purchaser hereby covenants and warrants that, between the Closing Date and the date on which he or she no longer holds any of the Securities, Purchaser will not engage in any hedging transactions or shorting transactions in any securities of the Company, including the Securities.

 

  

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                        (l)         The Purchaser hereby covenants and warrants that he or she is not acting as a "group" for purposes of Section 13 of the Securities Exchange Act of 1934.

3.         COMPANY REPRESENTATIONS, ETC. 

 

The Company represents and warrants to the Purchaser as of the date hereof and as of the Closing Date that, except as otherwise provided in the Placement Memorandum and herein:

 

3.1       Rights of Others Affecting the Transactions.  There are no preemptive rights of any shareholder of the Company, as such, to acquire the Shares.  No party has a currently exercisable right of first refusal with respect to the sale of the Shares.

 

3.2       Status.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Incorporation and has the requisite corporate power to own its properties and to carry on its business as now being conducted.  The Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so qualify would not have or result in a Material Adverse Effect.

 

3.3       Authorized Shares.  The authorized capital stock of the Company is as described in the Public Filings, subject to the sale of the Common Stock offered hereby from time to time since the date of the this placement.  All the issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid.  The Company has sufficient authorized and unissued shares of Common Stock as may be necessary to affect the issuance of the Securities. The Securities have been duly authorized and, when issued, in accordance with their terms, will be duly and validly issued, fully paid and non-assessable and, except to the extent, if any, provided by the law of the State of Incorporation, will not subject the Holder thereof to personal liability by reason of being such Holder.

 

3.4       Transaction Agreements and Stock.  This Agreement and the transactions contemplated thereby, have been duly and validly authorized by the Company. This Agreement has been duly executed and delivered by the Company, and this Agreement is, and the Certificates when executed and delivered by the Company, will be, valid and binding agreements of the Company enforceable in accordance with their respective terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors' rights generally.

 

3.5       Non-contravention.  The execution and delivery of this Agreement by the Company, the issuance of the Securities being offered by the Placement Memorandum, and the consummation by the Company of the other transactions contemplated by this Agreement do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under (i) the certificate of incorporation or by-laws of the Company, each as currently in effect, (ii) any indenture, mortgage, deed of trust, or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound except as herein set forth, or (iii) to its knowledge, any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company or any of its properties or assets, except where such conflict, breach or default which would not have or result in a Material Adverse Effect. 

 

  

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3.6       Approvals.  No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the shareholders of the Company is required to be obtained by the Company for the issuance and sale of the Shares to the Purchaser as contemplated by this Agreement, except such authorizations, approvals and consents that have been obtained.

 

3.7       Absence of Certain Changes.  Since the date of the  balance sheet included in the public filings, the Company has not (i) incurred or become subject to any material liabilities (absolute or contingent) except liabilities incurred in the ordinary course of business consistent with past practices; (ii) discharged or satisfied any material lien or encumbrance or paid any material obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business consistent with past practices; (iii) declared or made any payment or distribution of cash or other property to shareholders with respect to its capital stock, or purchased or redeemed, or made any agreements to purchase or redeem, any shares of its capital stock; (iv) sold, assigned or transferred any other tangible assets, or canceled any debts or claims, except in the ordinary course of business consistent with past practices; (v) suffered any substantial losses or waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of existing business; (vi) made any changes in employee compensation, except in the ordinary course of business consistent with past practices; or (vii) experienced any material problems with labor or management in connection with the terms and conditions of their employment.

 

3.8       Full Disclosure.  There is no fact known to the Company other than general economic conditions known to the public generally or as disclosed in the that has not been disclosed in writing to the Purchaser that would reasonably be expected to have or result in a Material Adverse Effect.

 

3.9       Absence of Litigation.  There is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company, threatened against or affecting the Company before or by any governmental authority or nongovernmental department, commission, board, bureau, agency or instrumentality or any other person, wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect or which would adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, this Agreement.  The Company is not aware of any valid basis for any such claim that (either individually or in the aggregate with all other such events and circumstances) could reasonably be expected to have a Material Adverse Effect. There are no outstanding or unsatisfied judgments, orders, decrees, writs, injunctions or stipulations to which the Company is a party or by which it or any of its properties is bound, that involve the transaction contemplated herein or that, alone or in the aggregate, could reasonably be expect to have a Material Adverse Effect.

 

  

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3.10     Absence of Certain Company Control Person Actions or Events.  Except as disclosed in the Public Filings, none of the following actions has been taken during the past ten (10) years with respect to a Company Control Person:[4]

 

(a)        A petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such Company Control Person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing.

 

(b)        Such Company Control Person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

(c)        Such Company Control Person was the made the subject of or consented to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:

 

            (1)        Acting, as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, any other Person regulated by the Commodity Futures Trading Commission (“CFTC”) or engaging in or continuing any conduct or practice in connection with such activity.

 

            (2)        Engaging in any type of business practice; or

 

            (3)        Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws; or

 

(d)        Such Company Control Person was found by a court of competent jurisdiction in a civil action or by the CFTC or SEC to have violated any federal or state securities law, and the judgment in such civil action or finding by the CFTC or SEC has not been subsequently reversed, suspended, or vacated.

 

3.11     Prior Issues.  During the twelve (12) months preceding the date hereof, the Company has issued 16,200,000 shares of its Common Stock; however it has issued no stock option grants, convertible securities or any shares of its Common Stock, except as disclosed in the Public Filings.

