Document:

virnetx_8k-ex1002.htm

Exhibit 10.2

EXHIBIT B

 

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into as of September ___, 2009, between VirnetX Holding Corporation, a Delaware corporation (the “Company”),
and each of the several purchasers signatory hereto (each such purchaser, a “Purchaser” and, collectively, the “Purchasers”).

This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Purchaser (the “Purchase Agreement”).

The Company and each Purchaser hereby agrees as follows:

1.           Definitions.

Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:

“Advice” shall have the meaning set forth in Section 6(d).

“Effectiveness Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 90th calendar day following the date hereof (or,
in the event of a “full review” by the Commission, the 120th calendar day following the date hereof) and with respect to any additional Registration Statements which may be required pursuant to Section 3(c), the 90th calendar day following the date on which an additional Registration Statement is required to be filed hereunder; provided, however,
that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments and the Commission is prepared to accelerate the effectiveness of such Registration Statement, the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above.

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

“Event” shall have the meaning set forth in Section 2(b).

“Event Date” shall have the meaning set forth in Section 2(b).

“Filing Date” means, with respect to the Initial Registration Statement required hereunder, 15 Trading Days following the date hereof and, with respect to any additional Registration Statements which may be required pursuant to Section 3(c),
(i) the later of (a) the date sixty (60) days after the date substantially all of the Registrable Securities registered under the immediately preceding Registration Statement are sold and (b) the date six (6) months from the date the immediately preceding Registration Statement is declared effective by the Commission or (ii) any earlier date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.

 

 

 

 

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.

“Indemnified Party” shall have the meaning set forth in Section 5(c).

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.

“Initial Shares” means a number of Registrable Securities equal to the lesser of (a) the total number of Registrable Securities and (b) one-third of the number of issued and outstanding shares of Common Stock that are held by non-Affiliates
of the Company on the day immediately prior to the filing date of the Initial Registration Statement.

“Losses” shall have the meaning set forth in Section 5(a).

“Plan of Distribution” shall have the meaning set forth in Section 2(a).

“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“Registrable Securities” means, as of any date of determination, (a) all of the Shares, (b) all Warrant Shares then issuable upon exercise of the Warrants (assuming on such date the Warrants are exercised in full without regard to any exercise
limitations therein) and (c) any securities issued or then issuable upon any stock split, dividend or other distribution,  recapitalization or similar event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another,
Registration Statement hereunder with respect thereto) for so long as (i) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (ii) such Registrable Securities have been previously sold in accordance with Rule 144, or (iii) such securities become eligible for resale without volume or manner-of-sale
restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any Affiliate of the Company, and all Warrants are exercised by “cashless exercise”
as provided in Section 2(c) of each of the Warrants), as reasonably determined by the Company, upon the advice of counsel to the Company.

 

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“Registration Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 3(c), including (in each case) the Prospectus, amendments and
supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.

 “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially
the same purpose and effect as such Rule.

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

“Selling Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).

“SEC Guidance” means (i) any publicly-available written or guidance of the Commission staff and (ii) the Securities Act.

2.           Shelf Registration.

(a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all or such maximum portion of the Registrable Securities as permitted by
SEC Guidance (provided that, the Company shall use commercially reasonable efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance) that are not then registered on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415.  Each Registration Statement filed hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith) and shall contain (unless otherwise directed by at least a majority in interest of the Holders) substantially the “Plan of Distribution” attached hereto as Annex A.  Subject to the terms of this Agreement, the Company shall use its commercially reasonable
efforts to cause a Registration Statement filed hereunder to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event prior to the applicable Effectiveness Date, and shall use its commercially reasonable efforts to keep such Registration Statement continuously effective under the Securities Act until all Registrable Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) (A) may be sold without volume
or manner-of-sale restrictions pursuant to Rule 144 and (B) may be sold without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, as determined by the counsel to the Company pursuant to a written letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders (the “Effectiveness Period”).  The Company shall request effectiveness
of a Registration Statement as of 5:00 p.m. New York City time on a Trading Day.   The Company shall immediately notify the Holders via facsimile or by e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company telephonically confirms effectiveness with the Commission, which shall be the date requested for effectiveness of such Registration Statement.  The Company shall, by 5:00 p.m. New York City time on the Trading Day after the effective date of
such Registration Statement, file a final Prospectus with the Commission as required by Rule 424.  Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(b), if any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement (and notwithstanding that the Company used commercially reasonable efforts to advocate with the
Commission for the registration of all of the Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will first be reduced by Registrable Securities represented by Warrant Shares (applied, in the case that some Warrant Shares may be registered, to the Holders on a pro rata basis based on the total number of unregistered Warrant Shares held by such Holders), and second by Registrable
Securities represented by Shares (applied, in the case that some Shares may be registered, to the Holders on a pro rata basis based on the total number of unregistered Shares held by such Holders). In the event of a cutback hereunder, the Company shall give the Holder at least three (3) Trading Days prior written notice along with the calculations as to such Holder’s allotment.

 

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(b) If: (i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the Company files the Initial Registration Statement without affording the Holders the opportunity to review and comment
on the same as required by Section 3(a) herein, the Company shall be deemed to have not satisfied this clause (i)), or (ii) the Company fails to file with the Commission a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed” or
will not be subject to further review and the Commission is prepared to accelerate the effectiveness of such Registration Statement, or (iii) prior to the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement within ten (10) Trading Days after the receipt of comments by or notice from the Commission that such amendment is required in order for such Registration
Statement to be declared effective, or (iv) as to, in the aggregate among all Holders on a pro-rata basis based on their purchase of the Securities pursuant to the Purchase Agreement, a Registration Statement registering for resale all of the Initial Shares is not declared effective by the Commission by the Effectiveness Date of the Initial Registration Statement, or (v) after the effective date of a Registration Statement, such Registration Statement ceases for any reason to remain continuously effective as
to all Registrable Securities included in such Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities (including, without limitation, because of the suspension of trading or any other limitation imposed by a Trading Market, a failure to keep such Registration Statement effective, a failure to disclose such information as is necessary for sales to be made pursuant to such Registration Statement, a failure to register a sufficient
number of shares of Common Stock or a failure to maintain the listing of the Common Stock), for more than ten (10) consecutive calendar days or more than an aggregate of fifteen (15) calendar days (which need not be consecutive calendar days) during any 12-month period, or (vi) the Company shall fail for any reason to satisfy the current public information requirement under Rule 144 as to the applicable Registrable Securities (any such failure or breach being referred to as an “Event”,
and for purposes of clauses (i), (iv), and (vi), the date on which such Event occurs, and for purpose of clause (ii) the date on which such five (5) Trading Day period is exceeded and for purpose of clause (iii) the date which such ten (10) Trading Day period is exceeded, and for purpose of clause (v) the date on which such ten (10) Trading Day or fifteen (15) calendar day period, as applicable, is exceeded being referred to as “Event Date”),
then, in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to 1.5% of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for any unregistered Registrable
Securities then held by such Holder; provided that in no event shall liquidated damages exceed, in the aggregate, 9% of a Holders aggregate Subscription Amount under the Purchase Agreement, less any amount paid pursuant to Section 4.2(b) of the Purchase Agreement.  If the Company fails to pay any partial liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event.

3.           Registration Procedures.

In connection with the Company’s registration obligations hereunder, the Company shall:

(a) Not less than three (3) Trading Days prior to the filing of each Registration Statement and not less than two (2) Trading Days prior to the filing of any related Prospectus or any amendment or supplement thereto
the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be reasonably necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto
to which the Holders of 66-2/3% of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than one (1) Trading Day after the Holders have been so furnished copies of a Registration Statement, or any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex
B (a “Selling Stockholder Questionnaire”) on a date that is not less than two (2) Trading Days prior to the Filing Date.

 

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(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration
Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly
as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided that, the Company shall excise any information contained therein which would constitute material non-public information as to any Holder which has not executed a confidentiality agreement with respect
thereto with the Company), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.

(c) If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common Stock then registered in a Registration Statement, then the Company shall file
as soon as reasonably practicable, but in any case prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number of such Registrable Securities.

(d) Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite
changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to a Registration
Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information related to the Registration Statement or Prospectus, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of
the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein
or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material (provided that in each notice the Company will not disclose the content of such material, non-public information to the Holders) and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus,
provided that, any and all of such information shall remain confidential to each Holder until such information otherwise becomes public, unless disclosure by a Holder is required by law; provided, further, that notwithstanding each Holder’s agreement to keep such information confidential, each such Holder makes no acknowledgement that any such information is material, non-public
information.

(e) Use its commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension
of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

 

 

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(f) Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed
to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form.

(g) Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale
of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).

(h)  The Company shall cooperate with any broker-dealer through which a Holder proposes to resell its Registrable Securities in effecting a filing with the FINRA Corporate Financing Department pursuant to FINRA
Rule 5110.

(i) Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification
(or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of all applicable jurisdictions in the United States, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that,
the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.

(j) If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration
Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.

(k) Upon the occurrence of any event contemplated by Section 3(d)(v), as promptly as commercially reasonably possible under the circumstances, prepare a supplement or amendment, including a post-effective amendment,
to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If
the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus.  The Company will use its commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.  The Company shall be entitled to exercise its right under this Section 3(k) to suspend the availability
of a Registration Statement and Prospectus, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(b), for a period not to exceed 60 calendar days (which need not be consecutive days) in any 12-month period.

(l) Comply with all applicable rules and regulations of the Commission.

 

 

 

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(m) The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the natural
persons thereof that have voting and dispositive control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended
as to such Holder only, until such information is delivered to the Company.  If any such Holder fails to furnish such information to the Company within 3 Trading Days with reasonable efforts being made by the Company to obtain such information, the Company shall have the right to exclude such Holder from the registration of the Registrable Securities and the Company shall have no obligation to pay such Holder liquidated damages under this Agreement.

(n) Neither the Company nor any Subsidiary or affiliate thereof shall identify any Holder as an underwriter in any public disclosure or filing with the Commission, or any Trading Market and any Holder being deemed
an underwriter by the Commission shall not relieve the Company of any obligations it has under this Agreement or any other Transaction Document; provided, however, that the foregoing shall not prohibit the Company from including the disclosure found in the "Plan of Distribution" section attached hereto as Annex A in the Registration Statement.

4.           Registration Expenses. Except as provided for in this Agreement, all fees and expenses incident to the performance of or compliance with,
this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings required to be made with
any Trading Market on which the Common Stock is then listed for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (D) if not previously paid by the Company in connection with an Issuer Filing, with respect to any filing that may be required to be made by any broker
through which a Holder intends to make sales of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission in connection with such sale, (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement.  In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit
and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.  In no event shall the Company be responsible for any broker or similar discounts or commissions of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders.

5.           Indemnification.

(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, members, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding
such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact
contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus
is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d).  The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware.

 

 

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(b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents
and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder’s failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue or alleged untrue statement
of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically for inclusion
in such Registration Statement or such Prospectus or (ii) to the extent that such information relates to such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or in any amendment or supplement thereto or (ii) in the case of an occurrence of an event of the type specified in Section
3(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d).  In no event shall the liability of any selling Holder under this Section 5(b) be greater in amount than the dollar amount of the net proceeds received by such Holder upon the
sale of the Registrable Securities giving rise to such indemnification obligation.

(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that, the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless:  (1) the Indemnifying
Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist
if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party).  The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld, conditioned or delayed.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within twenty Trading Days of written notice thereof to the Indemnifying Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is judicially determined not to be entitled to indemnification hereunder.

 

 

8

 

 

(d) Contribution. If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission.  The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately
preceding paragraph.  Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute pursuant to this Section 5(d), in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

6.           Miscellaneous.

(a) Remedies.  In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder
or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement.  Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

(b) No Piggyback on Registrations; Prohibition on Filing Other Registration Statements. Neither the Company nor any of its security holders (other than
the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statements other than the Registrable Securities except in connection with transactions contemplated by clause (d) under Exempt Issuance in the Purchase Agreement.  Other than a registration statement on Form S-3 (or on such other form available to the Company) for a sale by the Company of its securities, the Company shall not file any other registration statements until 45 days following the date
that all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the Commission, provided that this Section 6(b) shall not prohibit the Company from filing amendments to registration statements filed prior to the date of this Agreement, provided that no such amendment shall increase the amount of securities registered under such amendment.

(c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to
it in connection with sales of Registrable Securities pursuant to a Registration Statement.

