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):
December 1, 2016
MAJESCO ENTERTAINMENT COMPANY
(Exact
name of registrant as specified in its charter)
Delaware
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000-51128
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06-1529524
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(State
or other jurisdictionof incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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404I-T Hadley Road
S.
Plainfield, New Jersey 07080
(Address
of principal executive offices and zip code)
Registrant’s
telephone number, including area code:
(732) 225-8910
Please send copies of all communications to:
Harvey J. Kesner, Esq.
Sichenzia Ross Ference Kesner LLP
61 Broadway, 32nd Floor
New York, New York 10006
Telephone: (212) 930-9700
(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 the registrant
under any of the following provisions:
☐
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Written
communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
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☐
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Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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☐
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Forward-Looking Statements
This
Current Report on Form 8-K and other written and oral statements
made from time to time by us may contain so-called
“forward-looking statements,” all of which are subject
to risks and uncertainties. Forward-looking statements can be
identified by the use of words such as “expects,”
“plans,” “will,” “forecasts,”
“projects,” “intends,”
“estimates,” and other words of similar meaning. One
can identify them by the fact that they do not relate strictly to
historical or current facts. These statements are likely to address
our growth strategy, financial results and product and development
programs. One must carefully consider any such statement and should
understand that many factors could cause actual results to differ
from our forward looking statements. These factors may include
inaccurate assumptions and a broad variety of other risks and
uncertainties, including some that are known and some that are not.
No forward looking statement can be guaranteed and actual future
results may vary materially.
Information
regarding market and industry statistics contained in this Current
Report on Form 8-K is included based on information available to us
that we believe is accurate. It is generally based on industry and
other publications that are not produced for purposes of securities
offerings or economic analysis. We have not reviewed or included
data from all sources. Forecasts and other forward-looking
information obtained from these sources are subject to the same
qualifications and the additional uncertainties accompanying any
estimates of future market size, revenue and market acceptance of
products and services. We do not assume any obligation to update
any forward-looking statement. As a result, investors should not
place undue reliance on these forward-looking
statements.
Item 1.01 Entry into a
Material Definitive Agreement.
On December 1, 2016, Majesco Entertainment Company
(the “
Company
”) entered into an Agreement and Plan of
Reorganization (the “
Agreement
”) with Majesco Acquisition Corp., a Nevada
corporation and wholly-owned subsidiary of the Company, PolarityTE,
Inc., a Nevada corporation (“
Polarity
”) and Dr. Denver Lough, the owner of 100%
of the issued and outstanding shares of capital stock of Polarity
(the “
Seller
”). The closing is subject to various
closing conditions, including, approval of stockholders of the
Company in accordance with Delaware law and NASDAQ Listing Rule
5635 and a minimum cash balance available to the
Company.
Polarity is the
owner of a novel regenerative medicine and tissue engineering
platform developed and patented by Denver Lough, MD, PhD. This
radical and proprietary technology employs a patient’s own
cells for the healing of full-thickness, functionally-polarized
tissues. If clinically successful, the PolarityTE platform will be
able to provide medical professionals with a truly new paradigm in
wound healing and reconstructive surgery by utilizing a
patient’s own tissue substrates for the regeneration of skin,
bone, muscle, cartilage, fat, blood vessels and nerves. It is
because PolarityTE uses a natural and biologically sound platform
technology, which is readily adaptable to a wide spectrum of organ
and tissue systems that Polarity and its world-renowned clinical
advisory board are poised to drastically change the field and
future of translational regenerative medicine.
Polarity’s launch
product which is being prepared for clinical trials is the first
ever truly autologous skin regeneration construct of its kind,
which can regrow full-thickness and functional polarized skin,
including all layers (dermis & epidermis), hair, and skin
appendages. The PolarityTE constructs will offer patients a new
option for wound healing—“where self regenerates
self”. In parallel with the clinical development of the
functionally-polarized skin regenerative product, the PolarityTE
platform provides a new and radical pipeline for expansion into
numerous other tissues, including bone, muscle, cartilage, fat,
blood vessels, nerves, solid organs and vascularized composite
structures under a direct interface with practicing medical
leaders, in order to provide patients and the market with truly
practical answers to difficult wound and tissue voids.
At closing, upon satisfaction of each of the
closing conditions, the
Seller will be issued 7,050
shares of the Company’s newly
authorized Series E Preferred Stock (the “
Preferred
Shares
”) convertible into
an aggregate of 7,050,000 shares of the Company’s common
stock (the “
Merger
Consideration
” and such
transaction, the “
Merger
”), expected to constitute approximately 50%
of the issued and outstanding common stock of the Company on a
fully diluted basis at closing and depending in part, upon the
Company’s expected cash balance at closing. Until converted,
each Preferred Share is entitled to two votes for every share of
common stock into which it is convertible on any matter submitted
for a vote of stockholders.
