UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934
Date of
Report (Date of Earliest Event Reported): October 11,
2016
MetaStat, Inc.
(Exact
name of registrant as specified in its charter)
Nevada
(State
or other jurisdiction of incorporation)
|
000-52735
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20-8753132
|
|
(Commission File
Number)
|
(IRS Employer
Identification No.)
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27 Drydock Ave., 2
nd
Floor
Boston,
Massachusetts 02210
(Address of principal executive offices and zip code)
(617)
531-6500
(Registrant's
telephone number including area code)
_______________________
(Registrant's
former name or former address, if changed since last
report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of registrant under
any of the following provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12(b) under the Exchange
Act (17 CFR 240.14a-12(b))
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive
Agreement.
Common Stock and Warrant Private Placement
Between
September 28, 2016 and October 11, 2016, MetaStat, Inc. (the
“Company”) entered into a subscription agreement (the
“Subscription Agreement”) with a number of accredited
investors (collectively, the “Investors”) pursuant to
which the Company may sell up a maximum of 2,000 units, with each
unit consisting of (i) 5,000 shares of the Company’s common
stock, par value $0.0001 per share (the “Common
Stock”), at an effective price of $2.00 per share (the
“Effective Price”), and (ii) and five-year warrants
(the “Warrants”) to purchase 2,500 shares of Common
Stock (the “Warrant Shares”), at a purchase price of
$3.00 per share (the “Private Placement”). For the
benefit of certain Investors that would be deemed to have
beneficial ownership in excess of 4.99% or 9.99%, the Company may
issue shares of a newly created convertible preferred stock,
classified as Series A-2 Convertible Preferred Stock (the
“Series A-2 Preferred”), in lieu of issuing to such
Investors shares of Common Stock in the Private Placement. Each
share of Series A-2 Preferred is convertible into 10 shares of
Common Stock (the “Conversion Shares”). The offering
price is $10,000 per unit.
Pursuant
to the second and third closings of the Private Placement under the
Subscription Agreement, the Company issued an aggregate of 135
units consisting of 192,000 shares of Common Stock, 48,300 shares
of Series A-2 Preferred,
convertible
into 483,000 shares of Common Stock,
and 337,500 Warrants,
for an aggregate purchase price of $1.35 million. After deducting
placement agent fees and other offering expenses, the Company
received net proceeds of approximately $1.23 million. Additionally,
the Company will issue an aggregate of 54,000 placement agent
warrants in substantially the same form as the
Warrants.
For a
period of one hundred eighty (180) days following the final closing
of the Private Placement, the Investors shall have
“full-ratchet” anti-dilution price protection based on
certain issuances by the Company of Common Stock or securities
convertible into shares of Common Stock at an effective price per
share less than the Effective Price.
Pursuant
to a registration rights agreement entered into by the parties, the
Company has agreed to file a registration statement with the
Securities and Exchange Commission providing for the resale of the
shares of Common Stock, the Conversion Shares and the Warrant
Shares issued pursuant to the Private Placement on or before the
date which is forty-five (45) days after the date of the final
closing of the Private Placement. The Company will use
its commercially reasonable efforts to cause the registration
statement to become effective as promptly as possible after the
filing date.
Pursuant
to the Certificate of Designation of Rights and Preferences of the
Series A-2 Convertible Preferred Stock (the “Certificate of
Designation”), the terms of the Series A-2 Preferred are as
follows:
Ranking
The
Series A-2 Preferred will rank (i) senior to the Common Stock, (ii)
pari passu
with the
Company’s Series A Convertible Preferred Stock, and (iii)
junior to the Company’s Series B Convertible Preferred Stock
with respect to distributions of assets upon the liquidation,
dissolution or winding up of the Company.
Dividends
The
Series A Preferred is not entitled to any dividends.
Liquidation Rights
In the
event of any liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, the holders of the Series A-2
Preferred shall be entitled to receive out of the assets of the
Company, whether such assets are capital or surplus, for each share
of Series A-2 Preferred an amount of cash, securities or other
property to which such holder would be entitled to receive with
respect to each such share of Preferred Stock if such shares had
been converted to Common Stock immediately prior to such
liquidation, dissolution or winding-up of the Company.
Voluntary Conversion; Anti-Dilution Adjustments
Each
share of Series A-2 Preferred shall, at any time, and from time to
time, at the option of the holder, be convertible into ten (10)
shares of Common Stock (the “Series A-2 Conversion
Ratio”). The Series A-2 Conversion Ratio is subject to
customary adjustments for issuances of shares of Common Stock as a
dividend or distribution on shares of Common Stock, or mergers or
reorganizations.
Conversion Restrictions
The
holders of the Series A-2 Preferred may not convert their shares of
Series A-2 Preferred into shares of Common Stock if the resulting
conversion would cause such holder and its affiliates to
beneficially own (as determined in accordance with Section 13(d) of
the Exchange Act, and the rules thereunder) in excess of 4.99% or
9.99% of the Common Stock outstanding, when aggregated with all
other shares of Common Stock owned by such holder and its
affiliates at such time;
provided
,
however
, that such holder may elect to
waive these conversion restrictions upon 61 days’ advanced
written notice.
Voting Rights
The
Series A-2 Preferred has no voting rights. The Common Stock into
which the Series A-2 Preferred is convertible shall, upon issuance,
have all of the same voting rights as other issued and outstanding
Common Stock, and none of the rights of the Series A-2
Preferred.
The
foregoing description of the Private Placement and related
transactions does not purport to be complete and is qualified in
its entirety by reference to the complete text of the (i) form of
Subscription Agreement filed as Exhibit 10.1 hereto; (ii) form of
Registration Rights Agreement filed as Exhibit 10.2 hereto, (iii)
form of Warrant issued in connection with the Private Placement as
Exhibit 4.1 hereto, and (iv) form of Series A-2 Convertible
Preferred Stock Certificate of Designation as Exhibit 4.2
hereto.
Item 3.02. Unregistered Sales of Equity
Securities.
As
described more fully in Item 1.01 above, the issuance of the
securities pursuant to the Private Placement were exempt from
registration pursuant to Section 4(2) of, and Regulation D
promulgated under, the Securities Act of 1933, as
amended.
Item 9.01.
Financial Statement and
Exhibits.
(d)
Exhibits.
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Exhibit
No.
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Description
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4.1
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Form of
Warrant.
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4.2
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Series
A-2 Convertible Preferred Stock Certificate of
Designation
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10.1
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Form of
Subscription Agreement.
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10.2
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Form of
Registration Rights Agreement.
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SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
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METASTAT,
INC.
By:
/s/ Douglas A.
Hamilton
Name:
Douglas A. Hamilton
Title:
President and CEO
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Dated:
October 17, 2016
Exhibit
4.1
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
METASTAT, INC.
|
Warrant
Shares:[_____]
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Initial Exercise
Date: [_____], 2016
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Warrant
No. W- [_____]
THIS
COMMON STOCK PURCHASE WARRANT (the “
Warrant
”) certifies that,
for value received, [_____] or its assigns (the “
Holder
”) is entitled,
upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date
hereof (the “
Initial
Exercise Date
”) and on or prior to the close of
business on the five-year anniversary of the Initial Exercise Date
(the “
Termination
Date
”) but not thereafter, to subscribe for and
purchase from MetaStat, Inc., a Nevada corporation (the
“
Company
”), up to [_____]
shares (as subject to adjustment hereunder, the “
Warrant Shares
”) of
Common Stock. The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in
Section 2(c).
Section 1
.
Definitions
. Capitalized terms
used and not otherwise defined herein shall have the meanings set
forth in that certain Subscription Agreement (the
“
Subscription
Agreement
”), dated [_____], 2016, among the Company
and the subscribers signatory thereto. The following definitions
shall apply for purposes of this Warrant:
a) “
Business
Day
” means any day except Saturday, Sunday, any day
which is a federal legal holiday in the United States or any day on
which banking institutions in the State of New York are authorized
or required by law or other governmental action to
close.
b)
“
Trading Day
” means a day
on which the principal Trading Market is open for trading;
provided, that in the event that the Common Stock is not listed or
quoted on a Trading Market, then Trading Day shall mean a Business
Day.
c)
“
Trading
Market
” means whichever of the following markets or
exchanges on which the Common Stock is listed or quoted for trading
on the date in question: the New York Stock Exchange, the NYSE MKT,
the NASDAQ Global Select Market, the NASDAQ Global Market, the
NASDAQ Capital Market, the OTC Bulletin Board or any tier of the
OTC Markets Group, Inc. (or any successors to any of the
foregoing).
Section 2
.
Exercise
.
a)
Exercise
of Warrant
. Exercise of the purchase rights represented by
this Warrant may be made, in whole or in part, at any time or times
on or after the Initial Exercise Date and on or before the
Termination Date by delivery to the Company (or such other office
or agency of the Company as it may designate by notice in writing
to the registered Holder at the address of the Holder appearing on
the books of the Company) of a duly executed facsimile copy (or
e-mail attachment) of the Notice of Exercise in the form annexed
hereto. Within the earlier of (i) three (3) Trading Days and (ii)
the number of Trading Days comprising the Standard Settlement
Period (as defined in Section 2(d)(i) herein) following the date of
exercise as aforesaid, the Holder shall deliver the aggregate
Exercise Price for the shares specified in the applicable Notice of
Exercise by wire transfer or cashier’s check drawn on a
United States bank unless the cashless exercise procedure specified
in Section 2(c) below is specified in the applicable Notice of
Exercise.
No
ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise form be required. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date the final Notice of Exercise is
delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise
within one (1) Business Day of receipt of such notice.
The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares
available for purchase hereunder at any given time may be less than
the amount stated on the face hereof.
b)
Cashless
Exercise
. Notwithstanding any provision herein to the
contrary, commencing six (6) months from the Initial Exercise Date
if the Per Share Market Value (as defined below) of one share of
Common Stock is greater than the Exercise Price (at the date of
calculation as set forth below) and there is not an effective
registration statement under the Securities Act providing for the
resale of the Warrant Shares, in lieu of exercising this Warrant by
payment of cash, the Holder may exercise this Warrant by a cashless
exercise by surrender of this Warrant at the principal office of
the Company together with the properly endorsed Notice of Exercise,
in which event the Company shall issue to the Holder a number of
shares of Common Stock computed using the following
formula:
X = Y x
(B-A)
Where X
= the number of Warrant Shares to be issued to the
Holder.
Y
= the number of Warrant Shares purchasable upon exercise of
all of the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being exercised.
A
= the Exercise Price.
B
= the
Per Share Market Value of one share of Common Stock.
For
purposes hereof, “
Per Share Market Value
”
means on any particular date (a) the last closing bid price per
share of the Common Stock on such date on the OTC Bulletin Board or
another registered national stock exchange on which the Common
Stock is then listed, or if there is no such price on such date,
then the closing bid price on such exchange or quotation system on
the date nearest preceding such date, or (b) if the Common Stock is
not listed then on the OTC Bulletin Board or any registered
national stock exchange, the last closing bid price for a share of
Common Stock in the over the counter market, as reported by the OTC
Bulletin Board or by Pink OTC Markets Inc. or similar organization
or agency succeeding to its functions of reporting prices) at the
close of business on such date, or (c) if the Common Stock is not
then reported by the OTC Bulletin Board or by Pink OTC Markets Inc.
(or similar organization or agency succeeding to its functions of
reporting prices), then the average of the “Pink Sheet”
quotes for the five (5) Trading Days preceding such date of
determination, or (d) if the Common Stock is not then publicly
traded the fair market value of a share of Common Stock as
determined by the Company’s board of directors.
If Warrant Shares are issued in such a cashless exercise, the
parties acknowledge and agree that in accordance with Section
3(a)(9) of the Securities Act, the Warrant Shares shall take on the
characteristics of the Warrants being exercised, and the holding
period of the Warrant Shares being issued may be tacked on to the
holding period of this Warrant. The Company agrees not
to take any position contrary to this Section 2(b).
c)
Exercise Price
. The
exercise price per share of the Common Stock under this Warrant
shall be
$3.00
, subject to
adjustment hereunder (the “
Exercise
Price
”).
d)
Mechanics of
Exercise
.
i.
Delivery of Warrant Shares Upon
Exercise
. Warrant Shares purchased hereunder shall be
transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s or its designee’s balance
account with The Depository Trust Company through its Deposit or
Withdrawal at Custodian system (“
DWAC
”) if the Company is
then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by the Holder and
the Holder has provided the Company with written representations as
reasonably requested by the Company in connection with such legend
removal (which shall not include representations with respect to
the sale of any securities) or (B) the Warrant Shares are eligible
for resale by the Holder without volume or manner-of-sale
limitations pursuant to Rule 144 and the Holder has provided the
Company with written representations as reasonably requested by the
Company in connection with such legend removal (which shall not
include representations with respect to the sale of any
securities), and otherwise by physical delivery of a certificate,
registered in the Company’s share register in the name of the
Holder or its designee, for the number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the address
specified by the Holder in the Notice of Exercise by the date that
is the earlier of (i) one (1) Trading Day and (ii) the number of
Trading Days comprising the Standard Settlement Period after the
delivery to the Company of the Notice of Exercise (such date, the
“
Warrant Share
Delivery Date
”). Upon delivery of the Notice of
Exercise, the Holder shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date
of delivery of the Warrant Shares, provided that payment of the
aggregate Exercise Price (other than in the case of a cashless
exercise) is received within the earlier of (i) three Trading Days
and (ii) the number of Trading Days comprising the Standard
Settlement Period following delivery of the Notice of Exercise. The
Company agrees to maintain a transfer agent that is a participant
in the FAST program so long as this Warrant remains outstanding and
exercisable. As used herein, “
Standard Settlement
Period
” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of the Notice of
Exercise.
ii.
Delivery of New Warrants
Upon Exercise
. If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of
the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant.
iii.
Rescission Rights
. If the
Company fails to cause the Transfer Agent to transmit to the Holder
the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share
Delivery Date, then the Holder will have the right to rescind such
exercise.
iv.
Compensation for Buy-In on Failure to
Timely Deliver Warrant Shares Upon Exercise
. In addition to
any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder the Warrant
Shares in accordance with the provisions of Section 2(d)(i) above
pursuant to an exercise on or before the Warrant Share Delivery
Date, and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such
exercise (a “
Buy-In
”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2)
the price at which the sell order giving rise to such purchase
obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored (in which
case such exercise shall be deemed rescinded) or deliver to the
Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of
such loss. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms
hereof.
v.
No Fractional Shares or Scrip
.
No fractional shares or scrip representing fractional shares shall
be issued upon the exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay
a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or round up
to the next whole share.
vi.
Charges, Taxes and
Expenses
. Issuance of Warrant Shares shall be made without
charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such Warrant
Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the
Holder or in such name or names as may be directed by the Holder;
provided
,
however
, that in
the event that Warrant Shares are to be issued in a name other than
the name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto. The Company shall pay all Transfer
Agent fees required for same-day processing of any Notice of
Exercise and all fees to the Depository Trust Company (or another
established clearing corporation performing similar functions)
required for same-day electronic delivery of the Warrant
Shares.
vii.