 

 

9

 

 

(d) Discontinued Disposition.  By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed.  The Company will use its commercially reasonable efforts to
ensure that the use of the Prospectus may be resumed and shall deliver the Advice to the Holders as promptly as is practicable.  The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(b).

(e) Piggy-Back Registrations. If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s
stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination and, if within fifteen days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided, however,
that the Company shall not be required to register any Registrable Securities pursuant to this Section 6(e) that are eligible for resale pursuant without restriction pursuant to Rule 144 promulgated by the Commission pursuant to the Securities Act and without the requirement to be in compliance with Rule 144(c)(1) (or any successor thereto) or that are the subject of a then effective Registration Statement.

(f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed (either generally or in a particular instance and either retroactively or prospectively) by the Company and the Holders of 66% or more of the then outstanding Registrable Securities (including, for this purpose any Registrable Securities issuable upon exercise or conversion of any Security). If a Registration Statement does not register all of the Registrable Securities pursuant to
a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of one Holder or some Holders in particular
and that does not directly or indirectly affect the rights of all other Holders may be given by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the first  sentence of this Section
6(f).

(g) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth
in the Purchase Agreement.

(h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of 66-2/3% of the Holders of the then outstanding Registrable Securities.  Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase Agreement.

(i) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its
Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.

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

 

 

10

 

 

(k) Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined
in accordance with the provisions of the Purchase Agreement.

(l) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.

(m) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially similar result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

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

(o) Independent Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the obligations
of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such
obligations or the transactions contemplated by this Agreement. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose.

********************

 

(Signature Pages Follow)

  

11

  

               IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

	
VIRNETX HOLDING CORPORATION

 

 

	
By:__________________________________________

     Name:

     Title:

 

 

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

  

12

  

[SIGNATURE PAGE OF HOLDERS TO VHC RRA]

Name of Holder: __________________________

Signature of Authorized Signatory of Holder: __________________________

Name of Authorized Signatory: _________________________

Title of Authorized Signatory: __________________________

[SIGNATURE PAGES CONTINUE]

  

13

  

 

Annex A

Plan of Distribution

Each Selling Stockholder (the “Selling Stockholders”) of the common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock covered hereby on the principal
Trading Market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions.  These sales may be at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or negotiated prices.  A Selling Stockholder may use any one or more of the following methods when selling shares:

 

	
·  
	
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

	
·  
	
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

	
·  
	
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

	
·  
	
an exchange distribution in accordance with the rules of the applicable exchange;

 

	
·  
	
privately negotiated transactions;

 

	
·  
	
settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;

 

	
·  
	
in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;

 

	
·  
	
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

	
·  
	
a combination of any such methods of sale; or

 

	
·  
	
any other method permitted pursuant to applicable law.

 

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.

 

 

14

 

 

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales.  Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated,
but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

 

In connection with the sale of the common stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume.  The Selling
Stockholders may also sell shares of the common stock short and deliver these securities to close out their short positions or to return borrowed shares in connection with such short sales, or loan or pledge the common stock to broker-dealers that in turn may sell these securities.  The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or
other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales.  In such event, any commissions received by such broker-dealers or agents and any profit on
the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.  Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).

 

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares.  The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

 

The Selling Stockholders will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder unless an exemption therefrom is available.

 

The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling Stockholders.

 

We agreed to keep this prospectus effective until the earlier of (i) the date on which the shares may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144 and without the requirement for the Company to be in compliance with the
current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the shares have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect.  The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares of Common Stock covered hereby may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

 

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution.  In
addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the Selling Stockholders or any other person.  We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including
by compliance with Rule 172 under the Securities Act).

 

There can be no assurance that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement, of which this prospectus forms a part.

 

Once sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.

 

  

15

  

Annex B

 

VIRNETX HOLDING CORPORATION

 

Selling Stockholder Notice and Questionnaire

 

The undersigned beneficial owner of common stock (the “Registrable Securities”) of VirnetX Holding Corporation, a Delaware corporation (the “Company”), understands
that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the
Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed.  A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below.  All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

 

Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus.  Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not
being named as a selling stockholder in the Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.

 

  

16

  

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

 

QUESTIONNAIRE

1.  Name.

 

	  	
(a)
	
Full Legal Name of Selling Stockholder

	  	  	  
	  	  	 

	  	
(b)
	
Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:

	  	  	  
	  	  	 

	  	
(c)
	
Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire):

	  	  	  
	  	  	 

2.  Address for Notices to Selling Stockholder:

 

	 

	 

	 

	
  

	
Telephone: 
	
 

	 
Fax:
	 

	 
Contact Person:
	 

 

 

 

17

 

 

3.  Broker-Dealer Status:

 

	
  
	
(a)
	
Are you a broker-dealer?

 

Yes   o                      No   o

 

	
  
	
(b)
	
If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?

 

Yes   o                      No   o

 

	
  
	
Note:
	
If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

	
  
	
(c)
	
Are you an affiliate of a broker-dealer?

 

Yes   o                      No   o

 

	
  
	
(d)
	
If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

 

Yes   o                      No   o

 

	
  
	
Note:
	
If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

4.  Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.

 

Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.

 

	 	
(a)
	
Type and Amount of other securities beneficially owned by the Selling Stockholder:

	  	  	 

	  	  	 

 

  

18

  

5.  Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors
or affiliates) during the past three years.

 

	
  
	
State any exceptions here:

 

	 	 

	 	 

	 	  

 

The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective.

 

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto.  The
undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

	 	Beneficial Owner:
	 	 	 	 
	
Date
	
By: 
	 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 

 

PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

19helix_8k-ex1001.htm

EXHIBIT 10.1

 

 

STOCK PURCHASE AGREEMENT

 

 

By and Among

 

 

HELIX WIND, CORP.,

 

VENCO POWER GmbH

 

and

 

FIBER-TECH PRODUCTS GmbH, WESER ANLAGENTECHNIK BETEILIGUNGS GmbH 

AND CLANA POWER SYSTEMS GmbH, the Sellers,

 

and

 

DR. MATTHIAS PFALZ, ANDREAS GORKE AND REINHARD CALIEBE, the Principals 

Dated as of September 2, 2009

 

 

 

 

 

 

 

 

STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of September 2, 2009, among Helix Wind, Corp., a Nevada corporation listed on the Over-the-Counter Bulletin Board (“Helix” or the “Purchaser”), Venco Power GmbH, a German company (the “Company”), and Fiber-Tech Products GmbH,
Weser Anlagentechnik Beteiligungs GmbH and CLANA Power Systems GmbH (collectively, the “Sellers”) and Dr. Matthias Pfalz, Andreas Gorke and Reinhard Caliebe (collectively, the “Principals”).

 

W I T N E S S E T H:

 

WHEREAS, the Sellers own all the issued and outstanding capital stock of the Company (the “Shares”);

 

WHEREAS, the Purchaser desires to acquire from the Sellers, and the Sellers desire to sell to the Purchaser, the Shares upon the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements hereinafter set forth, the parties do hereby agree as follows:

 

1.   CERTAIN DEFINITIONS.

 

1.1           Defined Terms.  As used in this Agreement, the following terms shall have the meanings specified or referred to below:

 

"Affiliate" of any Person shall mean any Person which, directly or indirectly, controls or is controlled by that Person, or is under common control with that Person.  For the purposes of this definition, "control" (including, with correlative
meaning, the terms "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

 

“Alternative Transaction" shall have the meaning set forth in Section 6.4.

 

"Assets" shall mean all properties and assets of every kind and character or description, tangible or intangible, owned by the Company or otherwise used or held for use in connection with its business as of the Closing Date, including without limitation,
the Intellectual Property, Company Licenses and Contracts. Assets shall expressly exclude improvements and enhancements to the Intellectual Property and any new products developed after the Closing.

 

“Business Day" shall mean any day that is not a Saturday or a Sunday or a day on which banks located in California are authorized or required to be closed.

 

"Cash Amount" shall mean the amount of 907,500 Euros, such amount to be payable by way of the Initial Cash Payment, as such Initial Cash Payment may be adjusted as provided for in Schedule 2,
and in two additional cash payments to be made pursuant to the terms of the Secured Note.

 

 

 

 

 

"Closing" shall have the meaning set forth in Section 3.1.

 

"Closing Date" shall have the meaning set forth in Section 3.1.

 

"Closing Date Liabilities" shall have the meaning set forth in Section 4.6.

 

"Code" shall mean the Internal Revenue Code of 1986, as amended, and corresponding applicable statutes of the Finanzbehoerden.  All citations to the Code or to the regulations promulgated thereunder shall include any amendments or any substitute
or successor provisions thereto.

 

"Company/Seller Approvals" shall have the meaning set forth in Section 4.5.

 

"Company Licenses" shall mean all rights and incidents of interest in and to all licenses, franchises, grants, easements, exceptions, certificates, consents, permits, approvals, orders and other authorizations of any Governmental Body, all of which have
been identified on Schedule 4.11.

 

“Confidential Information” means trade secrets, confidential information and know-how (including but not limited to ideas, formulae, compositions, processes, procedures and techniques, research and development information, computer program code,
performance specifications, support documentation, drawings, specifications, designs, business and marketing plans, and customer and supplier lists and related information).

 

“Contemplated Transactions" shall mean the purchase of the Shares by the Purchaser from the Sellers and the execution, delivery and performance of and compliance with this Agreement and all other agreements to be executed and delivered pursuant to
this Agreement.

 

"Consulting Agreement" shall mean the Consulting Agreement to be delivered at Closing between the Purchaser and Dr. Matthias Pfalz, who is the current Operating Manager of the Company, such Consulting Agreement to be substantially in the form of Exhibit
A, attached hereto.

 

"Contracts" shall mean all contracts, agreements, commitments, notes, bonds, deeds of trust, indentures, leases, mortgages, arrangements, instruments and documents of any nature or description that the Company is party to or obligated by, including without
limitation the License Agreements.

 

"Damages" shall have the meaning set forth in Section 10.1.

 

"Employment Agreements" shall mean the Employment Agreement to be delivered at Closing between the Purchaser and each of Reinhard Caliebe and Andreas Gorke, substantially in the forms of Exhibit
C and Exhibit D, respectively, attached hereto.

 

 

 

 

 

"Encumbrance" shall mean any security interest, pledge, mortgage, lien, charge, encumbrance, license, easement, right-of-way, cloud on title, adverse claim, preferential arrangement or restriction of any kind, including, but not limited to, any restriction
on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

 

"Escrow Agreement" shall mean the Escrow Agreement to be delivered at Closing among the Sellers, the Purchaser and such escrow agent as shall be selected and agreed to by the Parties prior to the Closing Date, substantially in the form of Exhibit
E attached hereto.

 

"Euros" shall mean the exchange rate of the Euro in dollars as published in the Wall Street Journal on the last publication date prior to the date any determination under this Agreement requiring such exchange rate is necessary.

 

“Exhibits” shall be deemed to mean and shall be limited to those exhibits to this Agreement which are listed and set forth on the page of this Agreement entitled Exhibits and Schedules.

 

“Finanzbehoerden” shall mean the German tax and revenue authorities which are the equivalent of the IRS in the United States.

 

"GAAP" shall mean generally accepted accounting principles in the United States.

 

"Governmental Body" shall mean any United States or German federal, state or local or any foreign government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal or judicial or arbitral body or any quasi-governmental
or private body exercising any regulatory or taxing authority thereunder.

 

"Helix Shares" shall have the meaning and shall be adjusted as provided for and set forth in Section 2.2(b).

 

“Initial Cash Payment” shall mean the cash sum of 550,000 Euros, as such amount may be adjusted as provided in Schedule 2.

 

"Intellectual Property" shall mean any and all: (a) invention registrations, (b) patents (including but not limited to design patents), patent registrations and patent applications (including all reissues, divisions, continuations, continuations-in-part,
extensions and reexaminations) and all improvements to the inventions disclosed in each such registration, patent or application, (c) trademarks, trademark rights, business identifiers, service marks, trade dress, logos, trade names, brand names and corporate names (and any deviations thereof), whether or not registered, including but not limited to all common law rights, and registrations and applications for registration thereof, including, but not limited to, all marks registered in any trademark offices throughout
the world, (d) registered and unregistered copyrights in both published works and unpublished works (including but not limited to copyrights on designs) and registrations and applications for registration thereof, (e) computer software, including, without limitation, source code, operating systems and specifications, data, data bases, files, documentation and other materials related thereto, data and documentation, (f) all know-how, trade secrets and confidential or proprietary, technical and business information
(including but not limited to ideas, pricing information, client lists and other data, formulas, compositions, inventions, and conceptions of inventions whether patentable or unpatentable and whether or not reduced to practice), (g) whether or not confidential, technology (including know-how and show-how), production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial, marketing and business data, pricing
and cost information, business and marketing plans and customer and supplier lists and information, (h) all goodwill associated therewith accruing from the dates of first use thereof, and all rights associated with the foregoing, (i) all Contracts or agreements granting any right, title, license or privilege under the intellectual property rights of any third party, and (j) all registered website and domain names.