 

 

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[4] Current Company Control Persons include Damon D. Testaverde, Richard W. Hunt, William R. Hunt, Jr., and Vincent LaBarbara.

 

  

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3.12     No Undisclosed Liabilities or Events.  The Company has no liabilities or obligations other than those disclosed in the Public Filings or those incurred in the ordinary course of the Company's business since the date of the balance sheet included in the Public Filings, or which individually or in the aggregate, do not or would not have a Material Adverse Effect. There are no proposals currently under consideration or currently anticipated to be under consideration by the Board of Directors or the executive officers of the Company which proposal would (y) change the certificate of incorporation or other charter document or by-laws of the Company, each as currently in effect, with or without shareholder approval, which change would reduce or otherwise adversely affect the rights and powers of the shareholders of the Common Stock or (z) materially or substantially change the business, assets or capital of the Company, including its interests in subsidiaries.

 

3.13     No Default.  Neither the Company nor any of its subsidiaries is in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any material indenture, mortgage, deed of trust or other material instrument or agreement to which it is a party or by which it or its property is bound.

 

3.14     No Integrated Offering.  Neither the Company nor any of its Affiliates nor any person acting on its or their behalf has, directly or indirectly, at any time since January 1, 2011, made any offer or sales of any security or solicited any offers to buy any security under circumstances that would eliminate the availability of the exemption from registration under Regulation D in connection with the offer and sale of the Securities as contemplated hereby.

 

3.15     Fees to Brokers, and Others.  Except for payment of fees and commissions to the Broker[5] for itself and other selling agents, payment of which is the sole responsibility of the Company, the Company has taken no action which would give rise to any claim by any Person for brokerage commission, Broker's fees or similar payments by Purchaser relating to this Agreement or the transactions contemplated hereby.  Purchaser shall have no obligation with respect to such fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this paragraph that may be due in connection with the transactions contemplated hereby.  The Company shall indemnify and hold harmless each Purchaser, its employees, officers, directors, agents, and partners, and their respective Affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorney's fees) and expenses suffered in respect of any such claimed or existing fees, as and when incurred. 

 

                       

4.         CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

 

4.1       Transfer Restrictions.  The Purchaser acknowledges that (1) the Securities have not been and are not being registered under the provisions of the 1933 Act and the Shares have not been and are not being registered under the 1933 Act, and may not be transferred unless (A) subsequently registered thereunder or (B) the Purchaser shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; (2) any sale of the Securities made in reliance on Rule 144 promulgated under the 1933 Act may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such Securities 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 used in the 1933 Act, may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (3) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or to comply with the terms and conditions of any exemption thereunder or under state securities laws.

 

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[5] Commissions will not be paid to a Broker if he/she is a Control Person of the Company/Issuer.

 

  

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4.2       Restrictive Legend.  The Purchaser acknowledges and agrees that the certificates and other instruments representing any of the Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of any such Securities):

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

4.3       Rule 144 Resales.  The Purchaser has read and understands that Rule 144 promulgated under the Securities Act requires, among other conditions, a six (6) month holding period prior to the resale of securities acquired in a non-public offering without having to satisfy the registration requirements under the Securities Act. The Purchaser understands that the Company makes no representation or warranty regarding its fulfillment in the future of any reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or its dissemination to the public of any current financial or other information concerning the Company, as is required by Rule 144 as one of the conditions of its availability. The Purchaser is aware that the safe harbor provided by Rule 144 of the Securities Act is not now available for Purchaser’s resale of the Securities and Rule 144 may never become available for Purchaser’s resale of the Securities or any portion thereof.

 

4.4       Deposit and Resale of Securities. Purchaser understands that, in addition to the restricted stock requirements of Rule 144 set forth in Section 4.3, above, clearing brokers may decline to deposit into Purchaser’s account a stock certificate for a security that (1) has a closing price below one cent ($0.01) and/or (2) has stale or incomplete filings with the U.S. Securities and Exchange Commission (SEC) or with Canada’s System for Electronic Document Analysis and Retrieval (SEDAR]. Moreover, in the event that Company files with Pink Sheets, clearing brokers may decline to even consider depositing Company’s securities. In addition to these conditions and limitations, Purchaser understands that clearing brokers may subject Company’s securities to additional review before accepting such securities for deposit. This review process may (1) take up to two weeks or longer and (2) may include research into Company and/or Purchaser. Purchaser understands that the characteristics triggering additional review include but may not be limited to: (1) low price of the security or securities under review; (2) large number of shares being deposited with clearing broker into Purchaser’s account; (3) the securities in question are non-exchange traded; (4) the stock certificates are recently issued; (5) recent merger activity of underlying Company; and/or (6) change of name of the underlying Company issuing these stock certificates. Clearing brokers may also charge a fee to Purchaser’s account for this review. Finally, Purchaser understands that all of the aforementioned conditions, limitations, and characteristics triggering review may apply to Purchaser’s Deposit/Withdrawal At Custodian [DWAC] requests, Automated Customer Account Transfer Account Service [ACATS] requests, and Depository Trust Company [DTC] receipts for deposit requests.

 

  

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4.5       Filings.  The Company undertakes and agrees to make all necessary filings in connection with the sale of the Securities to the Purchaser under any United States laws and regulations applicable to the Company and, upon written request of the Purchaser, to provide a copy thereof to the Purchaser promptly after such filing.