Closing of Books
. The Company
will not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
e)
Holder’s Exercise
Limitations
. The Company shall not effect any exercise of
this Warrant, and a Holder shall not have the right to exercise any
portion of this Warrant, pursuant to Section 2 or otherwise, to the
extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s Affiliates, and any other Persons
acting as a group together with the Holder or any of the
Holder’s Affiliates (such Persons, “
Attribution Parties
”)),
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates or Attribution Parties and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other
Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for
purposes of this Section 2(e), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to
the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for
any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies,
the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any
Affiliates and Attribution Parties) and of which portion of this
Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed
to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which
portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall
be determined after
giving effect to the conversion or exercise of securities of the
Company, including this Warrant, by the Holder or its Affiliates or
Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The
“
Beneficial
Ownership Limitation
” shall be 4.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant. The Holder, upon notice to the Company,
may increase or decrease the Beneficial Ownership Limitation
provisions of this Section 2(e), provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon exercise of
this Warrant held by the Holder and the provisions of this Section
2(e) shall continue to apply. Any increase in the Beneficial
Ownership Limitation will not be effective until the 61
st
day after such
notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 2(e) to
correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.
Section
3
.
Certain
Adjustments
.
a)
Adjustments for Stock Splits,
Combinations, Certain Dividends and Distributions
. If the
Company shall, at any time or from time to time after the Initial
Exercise Date, effect a split of the outstanding Common Stock (or
any other subdivision of its shares of Common Stock into a larger
number of shares of Common Stock), combine the outstanding shares
of Common Stock into a smaller number of shares of Common Stock, or
make or issue or set a record date for the determination of holders
of Common Stock entitled to receive a dividend or other
distribution payable in shares of Common Stock, then, in each event
(i) the number of shares of Common Stock for which this Warrant
shall be exercisable immediately after the occurrence of any such
event shall be adjusted to equal the number of shares of Common
Stock that a record holder of the same number of shares of Common
Stock for which this Warrant is exercisable immediately prior to
the occurrence of such event would own or be entitled to receive
after the happening of such event, and (ii) the Exercise Price then
in effect shall be adjusted to equal (A) the Exercise Price then in
effect multiplied by the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to the adjustment
divided by (B) the number of shares of Common Stock for which this
Warrant is exercisable immediately after such
adjustment.
b)
Adjustment for Other Dividends and
Distributions
. If the Company shall, at any time or from
time to time after the Initial Exercise Date, make or issue or set
a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in (i)
cash, (ii) any evidences of indebtedness, or any other securities
of the Company or any property of any nature whatsoever, other
than, in each case, shares of Common Stock; or (iii) any warrants
or other rights to subscribe for or purchase any evidences of
indebtedness, or any other securities of the Company or any
property of any nature whatsoever, other than, in each case, shares
of Common Stock, then, and in each event, (A) the number of shares
of Common Stock for which this Warrant shall be exercisable shall
be adjusted to equal the product of the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to
such adjustment multiplied by a fraction (1) the numerator of which
shall be the last closing bid price per share of the Common Stock
at the date of taking such record and (2) the denominator of which
shall be such last closing bid price per share of the Common Stock
minus the amount allocable to one share of Common Stock of any such
cash so distributable and of the fair value (as determined in good
faith by the Board) of any and all such evidences of indebtedness,
shares of stock, other securities or property or warrants or other
subscription or purchase rights so distributable, and (B) the
Exercise Price then in effect shall be adjusted to equal (1) the
Exercise Price then in effect multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to the adjustment divided by (2) the number of shares of
Common Stock for which this Warrant is exercisable immediately
after such adjustment. A reclassification of the Common Stock
(other than a change in par value, or from par value to no par
value or from no par value to par value) into shares of Common
Stock and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of its Common Stock of
such shares of such other class of stock within the meaning of this
Section 3(b) and, if the outstanding shares of Common Stock shall
be changed into a larger or smaller number of shares of Common
Stock as a part of such reclassification, such change shall be
deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section
3(a).
c)
Adjustments for Reclassification,
Exchange or Substitution
. If the Common Stock for which this
Warrant is exercisable at any time or from time to time after the
Initial Exercise Date shall be changed to the same or different
number of shares of any class or classes of stock, whether by
reclassification, exchange, substitution or otherwise (other than
by way of a stock split or combination of shares or stock dividends
provided for in Section 3(a), Section 3(b), or a reorganization,
merger, consolidation, or sale of assets provided for in Section
3(d)), then, and in each event, an appropriate revision to the
Exercise Price shall be made and provisions shall be made (by
adjustments of the Exercise Price or otherwise) so that, upon any
subsequent exercise of this Warrant, the Holder shall have the
right to receive, in lieu of Common Stock, the kind and amount of
shares of stock and other securities receivable upon
reclassification, exchange, substitution or other change, by
holders of the number of shares of Common Stock for which this
Warrant was exercisable immediately prior to such reclassification,
exchange, substitution or other change, all subject to further
adjustment as provided herein.
d)
Adjustments for
Reorganization, Merger, Consolidation or Sales of Assets
. If
at any time or from time to time after the Initial Exercise Date
there shall be a capital reorganization of the Company (other than
by way of a stock split or combination of shares or stock dividends
or distributions provided for in Section 3(a), and Section 3(b), or
a reclassification, exchange or substitution of shares provided for
in Section 3(c)), or a merger or consolidation of the Company with
or into another corporation where the holders of the
Company’s outstanding voting securities prior to such merger
or consolidation do not own over 50% of the outstanding voting
securities of the merged or consolidated entity, immediately after
such merger or consolidation, or the sale of all or substantially
all of the Company’s properties or assets to any other person
(an “
Organic
Change
”), then as a part of such Organic Change an
appropriate revision to the Exercise Price shall be made if
necessary and provision shall be made if necessary (by adjustments
of the Exercise Price or otherwise) so that, upon any subsequent
exercise of this Warrant, the Holder shall have the right to
receive, in lieu of Common Stock, the kind and amount of shares of
stock and other securities or property of the Company or any
successor corporation resulting from the Organic Change. In any
such case, appropriate adjustment shall be made in the application
of the provisions of this Section 3(d) with respect to the rights
of the Holder after the Organic Change to the end that the
provisions of this Section 3(d) (including any adjustment in the
Exercise Price then in effect and the number of shares of stock or
other securities deliverable upon exercise of this Warrant) shall
be applied after that event in as nearly an equivalent manner as
may be practicable.
e)
Calculations
. All calculations
under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 3, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if
any) issued and outstanding.
f)
Notice to Holder
.
i.
Adjustment
to Exercise Price
. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 3, the Company shall
promptly deliver to the Holder a notice by facsimile or email
setting forth the Exercise Price after such adjustment and any
resulting adjustment to the number of Warrant Shares and setting
forth a brief statement of the facts requiring such
adjustment.
ii.
Notice
to Allow Exercise by Holder
. If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Company shall authorize the granting to all holders of the
Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (E) the
Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, then, in
each case, the Company shall cause to be delivered by facsimile or
email to the Holder at its last facsimile number or email address
as it shall appear upon the Warrant Register of the Company, at
least 20 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to
deliver such notice or
any defect therein
or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the
extent that any notice provided in this Warrant constitutes, or
contains, material, non-public information regarding the Company or
any of the Subsidiaries, the Company shall simultaneously file such
notice with the Commission pursuant to a Current Report on Form
8-K. The Holder shall remain entitled to exercise this Warrant
during the period commencing on the date of such notice to the
effective date of the event triggering such notice except as may
otherwise be expressly set forth herein.
Section
4
.
Transfer
of Warrant
.
a)
Transferability
. Subject to
compliance with any applicable securities laws, this Warrant and
all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company or
its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by
the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee
or assignees, as applicable, and in the denomination or
denominations reasonably requested in such instrument of
assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days
of the date the Holder delivers an assignment form to the Company
assigning this Warrant full. The Warrant, if properly assigned in
accordance herewith, may be exercised by a new holder for the
purchase of Warrant Shares without having a new Warrant
issued.
b)
New Warrants
. This Warrant may
be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants
are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 4(a), as to any transfer which
may be involved in such division or combination, the Company shall
execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with
such notice. All Warrants issued on transfers or exchanges shall be
dated the Initial Exercise Date and shall be substantially
identical with this Warrant except as to the number of Warrant
Shares issuable pursuant thereto.
c)
Warrant Register
. The Company
shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “
Warrant Register
”), in
the name of the record Holder hereof from time to time. The Company
may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.
d)
Transfer Restrictions
.
If, at the
time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this
Warrant shall not be either (i) registered pursuant to an effective
registration
statement under the Securities Act
and
under applicable state
securities or blue sky laws or (ii) eligible for resale without
volume or manner-of-sale restrictions or current public information
requirements pursuant to Rule 144, the Company may require, as a
condition of allowing such transfer, that the Holder or transferee
of this Warrant, as the case may be, comply with the provisions of
the Subscription Agreement and applicable securities
laws.
e)
Representation by the Holder
.
The Holder, by the acceptance hereof, represents and warrants that
it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling
such Warrant Shares or any part thereof in violation of the
Securities Act or any applicable state securities law, except
pursuant to sales registered or exempted under the Securities
Act.
Section
5
.
Miscellaneous
.
a)
No Rights as Stockholder Until
Exercise
. This Warrant does not entitle the Holder to any
voting rights, dividends or other rights as a stockholder of the
Company prior to the exercise hereof as set forth in Section
2(d)(i), except as expressly set forth in Section 3.
b)
Loss, Theft, Destruction
or Mutilation of Warrant
. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any
stock certificate relating to the Warrant Shares, and in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not
include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in
lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays, Holidays,
etc
. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein
shall not be a Business Day, then, such action may be taken or such
right may be exercised on the next succeeding Business
Day.
d)
Automatic Exercise upon
Expiration.
In the event that, upon the Termination Date,
the Per Share Market Value of one share of Common Stock (or other
security issuable upon the exercise hereof) as determined in
accordance with this Warrant above is greater than the Exercise
Price in effect on such date, then this Warrant shall automatically
be deemed on and as of such date to be exercised pursuant to a
Cashless Exercise as to all shares (or such other securities) for
which this Warrant shall not previously have been exercised or
converted, and the Company shall promptly deliver the shares (or
such other securities) issued upon such exercise to the Holder;
provided
,
however
, to the
extent that the foregoing automatic exercise would result in the
Holder exceeding the Beneficial Ownership Limitation, then the
Holder shall not be entitled to the Warrant Shares issuable upon
such automatic exercise to such extent and the remainder of such
Warrant Shares shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Beneficial Ownership
Limitation.
e)
Authorized
Shares
. The Company covenants that, during the period the
Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for
the issuance of the Warrant Shares upon the exercise of any
purchase rights under this Warrant. The Company further covenants
that its issuance of this Warrant shall constitute full authority
to its officers who are charged with the duty of issuing the
necessary Warrant Shares upon the exercise of the purchase rights
under this Warrant. The Company will take all such reasonable
action as may be necessary to assure that such Warrant Shares may
be issued as provided herein without violation of any applicable
law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of
the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for
such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such actions as may be reasonably necessary or appropriate to
protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately
prior to such increase in par value, (ii) take all such action as
may be reasonably necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use
commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having
jurisdiction thereof, as may be, reasonably necessary to enable the
Company to perform its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be reasonably
necessary from any public regulatory body or bodies having
jurisdiction thereof.
f)
Governing Law; Jurisdiction
.
This Warrant shall be governed by and construed in accordance with
the internal laws of the State of New York, without giving effect
to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction. Each of
the Company and the Holder (i) hereby irrevocably submits to the
jurisdiction of the United States District Court sitting in the
Southern District of New York and the courts of the State of New
York located in New York county for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement
or any of the other Transaction Documents or the transactions
contemplated hereby or thereby and (ii) hereby waives, and agrees
not to assert in any such suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of such
court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or
proceeding is improper.
g)
Restrictions
.
The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant will have restrictions upon resale imposed
by state and federal securities laws.
h)
Nonwaiver and
Expenses
. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice the Holder’s
rights, powers or remedies, notwithstanding the fact that all
rights hereunder terminate on the Termination Date. If the Company
willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the
Company shall pay to the Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to,
reasonable attorneys’ fees, including those of appellate
proceedings, incurred by the Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
i)
Notices
. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via facsimile or email at
the facsimile number or email address of the addressee at or prior
to 5:30 p.m. (New York City time) on a Trading Day, (b) the next
Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile or email at the facsimile
number or email address of the addressee on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any
Trading Day, (c) the second (2
nd
) Trading Day
following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (d) upon actual receipt by
the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth in the
Company’s records.
j)
Limitation of Liability
. No
provision hereof, in the absence of any affirmative action by the
Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the Holder for the purchase price of
any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the
Company.
k)
Remedies
. The Holder, in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees
that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this
Warrant and hereby agrees to waive and not to assert the defense in
any action for specific performance that a remedy at law would be
adequate.
l)
Successors and Assigns
. Subject
to applicable securities laws, this Warrant and the rights and
obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors and permitted assigns of the Company
and the successors and permitted assigns of Holder. The provisions
of this Warrant are intended to be for the benefit of any Holder
from time to time of this Warrant and shall be enforceable by the
Holder or holder of Warrant Shares.
m)
Amendment
. This Warrant may be
modified or amended or the provisions hereof waived with the prior
written consent of the Company
and the
holders of a majority of the Warrant Shares underlying the then
outstanding Warrants issued pursuant to the Subscription
Agreement
.
n)
Severability
. Wherever
possible, each provision of this Warrant shall be interpreted in
such manner as to be effective and valid under applicable law, but
if any provision of this Warrant shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this
Warrant.
o)
Headings
. The headings used in
this Warrant are for the convenience of reference only and shall
not, for any purpose, be deemed a part of this
Warrant.
********************
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
|
|
METASTAT, INC.
|
|
|
By:__________________________________________
Name:
Title:
|
NOTICE OF EXERCISE
TO: METASTAT,
INC.
(1)
The
undersigned hereby elects to purchase ________ Warrant Shares of
the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if
any.
(2)
Please
issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is
specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account
Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
(3)
Accredited
Investor
. The undersigned is an “accredited
investor” as defined in Regulation D promulgated under the
Securities Act of 1933, as amended.
(4) The
undersigned intends that payment of the Exercise Price shall be
made as (check one):
Cash
Exercise_______
Cashless
Exercise_______
If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of
$________ by certified or official bank check (or via wire
transfer) to the Company in accordance with the terms of the
Warrant.
If the
Holder has elected a Cashless Exercise, a certificate shall be
issued to the Holder for the number of shares equal to the whole
number portion of the product of the calculation set forth below,
which is ___________. The Company shall pay a cash adjustment in
respect of the fractional portion of the product of the calculation
set forth below in an amount equal to the product of the fractional
portion of such product and the Per Share Market Value on the date
of exercise, which product is ____________.