 

 

 

 

 

"IRS" shall mean the Internal Revenue Service.

 

"Laws" shall mean all federal, state, local, regional, municipal or foreign laws, statutes, rules, regulations, ordinances, codes, decrees, judgments, orders or other legal requirements.

 

"Liabilities" shall mean any and all liabilities, duties and obligations of, and claims against or relating to, the Company or the ownership, possession or use of any of the Assets or the Shares, whether accrued, unaccrued, absolute, contingent, known or
unknown, asserted or unasserted (including, without limitation, all liabilities of the Company to any Person, including any employee, consultant, officer or director of the Company, or to their respective spouses and/or children and/or Affiliates, in any amount whatsoever, and all liabilities of the Company with respect to this Agreement or the Contemplated Transactions, including, without limitation, legal and accounting fees).

 

“Liabilities Schedule” shall have the meaning set forth in Section 4.6.

 

"License Agreements" shall have the meaning set forth in Section 4.13(b).

 

"Lock-Up Agreement" shall mean the Lock-Up Agreement to be delivered at Closing by each of the Sellers, substantially in the form of Exhibit F attached hereto.

 

"Party" shall mean any of the Purchaser, the Company, the Sellers or the Principals, as the case may be.

 

“Patent” shall have the meaning set forth in Section 2.2(a).

 

"Patent Default Date " shall mean the second anniversary of the Closing Date.

 

"Person" shall mean any individual, corporation, limited liability company, partnership, joint venture, trust, association, unincorporated organization, other entity or Governmental Body.

 

"Purchase Price" shall have the meaning set forth in Section 2.2.

 

"Put Right Agreement" shall mean the Put Right Agreement to be delivered at Closing among each of the Sellers and Helix, substantially in the form of Exhibit G attached hereto.

 

"Purchaser Indemnified Parties" shall have the meaning set forth in Section 10.1.

 

"Records" shall mean all documents and records relating to the Company and its business (including without limitation, all employment and personnel records, technical design and know-how, sales data, customer lists, and all other information relating to
customers, representatives, distributors and suppliers and other information including advertising materials) and copies of all accounting books, records, ledgers and electronic data processing materials.

 

“Schedules” shall be deemed to mean and shall be limited to those schedules to this Agreement which are listed and set forth on the page of this Agreement entitled Exhibits and Schedules.

 

 

 

 

 

"Second Cash Payment" shall have the meaning set forth in Section 2.2(a).

 

"Secured Note" shall mean that certain Secured Promissory Note to be issued on the Closing Date to the Sellers in the amount of the cash portion of the purchase price which is to be paid following Closing, as provided for in Section 2.2(a), and being in
the form attached hereto as Exhibit H.

 

"Seller Indemnified Parties" shall have the meaning set forth in Section 10.2.

 

“Sellers’ Loans” shall mean the [approximately 497,432 Euros] aggregate amount of loans made by the Sellers and third parties to the Company as of the Closing Date. Said loans shall be repaid by the Company at and following Closing in
accordance with the payment schedule which is set forth on attached Schedule 4.6, and to the extent any amount is not paid at Closing, the Sellers’ Loans shall be amended to reflect payment by the Company to the Sellers over the 24-month period subsequent to Closing, subject to adjustments and offsets as provided herein.

"Taxes" shall mean all taxes, charges, fees, imposts, levies or other assessments, including, without limitation, all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, together with any interest and any penalties, fines, additions to tax or additional amounts imposed by any Governmental Body and shall include any transferee liability in respect of Taxes.

 

"Tax Returns" shall mean any federal, state, local or foreign return, report, information return or other document (including any related or supporting information) filed or required to be filed with any Governmental Body in connection with the determination,
assessment or collection of any Taxes or the administration of any laws, regulations or administrative requirements relating to any Taxes.

 

"Third Cash Payment" shall have the meaning set forth in Section 2.2(a).

 

"Transaction Documents" shall mean, collectively, this Agreement, the Escrow Agreement, the Secured Note, the Employment Agreements, the Consulting Agreement, the Lock-Up Agreement, the Put Right Agreement and any and all agreements, exhibits, schedules,
certificates, instruments and other documents contemplated hereby or executed and delivered in connection herewith.

 

1.2           Construction.  As used in this Agreement, the masculine, feminine or neuter gender and the singular or plural numbers shall each be deemed to include the other whenever the context
so requires. This Agreement shall be construed as a whole and in accordance with its fair meaning and without regard to any presumption or other rule requiring construction against the Party causing this Agreement or any part hereof to be drafted. 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. The Parties acknowledge that each Party has reviewed this Agreement and
has had the opportunity to have it reviewed by legal counsel of its own choosing. If any words or phrases are stricken or otherwise eliminated, whether or not other words or phrases have been added, this Agreement shall be construed as if the words or phrases stricken or otherwise eliminated were never included in this Agreement.

 

 

 

 

 

2.           PURCHASE AND SALE OF SHARES.

 

2.1           Purchase and Sale of Shares.  Upon the terms and subject to the conditions set forth herein, and on the basis of the representations and warranties contained herein, at the Closing,
the Sellers shall sell, convey, transfer, assign and deliver to the Purchaser, and the Purchaser shall purchase, acquire and accept from the Sellers, all of the Sellers’ right, title and interest in and to the Shares, free and clear of any Encumbrance, such Shares constituting 100% of the Company’s outstanding capital stock.

2.2           Purchase Price.  The purchase price for the Shares (the "Purchase Price") shall be 2,750,000 Euros, consisting of (i) the Cash Amount, adjusted as provided in (a) below, and
(ii) the balance payable in shares of common stock of Helix, adjusted as provided in (b) below. The stock portion of the purchase price shall be reduced by 250,000 Euros to reflect a decrease in value of the Vertikon technology.

 

(a)           Cash and Note.  At the Closing, the Purchaser shall deliver to the Company (i) the Initial Cash Amount of 550,000 Euros by wire
transfer of such funds to an account designed by the Sellers at least two Business Days prior to Closing and (ii) the Secured Note. The Secured Note shall provide that 115,000 Euros shall be due and payable to the Sellers on the 12-month anniversary of the Closing Date (the “Second Cash Payment”), and 242,500 Euros shall be due and payable to the Sellers on the 24-month anniversary of the Closing Date (the “Third Cash Payment”).  If the Parties negotiate different payment terms
for the Cash Payment at Closing and at 12 and 24 months, then the Secured Note shall reflect those terms. The Secured Note shall be made and executed by, and shall constitute the binding obligation of, the Purchaser.  The Secured Note shall be (i) secured by all the Assets , and (ii) automatically null and void upon the Patent Default Date if Dr. Matthias Pfalz and Reinhard Caliebe do not reasonably assist in the filing in the United States of the contemplated patents for the blade and support structures
utilized in the VENCO turbines  (the “Patent”). The Third Cash Payment shall be further secured pursuant to the terms of the Escrow Agreement, which shall provide that 7.5% of the gross sales of turbines sold by the Company shall be deposited into the escrow account established thereunder and shall be disbursed to the Sellers upon the date that the Third Cash Payment is due.

 

For purposes of the foregoing, Dr. Matthias Pfalz and Reinhard Caliebe shall be deemed to have fully satisfied their obligations hereunder to have reasonably assisted in the filing of the Patent if and to the extent they have cooperated, as reasonably within their power and control, with the reasonable written requests
of the Purchaser for the filing of the Patent and have signed and, to the extent necessary, participated in the preparation and submission of, applicable applications necessary for the filing of the Patent; provided that, neither Dr. Matthias Pfalz nor Reinhard Caliebe shall have or incur any financial responsibility or liability in connection with the filing of the Patent and neither such individual shall be required to expend or advance any sums or amounts in connection therewith, all such costs and expenses
relating to or incurred in connection with the Patent being the sole and exclusive obligation of the Purchaser.

 

The Secured Note shall provide that the Second Cash Payment shall be reduced by the amount that the Damage, if any, exceeds the Closing Date Liabilities; provided that, the amount of any such reduction of the Second Cash Payment shall in no event or under any circumstances exceed the sum of 40,000.00 Euros.

 

The Secured Note shall provide that the Third Cash Payment shall be contingent on certain events having occurred prior to the second anniversary of the Closing Date, all as described in the Secured Note.

 

The Secured Note shall be secured by the granting of a security interest in all of the Assets of the Company, which security interest shall be memorialized and embodied by the security agreement which is provided for in the Secured Note and which provides or shall provide that in the event of a default by Purchaser under
the terms of the Secured Note, under this Agreement or under any of the other Transaction Documents, the Sellers shall be entitled to, among other remedies, exercise all of the rights of a secured party under the laws of the United Kingdom.

 

 

 

 

 

(b)    Helix Shares. At the Closing, the Purchaser shall cause to be issued to the Sellers, pro ratably, the number of shares of common stock of Helix (the “Helix Shares”)
equal to the quotient of (x) 1,592,500 Euros and (y) the weighted average conversion rate of the Euro for the ten (10) Business Days prior to the Closing Date divided by (z) $2.00 (US).

 

In accordance with the formula set forth on Schedule 2, the Initial Cash Payment and the number of Euros set forth in Section 2.2(b) shall be adjusted on the Closing Date.

 

2.3           Exhibits to be Delivered.  The Parties have agreed to execute and deliver this Agreement based on the Schedules and Exhibits attached hereto (collectively, the “Agreement
Exhibits”), on the condition that, notwithstanding anything contained herein to the contrary, if the due diligence review to be done by the Purchaser after the date hereof indicates that any of the information disclosed on the Agreement Exhibits is inaccurate, incomplete or untrue in any material way, the Purchaser shall have the right, in its sole and absolute discretion, to terminate this Agreement, whereupon this Agreement shall be terminated
and have no further force and effect and neither Party shall have any liability or responsibility to the other.

 

3.           THE CLOSING.

 

3.1           Closing Date.  The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of the Purchaser within two (2) Business Days after
the date on which all of the conditions and obligations of the Parties as set forth in Articles 7 and 8 of this Agreement shall have been substantially satisfied in all material respects or otherwise duly waived, or on such other date and at such other place and date as the Purchaser and the Sellers may hereafter agree upon in writing (such date and time of the Closing being referred to herein as the "Closing Date").

 

3.2           Deliveries by the Purchaser at the Closing.  At the Closing, the Purchaser shall deliver to the Sellers the following:

 

	 	
(i)
	
the Initial Cash Payment;

 

	 	
(ii)
	
the Secured Note, duly executed by the Purchaser and containing a security agreement as hereinabove described reasonably acceptable to the Sellers;

 

	 	
(iii) 
	
the Escrow Agreement, duly executed by the Purchaser;

 

	 	
(iv) 
	
the Helix Shares, or an instruction letter reasonably acceptable to the Sellers and being executed by the Purchaser instructing the transfer agent for Helix to issue the Helix Shares to the Sellers;

 

	 	
(v) 
	
the Employment Agreements, duly executed by the Purchaser;

 

	 	
(vi) 
	
the Consulting Agreement, duly executed by the Purchaser;

 

	 	
(vii) 
	
the Put Right Agreement, duly executed by Helix;

 

	 	
(viii) 
	
the certificates referred to in Section 8.1;

 

	 	
(ix) 
	
such other instruments and certificates as may be reasonably requested by the Sellers; and

 

	 	
(x) 
	
the legal opinion described in Section 8.8.