 

4.6       Use of Proceeds.  The Company shall use the proceeds received hereunder as set forth in the Confidential Term Sheet, including as follows payment of certain fees and expenses to the Broker for itself and any other selling agents as provided herein.

 

4.7       Publicity, Filings, Releases, Etc.  Each of the parties agrees that it will not disseminate any information relating to the Transaction Agreements or the transactions contemplated thereby, including issuing any press releases, holding any press conferences or other forums, or filing any reports (collectively, “Publicity”), without giving the other party reasonable advance notice and an opportunity to comment on the contents thereof.  Neither party will include in any such Publicity any statement or statements or other material to which the other party reasonably objects.  Notwithstanding the foregoing, each of the parties hereby consents to the disclosure of the transactions contemplated hereby in required filings with the SEC and any state securities departments and any other regulatory authorities.

 

4.8       Broker Fees.[6]  The Company shall pay to the Broker (for itself and for any other selling agents) a commission in the form of cash equal in value to five percent (5%) of the gross proceeds from the sale of the Common Stock under this Agreement, as well as ten percent (10%) in common stock.  Such commission is more fully described in the Broker Commission Agreement between the Company and the Broker of even date herewith.

 

4.9       Attorneys' Fees.  The Company shall bear its legal fees and expenses incurred in connection with the preparation and negotiation of the documents contemplated by this transaction.  Other than the amounts contemplated in the immediately preceding sentence, each party shall pay the fees and expenses of its advisers, counsel, accountants, and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.

5.         TRANSFER AGENT INSTRUCTIONS.

 

The Company warrants that, with respect to the Securities, other than the stop transfer instructions to give effect to Section 4(a) hereof, it will give its transfer agent no instructions inconsistent with instructions to issue Common Stock from time to time bearing the restrictive legend specified in Section 4(b) of this Agreement.  Except as so provided, the Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement.  Nothing in this Section shall affect in any way the Purchaser's obligations and agreement to comply with all applicable securities laws upon resale of the Securities.  If the Purchaser provides the Company with an opinion of counsel reasonably satisfactory to the Company that registration of a resale by the Purchaser of any of the Securities in accordance with clause (1)(B) of Section 4(a) of this Agreement is not required under the 1933 Act, the Company shall (except as provided in clause (2) of Section 4(a) of this Agreement) permit the transfer of the Securities, promptly instruct the Company's transfer agent to issue one or more certificates for Common Stock without legend in such name and in such denominations as specified by the Purchaser.

 

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[6] Commissions will not be paid to a Broker if he/she is a Control Person of the Company/Issuer.

 

  

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6.         CLOSING DATE.

 

The Closing Date with respect to this Agreement and the subscription of the Purchase at such time as the subscription agreement is accepted by the Company.  There will be similar closing dates as to other subscriptions, from time to time, but each will not be dependant on any other closing date being scheduled or occurring.

 

7.         INDEMNIFICATION.

 

The Company agrees to indemnify and hold harmless each Purchaser and its officers, directors, employees, and agents, and each Purchaser Control Person from and against any losses, claims, damages, liabilities or expenses incurred (collectively, “Damages”), joint or several, and any action in respect thereof to which Purchaser, its partners, Affiliates, officers, directors, employees, and duly authorized agents, and any such Purchaser Control Person becomes subject to, resulting from, arising out of or relating to any misrepresentation, breach of warranty or non-fulfillment of or failure to perform any covenant or agreement on the part of Company contained in this Agreement, except to the extent such Damages result primarily from Purchaser's failure to perform any covenant or agreement contained in this Agreement, including the provision of current and accurate information in its Investor Questionnaire, or Purchaser's or its officers', directors', employees', agents' or Purchaser Control Persons' negligence, recklessness or bad faith in performing its obligations under this Agreement.

 

8.         JURY TRIAL WAIVER.     

 

The Company and the Purchaser 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 or in connection with this Agreement and the Placement Memorandum.

 

 

9.         GOVERNING LAW 

 

This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws.  The Company and each Purchaser hereby  submit to the jurisdiction of any state court of competent jurisdiction in and for New York County, New York, or in the United States District Court for the Southern District of New York sitting at New York City in any action or proceeding arising out of or relating to this Agreement and agree that all claims in respect of the action or proceeding may be heard and determined in any such court;  agree not to bring any action or proceeding arising out of or relating to this Agreement in any other court;  waive any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waive any bond, surety, or other security that might be required of any other party with respect thereto; and  agree that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or in equity.

 

  

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10.       MISCELLANEOUS

 

10.1     Waiver:     Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

 

10.2     Binding Effect: This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto.

 

10.3     Grammar:   All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.

 

10.4     FAXES:    A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto.

 

10.5     Counter-Part Signatures:    This Agreement may be signed in one or more counterparts, each of which shall be deemed an original.

 

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

 

10.7     Enforceability:   If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction.

 

10.8     Amendments:   This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement thereof.

 

10.9     Prior Agreements:    This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.

 

  

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11.       NOTICES. 