X = Y x
(B-A)
B
Where:
The
number of shares of Common Stock to be issued to the Holder is
(“X”).
The
number of shares of Common Stock purchasable upon exercise of all
of the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being exercised is
(“Y”).
The
Exercise Price is (“A”).
The Per
Share Market Value of one share of Common Stock is
(“B”).
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
_________________________________________________________________
Signature of Authorized Signatory of Investing
Entity
:
___________________________________________
Name of
Authorized Signatory:
_____________________________________________________________
Title
of Authorized Signatory:
______________________________________________________________
Date:
__________________________________________________________________________________
ASSIGNMENT FORM
(To
assign the foregoing warrant, execute
this
form and supply required information.
Do not
use this form to exercise the warrant.)
FOR
VALUE RECEIVED, [____ all of or [_______ shares of the foregoing
Warrant and all rights evidenced thereby are hereby assigned
to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated:
______________, _______
|
|
Holder’s
Signature: ________________________________________________
|
|
|
Holder’s
Address:
________________________________________________
________________________________________________
|
Exhibit
4.2
METASTAT,
INC.
CERTIFICATE
OF DESIGNATION OF PREFERENCES,
RIGHTS
AND LIMITATIONS
OF
SERIES
A-2 CONVERTIBLE PREFERRED STOCK
WHEREAS, the
Articles of Incorporation of MetaStat, Inc., a Nevada corporation
(the “
Corporation
”) provides
for a class of its authorized stock known as preferred stock,
comprised of 10,000,000 shares, issuable from time to time in one
or more series;
WHEREAS, the Board
of Directors of the Corporation is authorized to fix the dividend
rights, dividend rate, voting rights, conversion rights, rights and
terms of redemption and liquidation preferences of any wholly
unissued series of preferred stock and the number of shares
constituting any Series and the designation thereof, of any of
them; and
WHEREAS, it is the
desire of the Board of Directors of the Corporation, pursuant to
its authority as aforesaid, to fix the rights, preferences,
restrictions and other matters relating to a series of the
preferred stock, which shall consist of 1,000,000 shares of the
preferred stock which the corporation has the authority to issue,
classified as Series A-2, as follows:
NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
provide for the issuance of a series of preferred stock for cash or
exchange of other securities, rights or property and does hereby
fix and determine the rights, preferences, restrictions and other
matters relating to such series of preferred stock as
follows:
TERMS
OF PREFERRED STOCK
Section 1
.
Definitions
. For the
purposes hereof, the following terms shall have the following
meanings:
“
Business Day
” means any
day except Saturday, Sunday, any day which is a federal legal
holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“
Common Stock
" means the
Corporation's common stock, par value $0.0001 per share, and stock
of any other class into which such shares may hereafter have been
reclassified or changed.
“
Conversion Shares
” shall
have the meaning given such term is Section 5(i)
hereof.
“DTC”
shall have the meaning given in Section 5(a).
“
DWAC Delivery
” shall have
the meaning given in Section 5(a).
“
Exchange Act
” means the
Securities Exchange Act of 1934, as amended.
“
Fundamental Transaction
”
shall have the meaning given in Section 6(c).
“
Holder
” shall have the
meaning given such term in Section 2 hereof.
“
Original Issue Date
”
shall mean the date of the first issuance of any shares of the
Preferred Stock regardless of the number of transfers of any
particular shares of Preferred Stock and regardless of the number
of certificates which may be issued to evidence such Preferred
Stock.
“
Person
” means a
corporation, an association, a partnership, an organization, a
business, an individual, a government or political subdivision
thereof or a governmental agency.
“
Securities Act
” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“
Trading Day
” means a day
on which the principal Trading Market is open for trading;
provided, that in the event that the Common Stock is not listed or
quoted on a Trading Market, then Trading Day shall mean a Business
Day.
“
Trading Market
” means
whichever of the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the
New York Stock Exchange, the NYSE MKT, the NASDAQ Global Select
Market, the NASDAQ Global Market, the NASDAQ Capital Market, the
OTC Bulletin Board or any tier of the OTC Markets Group, Inc. (or
any successors to any of the foregoing).
Section 2
.
Designation and Amount;
Rank
.
(a)
Designation
and Amount.
The series of preferred stock shall be
designated as its Series A-2 Convertible Preferred Stock (the
“
Preferred
Stock
”) and the number of shares so designated shall
be one million (1,000,000) shares (which shall not be subject to
increase without the consent of all of the holders of the Preferred
Stock (each, a “
Holder
” and collectively,
the “
Holders
”). Capitalized
terms not otherwise defined herein shall have the meaning given
such terms in Section 1 hereof.
(b)
Rank.
All shares of the Series A-2 Preferred Stock shall rank (i)
pari passu
with the Series
A Convertible Preferred Stock and any class or series of capital
stock of the Corporation hereafter created and specifically
ranking, by its terms, on par with the Series A-2 Preferred Stock
and (ii) junior to the Series B Convertible Preferred Stock and any
class or series of capital stock of the Corporation hereafter
created specifically ranking, by its terms, senior to the Series
A-2 Preferred Stock, in each case as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary.
Section 3
.
Voting
Rights
. Except as otherwise provided herein and as otherwise
required by law, the Preferred Stock shall have no voting rights.
The Common Stock into which the Preferred Stock is convertible
shall, upon issuance, have all of the same voting rights as other
issued and outstanding Common Stock of the Corporation, and none of
the rights of the Preferred Stock.
Section 4
.
Liquidation
. Upon any
liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary (a “
Liquidation
”), the
Holders shall be entitled to receive out of the assets of the
Corporation, whether such assets are capital or surplus, for each
share of Preferred Stock an amount of cash, securities or other
property to which such holder would be entitled to receive with
respect to each such share of Preferred Stock if such shares had
been converted to Common Stock immediately prior to such
Liquidation (without giving effect for such purposes to the
limitations set forth in Section 7), subject to the preferential
rights of holders of any senior securities of the
Corporation.
Section 5
.
Conversion
.
a)
Conversions at Option of
Holder
. Each share of Preferred Stock shall, at any time and
from time to time, at the option of the Holder, be convertible into
ten shares of Common Stock of the Corporation (the
“
Conversion
Ratio
”).
Holders shall effect conversions by providing the Corporation with
the form of conversion notice attached hereto as
Annex A
(a “
Notice of Conversion
”).
Each Notice of Conversion shall specify the number of shares of
Preferred Stock to be converted, the number of shares of Preferred
Stock owned prior to the conversion at issue, the number of shares
of Preferred Stock owned subsequent to the conversion at issue and
the date on which such conversion is to be effected, which date may
not be prior to the date the Holder delivers such Notice of
Conversion to the Corporation by facsimile (the “
Conversion Date
”). If no
Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion to
the Corporation is deemed delivered hereunder. The calculations and
entries set forth in the Notice of Conversion shall control in the
absence of manifest or mathematical error. To effect conversions,
as the case may be, of shares of Preferred Stock, a Holder shall
not be required to surrender the certificate(s) representing such
shares of Preferred Stock to the Corporation unless all of the
shares of Preferred Stock represented thereby are so converted, in
which case the Holder shall deliver the certificate representing
such shares of Preferred Stock promptly following the Conversion
Date at issue. Shares of Preferred Stock converted or redeemed in
accordance with the terms hereof shall be canceled and may not be
reissued. Provided the Corporation’s transfer agent is
participating in the Depository Trust
Company
(“
DTC
”)
Fast Automated Securities Transfer program and the applicable
Conversion Shares are either registered for resale or eligible for
resale without restriction pursuant to Rule 144 of the Securities
Act and the Holder delivers a broker’s representation that
all of the applicable Conversion Shares have been sold, the Holder
may request that the applicable Conversion Shares be credited to
the account of the Holder’s prime broker with DTC through its
Deposit Withdrawal at Custodian system (a “
DWAC
Delivery
”).
b)
Mechanics
of Conversion
i.
Delivery of Certificate
Upon Conversion
. Not later than three trading days
(“
Trading
Days
”) after each Conversion Date (the
“
Share Delivery
Date
”), the Corporation shall deliver to the Holder a
certificate or certificates representing the number of shares of
Common Stock being acquired upon the conversion of shares of
Preferred Stock (the “
Conversion Shares
”) or in
the case of a DWAC Delivery, electronically transfer such
Conversion Shares by crediting the account of the Holder’s
prime broker with DTC through its DWAC system. If in the case of
any Notice of Conversion such certificate or certificates are not
delivered to or as directed by the applicable Holder by the third
business after the Conversion Date, the Holder shall be entitled to
elect by written notice to the Corporation at any time on or before
its receipt of such certificate or certificates thereafter, to
rescind such conversion, in which event the Corporation shall
immediately return the certificates representing the shares of
Preferred Stock tendered for conversion.
ii.
Obligation
Absolute
. The Corporation’s obligations to issue and
deliver the Conversion Shares upon conversion of Preferred Stock in
accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the
same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Corporation or
any violation or alleged violation of law by the Holder or any
other person, and irrespective of any other circumstance which
might otherwise limit such obligation of the Corporation to the
Holder in connection with the issuance of such Conversion
Shares.
iii.
Reservation of Shares
Issuable Upon Conversion
. The Corporation covenants that it
will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of the Preferred Stock, free from
preemptive rights or any other actual contingent purchase rights of
persons other than the Holders, not less than such number of shares
of the Common Stock as shall be issuable (taking into account the
adjustments and restrictions of herein) upon the conversion of all
outstanding shares of Preferred Stock. The Corporation covenants
that all shares of Common Stock that shall be so issuable shall,
upon issue, be duly and validly authorized, issued and fully paid,
nonassessable.
iv.
Transfer Taxes
. The
issuance of certificates for shares of the Common Stock on
conversion of the Preferred Stock shall be made without charge to
the Holders thereof for any documentary stamp or similar taxes that
may be payable in respect of the issue or delivery of such
certificate, provided that the Corporation shall not be required to
pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon
conversion in a name other than that of the Holder of such shares
of Preferred Stock so converted and the Corporation shall not be
required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid
to the Corporation the amount of such tax or shall have established
to the satisfaction of the Corporation that such tax has been
paid.
Section 6
.
Certain
Adjustments
.
a)
Stock Dividends and Stock
Splits
. If the Corporation, at any time while the Preferred
Stock is outstanding: (A) shall pay a stock dividend or otherwise
make a distribution or distributions on shares of its Common Stock
or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Corporation
pursuant to this Preferred Sock), (B) subdivide outstanding shares
of Common Stock into a larger number of shares, (C) combine
(including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issue by
reclassification of shares of the Common Stock any shares of
capital stock of the Corporation, then the Holders shall receive,
upon conversion, the number of shares of Common Stock such Holder
would have been entitled to receive assuming such Holder converted
such Preferred Stock immediately prior to the applicable event. Any
adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and
shall become effective immediately after the effective date in the
case of a subdivision, combination or
re-classification.
b)
Pro Rata
Distributions
. If the Corporation, at any time while
Preferred Stock is outstanding, shall distribute to all holders of
Common Stock (and not to Holders) evidences of its indebtedness or
assets or rights or warrants to subscribe for or purchase any
security, then in each such case, the Holders shall receive, upon
conversion, the number of shares of Common Stock or other property
such Holder would have been entitled to receive assuming such
Holder converted such Preferred Stock immediately prior to the
applicable event.
c)
Fundamental
Transaction
. If, at any time while the Preferred Stock is
outstanding, (A) the Corporation effects any merger or
consolidation of the Corporation with or into another Person (other
than a merger in which the Corporation is the surviving or
continuing entity and its Common Stock is not exchanged for or
converted into other securities, cash or property), (B) the
Corporation effects any sale of all or substantially all of its
assets in one transaction or a series of related transactions, (C)
any tender offer or exchange offer (whether by the Corporation or
another Person) is completed pursuant to which all of the Common
Stock is exchanged for or converted into other securities, cash or
property, or (D) the Corporation effects any reclassification of
the Common Stock or any compulsory share exchange pursuant (other
than as a result of a dividend, subdivision or combination covered
by Section C.7(b) above) to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property
(in any such case, a “Fundamental Transaction”), then,
upon any subsequent conversion of the Preferred Stock the Holders
shall have the right to receive, in lieu of the right to receive
Conversion Shares, for each Conversion Share that would have been
issuable upon such conversion immediately prior to the occurrence
of such Fundamental Transaction, the same kind and amount of
securities, cash or property as it would have been entitled to
receive upon the occurrence of such Fundamental Transaction if it
had been, immediately prior to such Fundamental Transaction, the
holder of one share of Common Stock (the “Alternate
Consideration”). For purposes of any such subsequent
conversion, the determination of the Conversion Ratio shall be
appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and
the Corporation shall adjust the Conversion Ratio in a reasonable
manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given
any choice as to the securities, cash or property to be received in
a Fundamental Transaction, then the Holders shall be given the same
choice as to the Alternate Consideration it receives upon any
conversion of the Preferred Stock following such Fundamental
Transaction. The terms of any agreement to which the Corporation is
a party and pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving
entity to comply with the provisions of this Section 6(c) and
insuring that the Preferred Stock will be similarly adjusted upon
any subsequent transaction analogous to a Fundamental Transaction.
The Corporation shall cause to be delivered to each Holder, at its
last address as it shall appear upon the stock books of the
Corporation, written notice of any Fundamental Transaction at least
20 calendar days prior to the date on which such Fundamental
Transaction is expected to become effective or close.
d)
Calculations
. All
calculations under this Section shall be made to the nearest cent
or the nearest 1/100th of a share, as the case may be. The number
of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the
Corporation, and the description of any such shares of Common Stock
shall be considered on issue or sale of Common Stock. For purposes
of this Section 6, the number of shares of Common Stock deemed to
be issued and outstanding as of a given date shall be the sum of
the number of shares of Common Stock (excluding treasury shares, if
any) issued and outstanding.
e)
Notice to Holders;
Adjustment to Conversion Ratio
. Whenever the Conversion
Ratio is adjusted pursuant to any of this Section, the Corporation
shall promptly mail to each Holder a notice setting forth the
Conversion Ratio after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
Section 7
.