 

 

 

 

 

3.3           Deliveries by the Sellers or the Company at the Closing.  At the Closing, the Company and/or the Sellers shall deliver to the Purchaser the following:

 

	 	
(i)
	
stock powers duly executed in blank, or such other written evidence of the full transfer of the Shares as shall be reasonably requested by Purchaser (there are no actual Certificates evidencing the Shares);

 

	 	
(ii)
	
if applicable, payoff letters, termination statements and other documentation relating to the release of all Encumbrances on the Assets;

 

	 	
(iii) 
	
the Company/Seller Approvals;

 

	 	
(iv) 
	
the Secured Note, duly executed by the Sellers and containing a security agreement as hereinabove described reasonably acceptable to the Purchaser;

 

	
  
	
(v)
	
the Escrow Agreement, duly executed by the Company and the Sellers;

 

	
  
	
(vi)
	
the Employment Agreements, duly executed by Reinhard Caliebe and Andreas Gorke, as the case may be;

 

	 	
(vii) 
	
the Consulting Agreement, duly executed by Dr. Matthias Pflaz;

 

	 	
(viii) 
	
the Put Right Agreement, duly executed by the Sellers;

 

	 	
(ix) 
	
the Lock-Up Agreement, duly executed by the Sellers;

 

	 	
(x) 
	
all Intellectual Property used by the Company not in the name of the Company, including without limitation,  all patent applications and the petty patent for 50kw held jointly by Heos and one of the Principals, all to be assigned to the Company;

 

	 	
(xi) 
	
such other instruments and certificates as may be reasonably requested by the Purchaser; and

 

	 	
(xi) 
	
the legal opinion described in Section 7.3.

 

4.   REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE PRINCIPALS.  The Sellers and the Principals, jointly and severally,
hereby represent and warrant to the Purchaser, to the best of their knowledge and belief, as follows:

 

4.1           Organization and Good Standing.  The Company is a corporation duly organized, validly existing and in good standing under the laws of Germany.  The Company has all
requisite corporate or other power to own, operate and lease the Assets and carry on its business as the same is now being conducted and as contemplated to be conducted.

 

4.2           Capitalization of the Company.  3 shares of stock of the Company, which allow for a total of 540 votes, are issued and outstanding, such stock having a par value of 50 Euros
per share.  The number of authorized, but unissued shares of stock of the Company shall be provided by the Sellers and the Company to the Purchaser prior to the Closing Date.  All of the outstanding shares of the capital stock of the Company are validly issued, fully paid and non-assessable and owned solely by the Sellers. There are, and at the Closing there will be, no outstanding subscriptions, options, rights, warrants, convertible securities, preemptive rights or other agreements, or understandings
with respect to the voting, sale, transfer, rights of first refusal, rights of first offer, proxy or registration or calls, demands or commitments of any kind relating to the issuance, sale or transfer of any capital stock or other equity securities of the Company, whether directly or upon the exercise or conversion of other securities.  There are, and at the Closing there will be, no outstanding contractual obligations of the Company or the Sellers to repurchase, redeem or otherwise acquire any shares
of their respective capital stock or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. The Company does not and has never maintained any stock, partnership, joint venture or any other security or ownership interest in any other Person.

 

 

 

 

 

The Shares constitute 100% of the issued and outstanding capital stock of the Company, and, upon consummation of the Contemplated Transactions, the Purchaser will own 100% of the issued and outstanding capital stock of the Company, free and clear of any Encumbrance other than those restrictions imposed by applicable
securities Laws.

 

4.3           Authority Relative to Agreement.  The Company has all requisite power and authority, corporate or otherwise, to execute, deliver and perform its obligations under this Agreement
and has taken all action, corporate or otherwise, necessary in order to execute and deliver the Transaction Documents and all other instruments or agreements to be executed by the Company in connection herewith and to consummate the Contemplated Transactions.  Each of the Sellers has the capacity and authorization to execute and deliver the Transaction Documents and all other instruments or agreements to be executed by the Sellers in connection herewith and to consummate the Contemplated Transactions.
This Agreement and the other Transaction Documents have been duly executed and delivered by the Company and the Sellers.  This Agreement and the other Transaction Documents constitute the valid and binding obligation of the Company and each of the Sellers, as the case may be, enforceable against them in accordance with the respective terms thereof, subject to laws relating to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, marshaling or other laws and rules of law affecting
the enforcement generally of creditors’ rights and remedies (including such as may deny giving effect to waivers of debtors’ or guarantors’ rights).

 

4.4           Absence of Conflict.  Neither the execution and delivery of the Transaction Documents by the Company and/or the Sellers nor the consummation of the Contemplated Transactions
by the Company and/or the Sellers will (a) violate, conflict with, result in a breach or termination of, constitute a default under or give rise to a right to terminate, amend, cancel or accelerate (or an event which, with notice or lapse of time or both, would constitute the same) (i) any Contract to which the Company or any of the Sellers is a party or by which any of their respective properties or assets is bound, (ii) the Articles of Incorporation or Bylaws of the Company, (iii) any Law, order of a Governmental
Body or any other restriction of any kind or character applicable to the Company or the Sellers or any of their respective properties or assets, other than obtaining the Company/Seller Approvals prior to Closing or (b) result in the creation or imposition of any Encumbrance upon the Shares or any Asset or any other property or asset of the Company.

 

4.5           Consents and Approvals.  No consent, waiver, registration, certificate, approval, grant, franchise, concession, permit, license, exception or authorization of, or declaration
or filing with, or notice or report to, (a) any Governmental Body or (b) any other Person (including, but not limited to, any party to any of the Contracts, is required in connection with the execution, delivery and performance of the Transaction Documents by the Company or the Sellers, other than the approvals set forth on Schedule 4.5 (such approvals collectively referred to as the "Company/Seller Approvals”).

 

4.6           Liabilities.  Neither the Company nor any of the Sellers have any Liabilities or obligations existing as of the date of this Agreement of any nature (whether absolute, accrued,
contingent or otherwise) in connection with the Assets, the Contracts or the business of the Company other than as set forth on Schedule 4.6 attached hereto (the “Liabilities Schedule”).  On the Closing Date, said Liabilities Schedule shall be updated to reflect Liabilities incurred by Company and, except to the extent otherwise permitted without consent of the Purchaser pursuant to Section 6.3(g), approved by the Purchaser
after the date hereof up to and including the Closing Date; said Schedule to be the “Closing Date Liabilities”. The items listed on attached Schedule 4.6 which are identified in such schedule and listed as Third Party Loans and Shareholder Loans, respectively, are to be evidenced and paid by Helix pursuant to promissory notes to be issued by Helix, except to the extent otherwise agreed by the Sellers and the Company.

 

4.7           Litigation.  Except as set forth on Schedule 4.7, there is no action, suit, hearing, inquiry, review, proceeding
or investigation by or before any court or Governmental Body pending, or threatened against or involving the Company or any of the Sellers or with respect to the activities of any employee or agent of the Company.  Neither the Company nor the Sellers have received any notice of any event or occurrence which could result in any such action, suit, hearing, inquiry, review, proceeding or investigation.

 

 

 

 

 

4.8           Tax Matters.

 

(a)           Except as set forth on Schedule 4.8, the Company and the Sellers have filed or caused to be filed on a timely basis all
Tax Returns that are or were required to be filed by them, pursuant to the Laws or administrative requirements of each Governmental Body with taxing power over it or its assets.  As of the time of filing, all such Tax Returns correctly reflected the facts regarding the income, business, assets, operations, activities, status, and other matters of the Company and any other information required to be shown thereon.  An extension of time within which to file any such Tax Return that has not been
filed has not been requested or granted.  The Company and the Sellers have delivered to the Purchaser true, complete and correct copies of all Tax Returns filed by them for the last three years.  Schedule 4.8 lists all state, local and foreign jurisdictions in which the Company has previously filed or currently file Tax Returns, which are all of the state, local or foreign taxing jurisdictions in which the Company has been or
are required to file Tax Returns.  There is no audit, action, suit, claim, proceeding or any investigation or inquiry, whether formal or informal, public or private, now pending or threatened against or with respect to the Company or either of the Sellers in respect of any Tax.  There are no Encumbrances for Taxes upon the assets of the Company.

 

(b)           With respect to all amounts in respect of Taxes imposed on the Company and the Sellers or for which they are or could be reasonably liable, whether to Governmental Bodies (as, for example,
under Law) or to other Persons (as, for example, under tax allocation agreements), with respect to all taxable periods or portions of periods since their inception through the Closing, and except as set forth on Schedule 4.8, (i) all applicable tax laws and agreements have been complied with in all material respects, and (ii) all such amounts required to be paid by the Company or the Sellers to Governmental Bodies or others on or before the date
hereof have been paid.

 

(c)           As of the date hereof, and except as set forth on Schedule 4.8, neither the Company nor any of the Sellers have requested,
executed or filed with the IRS, the Finanzbehoerden or any other Governmental Body any agreement or other document extending or having the effect of extending the period for assessment or collection of any Taxes for which the Company or the Sellers could be liable and which still is in effect.

 

(d)           There exists no tax assessment, proposed or otherwise, against the Company or the Sellers nor any lien for Taxes against any assets or property of the Company or the Sellers.

 

(e)           All Taxes that the Company or the Sellers are or were required by Law to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper
Governmental Body or other Person.

 

(f)           Neither the Company nor the Sellers are a party to, bound by or subject to any obligation under any tax sharing, tax
indemnity, tax allocation or similar agreement.

 

(g)           There is no claim, audit, action, suit, proceeding, or investigation with respect to Taxes due or claimed to be due from the Company or the Sellers or of any Tax Return filed or required
to be filed by the Company or the Sellers pending or threatened against or with respect to the Company or the Sellers.

 

4.9           No Brokers or Finders.  Neither the Company nor any of the Sellers has, nor have any of its respective Affiliates, officers, directors or employees on their behalf, employed
any broker or finder or incurred any liability for any brokerage or finder's fee or commissions or similar payment in connection with any of the Contemplated Transactions, and no Person has or will have any right, interest or valid claim against or upon the Purchaser or its Affiliates for any such fee or commission.

 

 

 

 

 

4.10           Financial Statements.

 

(a)           The audited financial statements of the Company to be delivered prior to Closing (collectively, the "Company Financial Statements"), are to be compiled on the accrual basis of accounting
in accordance with Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants and in accordance with GAAP.

 

 (b)           Except as otherwise disclosed in any financial statements provided by the Company to the Purchaser prior to the date of this Agreement, since January 1, 2009, there has been no
material adverse change in the business, operations or financial condition of the Company or any event, condition or contingency that could reasonably be expected to result in such a material adverse effect with respect to the Company or its business.

 

4.11           Compliance with Law.  The operations of the Company have been conducted in all material respects in accordance with all applicable Laws including without limitation any Laws
pertaining to the insurance industry.  Neither the Company nor the Sellers have received any notification of any asserted present or past failure to comply with any such Laws, and the Company is in compliance in all material respects with all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any such Laws.  The Company Licenses described and listed on Schedule 4.11 constitute all licenses, permits, orders, certificates,
authorizations or other approvals of Governmental Bodies required for the conduct of its business under applicable Laws. The Company is not in violation of any such Company Licenses.  All such Company Licenses are in full force and effect and no suspension or cancellation thereof has been threatened.

 

4.12           Title to Property; Sufficiency; Encumbrances.

 

(a)           The Company has good and marketable title to all of the Assets, in each case free from any Encumbrances except as may be otherwise disclosed in this Agreement, all such Assets being
listed on Schedule 4.12. The Company holds all leased real or personal property under valid and enforceable leases. Upon the Closing, the Company will own, or owns all of the Assets, and with respect to contract rights, is a party to and enjoys the right to the benefits of all Contracts used in or relating to the conduct of its business.

 

(b)           Following the consummation of the Contemplated Transactions, the Company will own, pursuant to good and marketable title, or lease, under valid and subsisting leases, or otherwise retain
its respective interest in, the Assets without incurring any penalty or other adverse consequence, including, without limitation, any increase in rentals, royalties, or licenses or other fees imposed as a result of, or arising from, the consummation of the Contemplated Transactions.

 

4.13           Intellectual Property Rights.

 

(a)           All Intellectual Property of the Company is currently in compliance with all legal requirements (including timely filings, proofs and payments of fees) and is valid and enforceable.  No Intellectual
Property of the Company which is necessary for the conduct of Company’s business as currently conducted or as currently proposed to be conducted has been or is now involved in any cancellation, dispute or litigation, and no such action is threatened.  No patent of the Company has been or is now involved in any interference, reissue, re-examination or opposition proceeding.  The Company and the Sellers hereby further disclose, however, that there has been some objection to one attempted
patent application in Germany which is now pending, but that the Company’s patent attorneys’ have advised that the objection is without substantial merit.