 

            11.1     Notice in Writing:    Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of:

 

(a)        The date delivered, if delivered by personal delivery as against written receipt therefore or by confirmed facsimile transmission,

 

(b)        The seventh (7th) business day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or

 

(c)        The third business day after mailing by domestic or international express courier, with delivery costs and fees prepaid,

 

In each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by ten (10) days’ advance written notice similarly given to each of the other parties hereto):

Company/Issuer:

_________________________

_________________________

_________________________

with a copy to (if applicable):   

__________________________, Esq.

____________________________________

____________________________________

	
Purchaser:

	
To the addresses set forth on the Investor Questionnaire attached hereto:[7]

 

With a copy to:

Network 1 Financial Securities, Inc.

2 Bridge Avenue

Red Bank, NJ  07701

Attn:  Damon Testaverde

 

_________________________

[7] The Individual Accredited Investor will complete the Questionnaire in Annex I.

 

The Institutional Accredited Investor will complete the Questionnaire in Annex II.

 

  

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12.       SURVIVAL OF REPRESENTATIONS AND WARRANTIES. 

The Company’s and the Purchaser' representations and warranties herein shall survive the execution and delivery of this Agreement and the delivery of the Certificates and the payment of the Purchase Price, and shall inure to the benefit of the Purchaser and the Company and their respective successors and assigns.

 

(Remainder of this Page is Intentionally Left Blank)

 

  

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IN WITNESS WHEREOF, this Securities Purchase Agreement has been duly executed by the Purchaser, for the amount of shares and subscription amount, as of the date set forth below.

	
·  

	
Purchaser is subscribing for 4,350,000 shares of Common Stock

	
·  

	
Price per share $0.02.

	
·  

	
Purchaser is submitting payment to the Company in the amount of $87,000.

/s/ H T Ardinger

Signature of Subscriber

H T Ardinger and Son, Inc

Print Name of Subscriber

Date: This 28 day of October 2011

By: H T Ardinger

Its: _________________  

As of the date set forth below, the undersigned hereby accepts this Agreement and has caused this Securities Purchase Agreement to be duly executed on its behalf.

NETWORK 1 FINANCIAL GROUP INC

/s/ Damon D Testaverde

By: Damon D Testaverde         

Title: CEO       

Date: This 28 day of October 2011.

  

16Unassociated Document

Exhibit 4.15

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE AND DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED DUE TO AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

No. 833

Date of Issuance: September 30, 2011

WARRANT TO PURCHASE

SHARES OF COMMON STOCK OF

OCULUS INNOVATIVE SCIENCES, INC.

(Void after November 30, 2018)

_______________________________________________

This certifies that VENTURE LENDING & LEASING VI, LLC, a Delaware limited liability company, or assigns (the “Holder”), for value received, is entitled to purchase from OCULUS INNOVATIVE SCIENCES, INC., a Delaware corporation (the “Company”), Thirty Nine Thousand One Hundred (39,100) fully paid and nonassessable shares of Company’s common stock (the “Shares”), for cash, at a purchase price per share (the “Stock Purchase Price”) equal to $1.5985. Holder may also exercise this Warrant on a cashless or “net issuance” basis as described in Section 1(b) below, and this Warrant shall be deemed to have been exercised in full on such basis on the Expiration Date (hereinafter defined), to the extent not fully exercised prior to such date. If in any case such number involves a fraction, the fraction shall be adjusted to the closest integral number.  The Stock Purchase Price and the number of shares purchasable hereunder are subject to further adjustment as provided in Section 4 of this Warrant.  This Warrant is issued in connection with the Loan and Security Agreement of even date herewith (as amended, restated and supplemented from time to time, the “Loan Agreement”), between Company, as borrower, and Venture Lending & Leasing VI, Inc., a subsidiary of Holder, as lender (“Lender”).  Capitalized terms used herein and not otherwise defined in this Warrant shall have the meaning(s) ascribed to them in the Loan Agreement, unless the context would otherwise require.    

 

This Warrant may be exercised at any time or from time to time up to and including 5:00 p.m.  (Pacific time) on November 30, 2018 (the “Expiration Date”), upon surrender to the Company at its principal office at 1129 North McDowell Blvd., Petaluma, California 94954 (or at such other location as the Company may advise Holder in writing) of this Warrant properly endorsed with the Form of Subscription attached hereto duly filled in and signed and upon payment in cash or by check of the aggregate Stock Purchase Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof.

 

This Warrant is subject to the following terms and conditions:

 

	 	
Section 1.

	
Exercise; Issuance of Certificates; Payment for Shares.

(a)           Unless an election is made pursuant to clause (b) of this Section 1, this Warrant shall be exercisable at the option of the Holder, at any time or from time to time, on or before the Expiration Date for all or any portion of the Shares (but not for a fraction of a Share) which may be purchased hereunder for the Stock Purchase Price multiplied by the number of Shares to be purchased.  The Company agrees that the Shares purchased under this Warrant shall be and are deemed to be issued to the Holder hereof as the record owner of such Shares as of the close of business on the date on which the Form of Subscription attached hereto shall have been delivered and payment made for such Shares. Subject to the provisions of Section 2, certificates for the Shares so purchased, together with any other securities or property to which the Holder hereof is entitled upon such exercise, shall be delivered to the Holder hereof by the Company at the Company’s expense within a reasonable time after the rights represented by this Warrant have been so exercised.  Except as provided in clause (b) of this Section 1, in case of a purchase of less than all the Shares which may be purchased under this Warrant, the Company shall cancel this Warrant and execute and deliver a new Warrant or Warrants of like tenor for the balance of the Shares purchasable under this Warrant surrendered upon such purchase to the Holder hereof within a reasonable time.  Each warrant so delivered shall be in such denominations as may be requested by the Holder hereof and shall be registered in the name of such Holder or such other name as shall be designated by such Holder, subject to the limitations contained in Section 2.