Conversion
Restrictions
.
a)
Notwithstanding anything to the contrary set forth in this
Certificate of Designation, at no time may a Holder of shares of
Preferred Stock convert shares of the Preferred Stock if the number
of shares of Common Stock to be issued pursuant to such conversion
would exceed, when aggregated with all other shares of Common Stock
owned by such Holder and its affiliates at such time, the number of
shares of Common Stock which would result in such Holder and its
affiliates beneficially owning (as determined in accordance with
Section 13(d) of the Exchange Act, and the rules thereunder) in
excess of 4.99% of all of the Common Stock outstanding at such
time;
provided
,
however
, that upon
a Holder providing the Corporation with sixty-one (61) days’
notice (pursuant to Section 8(a) hereof) (the "
Waiver Notice
") that such
Holder would like to waive Section 7(a) of this Certificate of
Designation with regard to any or all shares of Common Stock
issuable upon conversion of Preferred Stock, this Section 7(a)
shall be of no force or effect with regard to those shares of
Preferred Stock referenced in the Waiver Notice.
b)
Notwithstanding anything to the contrary set forth in this
Certificate of Designation, at no time may a Holder of shares of
Preferred Stock convert shares of the Preferred Stock if the number
of shares of Common Stock to be issued pursuant to such conversion
would exceed, when aggregated with all other shares of Common Stock
owned by such Holder and its affiliates at such time, would result
in such Holder and its affiliates beneficially owning (as
determined in accordance with Section 13(d) of the Exchange Act,
and the rules thereunder) in excess of 9.99% of the Common Stock
outstanding at such time;
provided
,
however
, that upon a Holder
providing the Corporation with a Waiver Notice that such Holder
would like to waive Section 7(b) of this Certificate of Designation
with regard to any or all shares of Common Stock issuable upon
conversion of Preferred Stock, this Section 7(b) shall be of no
force or effect with regard to those shares of Preferred Stock
referenced in the Waiver Notice.
Section 8
.
Miscellaneous
.
a)
Notices
. Any and
all notices or other communications or deliveries to be provided by
the Holders hereunder, including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, by
facsimile, by email, sent by a nationally recognized overnight
courier service, addressed to the Corporation. Any and all notices
or other communications or deliveries to be provided by the
Corporation hereunder shall be in writing and delivered personally,
by facsimile, by email, sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile telephone
number, email address, or address of such Holder appearing on the
books of the Corporation, or if no such facsimile telephone number
or address appears, at the principal place of business of the
Holder. Any notice or other communication or deliveries hereunder
shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number or via email at the
email address specified in this Section prior to 5:30 p.m. (New
York City time), (ii) the date after the date of transmission, if
such notice or communication is delivered via facsimile at the
facsimile telephone number or via email at the email address
specified in this Section later than 5:30 p.m. (New York
City
time) on any date and earlier than 11:59 p.m. (New York City time)
on such date, (iii) the second Business Day following the date of
mailing, if sent by nationally recognized overnight courier
service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.
b)
Absolute
Obligation
. Except as expressly provided herein, no
provision of this Certificate of Designation shall alter or impair
the obligation of the Corporation, which is absolute and
unconditional, to pay the liquidated damages (if any) on, the
shares of Preferred Stock at the time, place, and rate, and in the
coin or currency, herein prescribed.
c)
Lost or Mutilated
Preferred Stock Certificate
. If a Holder’s Preferred
Stock certificate shall be mutilated, lost, stolen or destroyed,
the Corporation shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated certificate,
or in lieu of or in substitution for a lost, stolen or destroyed
certificate, a new certificate for the shares of Preferred Stock so
mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such certificate,
and of the ownership hereof, and indemnity, if requested, all
reasonably satisfactory to the Corporation.
d)
Transfer and
Assignment
. The rights of each Holder hereunder shall be
automatically assignable by each Holder to any Person (other than a
known competitor of the Corporation) of all or a portion of the
Preferred Stock if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Corporation within a reasonable time
after such assignment, (ii) the Corporation is, within a reasonable
time after such transfer or assignment, furnished with written
notice of (a) the name and address of such transferee or assignee,
and (b) the number of shares of Preferred Stock with respect to
which are being transferred or assigned, and (iii) following such
transfer or assignment the further disposition of such Preferred
Stock is restricted under the Securities Act and applicable state
securities laws. The rights to transfer and assign the Preferred
Stock shall apply to the Holders (and to subsequent) successors and
assigns.
e)
Waiver
. Any waiver
by the Corporation or the Holder of a breach of any provision of
this Certificate of Designation shall not operate as or be
construed to be a waiver of any other breach of such provision or
of any breach of any other provision of this Certificate of
Designation. The failure of the Corporation or the Holder to insist
upon strict adherence to any term of this Certificate of
Designation on one or more occasions shall not be considered a
waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Certificate
of Designation. Any waiver must be in writing.
f)
Severability
. If
any provision of this Certificate of Designation is invalid,
illegal or unenforceable, the balance of this Certificate of
Designation shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it
shall be found that any interest or other amount deemed interest
due hereunder violates applicable laws governing usury, the
applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum permitted rate of
interest.
g)
Next Business Day
.
Whenever any payment or other obligation hereunder shall be due on
a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.
h)
Headings
. The
headings contained herein are for convenience only, do not
constitute a part of this Certificate of Designation and shall not
be deemed to limit or affect any of the provisions
hereof.
IN
WITNESS WHEREOF, the undersigned has executed and subscribed this
Certificate and does affirm the foregoing as true this
5
th
day of
October, 2016.
|
|
METASTAT,
INC.
|
|
|
By:
/s/ Daniel H.
Schneiderman
Name:
Daniel H. Schneiderman
Title:
Vice President, Finance, and Secretary
|
ANNEX
A
NOTICE
OF CONVERSION
(TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF
SERIES A-2 PREFERRED STOCK)
The
undersigned hereby elects to convert the number of shares of Series
A-2 Convertible Preferred Stock indicated below, into shares of
common stock (the "
Common
Stock
"), of MetaStat, Inc., a Nevada corporation (the
"
Corporation
"),
according to the conditions hereof, as of the date written below.
If shares are to be issued in the name of a person other than
undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates
and opinions as reasonably requested by the Corporation in
accordance therewith. No fee will be charged to the Holder for any
conversion, except for such transfer taxes, if any.
Conversion
calculations:
Date to
Effect Conversion: ___________________
Number
of shares of Preferred Stock owned prior to Conversion:
___________________
Number
of shares of Preferred Stock to be Converted:
____________________
Number
of shares of Common Stock to be Issued:
____________________
[HOLDER]
By:
____________________
Name:
Title:
Exhibit
10.1
SUBSCRIPTION
AGREEMENT
This
SUBSCRIPTION AGREEMENT (this “
Agreement
”) is made and entered
into as of __________, 2016, by and among MetaStat, Inc., a Nevada
corporation (the “
Company
”), and each of the
eligible investors who executes this Agreement and whose names are
set forth on the signature pages hereto (individually, a
“
Subscriber
” and
collectively, the “
Subscribers
”).
RECITALS
WHEREAS, the
Company is conducting a private placement (the “
Offering
”) of units (each a
“
Unit
” and
collectively the “
Units
”) to Subscribers who qualify
as “accredited investors”, as such term is defined in
Rule 501(a) of Regulation D of the Securities Act of 1933, as
amended (the “
Securities
Act
”);
WHEREAS, the
Company is offering up to a maximum of (the “
Maximum Offering
”) 2,000 Units or
$20,000,000, using certain non-exclusive registered agents (each an
“
Agent
” and
collectively the “
Agents
”);
WHEREAS, each Unit
consists of (i) 5,000 shares (the “
Shares
”) of the Company’s
common stock, par value $0.0001 per share (the “
Common Stock
”) at an effective
price of $2.00 per share (the “
Effective Price
”), and (ii) a
warrant to purchase 2,500 shares of Common Stock at a purchase
price of $3.00 per share and a term of 5 years (the
“
Warrants
”);
WHEREAS, In the
event that a Subscriber would own in excess of 4.99% or 9.99% of
the number of shares of the Common Stock outstanding on a Closing
Date (as defined herein) after giving effect to the issuance of
securities pursuant to this Agreement on such Closing Date, then,
in lieu of purchasing Shares of Common Stock as part of each Unit,
such Subscriber may purchase the number of shares of the
Company’s Series A-2 Convertible Preferred Stock (the
“
Series A-2
Preferred
”) set forth on the signature page hereof
(the “
Preferred
Shares
”). The shares of Series A-2 Preferred shall
have the rights, privileges, preferences and conversion provisions
as set forth in the form of Certificate of Designation of the
Series A-2 Preferred Stock attached hereto as
Exhibit A
(the “
Certificate of
Designation
”), which has been filed with the Nevada
Secretary of State. The shares of Common Stock issuable upon
conversion of the Preferred Shares shall be referred to herein as
the “
Conversion
Shares
.” In the event a Subscriber acquires Preferred
Shares pursuant hereto, then this Agreement, including without
limitation, the representations and warranties contained herein,
shall apply to the purchase of the Preferred Shares and,
accordingly, any reference to “Units,”
“Shares,” or “securities” shall also be
deemed to include the Preferred Shares listed on such
Subscriber’s signature page hereto and all Conversion
Shares.
WHEREAS, the
Shares, the Preferred Shares, the Conversion Shares, the Warrants
and the Warrant Shares (as defined below) shall be referred to
herein as the "
Securities
".
WHEREAS, the
offering price is $10,000 per Unit (the “
Purchase Price
”);
WHEREAS, the Units
are being offered pursuant to the Company’s Confidential
Private Placement Memorandum (together with all exhibits,
appendices, schedules, supplements and amendments thereto,
collectively the “
Memorandum
”), to which this
Agreement is attached as
Exhibit A
;
WHEREAS,
the
Units will be offered through September 30, 2016, subject to an
extension for up to an additional 30-day period as the Company and
the Agents may mutually agree (the “
Termination Date
”),
WHEREAS, the
Company may conduct an initial closing on an amount mutually agreed
by the Company and the Agents (the “
Initial Closing
”) or one or more
subsequent closings at any time following the Initial Closing on or
before the Termination Date. The Company may accept or reject
subscriptions in whole or in part in its discretion for any
reason;
WHEREAS,
following
one or more closings in which 1 Unit or $10,000 has been subscribed
for in cash, certain Subscribers may surrender outstanding
indebtedness in the aggregate amount of up to $825,000 owed by the
Company as evidenced by promissory notes held by such Subscribers
for Units in lieu of paying the Purchase Price in cash (the
“
Non-Convertible OID Note
Exchange
”), and following one or more closings in
which an aggregate of 150.5 Units or $1,505,000 has been subscribed
for in cash, certain Subscribers may surrender outstanding
indebtedness in the aggregate amount of up to $1,326,000 owed by
the Company as evidenced by promissory notes held by such
Subscribers for Units in lieu of paying the Purchase Price in cash
(the “
Promissory Note
Exchange
” and together with the Non-Convertible OID
Note Exchange, the “
Note
Exchange
”), as more fully described in the
Memorandum;
WHEREAS, the
Company and the Subscribers are executing and delivering this
Agreement in accordance with and in reliance upon the exemption
from securities registration afforded by Section 4(a)(2) of the
Securities Act and Rule 506(b) of Regulation D (“
Regulation D
”) as promulgated by
the United States Securities and Exchange Commission (the
“
Commission
”)
under the Securities Act; and
WHEREAS, the
Subscriber desires to purchase and the Company desires to sell that
amount of Units set forth on the signature page hereof on the terms
and conditions hereinafter set forth;
AGREEMENT
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company
and the Subscribers hereby agree as follows:
ARTICLE
I
Subscription for
Units
Section
1.1
Subscription
. The Company is
offering to each Subscriber and each Subscriber hereby irrevocably
subscribes for and agrees to purchase from the Company the number
of Units as set forth on such Subscriber’s signature page
hereto at a Purchase Price of $10,000 per Unit for aggregate
consideration as set forth on the Subscriber’s signature page
hereto (the “
Subscription
Proceeds
”), subject to a minimum subscription of one
(1) Unit ($10,000), unless the Company in its sole discretion
agrees to accept a subscription for a lesser number of Units. All
subscriptions are irrevocable by the Subscriber. The subscription
is not transferable or assignable by the Subscriber.
Section
1.2
Payment
.
(a) The
Subscription Proceeds shall be paid to Signature Bank, as escrow
agent for the Company (the “
Escrow Agent
”), by wire transfer
of immediately available funds in U.S. dollars (or in the form of a
personal or cashier’s check) in accordance with the wire and
delivery instructions attached hereto as
Exhibit B
.
The Subscription Proceeds must accompany the documents indicated in
Section 1.3 below.
(b) If
the Subscription Proceeds are paid to the Escrow Agent, the
Subscriber acknowledges and agrees that this Agreement and any
other documents delivered in connection herewith will be held by
certain Agents on behalf of the Company, and any Subscription
Proceeds will be deposited in an escrow account (the
“
Escrow
Account
”), held by the Escrow Agent. In the event that
this Agreement is not accepted in whole or in part by the Company
for whatever reason, this Agreement and any other documents
delivered in connection herewith will be returned to the Subscriber
by the Agents at the address of the Subscriber as set forth on the
Subscriber’s signature page hereto, and any Subscription
Proceeds deposited in the Escrow Account shall be returned to the
Subscriber by the Escrow Agent in accordance with the payment
information provided by the Agent to the Escrow Agent.
(c) In
connection with the Note Exchange, certain Subscribers who are
holders of the Company’s indebtedness in an amount of up to
$2,151,000 may tender their indebtedness in the form of promissory
notes to the Company in lieu of payment of the Subscription
Proceeds as described in Section 1.2(a) above.
Section
1.3
Documents Required from
Subscriber
. In order to subscribe for the Units, each
Subscriber will be required to complete, execute and deliver to the
Company the following:
(i) this
Agreement;
(ii)
the Confidential Private Subscriber Questionnaire, which is
attached as
Exhibit
B
to the Memorandum; and
(iii)
the Registration Rights Agreement, which is attached as
Exhibit C
to the
Memorandum.
Section
1.4
Obligations of the Escrow
Agent
. The Subscription Proceeds may be deposited by the
Subscriber on behalf of certain Agents in the Escrow Account
pursuant to the instructions in
Exhibit A
attached hereto. The Subscriber agrees that the Escrow Agent shall
have no accountability or obligations to the Subscriber whatsoever,
and acknowledges that the Escrow Agent is accountable only to the
Company and certain Agents. The Subscriber agrees that when the
Subscription Proceeds are deposited in the Escrow Account, the
Escrow Agent’s only duty shall be to deliver the Subscription
Proceeds to the Company or its designees, all solely according to
payment instructions submitted jointly by the Company and certain
Agents (the “
Payment
Instructions
”), and the Escrow Agent shall require no
further instructions from the Subscriber in delivering the same to
the Company or its designees. In the event the Company rejects this
subscription in whole or in part, the Escrow Agent shall return the
Subscription Proceeds directly to the investor without interest or
deduction there from. The proceeds of the Escrow Account shall be
distributed in accordance with Section 1.5.
Section
1.5
Closings
. The Initial Closing
of the purchase and sale of the Units to be acquired by the
Subscribers from the Company under this Agreement shall take place
at such time as Subscribers have executed this Agreement to
purchase an amount as mutually agreed by the Company and the Agents
(which amount shall not include the Note Exchange pursuant to the
terms of Section 1.2(c) hereof), and all of the conditions
applicable to the Initial Closing shall have been fulfilled or
waived in accordance herewith (the “
Initial Closing Date
”). After the
Initial Closing, the Company may conduct any number of additional
closings at any time (each, an “
Additional Closing
” and, together
with the Initial Closing, a “
Closing
”) so long as the final
Additional Closing occurs on or before the Termination Date.