The
parties to the Agreement made representations, warranties and
covenants that are customary for transactions of this
nature.
The
Merger is expected to be accounted for as an acquisition of assets
rather than a business pursuant to Financial Accounting Standards
Board Accounting Standards Codification 805-50-30 “Business
Combinations”. Accordingly, assets acquired through a
transaction that is not a business combination shall be measured
based on the cash consideration paid plus either the fair value of
the non-cash consideration given or the fair value of the assets
acquired, whichever is more clearly evident.
Following the Merger, the Company will continue to
be a “smaller reporting company,” as defined in Item
10(f)(1) of Regulation S-K, as promulgated by the
SEC.
The
foregoing description is a summary only, does not purport to set
forth the complete terms of the Agreement and is qualified in its
entirety by reference to the Agreement filed as Exhibit 2.1 to this
Current Report on Form 8-K and is hereby incorporated by
reference.
Series E Preferred Stock
On or prior to the effective time of the Merger,
the Company will file a Certificate of Designations, Preferences
and Rights of the 0% Series E Convertible Preferred Stock (the
“
Certificate of
Designation
”) with the
Delaware Secretary of State pursuant to which the Company will
designate 7,050 shares of the Company’s authorized shares of
preferred stock as Series E Preferred Stock.
The Series E Preferred
Stock are convertible into shares of common stock based on a
conversion calculation equal to the stated value of such preferred
stock, plus all accrued and unpaid dividends, if any, on such
preferred stock, as of such date of determination, divided by the
conversion price. The stated value of each Series E
Preferred Stock is $1,000 and the initial conversion price is $1.00
per share, each subject to adjustment for stock splits, stock
dividends, recapitalizations, combinations, subdivisions or other
similar events.
The Series
E Preferred Stock, with respect to dividend rights and rights on
liquidation, winding-up and dissolution, in each case will rank
senior to the Company's common stock and all other securities of
the Company that do not expressly provide that such securities rank
on parity with or senior to the Series E Preferred Stock. Until
converted, each share of Series E Preferred Stock is entitled to
two votes for every share of common stock into which it is
convertible on any matter submitted for a vote of
stockholders.
The
foregoing description is a summary only, does not purport to set
forth the complete terms of the Certificate of Designation and is
qualified in its entirety by reference to the Certificate of
Designation filed as Exhibit 3.1 to this Current Report on Form 8-K
and is hereby incorporated by reference.
2017 Equity Incentive Plan
On December 1, 2016, the Company’s Board of
Directors (the “
Board
”) approved the Company’s 2017 Equity
Incentive Plan (the “
2017 Plan
”). The purpose of the 2017 Plan is to
promote the success of the Company and to increase stockholder
value by providing an additional means through the grant of awards
to attract, motivate, retain and reward selected employees,
consultants and other eligible persons. The 2017 Plan provides for
the grant of incentive stock options, nonqualified stock options,
restricted stock, restricted stock units, stock appreciation rights
and other types of stock-based awards to the Company’s
employees, officers, directors and consultants. The
Compensation Committee of the Board will administer the 2017 Plan,
including determining which eligible participants will receive
awards, the number of shares of common stock subject to the awards
and the terms and conditions of such awards. Up to 3,450,000 shares
of common stock are issuable pursuant to awards under the 2017
Plan. Unless earlier terminated by the Board, the 2017 Plan shall
terminate at the close of business on December 1,
2026.
Employment Agreements
On December 1, 2016, the Company entered into an
employment agreement with Dr. Denver Lough (the
“
Lough
Employment Agreement
”).