 

  

  

  

(b)           The Holder, in lieu of exercising this Warrant by the cash payment of the Stock Purchase Price pursuant to clause (a) of this Section 1, may elect, at any time on or before the Expiration Date, to surrender this Warrant and receive that number of  Shares computed using the following formula:

 

 

	 	
Where:

	
X

	
=

	
the number of Shares to be issued to Holder.

 

	  	
Y

	
=

	
the number of Shares that Holder would otherwise have been entitled to purchase hereunder pursuant to Section 1(a) (or such lesser number of Shares as Holder may designate in the case of a partial exercise of this Warrant).

	 	 	 	 
	  	
A

	
=

	
the Per Share Price (as defined in Section 1(c) below) of one (1) Share at the time the net issuance election under this Section 1(b) is made.

	 	 	 	 
	  	
B

	
=

	
the Stock Purchase Price then in effect.

 

Election to exercise under this Section 1(b) may be made by delivering a signed form of subscription to Company via facsimile, to be followed by delivery of this Warrant.  Notwithstanding anything to the contrary contained in this Warrant, if as of the close of business on the last business day preceding the Expiration Date this Warrant remains unexercised as to all or a portion of the Shares purchasable hereunder, then effective as of 9:00 a.m.  (Pacific time) on the Expiration Date, Holder shall be deemed, automatically and without need for notice to the Company, to have elected to exercise this Warrant in full pursuant to the provisions of this Section 1(b), and upon surrender of this Warrant shall be entitled to receive that number of Shares computed using the above formula, provided that the application of such formula as of the Expiration Date yields a positive number for “X”.

 

(c)           For purposes of Section 1(b), “Per Share Price” means:

 

(i)           If Company’s Shares are traded on a securities exchange or actively traded over-the-counter:

 

(1)           If Company’s Shares are traded on a securities exchange, the Per Share Price shall be deemed to be the closing price of Company’s Shares as quoted on any exchange, as published in the Western Edition of The Wall Street Journal for the trading day immediately prior to the date of Holder’s election hereunder.

 

  

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(2)           If Company’s Shares are actively traded over-the-counter, the Per Share Price shall be deemed to be the closing bid or sales price, whichever is applicable, of the Shares for the trading day immediately prior to the date of the Holder’s election hereunder.

 

(ii)           If (i) is not applicable, the Per Share Price shall be determined in good faith by the Board of Directors of Company based on relevant facts and circumstances at the time of the net exercise under Section 1(b), including in the case of a Change of Control (as defined in Section 4.3(a) hereof), the consideration receivable by the holders of the Shares in such Change of Control and the liquidation preference (including any declared but unpaid dividends), if any, then applicable to the Shares.

 

Section 2.               Limitation on Transfer.

 

(a)           This Warrant and the Shares shall not be transferable except upon the conditions specified in this Section 2, which conditions are intended to ensure compliance with the provisions of the Securities Act.  Each holder of this Warrant or the Shares issuable hereunder will cause any proposed transferee of the Warrant or Shares to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Section 2.  Notwithstanding the foregoing and any other provision of this Section 2, Holder may freely transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant at any time to any lender transferee of a portion of the loan commitment of Lender under the Loan Agreement, by giving Company notice of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the transferee and surrendering this warrant to Company for reissuance to the transferees(s) (and Holder, if applicable).

 

                      (b)           Each certificate representing (i) this Warrant, (ii) the Shares, and (iii) any other securities issued in respect to the Shares upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of this Section 2 or unless such securities have been registered under the Securities Act or sold under Rule 144) be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under applicable state securities laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE AND DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAWS.  SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED DUE TO AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

(c)           The Holder of this Warrant and each person to whom this Warrant is subsequently transferred (as permitted hereunder) represents and warrants to the Company (by acceptance of such transfer) that it will not transfer this Warrant (or securities issuable upon exercise hereof unless a registration statement under the Securities Act was in effect with respect to such securities at the time of issuance thereof) except pursuant to (i) an effective registration statement under the Securities Act, (ii) Rule 144 under the Securities Act (or any other rule under the Securities Act exempting the disposition of securities from registration), or (iii) an opinion of counsel, reasonably satisfactory to counsel for the Company, that an exemption from such registration is available.

Section 3.               Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees that all Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any stockholder and free of all taxes, liens and charges with respect to the issue thereof.  The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Shares, or other securities and property, when and as required to provide for the exercise of the rights represented by this Warrant.  The Company will take all such action as may be necessary to assure that such Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Shares may be listed.  The Company will not take any action which would result in any adjustment of the Stock Purchase Price (as defined in Section 4 hereof) (i) if the total number of Shares issuable after such action upon exercise of all outstanding warrants, together with all Shares then outstanding and all Shares then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of Shares then authorized by the Company’s Articles of Incorporation, (ii) if the par value per Share would exceed the Stock Purchase Price.

 

  

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Section 4.               Adjustment of Stock Purchase Price and Number of Shares.  The Stock Purchase Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 4.  Upon each adjustment of the Stock Purchase Price, the Holder of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase Price resulting from such adjustment, the number of shares obtained by multiplying the Stock Purchase Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Stock Purchase Price resulting from such adjustment.