Subject to all conditions to Closing having been satisfied or
waived, each Closing shall take place at such time and place as the
parties shall agree (a “
Closing Date
”). For purposes of
this Agreement, a “business day” means a day (A) other
than Saturday or Sunday and (B) on which commercial banks are open
for business in New York City, New York. Closing of the Offering of
the Units shall occur in the following manner:
(a) The
Escrow Agent shall upon notice of a Closing Date jointly from the
Company and certain Agents, release to the Company or its designees
the proceeds of the Offering in accordance with the Payment
Instructions.
(b) Within
five (5) business days after each Closing Date, the Company shall
irrevocably instruct its transfer agent to deliver to the
Subscriber one or more stock certificates bearing the restrictive
legends described herein, evidencing (a) such number of Shares
equal to 5,000 multiplied by the number of Units the Subscriber is
purchasing as is set forth on Subscriber’s signature page
hereto, (b) such number of Preferred Shares equal to 500 multiplied
by the number of Units the Subscriber is purchasing as is set forth
on Subscriber’s signature page hereto, or (c) a combination
thereof as is set forth on Subscriber’s signature page
hereto.
Section
1.6
Price Protection
. For a period
of one hundred eighty (180) days following the final Closing Date,
so long as any Subscriber holds any Shares or Preferred Shares, if
the Company, at any time following the date hereof, issues any
Additional Securities (as defined below) at a price per such
Additional Security lower than the Effective Price (i.e., $2.00 per
share, subject to adjustment for any stock dividends, combinations,
splits, recapitalizations and the like with respect to the
Company’s Common Stock following the date hereof) (such lower
price, the “
Subsequent
Offering Price
”), upon each such issuance the Company
shall promptly cause to be issued and delivered to each Subscriber
such additional shares of Common Stock or Preferred Shares
(“
Ratchet
Shares
”) equal to the excess of (A) the quotient of
such Subscriber’s aggregate Purchase Price hereunder divided
by the Subsequent Offering Price (calculated, in the event of any
security convertible into or exercisable for shares of Common
Stock, based on the conversion or exercise price per share) minus
(B) the sum of the number of Shares originally issued hereunder and
the number of Ratchet Shares, if any, issued pursuant to this
Agreement prior to issuance of such additional Ratchet Shares.
Additionally, in connection with any such issuance of Ratchet
Shares, the Company shall promptly cause to be issued and delivered
to each Subscriber, Warrants to purchase such number of shares of
Common Stock equal to 50% of the number of any Ratchet Shares
issued to such Subscriber. As used herein (and except as provided
in the next succeeding sentence), “
Additional Securities
” means
shares of Common Stock, any other capital stock of the Company, or
any evidences of indebtedness or other securities representing or
directly or indirectly convertible into or exchangeable for capital
stock of the Company;
provided,
however
, that if shares of Common Stock
are offered as units together with any other rights (whether
warrants, other securities representing or directly or indirectly
convertible into or exchangeable for share capital of the Company,
or other rights), the “Subsequent Offering Price” shall
be the price paid for each “unit” in such offering,
which unit shall be comprised of (i) one share of Common Stock plus
(ii) a number of such other rights as is equal to (x) the aggregate
number of such other rights offered in such transaction divided by
(y) the aggregate number of shares of Common Stock offered in such
transaction. “Additional Securities” shall exclude: (i)
stock options, shares of Common Stock and other stock awards issued
to employees or directors of, or consultants or advisors to, the
Company pursuant to its 2012 Incentive Plan, as in effect on the
date hereof and described in the Commission Documents or pursuant
to any other stock option plan, agreement or arrangement approved
by the Company’s board of directors and/or governed by the
2012 Incentive Plan; (ii) shares of Common Stock actually issued
upon the exercise of options, warrants or other convertible
securities outstanding on the date hereof, in each case provided
such issuance is pursuant to the terms of such option, warrant or
convertible security; (iii) shares of Common Stock issued by the
Company as consideration for the acquisition of all of the equity
securities and voting rights, or all or substantially all of the
assets, of any person or other reorganization or joint venture, in
each case in a transaction approved by the board of directors of
the Company and, if required under applicable law or stock exchange
regulations, the Company’s stockholders; (iv) shares of
Common Stock issued by reason of a dividend, stock split, split-up
or other distribution on ordinary shares; (v) shares of Common
Stock, options or other securities convertible into, or exercisable
for, shares of Common Stock issued (a) in connection with the
acquisition of, or licensing arrangements for, pharmaceutical
products, (b) to suppliers or third party service providers in
connection with the provision of goods or services or (c) in
connection with sponsored research, collaboration, technology
license, development, OEM, marketing or other similar agreements or
strategic partnerships, in each case pursuant to transactions
approved by the Board of Directors of the Company and not in
connection with a capital raising transaction; or (vi) any shares
of Series B Preferred Stock or dividends thereon issued on or after
the date hereof (any securities issued as described in clauses (i)
through (vi), collectively, “
Excluded Securities
”). For the
avoidance of doubt, Excluded Securities (and the proceeds from the
issuance thereof) shall not be included in the calculation of the
aggregate gross proceeds to the Company from sales of Additional
Securities for purposes of this Section 1.6.
ARTICLE
II
Representations and
Warranties of the Company
Section
2.1
Representations and Warranties of the
Company
. Except as set forth on the Company Disclosure
Schedule attached hereto, and made a part hereof, the Company
hereby represents and warrants to the Subscribers, as of the date
of each Closing Date (except for the representations and warranties
that speak as of a specific date, which shall be made as of such
date), as follows:
(a)
Organization,
Good Standing and Power
. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws
of the State of Nevada and has the requisite corporate power to
own, lease and operate its properties and assets and to conduct its
business as it is now being conducted. The Company is duly
qualified to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary except for
any jurisdiction(s) (alone or in the aggregate) in which the
failure to be so qualified will not have a Material Adverse Effect
on the Company’s consolidated financial condition.
“
Material Adverse
Effect
” means any material adverse effect on the
business, operations, properties, or financial condition of the
Company and its Subsidiaries, taken as a whole, and/or any
condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company to
perform any of its obligations under this Agreement or the
Transaction Documents (as defined below) in any material
respect.
(b)
Corporate
Power; Authority and Enforcement
. The Company has the
requisite corporate power and authority to enter into and perform
this Agreement, the Registration Rights Agreement, the Warrants and
any other document in connection with the Memorandum (collectively,
the “
Transaction
Documents
”), to carry out the provisions of
Transaction Documents and to issue and sell the Units in accordance
with the terms hereof. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action, and no
further consent or authorization of the Company or its board of
directors or stockholders is required. Each of the Transaction
Documents constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and
remedies or by other equitable principles of general
application.
(c)
Internal
Documents
. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated herein and therein do not
and will not (i) violate any provision of its articles of
incorporation, by-laws or other organizational or charter documents
including, but not limited to, all documents setting forth and/or
establishing the terms, rights, conditions and/or limitations of
any of the Company’s stock (the “
Internal Documents
”), (ii)
conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, mortgage, deed of trust,
indenture, note, bond, license, lease agreement, instrument or
obligation to which the Company is a party or by which it or its
properties or assets are bound, (iii) create or impose a lien,
mortgage, security interest, pledge, charge or encumbrance
(collectively, “
Lien
”) of any nature on any
property of the Company under any agreement or any commitment to
which the Company is a party or by which the Company is bound or by
which any of its respective properties or assets are bound, or (iv)
result in a violation of any federal, state, local or foreign
statute, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations) applicable to
the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries are bound or
affected,
provided
,
however
, that,
excluded from the foregoing in all cases (other than clause (i)
above) are such conflicts, defaults, terminations,
amendments,
accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect.
(d)
Issuance
of Units, Etc
. The Units, the Shares the Preferred Shares,
the Conversion Shares and the Warrants comprising the Units, to be
issued at each Closing have been duly authorized by all necessary
corporate action and the Shares, when paid for or issued in
accordance with the terms hereof, will be validly issued and
outstanding, fully paid and nonassessable and, immediately after
each Closing, the Subscribers will be the owners of all of such
securities and have good and valid title to all of such securities,
free and clear of all encumbrances, except as may be imposed under
federal and state securities laws. When the shares of Common Stock
underlying the Warrants (the “
Warrant Shares
”) are issued in
accordance with the terms of the Warrants, such Warrant Shares will
be duly authorized by all necessary corporate action and validly
issued and outstanding, fully paid and nonassessable, and the
holders will be entitled to all rights accorded to a holder of
Common Stock and will be the record and beneficial owners of all of
such securities and have good and valid title to all of such
securities, free and clear of all encumbrances.
(e)
Subsidiaries
.
Each Subsidiary has been duly incorporated or otherwise organized
and is validly existing and in good standing in each of their
respective jurisdictions of incorporation or organization. Each
Subsidiary is duly qualified to do business and is in good standing
in every jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary except
for any jurisdiction(s) (alone or in the aggregate) in which the
failure to be so qualified will not have a Material Adverse Effect.
There are no outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or binding
upon any Subsidiary for the purchase or acquisition of any shares
of capital stock of any Subsidiary or any other securities
convertible into, exchangeable for or evidencing the rights to
subscribe for any shares of such capital stock. Neither the Company
nor any Subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares
of the capital stock of any Subsidiary or any convertible
securities, rights, warrants or options of the type described in
the preceding sentence. Neither the Company nor any Subsidiary is
party to, nor has any knowledge of, any agreement restricting the
voting or transfer of any shares of the capital stock of any
Subsidiary. For the purposes of this Agreement, “
Subsidiary
” shall mean any
corporation or other entity of which at least a majority of the
securities or other ownership interests having ordinary voting
power (absolutely or contingently) for the election of directors or
other persons performing similar functions are at the time owned
directly or indirectly by the Company and/or any of its other
Subsidiaries. MetaStat Biomedical Corporation, a Delaware
corporation, is wholly owned by the Company and is the
Company’s only Subsidiary.
(f)
Commission
Documents, Financial Statements
. For the two year period
preceding the date hereof, the Company has filed all reports,
schedules, forms, statements and other documents required to be
filed by it with the Commission pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended
(the “
Exchange
Act
”), including material filed pursuant to Section
13(a) or 15(d) of the Exchange Act (all of the foregoing including
filings incorporated by reference therein being referred to herein
as the “
Commission
Documents
”). The Company has not provided to the
Subscribers any material non-public information or other
information which, according to applicable law, rule or regulation,
was required to have been disclosed publicly by the Company but
which has not been so disclosed, other than (i) with respect to the
transactions contemplated by this Agreement, or (ii) pursuant to a
non-disclosure or confidentiality agreement signed by the
Subscribers, if any. At the time of the respective filings, the
Form 10-K’s and the Form 10-Q’s filed during the
two-year period preceding the date hereof complied in all material
respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to
such documents. The financial statements of the Company included in
the Commission Documents (the “
Financial Statements
”) complied as
of their respective filing dates as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the Commission or other applicable rules
and regulations with respect thereto. The Financial Statements have
been prepared in accordance with United States generally accepted
accounting principles (“
GAAP
”) applied on a consistent
basis during the periods involved (except (i) as may be otherwise
indicated in the Financial Statements or the notes thereto or (ii)
in the case of unaudited interim statements, to the extent they may
not include footnotes or may be condensed or summary statements),
and fairly present in all material respects the consolidated
financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then
ended
(subject, in the case of unaudited statements, to normal year-end
audit adjustments). The Company is an issuer that is subject to
Rule 144(i) under the Securities Act.
(g)
No
Material Adverse Effect
. Since February 28, 2015, neither
the Company, nor any Subsidiary has experienced or suffered any
Material Adverse Effect.
(h)
No
Undisclosed Events or Circumstances
. No event or
circumstance has occurred or exists with respect to the Company or
any Subsidiary or their respective businesses, properties,
operations or financial condition, which, under applicable law,
rule or regulation, requires public disclosure or announcement by
the Company but which has not been so publicly announced or
disclosed.
(i)
Memorandum,
Use of Proceeds
. The Memorandum, as of its date or such
later date on which the Memorandum is amended or supplemented, did
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances
under which they were made, not misleading. The Company hereby
covenants to use the monies raised from the Offering as described
in the “Use of Proceeds” section of the
Memorandum.
(j)
Title to Assets
.
Each of the Company and its Subsidiaries has good and marketable
title to (i) all properties and assets purportedly owned or used by
them as reflected in the Financial Statements, (ii) all properties
and assets necessary for the conduct of their business as currently
conducted, and (iii) all of the real and personal property
reflected in the Financial Statements free and clear of any Lien.
All leases are valid and subsisting and in full force and
effect.
(k)
Actions
Pending
. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or any other
proceeding pending or, to the knowledge of the Company, threatened
against or involving the Company or any Subsidiary (i) which
questions the validity of this Agreement or any of the other
Transaction Documents or the transactions contemplated hereby or
thereby or any action taken or to be taken pursuant hereto or
thereto or (ii) involving any of their respective properties or
assets. To the knowledge of the Company, there are no outstanding
orders, judgments, injunctions, awards or decrees of any court,
arbitrator or governmental or regulatory body against the Company
or any Subsidiary or any of their respective executive officers or
directors in their capacities as such.
(l)
Compliance
with Law
. The Company and each Subsidiary have all
franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals necessary for the conduct
of their respective business as now being conducted by it unless
the failure to possess such franchises, permits, licenses, consents
and other governmental or regulatory authorizations and approvals,
individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
(m)
No
Violation of Law.
The business of the Company and each
Subsidiary is not being conducted in violation of any federal,
state, local or foreign governmental laws, or rules, regulations
and ordinances of any of any governmental entity, except for
possible violations which singularly or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. The
Company is not required under federal, state, local or foreign law,
rule or regulation to obtain any consent, authorization or order
of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform
any of its obligations under the Transaction Documents, or issue
and sell the Units in accordance with the terms hereof or thereof
(other than (x) any consent, authorization or order that has been
obtained as of the date hereof, (y) any filing or registration that
has been made as of the date hereof or (z) any filings which may be
required to be made by the Company with the Commission or state
securities administrators subsequent to the Closing).
(n)
Taxes
.
The Company and each Subsidiary, to the extent its applicable, has
accurately prepared and filed all federal, state and other tax
returns required by law to be filed by it, has paid or made
provisions for the payment of all taxes shown to be due and all
additional assessments, and adequate provisions have been and are
reflected in the consolidated financial statements of the Company
for all current taxes and other charges to which the Company or any
Subsidiary, if any, is subject and which are not currently due and
payable. None of the federal income tax returns of the Company have
been audited by the Internal Revenue Service. The
Company
has no knowledge of any additional assessments, adjustments or
contingent tax liability (whether federal, state or foreign) of any
nature whatsoever, whether pending or threatened against the
Company or any Subsidiary for any period, nor of any basis for any
such assessment, adjustment or contingency.