 

 

 

 

 

(b)           All of the licenses and sublicenses and consent, royalty or other agreements concerning Intellectual Property which are necessary for the conduct of the Company’s business as currently conducted or as currently proposed to be conducted to which
the Company is a party or by which any of its assets are bound (collectively, “License Agreements”) are valid and binding obligations of the Company and the other parties thereto, enforceable in accordance with their terms, and there exists no event or condition which will result in a material violation or breach of or constitute (with or without due notice or lapse of time or both) a default by the Company under any such License Agreement.

(c)           The Company owns or has the valid right to use all of the Intellectual Property that is necessary for the conduct of the Company’s business as currently conducted or as currently proposed to be conducted and for the ownership, maintenance
and operation of the Company’s properties and assets, free and clear of all Encumbrances.  The Company has a valid and enforceable right to use all third party Intellectual Property and Confidential Information used or held for use in the business of the Company.

(d)           To the Company’s knowledge, the conduct of the Company’s business as currently conducted does not infringe or otherwise impair or conflict with (collectively, “Infringe”)
any Intellectual Property rights of any third party or any confidentiality obligation owed to a third party, and the Intellectual Property and Confidential Information of the Company which are necessary for the conduct of Company’s business as currently conducted or as currently proposed to be conducted are not being Infringed by any third party.  There is no litigation or order pending or outstanding or threatened or imminent, that seeks to limit or challenge or that concerns the ownership, use,
validity or enforceability of any Intellectual Property or Confidential Information of the Company and the Company’s use of any Intellectual Property or Confidential Information owned by a third party, and there is no valid basis for the same.

 

(e)           The consummation of the Contemplated Transactions will not result in the alteration, loss, impairment of or restriction on the Company’s ownership or right to use any of the Intellectual Property or Confidential Information which is necessary
for the conduct of Company’s business as currently conducted or as currently proposed to be conducted.

 

(f)            The Company has taken such steps or has taken such actions as the Company has determined, in its sole reasonable judgment, to be reasonably necessary to protect the Company’s rights in its Intellectual Property and Confidential Information.  Except
under confidentiality obligations and agreements as determined to be necessary by the Company, all of which are indicated on Schedule 4.14, there has been no material disclosure of any of the Company’s Confidential Information to any third party.

 

4.14           Contracts.

 

(a)           Schedule 4.14 contains a true, complete and accurate list of all Contracts, whether written or oral, to which the Company
is a party or by which any of the Company’s assets are bound. There is no Contract as to which the Company has been advised will be terminated or that by its terms is subject to renegotiation. The Company is not obligated under any loan agreement, promissory note or other evidence of indebtedness as a signatory, guarantor or otherwise and has not otherwise guaranteed the performance by any Person of the obligations of such Person under any Contract.

(b)           Except as set forth on Schedule 4.5, no consent of any Person to any Contract is required in connection with the execution,
delivery and performance of this Agreement or the Contemplated Transactions.

 

 

 

 

 

(c)           The Company is not in default under any Contract, nor has any event occurred, which through the passage of time or the giving of notice, or both, would constitute a default by the Company, would cause the acceleration of any of the Company’s obligations
thereunder, would result in the creation of any Encumbrance on the Company or restriction on any of the Assets.  No third party is in default under any lease or contract to which the Company is a party, nor has any event occurred that, through the passage of time or the giving of notice, or both, would constitute a default thereunder.

(d)           Except as set forth on Schedule 4.14, neither the Company nor the Sellers are a party to or bound by any Contract which
(i) limits the Company or either of the Sellers from competing in any line of business or with any Person or in any geographic area or during any time period or (ii) grants any Person any preferential right to purchase from the Company or the Sellers, any properties or assets of the Company or the Sellers or of any capital stock, or securities convertible into, any capital stock of the Company.

 

4.15           Affiliated Transactions.  Except as set forth on Schedule 4.15, no Affiliate or other family member (i) has
borrowed or has been advanced funds from or loaned funds to the Company, (ii) is a party to a Contract with the Company or (iii) has engaged in any transaction with the Company.

 

4.16           Ordinary Course. Since January 1, 2009, the business has been conducted only in the ordinary and usual course of business consistent with past practice.  Without limiting the
generality of the foregoing, the Company has not since January 1, 2009:  (i) suffered any adverse change in its financial condition, the business or operations or in the Assets; or (ii) sold, transferred, or otherwise disposed of any material portion of its properties or Assets.  It is hereby disclosed by the Company and the Sellers, however, that one of the Company’s factories located in Bremerhaven, Germany, has been recently shut down.

4.17           Employee Matters.  The Company is not (a) a party to any union, collective bargaining or similar agreement; (b) providing
or obligated to provide any profit sharing, deferred compensation, bonus, savings, stock option, stock purchase, pension, consulting, retirement, welfare or other incentive plan or agreement; (c) providing or obligated to provide “fringe benefits” or any employee perquisites to employees, including, without limitation, vacation, sick leave, medical, hospitalization, insurance and related benefits; or (d) a party to any employment or consulting agreement not terminable upon notice without penalty.  No
present or former employee of the Company has any claim on account of or for bonuses, vacation, time off earned or otherwise. On or before the Closing Date all accrued wages, salary, bonus, commissions, vacation and sick pay and Taxes relating thereto shall be paid by Company to the officers, directors, and employees of Company.

4.18           Records. The Records are the true books and records of the business of the Company and truly and accurately reflect the underlying
facts and transactions.

 

4.19           Accuracy. All representations, warranties and certifications contained in this Agreement, including any schedules delivered herewith, and all the other documents delivered in connection
with this Agreement and the Contemplated Transaction delivered directly or indirectly by the Company or the Sellers are true, correct and complete, do not contain any statement which is false or misleading with respect to a material fact and do not omit to state a material fact necessary in order to make the statements herein and therein not false or misleading.

 

 5.           REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.  The Purchaser hereby represents and warrants to the Company and to
the Sellers, to the best of the knowledge and belief of the Purchaser, as follows:

 

 

 

 

 

5.1           Organization and Good Standing.  The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada .  The Purchaser
has all requisite corporate or other power to own, operate and lease its respective properties and carry on its respective business as the same is now being conducted.

 

5.2           Authority Relative to Agreement.  The Purchaser has all requisite power and authority, corporate or otherwise, to execute, deliver and perform its obligations under this Agreement
and has taken all action, corporate or otherwise, necessary in order to execute and deliver the Transaction Documents and all other instruments or agreements to be executed in connection herewith and to consummate the Contemplated Transactions.  This Agreement has been duly executed and delivered by the Purchaser.  This Agreement constitutes the valid and binding obligation of the Purchaser, enforceable against such party in accordance with its terms, subject to laws relating to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, marshaling or other laws and rules of law affecting the enforcement generally of creditors’ rights and remedies (including such as may deny giving effect to waivers of debtors’ or guarantors’ rights).

 

5.3           Absence of Conflict.  Neither the execution and delivery of the Transaction Documents by the Purchaser nor the consummation of the Contemplated Transactions by such party will
(a) violate, conflict with, result in a breach or termination of, constitute a default under or give rise to a right to terminate, amend, cancel or accelerate (or an event which, with notice or lapse of time or both, would constitute the same) (i) any material contract to which it is a party or by which any of its respective properties or assets is bound; (ii) the Certificate of Incorporation or Bylaws of the Purchaser, , or (iii) any Law, order of a Governmental Body or any other restriction of any kind or character
applicable to such party or any of its respective properties or assets; or (b) result in the creation or imposition of any Encumbrance upon any properties or assets of such party except where any such violation, conflict, breach, termination, default, amendment, cancellation, acceleration or Encumbrance would not have a material adverse effect on the party or the Contemplated Transactions.

 

5.4           Consents and Approvals.  No consent, waiver, registration, certificate, approval, grant, franchise, concession, permit, license, exception or authorization of, or declaration
or filing with, or notice or report to, (a) any Governmental Body and (b) any other Person (including, but not limited to, any party to a Contract of the Purchaser), is required in connection with the execution, delivery and performance of the Transaction Documents by the Purchaser, other than approvals which have already been obtained and except where the failure to obtain any such approval would not have a material adverse effect on the Contemplated Transactions, other than the filing of the Current Report
on Form 8-K with respect to the Asset Purchase.

 

5.5           Litigation.  There is no action, suit, hearing, inquiry, review, proceeding or investigation by or before any court or Governmental Body pending, or threatened against or involving
the Purchaser or with respect to the activities of any employee or agent of the Purchaser which would have a material adverse impact upon the Contemplated Transactions.  The Purchaser has not received any notice of any event or occurrence which could result in any such action, suit, hearing, inquiry, review, proceeding or investigation.

 

5.6           Tax Matters.

 

(a)           The Purchaser has filed or caused to be filed on a timely basis all Tax Returns that are or were required to be filed by it, pursuant to the Laws or administrative requirements of each
Governmental Body with taxing power over it or its assets.  As of the time of filing, all such Tax Returns correctly reflected the facts regarding the income, business, assets, operations, activities, status, and other matters of the Purchaser and any other information required to be shown thereon.  There is no audit, action, suit, claim, proceeding or any investigation or inquiry, whether formal or informal, public or private, now pending or threatened against or with respect to the Purchaser
in respect of any Tax.  There are no Encumbrances for Taxes upon the assets of the Purchaser.

 

 

 

 

 

(b)           With respect to all amounts in respect of Taxes imposed on the Purchaser or for which they are or could be reasonably liable, whether to Governmental Bodies (as, for example, under Law)
or to other Persons (as, for example, under tax allocation agreements), with respect to all taxable periods or portions of periods since their inception through the Closing, (i) all applicable tax laws and agreements have been complied with in all material respects, and (ii) all such amounts required to be paid by the Purchaser  to Governmental Bodies or others on or before the date hereof have been paid.

 

(c)           As of the date hereof, and except as set forth on Schedule 4.8, the Purchaser has not requested, executed or filed with
the IRS or any other Governmental Body any agreement or other document extending or having the effect of extending the period for assessment or collection of any Taxes for which the Purchaser could be liable and which still is in effect.

 

(d)           There exists no tax assessment, proposed or otherwise, against the Purchaser nor any lien for Taxes against any assets or property of the Purchaser.

 

(e)           All Taxes that the Purchaser is or was required by Law to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental
Body or other Person.

 

(f)           The Purchaser is not a party to, bound by or subject to any obligation under any tax sharing, tax indemnity, tax allocation
or similar agreement.

 

(g)           There is no claim, audit, action, suit, proceeding, or investigation with respect to Taxes due or claimed to be due from the Purchaser or of any Tax Return filed or required to be filed
by the Purchaser pending or threatened against or with respect to the Company or the Sellers.

 

5.7           No Brokers or Finders.  The Purchaser has not, nor has any of its Affiliates, officers, directors or employees, employed any broker or finder or incurred any liability for any
brokerage or finder's fee or commissions or similar payment in connection with any of the Contemplated Transactions.

 

5.8           Compliance with Law.  The operations of the Purchaser have been conducted in all material respects in accordance with all applicable Laws including without limitation any Laws
pertaining to the insurance industry.  The Purchaser has not received any notification of any asserted present or past failure to comply with any such Laws, and the Company is in compliance in all material respects with all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any such Laws.

 

5.9           Records. All documents and records previously or hereafter provided to the Company and/or the Sellers by the Purchaser relating
to the business and operations of the Purchaser are or shall be the true books and records of the business of the Purchaser, and do or shall truly and accurately reflect the underlying facts and transactions described therein.

5.10           Accuracy. All representations, warranties and certifications contained in this Agreement, and all the other documents delivered in connection with this Agreement and the Contemplated
Transaction delivered directly or indirectly by the Purchaser are true, correct and complete, do not contain any statement which is false or misleading with respect to a material fact and do not omit to state a material fact necessary in order to make the statements herein and therein not false or misleading.

 

 

 

 

 

5.11           The Helix Shares.  When issued in accordance with the terms of this Agreement, the Helix Shares shall be duly authorized, fully paid and non-assessable, free and clear of any
Encumbrances other than pursuant to the terms of the Lock-Up Agreement and Put Right Agreement and applicable securities Laws.

 

6.           COVENANTS PRIOR TO CLOSING.

 

6.1            Access Prior to the Closing.

 

(a)           Between the date of this Agreement and the Closing, the Company and the Sellers shall, during normal business hours and upon reasonable prior notice, (i) give the Purchaser and its authorized
representatives and agents full and complete access to all properties, personnel, facilities and offices of the Company and to all the Records (and permit such parties to make copies thereof), (ii) permit the Purchaser and its authorized representative and agents to make inspections thereof, and (iii) cause the officers and employees of, and consultants to, the Company to furnish the Purchaser with all financial information and operating data and other information with respect to the business and properties of
the Company and to discuss with such parties and its representatives the affairs of the Company.