4.1           Subdivision or Combination of Stock.  Without duplication of any provision in the Company’s Restated Articles of Incorporation in case the Company shall at any time subdivide its outstanding Shares into a greater number of shares, the Stock Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding Shares shall be combined into a smaller number of shares, the Stock Purchase Price in effect immediately prior to such combination shall be proportionately increased.

4.2           Dividends in Shares, Other Stock, Property, Reclassification.  If at any time or from time to time the holders of Shares (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor,

(a)           Shares, or any shares of stock or other securities whether or not such securities are at any time directly or indirectly convertible into or exchangeable for Shares, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution, or

(b)           any cash paid or payable otherwise than as a cash dividend, or

(c)           Shares or other or additional stock or other securities or property (including cash) by way of spin off, split-up, reclassification, combination of shares or similar corporate rearrangement, (other than Shares issued as a stock split, adjustments in respect of which shall be covered by the terms of Section 4.1 above),

then and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of Shares receivable thereupon, and without payment of any additional consideration therefore, the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) above) which such Holder would hold on the date of such exercise had it been the holder of record of such Shares as of the date on which holders of Shares received or became entitled to receive such shares and/or all other additional stock and other securities and property.

4.3           Change of Control.

 

(a)           In the event of a Change of Control (as hereinafter defined), this Warrant shall be automatically exchanged for a number of shares of Company’s securities, such number of shares being equal to the maximum number of shares issuable pursuant to the terms hereof (after taking into account all adjustments described herein) had Holder elected to exercise this Warrant immediately prior to the closing of such Change of Control and purchased all such shares pursuant to the cash exercise provision set forth in Section 1(a) hereof (as opposed to the cashless exercise provision set forth in Section 1(b)).  Company acknowledges and agrees that Holder shall not be required to make any additional payment (cash or otherwise) for such shares as further consideration for their issuance pursuant to the terms of the preceding sentence.  “Change of Control” shall mean any sale, license, or other disposition of all or substantially all of the assets of Company, or any reorganization, privatization, consolidation, or merger of Company where the holders of Company’s securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction.  This Warrant shall terminate upon Holder’s receipt of the number of shares of the Company’s equity securities described in this Section 4.3(a).

 

  

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(b)           Notwithstanding anything to the contrary set forth in Section 4.3(a), at the first to occur of: (i) a Change of Control, (ii) the Company’s having closed a round of equity financing equal to or exceeding $20,000,000 in aggregate additional equity (a round of equity financing is defined as a transaction or a series of transactions with substantially the same terms and excludes the exercise or conversion of any securities outstanding on the day the Warrant is issued), or (iii) July 31, 2015 (each, a “Put Event”), at Holder’s option, Holder may elect, within sixty (60) days of such Put Event, to surrender this Warrant in full to Company in exchange for a cash payment in an amount equal to $156,250.

 

4.4           Intentionally Omitted.

4.5           Notice of Adjustment.  Upon any adjustment of the Stock Purchase Price of more than 5% of the existing stock purchase price, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the registered holder of this Warrant at the address of such holder as shown on the books of the Company.  The notice, which may be substantially in the form of Exhibit “A” attached hereto, shall be signed by the Company’s chief financial officer and shall state the Stock Purchase Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.

4.6           Other Notices.  If at any time:

(a)           the Company shall declare any cash dividend upon its Shares;

(b)           the Company shall declare any dividend upon its Shares payable in stock or make any special dividend or other distribution to the holders of its Shares;

(c)           the Company shall offer for subscription pro rata to the holders of its Shares any additional shares of stock of any class or other rights;

(d)           there shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another entity;

(e)           there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; or

(f)           the Company shall take or propose to take any other action, notice of which is actually provided to holders of the Shares;

then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, addressed to the Holder of this Warrant at the address of such Holder as shown on the books of the Company, (i) at least 20 day’s prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action and (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action, at least 20 day’s written notice of the date when the same shall take place.  Any notice given in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Shares shall be entitled thereto.  Any notice given in accordance with the foregoing clause (ii) shall also specify the date on which the holders of Shares shall be entitled to exchange their Shares for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action as the case may be.  In addition, the Company shall notify the Holder if the Company satisfies the Second Tranche Milestone, such notice to be provided as soon as possible following such satisfaction.

 

  

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4.7           Certain Events.  If any change in the outstanding Shares of the Company or any other event occurs as to which the other provisions of this Section 4 are not strictly applicable and the Board of Directors in good faith believes that an adjustment is necessary to effect the essential intent and principles with the adjustment provisions of this Warrant or if the provisions of this Section 4 are strictly applicable to an event but the application of such provisions would not fairly effect the adjustments to this Warrant in accordance with the essential intent and principles of such provisions, then the Board of Directors of the Company shall make in good faith an adjustment in the number and class of shares issuable under this Warrant, the Stock Purchase Price and/or the application of such provisions, in accordance with such essential intent and principles, so as to protect such purchase rights as aforesaid.  The adjustment shall be such as will give the Holder of this Warrant upon exercise for the same aggregate Stock Purchase Price the total number, class and kind of shares as the Holder would have owned had this Warrant been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring adjustment.