(o)
Intellectual
Property
. Each of the Company and its Subsidiaries owns or
has the lawful right to use all patents, trademarks, domain names
(whether or not registered) and any patentable improvements or
copyrightable derivative works thereof, websites and intellectual
property rights relating thereto, service marks, trade names,
copyrights, licenses and authorizations, if any, and all rights
with respect to the foregoing, if any, which are necessary for the
conduct of their respective business as now conducted without any
conflict with the rights of others, except where the failure to so
own or possess would not have a Material Adverse Effect
(collectively, the “
Intellectual Property Rights
”).
The Company has not received a written notice that any of the
Intellectual Property Rights used by the Company violates or
infringes upon the rights of any person. There is no pending or, to
the Company’s knowledge, threatened action, suit, proceeding
or claim by any person that the Company’s business as now
conducted infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of another. To
the Company’s knowledge, there is no existing infringement by
another person of any of the Intellectual Property Rights that
would have or would reasonably be expected to have a Material
Adverse Effect. The Company has taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their
Intellectual Property Rights, except where failure to do so could
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(p)
Securities Act of
1933
. Assuming the accuracy of the representations and
warranties of the Subscribers set forth in Section 3.1 hereof, the
Company has complied with all applicable federal and state
securities laws in connection with the offer, issuance and sale of
the Shares, Preferred Shares and Warrants hereunder. Neither the
Company nor anyone acting on its behalf, directly or indirectly,
has or will sell, offer to sell or solicit offers to buy any of the
Shares, the Preferred Shares, the Warrants or similar securities
to, or solicit offers with respect thereto from, or enter into any
preliminary conversations or negotiations relating thereto with,
any person, or has taken or will take any action so as to bring the
issuance and sale of any of the shares of Common Stock and the
Warrants in violation of the registration provisions of the
Securities Act and applicable state securities laws, and neither
the Company nor any of its affiliates, nor any person acting on its
or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the
Securities Act) in connection with the offer or sale of any of the
shares of Common Stock and the Warrants.
(q)
Governmental
Approvals
. Except for the filing of any notice prior or
subsequent to the Closing Date that may be required under
applicable state and/or federal securities laws (which if required,
shall be filed on a timely basis), including the filing of a Form
D, Current Report on Form 8-K and a registration statement or
statements pursuant to the Registration Rights Agreement, no
authorization, consent, approval, license, exemption of, filing or
registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is
or will be necessary for, or in connection with, the execution or
delivery of the Shares, the Preferred Shares or for the performance
by the Company of its obligations under the Transaction
Documents.
(r)
Investment Company
Act
. The Company is not, and is not an affiliate of, and
immediately after receipt of payment for the Securities, will not
be or be an affiliate of, an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that
it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as
amended.
(s)
No Integrated
Offering
. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would cause
the Offering and/or sale of the Units pursuant to this Agreement to
be integrated with prior offerings by the Company for purposes of
the Securities Act which would prevent the Company from selling the
Units pursuant to Rule 506 under the Securities Act, nor will the
Company or any of its affiliates take any action or steps that
would cause the offering and/or sale of the Units to be integrated
with other offerings.
(t)
Sarbanes-Oxley
Act.
The Company is in compliance in all material respects
with the applicable provisions of the Sarbanes-Oxley Act of 2002
(the “
Sarbanes-Oxley
Act
”), and the rules and regulations promulgated
thereunder, that are effective and for which compliance by the
Company is required as of the date hereof. The Company has
established disclosure controls and procedures (as such term is
defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) for
the Company and designed such disclosure controls and procedures to
ensure that information required to be disclosed by the Company in
the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms. The
Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by the
Company’s most recently filed periodic report under the
Exchange Act (such date, the “
Evaluation Date
”). The Company
presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no changes in the Company’s internal
control over financial reporting (as such term is defined in the
Exchange Act) that has materially affected, or is reasonably likely
to materially affect, the Company’s internal control over
financial reporting.
(u)
Certain Fees
.
Except as disclosed in the Memorandum, no brokers fees,
finders’ fees or financial advisory fees or commissions will
be payable by the Company with respect to the transactions
contemplated by this Agreement and the other Transaction
Documents.
(v)
Listing and Maintenance
Requirements
. The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act, and the Company has taken no
action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under
the Exchange Act nor has the Company received any notification that
the Commission is contemplating terminating such registration. The
Company has not, in the 12 months preceding the date hereof,
received notice from the OTCQB to the effect that the Company is
not in compliance with the listing or maintenance requirements of
the OTCQB. The Company is, and has no reason to believe that it
will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.
ARTICLE
III
Representations
and Warranties of the Subscribers
Section
3.1
Representations and Warranties of Each
of the Subscribers
. Each Subscriber, severally and not
jointly with the other Subscribers, hereby makes the following
representations and warranties to the Company as of the date
hereof, with respect solely to itself and not with respect to any
other Subscriber:
(a)
Authorization and
Power
. Each Subscriber has the requisite power and authority
to enter into and perform this Agreement and each of the other
Transaction Documents to which such Subscriber is a party and to
purchase the Units being sold to it hereunder. The execution,
delivery and performance of this Agreement and each of the other
Transaction Documents to which such Subscriber is a party by such
Subscriber and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate, partnership or limited liability company
action, and no further consent or authorization of such Subscriber
or its board of directors, stockholders, partners, members, or
managers, as the case may be, is required. This Agreement and each
of the other Transaction Documents to which such Subscriber is a
party has been duly authorized, executed and delivered by such
Subscriber and constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of such Subscriber
enforceable against such Subscriber in accordance with the terms
hereof.
(b)
No Conflicts
. The
execution, delivery and performance of this Agreement and each of
the other Transaction Documents to which such Subscriber is a party
and the consummation by such Subscriber of the transactions
contemplated hereby and thereby or relating hereto do not and will
not (i) result in a violation of such Subscriber’s charter
documents, bylaws, operating agreement, partnership agreement or
other organizational documents or (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of any
agreement, indenture or instrument or obligation to which such
Subscriber is a party or by which its properties or assets are
bound, or result in a violation of any law, rule, or regulation, or
any order, judgment or decree of any court or governmental agency
applicable to such Subscriber or its properties (except for such
conflicts, defaults and violations as would not, individually or in
the aggregate, have a material adverse effect on such Subscriber).
Such Subscriber is not required to obtain any consent,
authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or
any other Transaction Document to which such Subscriber is a party
or to purchase the Units in accordance with the terms hereof,
provided, that for purposes of the representation made in this
sentence, such Subscriber is assuming and relying upon the accuracy
of the relevant representations and agreements of the Company
herein.
(c)
Status
of Subscribers
. Such Subscriber is an “accredited
investor” as defined in Regulation D under the Securities Act
and as set forth on such Confidential Private Subscriber
Questionnaire attached as
Exhibit B
to the Memorandum.
Such Subscriber is not required to be registered as a broker-dealer
under Section 15 of the Exchange Act and such Subscriber is not a
broker-dealer, nor an affiliate of a broker-dealer, unless
indicated on such Confidential Private Subscriber
Questionnaire.
(d)
Acquisition
for Investment
. Such Subscriber is acquiring the Units and
underlying securities solely for its own account for the purpose of
investment and not with a view to or for sale in connection with a
distribution. Such Subscriber does not have a present intention to
sell Units or underlying securities, nor a present arrangement
(whether or not legally binding) or intention to effect any
distribution of the Units or underlying securities to or through
any person or entity;
provided
,
however
, that by making the
representations herein, such Subscriber does not agree to hold the
Units or underlying securities for any minimum or other specific
term and reserves the right to dispose of the Units or underlying
securities at any time in accordance with federal and state
securities laws applicable to such disposition. Each Subscriber
acknowledges that it is able to bear the financial risks associated
with an investment in the Units and that it has been given full
access to such records of the Company and to the officers of the
Company and received such information as it has deemed necessary or
appropriate to conduct its due diligence investigation and has
sufficient knowledge and experience in investing in companies
similar to the Company in terms of the Company’s stage of
development so as to be able to evaluate the risks and merits of
its investment in the Company.
(e)
Opportunities for
Additional Information
. Such Subscriber acknowledges that
such Subscriber has had the opportunity to ask questions of and
receive answers from, or obtain additional information from, the
executive officers of the Company concerning the financial and
other affairs of the Company.
(f)
No
General Solicitation
. Such Subscriber acknowledges that the
Units and the underlying securities were not offered to such
Subscriber by means of (i) to such Subscriber's knowledge, any form
of general or public solicitation, (ii) general advertising, or
(iii) publicly disseminated advertisements or sales literature,
including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar
media, or broadcast over television or radio, or (ii) any seminar
or meeting to which such Subscriber was invited by any of the
foregoing means of communications.
(g)
Rule
144
. Such Subscriber understands that the Units and the
Securities comprising the Units must be held indefinitely unless
such Shares, Conversion Shares and Warrant Shares are registered
under the Securities Act or an exemption from registration is
available. Such Subscriber acknowledges that such Subscriber is
familiar with Rule 144, of the rules and regulations of the
Commission, as amended, promulgated pursuant to the Securities Act
(“
Rule 144
”),
and that such person has been advised that Rule 144 permits resales
only under certain circumstances. Such Subscriber understands that
to the extent that Rule 144 is not available, such Subscriber will
be unable to sell any Shares, Preferred Shares, Conversion Shares,
Warrants or Warrant Shares without either registration under the
Securities Act or the existence of another exemption from such
registration requirement.
(h)
General
.
Such Subscriber understands that the Units and underlying
securities are being offered and sold in reliance on a
transactional exemption from the registration requirements of
federal and state securities laws and the Company is relying upon
the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of such Subscriber
set forth herein in order to determine the applicability of such
exemptions and the suitability of such Subscriber to acquire the
Units and underlying securities.
(i)
Independent
Investment
. Except as may be disclosed in any filings with
the Commission by the Subscribers under Section 13 and/or Section
16 of the Exchange Act, no Subscriber has agreed to act with any
other Subscriber for the purpose of acquiring, holding, voting or
disposing of the Units or underlying securities purchased hereunder
for purposes of Section 13(d) under the Exchange Act, and each
Subscriber is acting independently with respect to its investment
in the Units and underlying securities.
(j)
Company’s
Business
. The Memorandum reflects the Company’s
current intentions and business, financial and other information
currently available to the Company and, as such, the Subscriber
understands and acknowledges that the precise nature of the
Company’s operations, use of proceeds, capital needs, and
other factors inherent in the Company’s business can be
expected to change from time to time.
(k)
Legend
.
(i) The Securities may only be disposed of in compliance with state
and federal securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration
statement or Rule 144, to the Company or to an Affiliate of a
Subscriber or in connection with a pledge as contemplated in
Section 3.1(k)(ii), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the
transferor and reasonably acceptable to the Company, the form and
substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and the
Registration Rights Agreement and shall have the rights and
obligations of a Subscriber under this Agreement and the
Registration Rights Agreement.
(ii) The
Subscribers agree to the imprinting, so long as is required by this
Section 3.1(k), of a legend on any of the Securities in the
following form:
THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION
THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
(iii) The
Company acknowledges and agrees that a Subscriber may from time to
time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or
all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act and who agrees to be bound by the provisions of
this Agreement and the Registration Rights Agreement and, if
required under the terms of such arrangement, such Subscriber may
transfer pledged or secured Securities to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval
of the Company and no legal opinion of legal counsel of the
pledgee, secured party or pledgor shall be required in connection
therewith. Further, no notice shall be required of such pledge. At
the appropriate Subscriber’s expense, the Company will
execute and deliver such reasonable documentation as a pledgee or
secured party of Securities may reasonably request in connection
with a pledge or transfer of the Securities, including, if the
Securities are subject to registration pursuant to the Registration
Rights Agreement, the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act
or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders (as defined in
the Registration Rights Agreement) thereunder.
(iv) So
long as the Company has received written representations from such
Subscriber as reasonably requested by the Company in connection
with such legend removal (which shall not include representations
with respect to the sale of any securities), certificates
evidencing the Shares, the Conversion Shares, and Warrant Shares
shall not contain any legend (including the legend set forth in
Section 3.1(k)(ii) hereof), (i) while a registration statement
(including the Registration Statement) covering the resale of such
security is effective under the Securities Act, (ii) following any
sale of such Shares, Conversion Shares or Warrant Shares pursuant
to Rule 144, (iii) if such Shares, Conversion Shares or Warrant
Shares are eligible for sale under Rule 144, or (iv) if such legend
is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by
the staff of the Commission). The Company shall cause its counsel
to issue a legal opinion to its transfer agent promptly after the
Effective Date if required by its transfer agent to effect the
removal of the legend hereunder, subject to the Company receiving
written representations from such Subscriber as reasonably
requested by the Company in connection with such legend removal
(which shall not include representations with respect to the sale
of any securities). If all or any portion of a Warrant is exercised
at a time when there is an effective registration statement to
cover the resale of the Warrant Shares, or if such Shares,
Conversion Shares or Warrant Shares may be sold under Rule 144 and
the Company is then in compliance with the current public
information required under Rule 144, or if the Shares, Conversion
Shares or Warrant Shares may be sold under Rule 144 without the
requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such Shares,
Conversion Shares or Warrant Shares or if such legend is not
otherwise required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued
by the staff of the Commission) then such Warrant Shares shall be
issued free of all legends, subject to the Company receiving
written representations from such Subscriber as reasonably
requested by the Company in connection with such legend removal
(which shall not include representations with respect to the sale
of any securities). The Company agrees that following the Effective
Date or at such time as such legend is no longer required under
this Section 3.1(k)(iv), it will, no later than two Trading Days
following the delivery by a Subscriber to the Company or its
transfer agent of a certificate representing Shares, Conversion
Shares or Warrant Shares, as the case may be, issued with a
restrictive legend (such second Trading Day, the
“
Legend Removal
Date
”), deliver or cause to be delivered to such
Subscriber a certificate representing such shares that is free from
all restrictive and other legends, subject to the Company receiving
written representations from such Subscriber as reasonably
requested by the Company in connection with such legend removal
(which shall not include representations with respect to the sale
of any securities). The Company may not make any notation on its
records or give instructions to the transfer agent that enlarge the
restrictions on transfer set forth in this Section 3.1(k).
Certificates for Securities subject to legend removal hereunder
shall be transmitted by the transfer agent to the Subscriber by
crediting the account of the Subscriber’s prime broker with
the Depository Trust Company System as directed by such
Subscriber.
(v) In
addition to such Subscriber’s other available remedies,
subject to the Company receiving written representations from such
Subscriber as reasonably requested by the Company in connection
with such legend removal (which shall not include representations
with respect to the sale of any securities), the Company shall pay
to a Subscriber, in cash, if the Company fails to (i) issue and
deliver (or cause to be delivered) to a Subscriber by the Legend
Removal Date a certificate representing the Securities so delivered
to the Company by such Subscriber that is free from all restrictive
and other legends or (ii) if after the Legend Removal Date such
Subscriber purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such
Subscriber of all or any portion of the number of shares of Common
Stock, or a sale of a number of shares of Common Stock equal to all
or any portion of the number of shares of Common Stock that such
Subscriber anticipated receiving from the Company without any
restrictive legend, then, an amount equal to the excess of such
Subscriber’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (including brokerage
commissions and other out-of-pocket expenses, if any) (the
“
Buy-In
Price
”) over the product of (A) such number of
Underlying Shares that the Company was required to deliver to such
Subscriber by the Legend Removal Date multiplied by (B) the lowest
closing sale price of the Common Stock on any Trading Day during
the period commencing on the date of the delivery by such
Subscriber to the Company of the applicable Underlying Shares (as
the case may be) and ending on the date of such delivery and
payment under this clause (ii).