Pursuant to the terms of the Lough Employment Agreement, Dr. Lough
will serve as Chairman of the Board and as Chief Executive Officer
and Chief Scientific Officer of the Company for a term of one year
which shall be automatically renewed for successive one year
periods thereafter unless earlier terminated. Pursuant to the Lough
Employment Agreement, the Company shall pay Dr. Lough (i) a
one-time signing bonus of $100,000, (ii) an annual base salary of
$350,000, (iii) an annual discretionary bonus, as determined by the
Board, in an amount up to 100% of Dr. Lough’s then current
base salary and (iv) 10 year options (the
“
Lough
Options
”) to purchase up
to 1,000,000 shares of the Company’s common stock at an
exercise price of $3.15 per share (equal to 100% of the market
price as defined by NASDAQ (“
Fair Market
Value
”)) which Options
shall vest in 24 equal installments commencing on the one month
anniversary of the Lough Employment Agreement. The Lough Options
were granted pursuant to the 2017 Plan and the exercise of the
Lough Options and the 2017 Plan are subject to stockholder
approval. If Dr. Lough terminates the Lough Employment Agreement
for Good Reason (defined hereafter) or a Change of Control (as
defined in the Lough Employment Agreement) or the Company
terminates the Lough Employment Agreement without Cause (defined
hereafter), then Dr. Lough shall be entitled to receive (i) the sum
of his then base salary from the date of termination, (ii)
reasonable expenses incurred by Dr. Lough in connection with the
performance of his duties, (iii) accrued but unused vacation time
through the date of termination, (iv) the sum of this then annual
bonus and (v) all Share Awards (as defined in the Lough Employment
Agreement) earned and vested prior to the date of termination. In
addition, Dr. Lough shall have the right to Participation Payments
(as defined in the Lough Employment Agreement) from commercial
transactions associated with the Patents (as defined in the Lough
Employment Agreement) and intellectual property rights associated
with such Patents. If the Company terminates the Lough Employment
Agreement for Cause, the Company will have no further obligations
or liability to Dr. Lough except for the obligation to (i) pay Dr.
Lough his then annual salary through the date of termination, (ii)
unpaid annual bonus pursuant to the terms of the Lough Employment
Agreement, (iii) reasonable expenses incurred by Dr. Lough in
connection with the performance of his duties and (v) accrued but
unused vacation time through the date of termination.
“
Good
Reason
” means
the
occurrence of any of the following events without the
employee’s consent: (A) the assignment to the employee of
duties that are significantly different from, and/or that result in
a substantial diminution of, the duties that he assumed on the
effective date (including reporting to anyone other than solely and
directly to the Board); (B) the assignment to the employee of a
title that is different from and subordinate to the title that he
assumed on the effective date, provided, however, for the absence
of doubt following a Change of Control, should the employee be
required to serve in a diminished capacity in a division or unit of
another entity (including the acquiring entity), such event shall
constitute Good Reason regardless of the title of the Employee in
such acquiring company, division or unit; or (C) material breach by
the Company of the employment agreement.
“
Cause
” means
(a) the willful and continued
failure of the employee to perform substantially his duties and
responsibilities for the Company (other than any such failure
resulting from the employee’s death or Disability (as defined
in the employment agreement) after a written demand by the Board
for substantial performance is delivered to the employee by the
Company, which specifically identifies the manner in which the
Board believes that the employee has not substantially performed
his duties and responsibilities, which willful and continued
failure is not cured by the employee within 30 days following his
receipt of such written demand; (b) the conviction of, or plea of
guilty or
nolo contendere
to, a felony, or (c) fraud, dishonesty or gross misconduct which is
materially and demonstratively injurious to the
Company.
On December 1, 2016, the Company entered into an
employment agreement with Edward Swanson (the
“
Swanson Employment
Agreement
”
).
Pursuant to the terms of the Swanson Employment Agreement, Dr.
Swanson will serve as Chief Operating Officer of the Company for a
term of one year which shall be automatically renewed for
successive one year periods thereafter unless earlier terminated.
Pursuant to the Swanson Agreement, the Company shall pay Dr.
Swanson (i) a one-time signing bonus of $100,000, (ii) an annual
base salary of $300,000, (iii) an annual discretionary bonus, as
determined by the Board, in an amount up to 100% of Dr.
Swanson’s then current base salary and (iv) 10 year options
(the “
Swanson
Options
”) to purchase up
to 846,000 shares of the Company’s common stock pursuant to
the 2017 Plan at Fair Market Value which Swanson Options shall vest
in 24 equal installments commencing on the one month anniversary of
the Swanson Employment Agreement and are subject to stockholder
approval. If Dr. Swanson terminates the Swanson Employment
Agreement for Good Reason or a Change of Control (as defined in the
Swanson Employment Agreement) or the Company terminates the Swanson
Employment Agreement without Cause, then Dr. Swanson shall be
entitled to receive (i) the sum of his then base salary from the
date of termination, (ii) reasonable expenses incurred by Dr.
Swanson in connection with the performance of his duties, (iii)
accrued but unused vacation time through the date of termination,
(iv) the sum of this then annual bonus and (v) all Share Awards (as
defined in the Swanson Employment Agreement) earned and vested
prior to the date of termination. If the Company terminates the
Swanson Employment Agreement for Cause, the Company will have no
further obligations or liability to Dr. Swanson except for the
obligation to (i) pay Dr. Swanson his then annual salary through
the date of termination, (ii) unpaid annual bonus pursuant to the
terms of the Swanson Employment Agreement, (iii) reasonable
expenses incurred by Dr. Swanson in connection with the performance
of his duties and (v) accrued but unused vacation time through the
date of termination.