 

(b)           Each of the Parties shall use its best reasonable efforts to cause their respective Affiliates, officers, directors,
employees, auditors, attorneys, consultants, advisors and agents, to treat as confidential and hold in strict confidence, unless compelled to disclose by judicial or administrative process or, in the opinion of its counsel, by other requirements of Law, all confidential information of the Companyor the Purchaser, as the case may be, furnished to the Purchaser by the Company or the Sellers or to the Company or the Sellers by the Purchaser, as the case may be, or any of their respective representatives in connection
with the Contemplated Transactions and will not release or disclose such confidential information to any other Person, except their respective auditors, attorneys, financial advisors and other consultants, agents and advisors in connection with the consummation of the Contemplated Transactions.  If the Contemplated Transaction does not occur (i) such confidence shall be maintained by the Parties and each Party shall use its best reasonable efforts to cause its officers, directors, Affiliates and such
other Persons to maintain such confidence, except to the extent such information comes into the public domain (other than as a result of an action by such Party, its officers, directors or such other Persons in contravention of this Agreement), and (ii) upon the request of any Party, the other Party shall promptly return to the requesting Party any written materials remaining in its possession, which materials it has received from the requesting Party or its representatives, together with any analyses or other
written materials based upon the materials provided.

 

6.2           Publicity.  Neither Party shall, and none of them shall permit any Affiliate to, issue any press release or make any other statement or disclosure with respect to this Agreement
or the Contemplated Transactions without the prior written approval of the other Party.  Nothing contained herein shall prevent any Party at any time from furnishing any required information to any Governmental Body or from issuing any press release or making any other statement or disclosure with respect to this Agreement and the Contemplated Transactions (after consulting with the other Parties hereto) if required by Law or any regulatory agency or to comply with the terms of this Agreement.

 

6.3           Conduct of Business.  Except as expressly consented to in writing by the Purchaser, between the date of this Agreement and until (i) the earlier of the termination of this Agreement
in accordance with the terms hereof or (ii) the Closing, the Company shall conduct its business diligently, in good faith and only in the ordinary course of business consistent with past practice and use all its reasonable efforts to preserve intact its present business organization and employees and to preserve the goodwill of Persons having business relations with it. Without limiting the generality of the foregoing, the Company and the Sellers shall not, directly or indirectly, except upon first obtaining
the prior written consent of the Purchaser, which consent shall not be unreasonably withheld or conditioned or unduly delayed:

 

(a)           amend its Memorandum of Association or Bylaws;

 

 

 

 

 

(b)           acquire any capital stock or other equity securities of any Person or any equity or ownership interest in any business;

 

(c)           incur or guarantee any debt or liabilities of any kind or make any loans of any kind other than in the ordinary course of business (and any such debt or liability to be scheduled on
the Closing Date Liabilities);

 

(d)           (i) split, combine or reclassify its outstanding capital stock or declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, (ii) spin-off
any assets or businesses, sell any assets or businesses or effect any extraordinary corporate transaction, (iii) engage in any transaction for the purpose of effecting a recapitalization, or (iv) engage in any transaction or series of related transactions which has a similar effect to any of the foregoing;

 

(e)           issue or sell, transfer, pledge or otherwise dispose of, or agree to issue, sell, pledge or otherwise dispose of, any additional shares of, or any options, warrants or rights of any
kind to acquire any shares of its capital stock of any class, or any debt or equity securities convertible into or exchangeable for such capital stock;

 

(f)           redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stock;

 

(g)           enter into any Contract (written or oral) or other transactions (A) not in the ordinary course of business, (B) involving consideration in excess of $10,000 or (C) for the sale, acquisition
or lease of any assets or business, including without limitation the direct or indirect sale, lease, mortgage or otherwise encumbrance of any of its properties or assets;

 

(h)           modify the terms of, terminate or fail in any respect to comply with the terms of any Contract or Company License;

 

(i)           grant or agree to grant any employee or agent of the Company any increase in wages or bonus, severance, profit sharing, retirement, deferred compensation or other compensation or benefit except in the ordinary course of the business of the Company;

 

(j)           enter into or amend any employment, consulting, severance or similar Contracts, except in the ordinary course of the business of the Company;

 

(k)           fail to promptly advise the Purchaser in writing of any condition or event which may have a material adverse effect on the Company or the business; or

 

(l)           agree or otherwise commit, whether in writing or otherwise, to do, or take any action or omit to take any action that would result in, any of the foregoing.

 

6.4           Exclusivity. Through the earlier of the Closing or the date of termination of this Agreement pursuant to Section 11 hereof, none of the Company or the Sellers shall, directly or indirectly,
through any director, officer, employee, agent, broker, representative or otherwise (and each of said Parties shall use reasonable efforts to insure such Persons shall not directly or indirectly) (i) solicit, initiate or encourage the submission of inquiries, proposals or offers from any Person relating to (x) any business combination with respect to the Company or the business of the Company; or (y) the sale of any of the assets and/or capital stock of the Company (an "Alternative Transaction"), (ii) enter
into or participate in any negotiations, or initiate any discussions or continue any discussions initiated by others, regarding any Alternative Transaction, or furnish to any other Person any information with respect to the assets or business of the Company or its business for the purposes of pursuing a possible Alternative Transaction with any other party, or (iii) otherwise participate in, assist, facilitate or encourage any effort or attempt by any other Person to do any of the foregoing except as required
by law as fiduciaries.  The Company shall promptly notify the Purchaser of any proposal or inquiry made to it or the Sellers or any of its directors, officers, employees, agents, representatives, or otherwise with respect to any of the foregoing.

 

 

 

 

 

6.5           Amending Schedules.  From time to time prior to the Closing, the Parties shall promptly provide, supplement and/or amend the Schedules hereto with respect to any matter arising
after the date of this Agreement which, if existing or occurring at the date of this Agreement, would have been required to have been set forth on the Schedules to this Agreement.  Such supplement or amendment shall have the effect of curing any related misrepresentation or breach of warranty made in connection with the transactions contemplated by this Agreement; provided, however, that if such misrepresentation or breach is one that will affect
the Contemplated Transactions in any material adverse manner, the non-amending party shall elect either (i) to terminate this Agreement without any further liability to the Parties or (ii) in such non-amending party’s sole discretion, to waive such breach and consummate the Contemplated Transactions. In the event that the non-amending party does not elect to terminate this Agreement within ninety (90) days following the date of receipt of any supplemented or amended Schedules, then such non-amending party
shall be deemed to have elected to waive any such breach and to consummate the Contemplated Transactions notwithstanding such breach.

 

6.6           Remedies.                      

 

(a)           In addition to any and all other remedies available at law or equity, in the event the Company or the Sellers shall breach or threaten to breach any of the provisions of this Agreement, each of the Company and the Sellers agree and acknowledge that
damages would be difficult to ascertain, the Purchaser will suffer immediate, irreparable harm, and the Purchaser shall be entitled, in addition to any and all other remedies, to an injunction issued by a court of competent jurisdiction restraining the aforesaid violations of the Company and/or the Sellers, without the necessity of posting a bond. Nothing contained in this Section 6.6 is intended to limit in any way any of the rights or remedies of any Party to this Agreement in respect of any breach or threatened
breach of this or any other provision of this Agreement.  The Company and the Sellers acknowledge and agree that there is no adequate remedy at law for any such breach or threatened breach and, in the event that any action or proceeding is brought seeking injunctive relief, said Party shall not use as a defense thereto that there is an adequate remedy at law. Furthermore, the Purchaser shall be entitled to a right of specific performance upon a breach of this Agreement by the Company and/or the Sellers.  Notwithstanding
the foregoing, however, or any other provision to the contrary contained in this Agreement, the Principals shall have, suffer or incur no personal liability under, pursuant to or in connection with any breach of this Agreement.

 

(b)           In addition to any and all other remedies available at law or equity, in the event the Purchaser shall breach or threaten to breach any of the provisions of this Agreement, the Purchaser agrees and acknowledges that damages would be difficult or impossible
to ascertain, the Company and the Sellers will suffer immediate, irreparable harm, and the Company and the Sellers shall be entitled, in addition to any and all other rights or remedies available hereunder or under applicable law, to an injunction issued by a court of competent jurisdiction restraining the aforesaid violations by the Purchaser , without the necessity of posting a bond. Nothing contained in this Section 6.6 is intended to limit in any way any of the rights or remedies of any Party to this Agreement
in respect of any breach or threatened breach of this or any other provision of this Agreement.  The Purchaser acknowledges and agrees that there is no adequate remedy at law for any such breach or threatened breach and, in the event that any action or proceeding is brought seeking injunctive relief, neither the Purchaser shall use as a defense thereto that there is an adequate remedy at law. Furthermore, the Company and Sellers shall be entitled to a right of specific performance upon a breach of this
Agreement by the Purchaser .

 

7.           CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER.  The obligations of the Purchaser to consummate the Contemplated Transactions shall be subject to the satisfaction at or prior to
the Closing of each of the following conditions, any one or more of which may be waived by the Purchaser:

 

7.1           Representations, Warranties and Agreements.

 

 

 

 

 

(a)           The representations and warranties of the Company and the Sellers set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and
as of the Closing with the same effect as though made as of the Closing, unless made as of another date, in which case they shall be true and correct in all material respects as of such date; and

 

(b)           The Company and the Sellers shall have performed and complied in all respects with the agreements contained in this Agreement required to be performed and complied with by it prior to
or as of the Closing.

 

The Purchaser shall have received a certificate to the foregoing effect signed by an authorized executive officer of the Company and from the Sellers.

 

7.2           No Injunction.  There shall not be in effect or threatened any injunction, order or decree of a Governmental Body of competent jurisdiction that prohibits or delays, or seeks
to prohibit or delay, consummation of any material part of the Contemplated Transactions.

 

7.3           Legal Opinion.  The Purchaser shall have received an opinion of counsel to the Company, dated the Closing Date and addressed to the Purchaser and satisfactory to the Purchaser
and its counsel certifying as (i) to the authority of the Company, the Principals and the Seller to enter into this Agreement and the other Transaction Documents, (ii) the enforceability of the Employment Agreements, the Consulting Agreement, the Secured Note (and the security agreements contained therein), the Escrow Agreement and the Put Right Agreement, and (iii)  such other matters as shall be reasonably requested by the Purchaser  with respect to the contemplated Transactions.

 

7.4           Approvals.  All Company/Seller Approvals necessary in connection with the execution, delivery and performance of this Agreement by the Company or for the consummation of the
Contemplated Transactions shall have been obtained and delivered to the Purchaser and shall be in full force and effect.

 

7.5           No Material Adverse Effect.  No event, occurrence, fact, condition, change, development or effect shall have occurred, exist or come to exist since the date of this Agreement
that, individually or in the aggregate, has constituted or resulted in, or could reasonably be expected to constitute or result in, a material adverse effect on the Company’s business.

 

7.6           Corporate Approval.  Prior to the Closing, this Agreement and the Contemplated Transactions shall have been duly approved by the Sellers and the Board of Directors of the Company
in accordance with applicable Law.

 

7.7           Secretary of State Certificate.  The Purchaser shall have received a certificate with respect to the Company from the applicable Commercial Register (Handelsregister) in the
local court of competent jurisdiction (Amtsgericht) where the Company was originally formed in Germany as of a date which is within ten (10) days prior to the Closing Date, showing the Company to be validly existing and in good standing under applicable German Laws.

 

7.8           Secretary’s Certificate of the Company.  The Purchaser shall have received a certificate of the Secretary of the Company certifying (i) a true and complete copy of the
resolutions duly and validly adopted by the Board of Directors and stockholders of the Company, evidencing the authorization of the execution and delivery of this Agreement and the consummation of the Contemplated Transactions, (ii) the names and signatures of the officers of the Company authorized to sign this Agreement and the other documents to be delivered hereunder and (iii) a true and complete copy of the Certificate of Incorporation and Bylaws of the Company.

 

 

 

 

 

7.9           Proceedings Satisfactory.  All certificates, opinions and other documents to be delivered by the Company to the Purchaser other than the Schedules and all other matters to be
accomplished by the Company prior to or at the Closing shall be satisfactory in the judgment of the Purchaser and its counsel.