(vi) Each
Subscriber, severally and not jointly with the other Subscribers,
agrees with the Company that such Subscriber will sell any
Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are
sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein, and
acknowledges that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section
3.1(k) is predicated upon the Company’s reliance upon this
understanding and is subject to the Company receiving written
representations from such Subscriber as reasonably requested by the
Company in connection with such legend removal (which shall not
include representations with respect to the sale of any
securities).
ARTICLE
IV
Indemnification
Section
4.1
General Indemnity
. The Company
agrees to indemnify and hold harmless the Subscribers (and their
respective directors, officers, managers, partners, members,
shareholders, affiliates, agents, successors and assigns) from and
against any and all losses, liabilities, deficiencies, costs,
damages and expenses (including, without limitation, reasonable
attorneys’ fees, charges and disbursements) incurred by the
Subscribers as a result of any breach of the representations,
warranties or covenants made by the Company herein. Each Subscriber
severally but not jointly agrees to indemnify and hold harmless the
Company and its directors, officers, affiliates, agents, successors
and assigns from and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys’ fees, charges and
disbursements) incurred by the Company as a result of any breach of
the representations, warranties or covenants made by such
Subscriber herein. The maximum aggregate liability of each
Subscriber pursuant to its indemnification obligations under this
Article IV shall not exceed the portion of the Purchase Price paid
by such Subscriber hereunder. In no event shall any
“Indemnified Party” (as defined below) be entitled to
recover consequential or punitive damages resulting from a breach
or violation of this Agreement.
Section
4.2
Indemnification Procedure
. Any
party entitled to indemnification under this Article IV (an
“
Indemnified
Party
”) will give written notice to the indemnifying
party of any matters giving rise to a claim for indemnification;
provided
, that the
failure of any party entitled to indemnification hereunder to give
notice as provided herein shall not relieve the indemnifying party
of its obligations under this Article IV except to the extent that
the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought
against an Indemnified Party in respect of which indemnification is
sought hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of the
Indemnified Party a conflict of interest between it and the
indemnifying party may exist with respect of such action,
proceeding or claim, to assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Party. In the event that
the indemnifying party advises an Indemnified Party that it will
contest such a claim for indemnification hereunder, or fails,
within thirty (30) days of receipt of any indemnification notice to
notify, in writing, such person of its election to defend, settle
or compromise, at its sole cost and expense, any action, proceeding
or claim (or discontinues its defense at any time after it
commences such defense), then the Indemnified Party may, at its
option, defend, settle or otherwise compromise or pay such action
or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any
such claim, proceeding or action, the Indemnified Party’s
costs and expenses arising out of the defense, settlement or
compromise of any such action, claim or proceeding shall be losses
subject to indemnification hereunder. The Indemnified Party shall
cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party, which
relates to such action or claim. The indemnifying party shall keep
the Indemnified Party fully apprised at all times as to the status
of the defense or any settlement negotiations with respect thereto.
If the indemnifying party elects to defend any such action or
claim, then the Indemnified Party shall be entitled to participate
in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any
settlement of any action, claim or proceeding effected without its
prior written consent,
provided
,
however
, that the indemnifying
party shall be liable for any settlement if the indemnifying party
is advised of the settlement but fails to respond to the settlement
within thirty (30) days of receipt of such notification.
Notwithstanding anything in this Article IV to the contrary, the
indemnifying party shall not, without the Indemnified Party’s
prior written consent, settle or compromise any claim or consent to
entry of any judgment in respect thereof which imposes any future
obligation on the Indemnified Party or which does not include, as
an unconditional term thereof, the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all liability
in respect of such claim. The indemnity agreements contained herein
shall be in addition to (a) any cause of action or similar rights
of the Indemnified Party against the indemnifying party or others,
and (b) any liabilities the indemnifying party may be subject to
pursuant to the law.
ARTICLE
V
Miscellaneous
Section
5.1
Fees and Expenses
. Except as
otherwise set forth in this Agreement and the other Transaction
Documents, each party shall pay the fees and expenses of its
advisors, counsel, accountants and other experts, if any, and all
other expenses, incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this
Agreement.
Section
5.2
Consent to Jurisdiction
. Each
of the Company and the Subscribers (i) hereby irrevocably submits
to the exclusive jurisdiction of the United States District Court
sitting in the Southern District of New York and the courts of the
State of New York located in New York county for the purposes of
any suit, action or proceeding arising out of or relating to this
Agreement or any of the other Transaction Documents or the
transactions contemplated hereby or thereby and (ii) hereby waives,
and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of
such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or
proceeding is improper. Each of the Company and the Subscribers
consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such
party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this
Section 5.2 shall affect or limit any right to serve process in any
other manner permitted by law. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
Section
5.3
Entire Agreement; Amendment
.
This Agreement, the Memorandum and the other Transaction Documents
contains the entire understanding and agreement of the parties with
respect to the matters covered hereby and, except as specifically
set forth herein or in the Transaction Documents and the
Memorandum, neither the Company nor any of the Subscribers makes
any representations, warranty, covenant or undertaking with respect
to such matters and they supersede all prior understandings and
agreements with respect to said subject matter, all of which are
merged herein. No provision of this Agreement nor any of the
Transaction Documents may be waived or amended other than by a
written instrument signed by the Company and the holders of over
fifty percent (50%) of the aggregate number of Shares and
Conversion Shares issued or issuable upon conversion of the
Preferred Shares then outstanding (the “
Majority Holders
”). No such
amendment shall be effective to the extent that it applies to less
than all of the holders of the Shares, Preferred Shares and
Conversion Shares then outstanding. No consideration shall be
offered or paid to any person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents
unless the same consideration is also offered to all of the parties
to the Transaction Documents.
Section
5.4
Notices
. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via electronic mail or
“Email” at the Email address set forth on the signature
pages attached hereto at or prior to 5:30 p.m. (New York City time)
on a Trading Day (defined below), (b) the next Trading Day after
the date of transmission, if such notice or communication is
delivered via Email at the Email address set forth on the signature
pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the
second (2
nd
) Trading Day
following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (d) upon actual receipt by
the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth on the
signature pages attached hereto. For purposes hereof,
“
Trading Day
”
means a day on which the OTCQB is open for trading.
Section
5.5
Waivers
. No waiver by any party
of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any other provisions, condition
or requirement hereof, nor shall any delay or omission of any party
to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
Section
5.6
Headings
. The section headings
contained in this Agreement (including, without limitation, section
headings and headings in the exhibits and schedules) are inserted
for reference purposes only and shall not affect in any way the
meaning, construction or interpretation of this Agreement. Any
reference to the masculine, feminine, or neuter gender shall be a
reference to such other gender as is appropriate. References to the
singular shall include the plural and vice versa.
Section
5.7
Successors and Assigns
. This
Agreement may not be assigned by a party hereto without the prior
written consent of the Company or the Subscribers, as applicable,
provided
,
however
, that,
subject to federal and state securities laws and as otherwise
provided in the Transaction Documents, a Subscriber may assign its
rights and delegate its duties hereunder in whole or in part (i) to
a third party acquiring all or substantially all of its shares of
Common Stock or Warrants in a private transaction or (ii) to an
affiliate, in each case, without the prior written consent of the
Company or the other Subscribers, after notice duly given by such
Subscriber to the Company
provided
, that no such
assignment or obligation shall affect the obligations of such
Subscriber hereunder and that such assignee agrees in writing to be
bound, with respect to the transferred securities, by the
provisions hereof that apply to the Subscribers. The provisions of
this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
Section
5.8
No Third Party Beneficiaries
.
This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns and is not
for the benefit of, nor may any provision hereof be enforced by,
any other person.
Section
5.9
Governing Law
. This Agreement
shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the
conflicts of law principles which would result in the application
of the substantive law of another jurisdiction. This Agreement
shall not be interpreted or construed with any presumption against
the party causing this Agreement to be drafted.
Section
5.10
Survival
. The representations
and warranties of the Company and the Subscribers shall survive the
execution and delivery hereof and the Closing hereunder for a
period of one (1) year following the Closing Date.
Section
5.11
Counterparts
. This Agreement
may be executed in any number of counterparts, each of which when
so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement and
shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being
understood that all parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as
if such facsimile signature were the original thereof.
Section
5.12
Publicity
. The Company agrees
that it will not disclose, and will not include in any public
announcement, the name of the Subscribers without the consent of
the Subscribers unless and until such disclosure is required by law
or applicable regulation, and then only to the extent of such
requirement.
Section
5.13
Severability
. The provisions of
this Agreement and the Transaction Documents are severable and, in
the event that any court of competent jurisdiction shall determine
that any one or more of the provisions or part of the provisions
contained in this Agreement or the Transaction Documents shall, for
any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not
affect any other provision or part of a provision of this Agreement
or the Transaction Documents and such provision shall be reformed
and construed as if such invalid or illegal or unenforceable
provision, or part of such provision,
had never been
contained herein, so that such provisions would be valid, legal and
enforceable to the maximum extent possible.
Section
5.14
Further Assurances
. From and
after the date of this Agreement, upon the request of any
Subscriber or the Company, each of the Company and the Subscribers
shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and
carry out and to effectuate fully the intent and purposes of this
Agreement, the Shares, the Preferred Shares, the Conversion Shares,
the Warrants, the Warrant Shares, the Registration Rights Agreement
and the other Transaction Documents.
[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have caused this Subscription
Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
|
METASTAT, INC.
|
|
|
By:__________________________________________
Name:
Title:
Address for Notice
:
MetaStat, Inc.
27 Drydock Ave., 2
nd
Floor
Boston, MA 02210
Attention: Douglas A. Hamilton, CEO; or
Daniel Schneiderman, Vice President, Finance
Telephone No.: (617) 531-6500
Facsimile No. (646) 304-7086
Email:
dhamilton@metastat.com
and
dschneiderman@metastat.com
With a
copy to (which shall not constitute notice):
|
|
|
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
Attention: David J. Levine, Esq.
Telephone No.: 212-407-4923
Facsimile No.: 212-818-1184
Email:
dlevine@loeb.com
|
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR SUBSCRIBERS FOLLOWS]
SUBSCRIBER
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT
IN
WITNESS WHEREOF, the undersigned have caused this Subscription
Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Name of
Subscriber: ________________________
Signature of Authorized Signatory of
Subscriber
: ________________________
Name of
Authorized Signatory: ________________________
Title
of Authorized Signatory: ________________________
Email
Address of Authorized Signatory:
________________________
Phone
Number of Authorized Signatory:
________________________
Facsimile Number of
Authorized Signatory: ______________________
__
Address
for Notice to Subscriber:
________________________
________________________
________________________
Address
for Delivery of Securities to Subscriber (if not same as address
for notice):
________________________
________________________
________________________
Number
of Units Subscribed For: __________
Subscription
Proceeds (Number of Units Subscribed For x Purchase Price of
$10,000): $__________
Shares
to be Issued to Subscriber (Number of Units Subscribed For x
5,000): __________
And/or
Preferred Shares to be Issued to Subscriber (Number of Units
Subscribed For x 500): _________
Warrant
to be Issued to Subscriber (Number of Units Subscribed For x
2,500): __________
Subscriber’s
Tax I.D. or Social Security Number: __________
EXHIBIT A
TO THE SUBSCRIPTION AGREEMENT
FORM OF SERIES A-2 CERTIFICATE OF DESIGNATION
EXHIBIT B
TO THE SUBSCRIPTION AGREEMENT
ESCROW WIRE INSTRUCTIONS
COMPANY
DISCLOSURE SCHEDULE
Schedule
2.1(g) and Schedule 2.1(h)
The
Company currently anticipates that its cash and cash equivalents
will be sufficient to fund its operations through February 2017,
without raising additional capital in this offering or another
similar offering. While the Company is seeking to raise additional
capital, the Company is actively pursuing a strategic alliance,
joint venture, business combination or other similar transaction
with various third parties. However, the Company may not be
able to complete such a transaction in the timely manner that is
required by it in light of its current cash needs. In the event the
Company does not timely obtain necessary equity and/or debt
financing to continue its operations, or it is unable to timely
consummate a strategic alliance, joint venture, business
combination or other similar type of transaction, it will be forced
to cease operations.
Exhibit
10.2
REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this “
Agreement
”) is made and
entered into as of [________], 2016, by and among MetaStat, Inc., a
Nevada corporation (the “
Company
”), and the
subscribers signatory hereto (each, a “
Subscriber
” and
collectively, the “
Subscribers
”). This
Agreement is made pursuant to Subscription Agreement, dated on or
about the date hereof, by and among the Company and the Subscribers
thereto (the “
Subscription
Agreement
”).
The
Company and each Subscriber hereby agrees as follows:
1.
Definitions
.
Capitalized
terms used and not otherwise defined herein that are defined in the
Subscription Agreement shall have the meanings given such terms in
the Subscription 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 120
th
calendar day
following the Filing Date and with respect to any additional
Registration Statements which may be required pursuant to Section
2(c), the 60
th
calendar day
following the date on which an additional Registration Statement is
required to be filed hereunder (or, in the event of a “full
review” by the Commission, the 90
th
calendar day
following the date such 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, the Effectiveness Date as
to such Registration Statement shall be the fifth (5
th
) Trading Day
following the date on which the Company is so notified if such date
precedes the dates otherwise required above, provided, further, if
such Effectiveness Date falls on a day that is not a Trading Day,
then the Effectiveness Date shall be the next succeeding Trading
Day.
“
Effectiveness Period
”
shall have the meaning set forth in Section 2(a).
“
Filing Date
” means, with
respect to the Initial Registration Statement required hereunder,
the 45
th
calendar day following the Termination Date of the Offering, and,
with respect to any additional Registration Statements which may be
required pursuant to Section 2(c), the earliest practical 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.
“
Losses
” shall have the
meaning set forth in Section 5(a).
“
Plan of Distribution
”
shall have the meaning set forth in Section 2(a).
“
Proceeding(s)
” means any
writ, injunction, decree, order, judgment, lawsuit, claim, action,
arbitration, proceeding, investigation, summons, audit or hearing
(in each case, whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard
by or before, or otherwise involving, any governmental
authority.
“
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 shares of Common
Stock and Conversion Shares issued pursuant to the Subscription
Agreement, (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), (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 the Holder has
completed and delivered to the Company a Selling Stockholder
Questionnaire and 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 (1) 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, (2) such Registrable Securities have been previously
sold in accordance with Rule 144, or (3) such securities become
eligible for resale without public information requirements or
volume or manner-of-sale restrictions pursuant to Rule 144
(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), as reasonably determined by
the Company, upon the advice of counsel to the
Company.