The
foregoing description is a summary only, does not purport to set
forth the complete terms of the Lough Employment Agreement, Swanson
Employment Agreement and the 2017 Plan, and is qualified in its
entirety by reference to the Lough Employment Agreement, Swanson
Employment Agreement and the 2017 Plan filed as Exhibit 10.1, 10.2
and 10.3, respectively to this Current Report on Form 8-K and is
hereby incorporated by reference.
Stockholders Agreement
On December 1, 2016, the Company entered into a
Stockholders Agreement (the “
Stockholders
Agreement
”) with Dr.
Lough, Dr. Swanson (together with Dr. Lough, the
“
Restricted
Stockholders
”), Polarity
and certain stockholders of the Company (the
“
Majesco
Stockholders
”). Pursuant
to the terms of the Stockholders Agreement, the Company and Majesco
Stockholders shall have the right to purchase from each Restricted
Stockholder all of the Restricted Stockholder’s Seller Stock
(as defined in the Stockholders Agreement) if such Restricted
Stockholder’s employment with the Company is terminated for
Cause or by the Restricted Stockholder without Good Reason at the
fair market value as determined pursuant to the terms of the
Stockholders Agreement. In addition, the Company shall have the
right to purchase from each Restricted Stockholder all of the
Restricted Stockholder’s Seller Stock if (i) such Restricted
Stockholder breaches any material provisions of such Restricted
Stockholder’s Employment Agreement or (ii) such Restricted
Stockholder beaches any material provision of the Agreement, at a
per share price of $0.001 per share. No Restricted Stockholder may
sell any shares of Seller Stock to any third party unless the
Company and the Majesco Stockholders are first offered the right to
participate in any such offering on terms and conditions not less
favorable to the Company and the Majesco Stockholders than those
applicable to the third party.
The
foregoing description is a summary only, does not purport to set
forth the complete terms of the Stockholders Agreement and is
qualified in its entirety by reference to the Stockholders
Agreement filed as Exhibit 10.4 to this Current Report on Form 8-K
and is hereby incorporated by reference.
Voting Agreement
On December 1, 2016, the Company entered into a
Voting Agreement (the “
Voting
Agreement
”) with Dr.
Lough, Dr. Swanson, Polarity and certain stockholders of the
Company (collectively, the “
Stockholders
”). Pursuant to the terms of the Voting
Agreement, the Stockholders agree to vote the Shares (defined
hereafter) at any annual or special meeting of stockholders of the
Company, or execute a written consent in lieu of such meeting to
vote: (i) in favor of: (1) approval of the Merger and the issuance
of the Preferred Shares and the Company’s common stock into
which such Preferred Shares are convertible in such amount that
exceeds 19.99% of the Company’s issued and outstanding common
stock and (2) approval of any proposal to adjourn of postpone the
stockholder’s meeting to a later date if there are not
sufficient votes for the approval of the Merger Consideration and
transactions contemplated by the Agreement; and (ii) against any
proposal which could be expected to result in a breach of any
obligation of the Company which could be expected to result in any
of the conditions of the Company’s obligations under the
Agreement not being fulfilled. All Shares that the Stockholders
purchase or acquire the right to vote or otherwise acquire
beneficial ownership after December 1, 2016 shall be subject to the
terms of the Voting Agreement. Stockholders shall not deposit any
of the Shares in a voting trust, or grant any proxies with respect
to the Shares except as provided for in the Voting Agreement.
“
Shares
” shall mean the Company’s common
stock, Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and any additional capital stock of the Company
acquired by the Stockholders after December 1,
2016.
The
foregoing description is a summary only, does not purport to set
forth the complete terms of the Voting Agreement and is qualified
in its entirety by reference to the Voting Agreement filed as
Exhibit 10.5 to this Current Report on Form 8-K and is hereby
incorporated by reference.
Acquisition of Laboratory Equipment
Effective December
1, 2016, Majesco Acquisition II Corp. (“
Acq. Corp.
”), a wholly-owned
subsidiary of the Company, entered into a Warranty Bill of Sale of
Laboratory Equipment (“
Bill
of Sale
”) with Acq. Corp. and Q Therapeutics, Inc.
pursuant to which Acq Corp purchased certain laboratory equipment
for $80,000.