Section 5.               Issue Tax.  The issuance of certificates for Shares upon the exercise of this Warrant shall be made without charge to the Holder of this Warrant for any issue tax in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Holder of this Warrant being exercised.

Section 6.               Closing of Books.   The Company will at no time close its transfer books against the transfer of this Warrant or of any Shares issued or issuable upon the exercise of this Warrant in any manner which interferes with the timely exercise of this Warrant, unless required by applicable law or regulation, or to avoid the violation of any applicable law or regulation.

Section 7.               No Voting or Dividend Rights; Limitation of Liability.  Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent as a stockholder in respect of meetings of stockholders for the election of directors of the Company or any other matters or any rights whatsoever as a stockholder of the Company.  No dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised.  No provisions hereof, in the absence of affirmative action by the Holder to purchase Shares, and no mere enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the Stock Purchase Price or as a stockholder of the Company, whether such liability is asserted by the Company or by its creditors.

Section 8.               Intentionally Omitted.

Section 9.               Intentionally Omitted.

 

  

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Section 10.               Rights and Obligations Survive Exercise of Warrant.  The rights and obligations of the Company, of the Holder of this Warrant and of the holder of Shares issued upon exercise of this Warrant, contained in Section 6 shall survive the exercise of this Warrant.

 

Section 11.               Modification and Waiver.  This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.

 

Section 12.               Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder hereof or the Company shall be deemed to have been given (i) upon receipt if delivered personally or by courier (ii) upon confirmation of receipt if by telecopy or (iii) three business days after deposit in the US mail, with postage prepaid and certified or registered, to each such Holder at its address as shown on the books of the Company or to the Company at the address indicated therefor in the first paragraph of this Warrant.

 

Section 13.               Survival.  All of the obligations of the Company relating to the Shares issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant.  All of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder hereof.  The Company will, at the time of the exercise of this Warrant, in whole or in part, upon request of the Holder hereof and at the Holder’s expense, acknowledge in writing its continuing obligation to the Holder hereof in respect of any rights (including, without limitation, any right to registration of the Shares) to which the Holder hereof shall continue to be entitled after such exercise in accordance with this Warrant; provided, that the failure of the Holder hereof to make any such request shall not affect the continuing obligation of the Company to the Holder hereof in respect of such rights.

Section 14.               Descriptive Headings and Governing Law.  The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant.  This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California.

 

Section 15.               Lost Warrants or Stock Certificates.  The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of any Warrant or stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company at Holder’s expense will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.

Section 16.               Fractional Shares.  No fractional shares shall be issued upon exercise of this Warrant.  The Company shall, in lieu of issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Stock Purchase Price.

 

Section 17.               Representations of Holder.  With respect to this Warrant, Holder represents and warrants to the Company as follows:

17.1           Experience.  It is an “accredited investor” as that term is defined in Rule 501 (a) promulgated under the Securities Act of 1933, as amended; is experienced in evaluating and investing in companies engaged in businesses similar to that of the Company;  it understands that investment in this Warrant involves substantial risks; it has made detailed inquiries concerning the Company, its business and services, its officers and its personnel; the officers of the Company have made available to Holder any and all written information it has requested; the officers of the Company have answered to Holder’s satisfaction all inquiries made by it; in making this investment it has relied upon information made available to it by the Company; and it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of investment in the Company and it is able to bear the economic risk of that investment.

 

  

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17.2           Investment.  It is acquiring this Warrant for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof.  It understands that this Warrant and the Shares issuable upon exercise thereof have not been registered under the Securities Act, nor qualified under applicable state securities laws.

17.3           Rule 144.  It acknowledges that this Warrant and the Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available.  It has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act.

17.4           Access to Data.  It acknowledges that it has had an opportunity to discuss the Company’s business, management and financial affairs with the Company’s management and has had the opportunity to inspect the Company’s facilities.

Section 18.               Additional Representations and Covenants of the Company.  The Company hereby represents, warrants and agrees as follows:

 

18.1           Corporate Power.  The Company has all requisite corporate power and corporate authority to issue this Warrant and to carry out and perform its obligations hereunder.

18.2           Authorization.  All corporate action on the part of the Company, its directors and stockholders necessary for the authorization, execution, delivery and performance by the Company of this has been taken.  This Warrant is a valid and binding obligation of the Company, enforceable in accordance with its terms.

18.3           Offering.  Subject in part to the truth and accuracy of Holder’s representations set forth in Section 17 hereof, the offer, issuance and sale of this Warrant is, and the issuance of Shares upon exercise of this Warrant will be exempt from the registration requirements of the Securities Act, and are exempt from the qualification requirements of any applicable state securities laws; and neither the Company nor anyone acting on its behalf will take any action hereafter that would cause the loss of such exemptions.

 

18.4           Listing; Stock Issuance.  The Company shall secure and maintain the listing of the Shares issuable upon exercise of this Warrant upon each securities exchange or over-the-counter market upon which the Company’s Shares are listed or quoted.  Upon exercise of this Warrant, the Company will use its best efforts to cause stock certificates representing the Shares purchased pursuant to the exercise to be issued in the names of Holder, its nominees or assignees, as appropriate at the time of such exercise.

18.5           Certificate and By-Laws.  The Company has made available to Holder true and complete copies of the Company’s Certificate of Incorporation, By-Laws, and each Certificate of Designation or other charter document setting, forth any rights, preferences and privileges of Company’s capital stock, each as amended and in effect on the date of issuance of this Warrant.