 

7.10           Arrangements with Suppliers.   The Company shall have assisted Purchaser in obtaining and entering into written agreements with the Company’s current suppliers to
manufacture Purchaser’s products in Germany at fixed cost of goods sold for no less than the first 12 months after the Closing Date, and all such agreements shall be in form and substance satisfactory to Purchaser. The fixed cost of goods sold, subject to a 10% variance for each item listed, shall be as indicated on Schedule 7.10.

 

7.11           Manufacturing Drawings for D361 and D100. The Company shall have provided manufacturing ready drawings to the Purchaser with respect to the manufacturing of the equipment and related
components of the Company commonly referred to as the D361 (the “D361”) and the D100, and such manufacturing drawings shall be accepted and approved by the manufacturing consulting partner of the Purchaser in Asia, East West Consulting, Ltd., which approval shall not be unreasonably withheld or conditioned or unduly delayed.  The Company and the Purchaser agree that the sales and technical personnel of the Company and the Purchaser shall communicate as necessary following the date of this
Agreement so as to facilitate the satisfaction of this closing requirement prior to the Closing Date, including the initiation and participation in conference calls regarding this issue on at least a weekly basis.

 

7.12           Testing of the D361. The D361 which is currently installed in the San Diego facilities of the Purchaser shall be confirmed by the Purchaser to function within twenty percent (20%)
of the power curve for the D361 previously submitted by the Company.  Such functional compliance of the D361 shall be determined through the testing of the D361 by the Purchaser, which testing shall be commenced promptly following the date of this Agreement (to the extent not already commenced), and shall be fully completed on or before September 30, 2009.  All such testing shall be performed by the Purchaser in accordance with the methodology (i.e., without inverter) and procedures of the
Company as previously communicated to the Purchaser by the Company in developing such power curve.  For the purpose of allowing the Company and the Sellers to monitor the data resulting from such testing and to assist the Purchaser in the calculation of the final testing value and conclusions, any and all data relating to such testing shall be provided by the Purchaser to the Company on not less than a weekly basis while such testing is ongoing, and final data shall be submitted to the Company promptly
following the date such testing is completed.  In the event that for any reason the Purchaser fails to perform or to complete such testing and evaluation prior to September 30, 2009, then the D361 shall be deemed for all purposes of this Agreement to have resulted in a power curve within the permitted compliance range referred to above, and the foregoing condition of closing shall be deemed to have been fully satisfied.

 

7.13           “Testing of the Vertikon. The Company shall provide the Purchaser with the data from the Company’s testing of the equipment and related components of the Company commonly
referred to as the Vertikon (the “Vertikon”) for as many months as possible immediately preceding the date of this Agreement, and the Company shall continue to provide such additional data as may be obtained from such testing up through the Closing Date.

 

7.14           Updated Liabilities Schedule. A final and updated Liabilities Schedule shall be provided by the Sellers on the day immediately prior to the Closing Date and shall be attached to
this Agreement in substitution for the version of Schedule 4.6 which is attached to this Agreement as of the date of this Agreement.  Such updated Liabilities Schedule will include the amount of any claims and/or charges of and by KD GmbH and/or Michael Duwe, and prior to the Closing Date, the Company shall deal exclusively with KD GmbH and Michael Duwe in determining and negotiating the final amount of such claims and charges.

 

 

 

 

 

8.           CONDITIONS TO THE OBLIGATIONS OF THE SELLERS AND THE COMPANY.  The obligations of the Sellers and the Company to consummate the Contemplated Transactions shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions, any one or more of which may be waived by the Sellers:

 

8.1           Representations, Warranties and Agreements.

 

(a)           The representations and warranties of the Purchaser set forth in this Agreement shall be true and correct in all respects as of the date of this Agreement and as of the Closing with
the same effect as though made as of the Closing, unless made as of another date, in which case they shall be true and correct in all respects as of such date; and

 

(b)           The Purchaser shall have performed and complied in all respects with the agreements contained in this Agreement required to be performed and complied with by them prior to or as of the
Closing.

 

The Sellers shall have received a certificate to the foregoing effect signed by an authorized executive officer of the Purchaser.

 

8.2           No Injunction.  There shall not be in effect or threatened any injunction, order or decree of a Governmental Body of competent jurisdiction that prohibits or delays, or seeks
to prohibit or delay, consummation of any material part of the Contemplated Transactions.

 

8.3           AApprovals.  All approvals necessary in connection
with the execution, delivery and performance of this Agreement by the Purchaser or for the consummation of the Contemplated Transactions shall have been obtained or made and shall be in full force and effect.

 

8.4           Proceedings Satisfactory.  All certificates, opinions and other documents to be delivered by the Purchaser to the Company and all other corporate or organizational matters to
be accomplished by the Purchaser  prior to or at the Closing shall be satisfactory in the reasonable judgment of the Company and the Sellers and their legal counsel.

 

8.5           No Material Adverse Effect.  No event, occurrence, fact, condition, change, development or effect shall have occurred, exist or come to exist since the date of this Agreement
that, individually or in the aggregate, has constituted or resulted in, or could reasonably be expected to constitute or result in, a material adverse effect on the Helix’s business.

 

8.6           Corporate Approval.  Prior to the Closing, this Agreement, the Contemplated Transactions shall have been duly approved by the Board of Directors of the Purchaser, in accordance
with applicable Law.

 

 8.6           Secretary of State Certificates.  The Company and the Sellers shall have received a certificate of the Secretary of State of the State of the State of Nevada with respect
to the Purchaser, dated within ten (10) days prior to the Closing Date, showing the Purchaser to be validly existing and in good standing in the State of of Nevada.

 

8.7           Secretary’s Certificate.  The Company shall have received a certificate of the Secretary of the Purchaser certifying (i) a true and complete copy of the resolutions duly
and validly adopted by the Board of Directors of the Purchaser evidencing the authorization of the execution and delivery of this Agreement, the consummation of the Contemplated Transactions, and (ii) the names and signatures of the officers of the Purchaser authorized to sign this Agreement and the other documents to be delivered hereunder.

 

 

 

 

 

8.8           Legal Opinion.  The Company shall have received the opinion of counsel to the Purchaser, dated the Closing Date and addressed to the Company and satisfactory to the Company and
the Sellers and their legal counsel, certifying as to (i) the authority of Purchaser to enter into this Agreement and the other Transaction Documents, (ii) the enforceability of the Employment Agreements, the Consulting Agreement, the Secured Note (and the security agreements contained therein), the Escrow Agreement and the Put Right Agreement, and (iii) such other matters as shall be reasonably requested by the Company and/or the Sellers with respect to the contemplated Transactions.

 

 9.           AUDITED FINANCIAL STATEMENTS.

 

9.1           Audited Financial Statements.  Within ten (10) days after the execution and delivery of this Agreement, the Company shall instruct its independent auditors to prepare and audit
the Company Financial Statements and such other information as may be required in order for the Purchaser to consummate the Contemplated Transactions. All costs and expenses relating thereto shall be incurred by the Company and the Sellers. The Company shall provide the Purchaser with copies of the audited financial statements within five (5) Business Days after the receipt thereof by the Company.

 

9.2           Receipt of Audited Financials.  Notwithstanding anything contained in this Agreement to the contrary, the Purchaser shall not be required to consummate the Contemplated Transactions
until and unless (i) the Company Financial Statements do not disclose a material adverse change from the unaudited financial statements of the Company previously delivered by the Company and/or the Sellers to the Purchaser, and (ii) the audited financial statements comply with all applicable rules and regulations of the Securities and Exchange Commission.

 

10.           INDEMNIFICATION; SURVIVAL.

 

10.1           Indemnification by the Sellers. The Sellers, jointly and severally, shall indemnify and hold harmless the Purchaser and its Affiliates, officers, directors, stockholders, employees and
agents and the successors and assigns of all of them (the "Purchaser Indemnified Parties"), and shall reimburse the Purchaser Indemnified Parties for, any loss, liability, claim, damage, expense (including, but not limited to, costs of investigation and defense and attorneys' fees) (collectively, "Damages"), arising from or in connection with (a) any material inaccuracy or breach of any of the representations and warranties, of the Company or the Sellers in this Agreement or in any certificate or document delivered
by the Company or the Sellers pursuant to this Agreement, or any actions, omissions or statements of fact inconsistent with in any material respect any such representation or warranty, (b) any failure by the Company or the Sellers to perform or comply with any agreement, covenant or obligation in this Agreement or in any certificate or document delivered by the Company or the Sellers pursuant to this Agreement to be performed by or complied with by the Company or the Sellers, (c) any claims made by a third Person
against the Purchaser or the Assets based upon obligations under Contracts of the Company or the Sellers for services performed prior to the Closing Date which were not listed on Schedule 4.6, (d) Taxes attributable to the ownership of the Company or the specific Assets prior to the Closing, (e) Taxes attributable to the conduct by the Company of its business or the Company's operation or ownership of its Assets prior to the Closing, (f) any claims for severance or any other compensation made by the Company’s
employees or agents with respect to any termination of any employee by the Company prior to the Closing Date and which was not disclosed on any Schedule attached to this Agreement, (g) any claim made at any time by any Governmental Body in respect of the business of the Company for all periods prior to the Closing Date, (h) any debt, claim, liability or obligation of the Company or the Sellers other than the Liabilities or (i) any litigation, action, claim, proceeding or investigation by any third party relating
to or arising out of the business or operations of the Company or the Sellers.  The foregoing indemnification provision shall be deemed to expressly survive the termination or expiration of this Agreement, and shall remain in full force and effect following such a termination or expiration.  Notwithstanding the foregoing, however, or any other provision to the contrary contained in this Agreement, the Principals shall have, suffer or incur no personal liability under, pursuant to or in connection
with any Damages incurred by Purchaser under this Agreement.

 

10.2           Indemnification by the Purchaser.  The Purchaser shall indemnify and hold harmless the Sellers and their respective Affiliates, employees, agents and the successors and assigns
of all of them (the "Seller Indemnified Parties"), and shall reimburse the Seller Indemnified Parties for, any Damages arising from or in connection with (a) any inaccuracy or breach of any of the representations and warranties of the Purchaser in this Agreement or in any certificate or document delivered by the Purchaser to the Company pursuant to this Agreement, (b) any failure by the Purchaser  to perform or comply with, in any respect, any agreement, covenant or obligation in this Agreement or in
any certificate or document delivered by the Purchaser pursuant to this Agreement to be performed by or complied with by the Purchaser, including specifically, but not limited to, the Secured Note, the Employment Agreements, the Consulting Agreement, the Escrow Agreement and the Put

 

 

 

 

 

Right Agreement, and (c) any disclosure of Confidential Information of the Company by the Purchaseror any of its Affiliates, officers, directors, employees or agents in violation of Section 6.1(b) of this Agreement.  The foregoing indemnification provision shall be deemed to expressly survive the termination
or expiration of this Agreement, and shall remain in full force and effect following such a termination or expiration.

 

10.3           Survival.  All representations, warranties, covenants and agreements of the Parties contained herein or in any other certificate or document delivered pursuant hereto shall
survive the Closing for a period of one (1) year following the Closing Date.

 

10.4           Indemnification against Heos.  In addition to the foregoing, Seller shall indemnify the Purchaser Indemnified Parties from any
Damages arising directly or indirectly in connection with the existing German petty patent held by Dr. Mathias Pfalz and Heos as filed on August 3, 2007, under patent no. DE202007010873U1.

 

10.5           Liability Limitation. Notwithstanding anything contained herein to the contrary, the maximum cumulative liability of the Sellers hereunder with respect to any of the indemnities
or any of the representations and warranties contained in this Agreement shall in no event exceed, and shall be limited to, an amount equal to ten percent (10%) of the total Purchase Price.  In the event that any such indemnification liabilities are incurred by Sellers hereunder, the amount of such liabilities shall be paid by Sellers either in cash or in Helix Shares, or in a combination of cash and Helix Shares, as determined by Sellers in Sellers’ sole and absolute discretion.  To
the extent any such amount is determined by the Sellers to be paid by the Sellers in Helix Shares, the value of the Helix Shares for this purpose shall be deemed to have the value at which such shares are traded on the day immediately preceding the date upon which such Helix Shares are delivered or irrevocably assigned to Purchaser.