The
foregoing description is a summary only, does not purport to set
forth the complete terms of the Bill of Sale and is qualified in
its entirety by reference to the Bill of Sale filed as Exhibit 10.6
to this Current Report on Form 8-K and is hereby incorporated by
reference.
Lease of Office Space
On
December 1, 2016, the Company entered into a Lease (the
“
Lease
”) with
Paradigm Resources, L.C. (“
Paradigm
”), pursuant to which the
Company will lease 5,331 square feet of office and lab space in
Salt Lake City, Utah at a monthly lease rate of $12,439. The lease
will commence on January 1, 2017 and terminate on December 31,
2017.
The
foregoing description is a summary only, does not purport to set
forth the complete terms of the Lease and is qualified in its
entirety by reference to the Lease filed as Exhibit 10.7 to this
Current Report on Form 8-K and is hereby incorporated by
reference.
Certain
Risk Factors Relating to
Polarity
An investment in our common stock involves a high
degree of risk. Before deciding whether to invest in our common
stock, you should consider carefully the risks discussed under the
section captioned “Risk Factors” contained in our most
recent annual report on Form 10-K, our quarterly reports on Form
10-Q and any current reports on Form 8-K on file with the
Securities and Exchange Commission (the “SEC”), all of
which are incorporated herein by reference, and which may be
amended, supplemented or superseded from time to time by other
reports we file with the SEC.
There are numerous and varied risks, known and unknown, that may
prevent us from achieving our goals. If any of these risks actually
occur, our business, financial condition or results of operation
may be materially adversely affected. In such case, the trading
price of our common stock could decline and investors could lose
all or part of their investment.
Rapid technological change could cause Polarity’s platform,
PolarityTE, to become obsolete.
The
technologies underlying Polarity’s platform, PolarityTE, are
subject to rapid and profound technological change. Competition
intensifies as technical advances in each field are made and become
more widely known. Polarity can give no assurance that others will
not develop processes with significant advantages over the
processes that Polarity offers or is seeking to develop. Any such
occurrence could have a material and adverse effect on
Polarity’s business, results of operations and financial
condition.
Polarity’s revenues will depend upon adequate reimbursement
from public and private insurers and health systems.
Polarity’s
success will depend on the extent to which reimbursement for the
costs of its treatments will be available from third party payers,
such as public and private insurers and health
systems. Government and other third party payers attempt
to contain healthcare costs by limiting both coverage and the level
of reimbursement of new treatments. Therefore, significant
uncertainty usually exists as to the reimbursement status of new
healthcare treatments. If Polarity is not successful in obtaining
adequate reimbursement for its treatment from these third party
payers, the market's acceptance of Polarity’s treatment could
be adversely affected. Inadequate reimbursement levels
also likely would create downward price pressure on
Polarity’s treatment. Even if Polarity does
succeed in obtaining widespread reimbursement for its treatment,
future changes in reimbursement policies could have a negative
impact on Polarity’s business, financial condition and
results of operations.
To be commercially successful, Polarity must convince physicians
that its treatments are
safe and
effective alternatives to existing treatments and that
Polarity’s treatments should be used.
Polarity
believes physicians will only adopt its treatment if they
determine, based on experience, clinical data and published peer
reviewed journal articles, that the use of Polarity’s
treatment is a favorable alternative to conventional methods,
including skin grating. Physicians may be slow to change
their medical treatment practices for the following reasons, among
others:
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●
Lack of evidence
supporting additional patient benefits and Polarity’s
treatments over conventional methods;
●
Perceived liability risks generally associated with the use of new
procedures; and
●
Limited availability of reimbursement from third party
payers.
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In
addition, Polarity believes that recommendations for and support of
its treatments by influential physicians are essential for market
acceptance and adoption. If Polarity does not receive
this support or is unable to demonstrate favorable long-term
clinical data, physicians and hospitals may not use
Polarity’s treatment, which would significantly reduce
Polarity’s ability to achieve revenue and would prevent
Polarity from sustaining profitability.
Polarity’s ability to protect its intellectual property and
proprietary technology
through
patents and other means is uncertain and may be inadequate, which
could
have a
material and adverse effect on Polarity.
Polarity’s
success depends significantly on its ability to protect its
proprietary rights to the technologies used in it treatment and
PolarityTE platform. Polarity relies on patent
protection, as well as a combination of copyright, trade secret and
trademark laws and nondisclosure, confidentiality and other
contractual restrictions to protect its proprietary
technology. These legal means afford only limited
protection and may not adequately protect Polarity’s rights
or permit Polarity to gain or keep any competitive
advantage. In addition, Polarity’s pending patent
applications include claims to material aspects of Polarity’s
procedures that are not currently protected by issued
patents. The patent application process can be time
consuming and expensive. Polarity cannot ensure that any
of its pending patent applications will result in issued
patents. Competitors may be able to design around
Polarity’s patents or develop procedures that provide
outcomes that are comparable or even superior to Polarity’s.