18.6           Intentionally Omitted.

18.7           Financial and Other Reports.  From time to time up to the earlier of the Expiration Date or the complete exercise of this Warrant, the Company shall furnish to Holder (i) upon delivery to the Company’s Board of Directors, an audited balance sheet and statement of changes in financial position at and as of the end of such fiscal year, together with an audited statement of income for such fiscal year; (ii) within 45 days after the close of each fiscal quarter of the Company, an unaudited balance sheet and statement of cash flows at and as of the end of such quarter, together with an unaudited statement of income for such quarter and a capitalization table; and (iii) promptly after sending, making available, or filing, copies of all reports, proxy statements, and financial statements that the Company sends or makes available to its stockholders and all registration statements and reports that the Company files with the SEC or any other governmental or regulatory authority.  In addition, Company agrees to provide Holder at any time and from time to time with such information as Holder may reasonably request for purposes of Holder’s compliance with regulatory, accounting and reporting requirements applicable to Holder.  Notwithstanding the foregoing, the Company shall not be required to furnish to Holder the financial information described in this Section 18.7 in the event such financial information has been previously delivered to Lender pursuant to the Loan Agreement and/or Supplement.

[Remainder of this page intentionally left blank; signature page follows]

 

  

8

  

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officer, thereunto duly authorized as of the date of issuance set forth on the first page hereof.

 

 

	OCULUS INNOVATIVE SCIENCES, INC.	 	 
	
 

	 	 	 	 
	 	 	 	
 

	 
	
By:    

	/s/ Robert E. Miller	 	 	 
	Name:    	Robert E. Miller	 	 	 
	Title:    	Chief Financial Officer	 	 	 

 

 

	
VENTURE LENDING & LEASING VI, LLC,

a Delaware limited liability company

	 	 
	
 

	 	 	 	 
	 	 	 	 	 
	By:     	
Westech Investment Advisors LLC, 

a California limited liability company

	 	 
	Its:    	Managing Member	 	 
	 	 	 	
 

	 
	 	By:    	 	 	 
	 	Name: 	 	 	 
	 	Title:   	 	 	 

 

  

9

  

FORM OF SUBSCRIPTION

(To be signed only upon exercise of Warrant)

 

To:           OCULUS INNOVATIVE SCIENCES, INC.

	
o

	
The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, (1) See Below ________________ (_____) shares (the “Shares”) of Stock of __________ and herewith makes payment of _____________ Dollars ($________) therefor, and requests that the certificates for such shares be issued in the name of, and delivered to, _________, whose address is ___________.

 

	
o

	
The undersigned hereby elects to convert ______ percent (__%) of the value of the Warrant pursuant to the provisions of Section 1(b) of the Warrant.

 

The undersigned acknowledges that it has reviewed the representations and warranties contained in Section 17 of this Warrant and by its signature below hereby makes such representations and warranties to the Company.

 

	
Dated

	
 

	
Holder:

	
 

	
By:

	
 

	
Its:

	
 

	  	  
	
(Address)

	  
	
 

	
 

 

	
(1)

	
Insert here the number of shares called for on the face of the Warrant (or, in the case of a partial exercise, the portion thereof as to which the Warrant is being exercised), in either case without making any adjustment for additional Shares or any other stock or other securities or property or cash which, pursuant to the adjustment provisions of the Warrant, may be issuable upon exercise.

 

  

  

  

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned, the holder of the within Warrant, hereby sells, assigns and transfers all of the rights of the undersigned under the within Warrant, with respect to the number of Shares covered thereby set forth herein below, unto:

 

	
Name of Assignee

	
Address

	
No. of Shares

 

 

 

 

 

 

	
Dated

	
 

	
Holder:

	
 

	
By:

	
 

	Its:	 

 

  

  

  

 

EXHIBIT "A"

[On letterhead of the Company]

Reference is hereby made to that certain Warrant dated September __, 2011, issued by OCULUS INNOVATIVE SCIENCES, INC, a Delaware corporation (the "Company"), to VENTURE LENDING & LEASING VI, INC., a Maryland corporation (the "Holder").

[IF APPLICABLE]  The Warrant provides that the actual number of shares of the Company's capital stock issuable upon exercise of the Warrant and the initial exercise price per share are to be determined by reference to one or more events or conditions subsequent to the issuance of the Warrant.  Such events or conditions have now occurred or lapsed, and the Company wishes to confirm the actual number of shares issuable and the initial exercise price.  The provisions of this Supplement to Warrant are incorporated into the Warrant by this reference, and shall control the interpretation and exercise of the Warrant.

[IF APPLICABLE]  Notice is hereby given pursuant to Section 4.5 of the Warrant that the following adjustment(s) have been made to the Warrant:  [describe adjustments, setting forth details regarding method of calculation and facts upon which calculation is based].

This certifies that the Holder is entitled to purchase from the Company __________________________ (____________) fully paid and nonassessable shares of the Company's _________ Stock at a price of _________________________ Dollars ($__________) per share (the "Stock Purchase Price").  The Stock Purchase Price and the number of shares purchasable under the Warrant remain subject to adjustment as provided in Section 4 of the Warrant.

Executed this ___ day of ________________, 20____.

 

 

	OCULUS INNOVATIVE SCIENCES, INC
	 	 
	
By:    

	
 

	
Name:    

	
 

	
Title:

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