“
Registration Statement
”
means any registration statement required to be filed hereunder
pursuant to Section 2(a) and any additional registration statements
contemplated by Section 2(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
” means a questionnaire in the form
attached as
Annex B
hereto, or such other form of questionnaire as may reasonably be
adopted by the Company from time to time.
“
SEC Guidance
” means (i)
any publicly-available written or oral guidance of the Commission
staff, or any comments, requirements or requests of the Commission
staff and (ii) the Securities Act.
2.
Resale
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 of the Registrable Securities 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-1 and shall contain
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 under this Agreement to be declared effective under
the Securities Act as promptly as possible after the filing
thereof, but in any event no later than 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) may be sold without public
information requirements or volume or manner-of-sale restrictions
pursuant to Rule 144 and 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 opinion letter to such effect, addressed and
acceptable to the Transfer Agent and the affected Holders (the
“
Effectiveness
Period
”). The Company shall promptly notify the
Holders via facsimile or by e-mail of the effectiveness of a
Registration Statement within two Trading Days that the Company
telephonically confirms effectiveness with the Commission. The
Company shall file a final Prospectus with the Commission as
required by Rule 424.
(b)
Notwithstanding the registration obligations set forth in Section
2(a), if the Commission informs the Company that all of the
Registrable Securities cannot, as a result of the application of
Rule 415, be registered for resale as a secondary offering on a
single registration statement, the Company agrees to promptly
inform each of the Holders thereof and use its commercially
reasonable efforts to file amendments to the Initial Registration
Statement as required by the Commission, covering the maximum
number of Registrable Securities permitted to be registered by the
Commission, on Form S-1 or such other form available to register
for resale the Registrable Securities as a secondary offering,
subject to the provisions of Section 2(e).
(c)
Notwithstanding
any other provision of this Agreement, if the Commission or any SEC
Guidance sets forth a limitation on the number of Registrable
Securities permitted to be registered on a particular Registration
Statement as a secondary offering (and notwithstanding that the
Company used commercially reasonable efforts to advocate with the
Commission for the registration of all or a greater portion of
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 be
reduced as follows:
a.
First,
the Company shall reduce or eliminate any securities to be included
by any Person other than a Holder; and
b.
Second, the Company shall reduce 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).
In
the event of a cutback hereunder, the Company shall give the Holder
at least two (2) Trading Days prior written notice along with the
calculations as to such Holder’s allotment. In the event the
Company amends the Initial Registration Statement in accordance
with the foregoing, the Company will use its commercially
reasonable efforts to file with the Commission, as promptly as
allowed by Commission or SEC Guidance provided to the Company or to
registrants of securities in general, one or more registration
statements on Form S-1 or such other form available to register for
resale those Registrable Securities that were not registered for
resale on the Initial Registration Statement, as
amended.
(d) Each
Holder agrees to furnish to the Company a completed Selling
Stockholder Questionnaire not more than twenty (20) Business Days
following the date of this Agreement. Each Holder further agrees
that it shall not be entitled to be named as a selling security
holder in the Registration Statement or use the Prospectus for
offers and resales of Registrable Securities at any time, unless
such Holder has returned to the Company a completed and signed
Selling Stockholder Questionnaire. If a Holder of Registrable
Securities returns a Selling Stockholder Questionnaire after the
deadline specified in the previous sentence, the Company shall use
its commercially reasonable efforts to take such actions as are
required to name such Holder as a selling security holder in the
Registration Statement or any pre-effective or post-effective
amendment thereto and to include (to the extent not theretofore
included) in the Registration Statement the Registrable Securities
identified in such late Selling Stockholder Questionnaire; provided
that the Company shall not be required to file an additional
Registration Statement solely for such shares. Each Holder
acknowledges and agrees that the information in the Selling
Stockholder Questionnaire will be used by the Company in the
preparation of the Registration Statement and hereby consents to
the inclusion of such information in the Registration
Statement.
3.
Registration
Procedures
.
In
connection with the Company’s registration obligations
hereunder, the Company shall:
(a) Not
less than two (2) Trading Days prior to the filing of each
Registration Statement and not less than one (1) Trading Day prior
to the filing of any related Prospectus or any amendment or
supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference),
the Company shall (i) furnish to each Holder copies of all such
documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be
subject to the reasonable review of such Holders, and (ii) use its
commercially reasonable efforts to cause its officers and
directors, counsel and independent registered public accountants to
respond to such inquiries as shall be necessary, in the reasonable
opinion of respective counsel to each Holder, to conduct a
reasonable investigation within the meaning of the Securities Act.
Notwithstanding the above, the Company shall not be obligated to
provide the Holders advance copies of any universal shelf
registration statement registering securities in addition to those
required hereunder, or any Prospectus prepared
thereto.
(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 practicable to any comments
received from the Commission with respect to a Registration
Statement or any amendment thereto and provide as promptly as
reasonably practicable to the Holders true and complete copies of
all correspondence from and to the Commission related to and/or
applicable to a Holder in the reasonable opinion of the Company
relating to a Registration Statement (provided that, the Company
shall excise any information contained therein which would
constitute material non-public information regarding the Company or
any of its Subsidiaries), 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
Effectiveness 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) 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) and (if requested by
any such Person) confirm such notice in writing no later than one
(1) Trading Day following the day (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, (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 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
,
however
, in no event shall any
such notice contain any information which would constitute
material, non-public information regarding the Company or any of
its Subsidiaries.
(d) 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.
(e) 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.
(f) 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(c).
(g)
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 such jurisdictions within the
United States as any Holder reasonably requests in writing, 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.
(h) 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 Subscription Agreement (solely with respect
to Holders a party thereto) and applicable securities laws, 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 reasonably request. In no event shall the Company name
the Holder as an underwriter in a Registration Statement,
Prospectus or amendment or supplement thereto without the prior
written consent of such Holder.
(i) Upon
the occurrence of any event contemplated by Section 3(c), as
promptly as reasonably practicable under the circumstances taking
into account the Company’s good faith assessment of any
adverse consequences to the Company and its stockholders of the
premature disclosure of such event, 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(c) 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. In addition,
i
f (i) there is material non-public information regarding
the Company which the Company’s Board of Directors (the
“
Board
”) determines not to
be in the Company’s best interest to disclose and which the
Company is not otherwise required to disclose, (ii) there is a
significant business opportunity (including, but not limited to,
the acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender
offer or other similar transaction) available to the Company which
the Board determines not to be in the Company’s best interest
to disclose, or (iii) the Company is required to file a
post-effective amendment to the Registration Statement to
incorporate the Company’s quarterly and annual reports and
audited financial statements on Forms 10-Q and 10-K, then the
Company may (x) postpone or suspend filing of a registration
statement for a period not to exceed thirty (30) consecutive days
or (y) postpone or suspend effectiveness of a registration
statement for a period not to exceed thirty (30) consecutive days;
provided
that the
Company may not postpone or suspend effectiveness of a registration
statement under this Section for more than forty-five (45) days in
the aggregate during any three hundred sixty (360) day period;
provided
,
however
, that no
such postponement or suspension shall be permitted for consecutive
fifteen (15) day periods arising out of the same set of facts,
circumstances or transactions.
(j) Comply
in all material respects with all applicable rules and regulations
of the Commission.
(k) The
Company shall 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, pursuant to the Selling
Stockholder Questionnaire.
4.
Registration
Expenses
.
All
fees and expenses incident to the performance of or compliance
with, this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to 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 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, brokers
(including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a
margin call of Common Stock), investment advisors 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 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(c)(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), but only if and to the
extent that following the receipt
of the Advice the
misstatement or omission giving rise to such Loss would have been
corrected. 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.
(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 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 (in the case of any Prospectus or supplement thereto, in
light of the circumstances under which they were made) 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 expressly for
inclusion in such Registration Statement or such Prospectus or (ii)
to the extent, but only 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. 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 and
adversely 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 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.
(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, except in
the case of fraud by a Holder.
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
. Except as set forth on
Schedule 6(b)
attached hereto,
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. The Company shall not file any other
registration statements until all Registrable Securities are
registered pursuant to a Registration Statement that is declared
effective by the Commission, provided that this Section 6(b)(i)
shall not prohibit the Company from filing amendments to
registration statements filed prior to the date of this Agreement
and (ii) shall not prohibit the Company from filing a shelf
registration statement on Form S-3 for a primary offering by the
Company, provided that the Company makes no offering of securities
pursuant to such shelf registration statement prior to the
effective date of the Registration Statement required hereunder
that includes all of the Registrable Securities.
(c)
Compliance
.
Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as
applicable to it (unless an exemption therefrom is available) in
connection with sales of Registrable Securities pursuant to a
Registration Statement.
(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(c)(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 as promptly as is
practicable.
(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 to Rule 144
(without volume restrictions or current public information
requirements) promulgated by the Commission pursuant to the
Securities Act 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 by the Company and the Holders of at least a
majority of the then outstanding Registrable Securities (for
purposes of clarification, this includes 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 a Holder or
some Holders and that does not directly or indirectly affect the
rights of other Holders may be given only by such Holder or Holders
of all of the Registrable Securities to which such waiver or
consent relates. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any
provision of this Agreement unless the same consideration also is
offered to all of the parties to this Agreement.
(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 Subscription 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 all of the Holders
of the then outstanding Registrable Securities. Each Holder may
assign their respective rights hereunder to any Person to whom such
Subscriber assigns or transfers any Registrable Securities,
provided that such transferee agrees in writing to be bound, with
respect to the transferred Registrable Securities, by the
provisions of this Agreement and any other Transaction Document
that applies to the Subscribers.
(i)
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” format data file, such signature shall create a
valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect
as if such facsimile or “.pdf” signature page were an
original thereof.
(j)
Governing
Law
. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be
determined in accordance with the provisions of this Agreement and
the Subscription Agreement.
(k)
Cumulative
Remedies
. The remedies provided herein are cumulative and
not exclusive of any other remedies provided by law.
(l)
Severability
. If
any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. 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.
(m)
Headings
.
The headings in this Agreement are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
(n)
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 group or entity, or create a
presumption that the Holders are in any way acting in concert or as
a group or entity with respect to such obligations or the
transactions contemplated by this Agreement or any other matters.
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.
It is expressly understood and agreed that each provision contained
in this Agreement is between the Company and a Holder, solely, and
not between the Company and the Holders collectively and not
between and among Holders.
********************
(Signature Pages Follow)
IN
WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
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METASTAT, INC.
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By:__________________________________________
Name:
Title:
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[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
[SIGNATURE
PAGE OF HOLDERS TO RRA]
Name of
Holder: __________________________
Signature of Authorized Signatory of
Holder
: __________________________
Name of
Authorized Signatory: _________________________
Title
of Authorized Signatory: __________________________
[SIGNATURE PAGES
CONTINUE]
Schedule 6(b)
Other Securities to be Included on the Registration
Statement
To
include: (a) shares of common stock underlying issued PIK dividends
of the Company’s Series B Convertible Preferred Stock
originally issued in March 2015 (the “
Series B Preferred
”)
issued through the date of the prospectus; (b) shares of common
stock underlying the conversion of shares of Series B Preferred to
be issued pursuant to “full-ratchet” anti-dilution
price protection adjustments, subject to the terms of the Series B
Preferred; (c) common stock underlying the exercise of certain
common stock purchase warrants issued by the Company, and (d)
shares of common stock and shares of common stock underlying
warrants in connection with the private placements on May 26,2016
and June 8, 2016.
Annex A
Plan of Distribution
Each
Selling Stockholder (the “
Selling Stockholders
”) of
the securities and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of
their securities covered hereby on the principal Trading Market or
any other stock exchange, market or trading facility on which the
securities are traded or in private transactions. These sales may
be at fixed or negotiated prices. A Selling Stockholder may use any
one or more of the following methods when selling
securities:
● ordinary
brokerage transactions and transactions in which the broker-dealer
solicits Subscribers;
● block
trades in which the broker-dealer will attempt to sell the
securities 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 securities at a
stipulated price per security;
● 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 securities under Rule 144 under
the Securities Act of 1933, as amended (the “
Securities Act
”) or any
other exemption from registration, if available, rather than under
this prospectus.
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 Subscriber of securities, from
the Subscriber) 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 securities 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 securities in the course of hedging
the positions they assume. The Selling Stockholders may also sell
securities short and deliver these securities to close out their
short positions, or loan or pledge the securities 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 securities offered
by this prospectus, which securities 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 securities 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 securities 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
securities.
The
Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the securities. The
Company has agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
Because
Selling Stockholders may be deemed to be “underwriters”
within the meaning of the Securities Act, they will be subject to
the prospectus delivery requirements of the Securities Act
including Rule 172 thereunder. In addition, any securities covered
by this prospectus which qualify for sale pursuant to Rule 144
under the Securities Act may be sold under Rule 144 rather than
under this prospectus. The Selling Stockholders have advised us
that there is no underwriter or coordinating broker acting in
connection with the proposed sale of the resale securities by the
Selling Stockholders.
We
agreed to keep this prospectus effective until the earlier of (i)
the date on which the securities 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, 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 securities have
been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale
securities 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 securities 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 securities 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 securities 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 Subscriber at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).
Annex B
METASTAT,
INC.
Selling
Stockholder Notice and Questionnaire
The
undersigned beneficial owner of common stock (the
“
Registrable
Securities
”) of METASTAT, INC., a Nevada 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.
In
order to sell or otherwise dispose of any Registrable Securities
pursuant to the Registration Statement, a holder of Registrable
Securities generally will be required to be named as a selling
stockholder in the related prospectus or a supplement thereto (as
so supplemented, the “
Prospectus
”), deliver the
Prospectus to Subscribers of Registrable Securities (including
pursuant to Rule 172 under the Securities Act) and be bound by the
provisions of the Registration Rights Agreement (including certain
indemnification provisions, as described below). Holders must
complete and deliver this Notice and Questionnaire in order to be
named as selling stockholders in the Prospectus.
Holders of Registrable Securities who do not
complete, execute and return this Notice and Questionnaire within
twenty (20) Business Days following the date of the Agreement (1)
will not be named as selling stockholders in the Resale
Registration Statement or the Prospectus and (2) may not use the
Prospectus for resales of Registrable
Securities.
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.
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:
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Telephone:
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Fax:
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Contact
Person:
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3.
Broker-Dealer Status:
(a)
Are you a
broker-dealer?
Yes
__ No
__
(b)
If
“yes” to Section 3(a), did you receive your Registrable
Securities as compensation for investment banking services to the
Company?
Yes
__ No
__
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
__ No
__
(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
__ No
__
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 Subscription
Agreement.
(a)
Type and Amount of
other securities beneficially owned by the Selling
Stockholder:
(b)
Number of shares of
Common Stock to be registered pursuant to this Notice for
resale:
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 material
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; provided that the
undersigned shall not be required to notify the Company of any
changes to the number of securities held or owned by the
undersigned or its affiliates.
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.
Date:
Beneficial
Owner:
By:
Name:
Title:
B-3