Furthermore, the laws of foreign countries may not protect
Polarity’s intellectual property rights to the same extent as
do the laws of the United States.
The
failure to obtain and maintain patents and/or protect
Polarity’s intellectual property rights could have a material
and adverse effect on Polarity’s business, results of
operations, and financial condition. Whether a patent is
valid is a complex matter of science and law, and therefore
Polarity cannot be certain that, if challenged, its patents would
be upheld. If one or more of those patents are
invalidated, that could reduce or eliminate any competitive
advantage Polarity might otherwise have had.
In the event a competitor infringes upon
Polarity’s pending patent or other intellectual property
rights, enforcing those rights may be costly, uncertain, difficult
and time consuming. Even if successful, litigation to enforce or
defend Polarity’s intellectual property rights could be
expensive and time consuming and could divert Polarity’s
management's attention. Further, bringing litigation to enforce
Polarity’s patents subjects Polarity to the potential for
counterclaims. In the event that one or more of our patents are
challenged, a court or the United States Patent and Trademark
Office (“
USPTO
”) may invalidate the patent(s) or determine
that the patent(s) is not enforceable, which could harm
Polarity’s competitive position. If the USPTO ultimately
cancels or narrows the claim in any of Polarity’s patents
through these proceedings, it could prevent or hinder Polarity from
being able to enforce them against competitors. Such adverse
decisions could negatively impact Polarity’s future, expected
revenue.
Polarity may become subject to claims of infringement of
the
intellectual
property rights of others, which could prohibit Polarity from
developing
its
treatment, require Polarity to obtain licenses from third parties
or to develop
non-infringing
alternatives, and subject Polarity to substantial monetary
damages.
Third
parties could assert that Polarity’s procedures infringe
their patents or other intellectual property
rights. Whether a product infringes a patent or other
intellectual property involves complex legal and factual issues,
the determination of which is often
uncertain. Therefore, Polarity cannot be certain that it
has not infringed the intellectual property rights of
others. Because patent applications may take years to
issue, there also may be applications now pending of which Polarity
is unaware that may later result in issued patents that
Polarity’s procedure or processes infringe. There
also may be existing patents or pending patent applications of
which Polarity is unaware that its procedures or processes may
inadvertently infringe.
Any
infringement claim could cause Polarity to incur significant costs,
place significant strain on Polarity’s financial resources,
divert management's attention from Polarity’s business and
harm Polarity’s reputation. If the relevant
patents in such claim were upheld as valid and enforceable and
Polarity was found to infringe, Polarity could be prohibited from
utilizing any procedure that is found to infringe unless Polarity
obtains licenses to use the technology covered by the patent or
other intellectual property or is able to design around the patent
or other intellectual property. Polarity may be unable
to obtain such a license on terms acceptable to it, if at all, and
Polarity may not be able to redesign it’s processes to avoid
infringement. A court could also order Polarity to pay
compensatory damages for such infringement, plus prejudgment
interest and could, in addition, treble the compensatory damages
and award attorney fees. These damages could be substantial and
could harm Polarity’s reputation, business, financial
condition and operating results.
Polarity’s business is subject to continuing regulatory
compliance by the U.S. Food and Drug Administration (the
“FDA”) and other authorities, which is costly and
Polarity’s failure to comply could result in negative effects
on its business.
The FDA has specific regulations governing
tissue-based products, or HCT/Ps. The FDA has broad
post-market and regulatory and enforcement powers. The
FDA's regulation of HCT/Ps includes requirements for registration
and listing of products, donor screening and testing, processing
and distribution (“
Current Good Tissue
Practices
”), labeling,
record keeping and adverse-reaction reporting, and inspection and
enforcement.
Even
if pre-market clearance or approval is obtained, the approval or
clearance may place substantial restrictions on the indications for
which the product may be marketed or to whom it may be marketed,
may require warnings to accompany the product or impose additional
restrictions on the sale and/or use of the product. In
addition, regulatory approval is subject to continuing compliance
with regulatory standards, including the FDA's quality system
regulations.
If
Polarity fails to comply with the FDA regulations regarding its
tissue regeneration processes, the FDA could take enforcement
action, including, without limitation, any of the following
sanctions:
●
Untitled
letters, warning letters, fines, injunctions, and civil
penalties;
●
Operating
restrictions, partial suspension or total shutdown
of procedure;
●
Refusing
requests for clearance or approval of new procedures;
●
Withdrawing
or suspending current applications for approval or approvals
already granted; and
It
is likely that the FDA's regulation of HCT/Ps will continue to
evolve in the future. Complying with any such new
regulatory requirements may entail significant time delays and
expense, which could have a material adverse effect on
Polarity’s business.