 

11.           TERMINATION.

 

11.1           Termination Procedures.  This Agreement may be terminated as follows:

 

(a)           by mutual written agreement of all of the Parties at any time;

 

(b)           by the Purchaser, by notice to the Company or a Seller, if the Company or any Seller has breached this Agreement in any material respect and such breach is not cured within ten (10)
days after written notice from the Purchaser to such party;

 

(c)           by the Company or the Sellers, by notice to the Purchaser, if the Purchaser has breached this Agreement in any material respect and such breach is not cured within ten (10) days after
written notice from the Company or the Sellers to the Purchaser;

 

(d)           by the Purchaser, by notice to the Company, if its due diligence investigation indicates that any of the information provided for in the Agreement or in Exhibits is inaccurate, incomplete or untrue in a material way;

 

(e)           by the Purchaser or the Company and the Sellers, if funding in the amount of at least $5 million is not raised  by Helix within 120 days following the execution of this Agreement; or

 

(f) by the Purchaser or the Company and the Sellers if all of the conditions and requirements for Closing set forth in this Agreement fail to be satisfied or otherwise waived by the Parties hereto within one hundred eighty (180) days following the date of this Agreement, unless such 180-day period is extended by mutual
written agreement of the parties hereto.

 

11.2           Effect of Termination. In the event that this Agreement is terminated, this Agreement shall terminate without any liability or further obligation of any Party to another, except
for the continuing obligations of the Parties provided for under Sections 6.1(b), 6.2, 10.1, 10.2, 10.3 and 11.3 of this Agreement, and except that none of the Parties shall be released from liability for any intentional misrepresentation or fraud.

 

 

 

 

 

11.3           Expenses.  The Parties shall each bear their own respective expenses incurred in connection with this Agreement and the Contemplated Transactions, provided, however,
that if the Purchaser or Helix terminates this Agreement for any reason other than as set forth above, Helix shall be required to reimburse the Sellers promptly upon receipt by Helix of verifiable itemized invoices incurred by the Company or the Sellers in connection with or arising as a result of the Contemplated Transaction, including the reasonable attorneys’ fees and expenses of the Company and/or the Sellers, up to a cumulative aggregate amount of 3,000 Euros less any amounts funded to the Company
or the Sellers or on their behalf prior to the Closing Date.  The foregoing agreement for reimbursement of Seller’s costs shall be deemed to expressly survive the termination or expiration of this Agreement, and shall remain in full force and effect following such a termination or expiration.

 

11.4           Distribution Agreement. In the event that this Agreement is terminated or otherwise expires in accordance with the terms hereof, the Parties hereto hereby expressly agree and acknowledge
that the Distribution Agreement which is currently in effect between the Company and Helix shall remain in full force and effect in accordance with its terms.

 

11.5           Technology and Trade Secrets.  In the event that this Agreement is terminated or otherwise expires in accordance with the terms hereof, none of the Parties hereto shall manufacture
any products of Helix or the Company, for its own account or make any use of any trade secrets, Confidential Information or other documented intellectual property which either such party has gained access to or become aware of as the result of the Contemplated Transaction hereunder or any disclosures made in connection therewith.

12.           MISCELLANEOUS.

 

12.1           Entire Agreement.  This Agreement contains, and is intended as, a complete and exclusive statement of all of the terms and the arrangements between the Parties with respect
to the matters provided for, supersedes any previous agreements and understandings between the Parties, including without limitation, the Letter of Intent dated June 24, 2009 among the Parties, with respect to those matters.

 

12.2           Severability.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

 

12.3   Governing Law.  This Agreement shall be governed by and construed in accordance with the internal substantive laws of the United Kingdom. In the event of a dispute between
the Parties regarding the terms of this Agreement, each of the Parties covenant and agree to attempt in good faith to resolve such dispute and, failing such resolution, to submit such dispute to a panel of three (3) arbitrators, one to be appointed by Purchaser and the other to be appointed by the Sellers, and the two so appointed arbitrators shall appoint the third arbitrator to resolve the dispute between the Parties.  The decision of the arbitrators shall be final and binding upon the Parties.

 

12.4           Further Assurances.  In case at any time after the Closing, any further action or the execution and delivery of any additional documents or instruments shall be necessary or
desirable to carry out the purposes of this Agreement and render effective the consummation of the Contemplated Transactions, the Parties shall take such actions and execute such additional documents and instruments as may be reasonably requested by any other Party.

 

12.5   Headings. The section headings contained in this Agreement are solely for the purpose of reference, are not part of the Agreement of the Parties and shall not in any way affect
the meaning or interpretation of this Agreement.  All references in this Agreement to Sections, Schedules and Exhibits are to sections, schedules and exhibits to this Agreement, unless otherwise indicated.

 

 

 

 

 

12.6   Notices.  All notices and other communications under this Agreement shall be in writing and shall be deemed given when (a) delivered by hand, (b) transmitted by facsimile
(and confirmed by return facsimile), or (c) delivered, if sent by Express Mail, Federal Express or other nationally recognized overnight delivery service or registered or certified mail, return receipt requested, to the addressee at the addresses or facsimile numbers set forth hereinbelow (or to such other addresses, or facsimile number as a party may specify by notice given to the other party pursuant to this provision).  Rejection or other refusal to accept or the inability to deliver because of changed
address of which no notice was given shall be deemed to be receipt of the notice, demand or request sent.  By giving at least thirty (30) days’ written notice hereof, any Party hereto shall have the right from time to change its respective address, and shall have the right to specify as its address any other address within the United States of America or Germany.  The additional addresses for delivery of notices to the respective parties is as follows:

 

	
If to the Purchaser, to:

	  
	
Helix Wind, Corp.

	
1848 Commercial Street

	
San Diego, CA 92113

	
Facsimile No.:

	  
	
with a copy to:

	  
	
David Lubin & Associates, PLLC

5 North Village Avenue

Rockville Centre, NY 11570

	
Facsimile No.: 516-887-8250

	
Attn: David Lubin, Esq.

	  
	  
	
If to the Company, to:

	  
	
Venco Power GmbH

Luisenburgweg 29

95182 Döhlau O.T. Tauperlitz

Germany

Facsimile No.: +49 9281 74119

 

If to the Sellers or the Principals, to:

 

FIBER-TECH Products GmbH

Tuchschererstraße 10

09116 Chemnitz

Germany

Facsimile No.:  +49 371 84276-28

 

Weser-Anlagentechnik Beteiligungs GmbH

Dorumer Weg 19

27576 Bremerhaven

Germany

Facsimile No.:  +49 4705 810 575

 

 

 

 

 

	

CLANA Power Systems GmbH

Luisenburgweg 29

95182 Döhlau O.T. Tauperlitz

Germany

Facsimile No.:  +49 9281 74119

 

	
with a copy in each case of notice to the Company, the Sellers and/or the Principals to:

	  
	
Coleman Tally LLP

7000 Central Parkway NE

Suite 1150

Atlanta, Georgia 30328

Facsimile: 770-698-9729

	
Attn: John W. Boykin, Esq.

Facsimile:  (770) 698-9729

 

12.7           Binding Effect; Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns and heirs and
representatives.  Except as specifically set forth herein, nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any Person who is not a Party.  The Company and the Sellers shall not assign this Agreement or of any their rights or obligations hereunder without the prior written consent of the Purchaser. The Purchaser shall have the right to assign all its rights in this Agreement, including the purchase of the Assets, to a wholly-owned subsidiary.

 

12.8           Counterparts.  This Agreement may be executed in any number of counterparts and by facsimile, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

12.9           Amendment and Waiver.  This Agreement may be amended, or any provision of this Agreement may be waived, provided that such amendment or waiver will be signed by all the Parties.  The
waiver of any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other breach.

 

12.10           Time of the Essence.  Time is of the essence of this Agreement and each and every provision hereof.

 

12.11           Further Assurances.  The Parties hereto will execute and deliver such documents and instruments as may be requested from time to time to effectuate the intentions of the parties
under this Agreement and any of the other Transaction Documents, to correct manifest error in any of the Transaction Documents, or to replace lost, stolen or destroyed Transaction Documents.

 

12.12           Missing and Incomplete Exhibits and Schedules. The Parties hereto hereby acknowledge and agree that as of the date of the execution of this Agreement by the Parties hereto, certain
of the required Schedules may either be missing or may not be fully current or complete, and that certain of the required Exhibits may be missing because they had not been fully negotiated and agreed to at the time of the signing of the Agreement.  In this regard, within thirty (30) days following the date of this Agreement, Seller shall provide any missing or incomplete Schedules for attachment to this Agreement and for review by the Purchaser, and the Parties shall fully negotiate and agree to the
form and substance of any missing Exhibits and to the attachment of any such missing Exhibits to this Agreement. Notwithstanding anything contained herein to the contrary, if based on the information provided for in the Schedules Helix decides, in its sole and absolute discretion, to terminate this Agreement and the transactions contemplated herein, Helix shall notify the Seller and upon delivery of such notice, this Agreement, including without limitation, the provision contained in Section 11.3, shall be terminated
in its entirety and have no further force and effect, provided, however, that the confidentiality provision contained in Section 6.1(b) shall remain in force and effect.

 

[The remainder of this page is intentionally left blank; signature pages to follow]

 

(Counterpart signature page to Stock Purchase Agreement)

 

 

 

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Share Purchase Agreement as of the date and year first above written.

 

	 	
THE COMPANY:

VENCO POWER GmbH,

a German corporation

 

By:  /s/ Dr. Matthia Pfalz

Name: Dr. Matthia Pfalz

Title:   Chief Executive Officer

SELLERS:

FIBER-TECH PRODUCTS GmbH,

a German corporation

By:  /s/ Dr. Matthia Pfalz

Dr. Matthias Pfalz

Its:  Chief Executive Officer

 

WESER ANLAGENTECHNIK BETEILIGUNGS GmbH,

a German corporation

By:  /s/ Andreas Gorke

Andreas Gorke

Its:  Chief Executive Officer

 

CLANA POWER SYSTEMS GmbH,

a German corporation

By:  /s/ Reinhard Caliebe

Reinhard Caliebe

Its:  Chief Executive Officer

 

 

[SIGNATURES CONTINUE ON FOLLOWING PAGES]

 

 

 

 

 

(Counterpart signature page to Stock Purchase Agreement)

 

	
PRINCIPALS:

/s/ Dr. Matthias Pfalz

Dr. Matthias Pfalz

/s/ Andreas Gorke

Andreas Gorke

/s/ Reinhard Caliebe

Reinhard Caliebe

 

 

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

 

 

 

 

(Counterpart signature page to Stock Purchase Agreement)

 

	 	
PURCHASER:

 

HELIX WIND, CORP.,

a Nevada corporation

By:        /s/ Ian Gardner

Name:   Ian Gardner

Title:     Chief Executive Officer

 

 

 

 

EXHIBITS AND SCHEDULES

 

	Exhibits

Exhibit A       

Exhibit B   

Exhibit C       

Exhibit D      

Exhibit E   

Exhibit F   

Exhibit G  
	
 

Consulting Agreement between the Company and Dr. Matthias Pfalz

Employment Agreement between the Company and Reinhard Caliebe

Employment Agreement between the Company and Andreas Gorke

Escrow Agreement among the Sellers, the Purchaser and _____, as escrow agent

Lock-Up Agreement

Put Right Agreement among the Sellers and Helix

Secured Note

 

 

	
Schedules

Schedule 2

Schedule 4.5

Schedule 4.6

Schedule 4.7

Schedule 4.8

Schedule 4.11

Schedule 4.12

Schedule 4.14

Schedule 4.15

Schedule 7.10
	
 

 

Adjustment based on Euro

Company/Seller Approvals

Liabilities

Litigation

Taxes

Company Licenses

Assets

Contracts

Affiliated Transactions

Cost of Goods Sold

	
 

 

 

 

 

 

 

SCHEDULE 2 

 

if 1 Euro is below $1.19 then the deal value shall be deemed 3.00MM Euro and the cash payment adjusted accordingly;

if 1 Euro is equal/above $1.20 and below $1.25 then the deal value shall be deemed 2.95MM Euro;

if 1 Euro is equal/above $1.25 and below $ 1.30 then the deal value shall be 2.90MM Euro;

if 1 Euro is equal/above $1.30 and below $1.35 then the deal value shall be2.85MM Euro;

if 1 Euro is equal/above $1.35 and below $1.40 then the deal value shall be 2.80MM Euro; and

if 1 Euro is equal/above $1.40 Deal value = 2.75MM EUR.

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