Polarity faces significant uncertainty in the industry due to
government healthcare
reform.
There
have been and continue to be proposals by the Federal Government,
State Governments, regulators and third party payers to control
healthcare costs, and generally, to reform the healthcare system in
the United States. There are many programs and
requirements for which the details have not yet been fully
established or the consequences are not fully
understood. These proposals may affect aspects of
Polarity’s business. Polarity also cannot predict
what further reform proposals, if any, will be adopted, when they
will be adopted, or what impact they may have on
Polarity.
Oversight in the industry might affect the manner in which Polarity
may compete in the marketplace.
There
are laws and regulations that govern the means by which companies
in the healthcare industry may market their treatments to
healthcare professionals and may compete by discounting the prices
of their treatments, including for example, the federal
Anti-Kickback Statute, the federal False Claims Act, the federal
Health Insurance Portability and Accountability Act of 1996, state
law equivalents to these federal laws that are meant to protect
against fraud and abuse and analogous laws in foreign countries.
Violations of these laws are punishable by criminal and civil
sanctions, including, but not limited to, in some instances civil
and criminal penalties, damages, fines, exclusion from
participation in federal and state healthcare programs, including
Medicare and Medicaid. In addition, federal and state laws are also
sometimes open to interpretation, and from time to time Polarity
may find itself at a competitive disadvantage if Polarity’s
interpretation differs from that of our competitors.
Polarity may have significant liability exposure and its insurance
may not cover all potential claims.
Polarity
is exposed to liability and other claims in the event that its
treatment is alleged to have caused harm. Polarity may not be able
to obtain insurance for the potential liability on acceptable terms
with adequate coverage or at reasonable costs. Any potential
product liability claims could exceed the amount of
Polarity’s insurance coverage or may be excluded from
coverage under the terms of the policy. Polarity’s insurance
may not be renewed at a cost and level of coverage comparable to
that then in effect.
If the NASDAQ Stock Market determines that the Merger with Polarity
and the issuance of the Merger Consideration results in a change of
control of the Company, the Company may be required to submit a new
application under NASDAQ’s original listing standards and if
such application is not approved, the Company’s common stock
may be delisted from The NASDAQ Capital Market.
In connection with the Merger, the Company will issue 7,050 shares
of Series E Preferred Stock, which are convertible into an
aggregate of 7,050,000 shares of the Company’s common
stock. NASDAQ Rule 5110(a) provides that a Company
must apply for initial listing in connection with a transaction
whereby a company combines with a non-NASDAQ entity, resulting in a
change of control of such company and potentially allowing the
non-NASDAQ entity to effectively obtain NASDAQ
listing. In determining whether a change of control has
occurred, NASDAQ considers all relevant factors including, changes
in management, board of directors, voting power, ownership and
financial structure of the Company. If The NASDAQ Stock
Market determines that a change of control does in fact result from
the consummation of the Merger and the issuance of the Merger
Consideration and an original listing application has not been
approved prior to the consummation of Merger, the Company will be
in violation of NASDAQ Rule 5110(a) and the Company’s common
stock could be delisted from The NASDAQ Capital
Market.
Item
5.02
|
Departure of Directors or
Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain
Officers.
|
The
disclosure set forth above in Item 1.01 of this Current Report is
incorporated by reference herein.
Effective
December 1, 2016, Mr. Honig resigned from his position as Chief
Executive Officer and Co-Chairman of the Board. Mr. Honig remains a
director of the Board.
Effective
December 1, 2016, Michael Brauser resigned from his position as
Co-Chairman of the Board. Mr. Brauser remains a director of the
Board.
Effective
December 1, 2016, David Rector, a Class I director, Edward Karr, a
Class I director and Andrew Kaplan, a Class II director resigned as
members of the Board.
Each
director resignation was not the
result from any disagreement with the Company, the
Company’s management or the Board.
On
December 1 2016, the Board appointed Dr. Lough, Dr. Swanson and
John Stetson as directors of the Company to fill vacancies created
upon the resignations of David Rector, Edward Karr, and Andrew
Kaplan. Dr. Lough’s appointment is to serve as a Class I
director with a term expiring in 2018, Dr. Swanson’s
appointment is to serve as a Class I director with a term expiring
in 2018 and Mr. Stetson’s appointment as a Class II director
with a term expiring in 2019. Effective December 1, 2016, the Board
also appointed Dr. Lough Chief Executive Officer, Chief Scientific
Officer and Chairman of the Board and Dr. Swanson as Chief
Operating Officer of the Company. The appointment of Dr. Lough and
Dr. Swanson is pursuant to their employment agreements also entered
into December 1, 2016. Mr. Stetson currently serves as the
Company’s Chief Financial Officer.
There
are no family relationships between Dr. Lough, Dr. Swanson or Mr.
Stetson and any of our other officers and directors.
Set
forth below is the biographical information of the newly appointed
officers and directors, as required by Item 401 of Regulation
S-K.
Denver Lough, 35
From August 2009, Dr. Lough has served as
Department of Surgery Faculty and Translational Research Director
at
Laboratory for Regenerative
Medicine and Applied Sciences, Institute for Plastic Surgery
Southern Illinois University School of Medicine, and from June
2013, he has served as Director of Biomedical Applications for
Laboratory for Craniofacial Regenerative Medicine Johns Hopkins
Hospital Department of Plastic and Reconstructive Surgery. In
addition, Dr. Lough was a lead research associate in the
Vascularized Composite Allotransplantation Laboratory at the Johns
Hopkins Hospital Department of Plastic and Reconstructive Surgery
and has been a research consultant to the Johns Hopkins Hendrix
Burn Research Center. Dr. Lough was assembled as a member among
other burn experts as a Taiwanese presidential disaster response
team following the largest civilian burn disaster in
2015.
Since 2012 Dr. Lough has been a Plastic
& Reconstructive Surgery House Staff Officer at Johns Hopkins
University School of Medicine, Department of Plastic &
Reconstructive Surgery. Dr. Lough also founded PolarityTE, LLC,
PolarityTE, Inc. and Lough & Associates LLC which are engaged
in the business of developing intellectual property related to
regenerative medicine and related fields. Dr. Lough has received
numerous accolades and awards by national societies related to
basic and translational science applications in tissue engineering,
regenerative medicine, and immunology as well as within solid organ
and reconstructive transplantation.
We
believe that Dr. Lough is qualified to serve as a member of our
Board because of his experience in clinical medicine and surgery as
well as the development and innovation of technologies related to
regenerative medicine and related patents and intellectual property
which the Company has reviewed for potential development. Dr. Lough
holds an M.D. and PhD in Biochemistry, Molecular and Cell Biology
from Georgetown University which he earned in
2012.
Edward Swanson, 31
Following
completion of his undergraduate degree in Applied Sciences in
Biomedical Sciences at the School of Engineering and Applied
Sciences at the University of Pennsylvania, Dr. Swanson received
his medical degree from Harvard Medical School, where he attended
as a student from August 2008 to May 2012, graduating with honors
for his thesis researching surgical outcomes within craniofacial
and plastic surgery. From July 2012 until December 2016, Dr. Edward
Swanson
was a Surgical Resident in
Plastic
& Reconstructive Surgery in the Department of
Plastic and Reconstructive Surgery at The Johns Hopkins University
School of Medicine. During his time at Johns Hopkins, he served in
a leadership role within the residency, sitting on the Program
Evaluation Committee from July 2015 to December 2016 and The Johns
Hopkins Hospital Housestaff Patient Safety and Quality Council from
July 2014 to June 2015. Dr. Swanson has extensive experience in
basic and translational biomedical research, including as a
research associate in Wound Healing in the Division of Plastic
Surgery at the Brigham and Women’s Hospital and Harvard
Medical School from May 2004 to August 2004, thesis student in
Traumatic Brain Injury at the University of Pennsylvania from
August 2006 to May 2007, research fellow in Pancreatic Cancer
Cellular Biology at the Brigham and Women’s Hospital and
Harvard Medical School from July 2007 to July 2008, research fellow
in Nanomedicine at Harvard Medical School and MIT from May 2008 to
August 2008, and research fellow in Vascularized Composite
Allotransplantation at the Massachusetts General Hospital and
Harvard Medical School during his final year of medical school. In
addition, Dr. Swanson directed the large animal translational
research as a lead research associate in the Vascularized Composite
Allotransplantation Laboratory in the Department of Plastic and
Reconstructive Surgery at The Johns Hopkins University School of
Medicine form July 2014 to June 2015, overseeing experimental
projects funded by multimillion dollar grants. Furthermore, Dr.
Swanson has demonstrated national and international leadership
throughout the field of plastic and reconstructive surgery at a
young age, with greater than 40 peer-reviewed publications, five
book chapters, and 30 national/international conference
presentations.
We believe that Dr.
Swanson is qualified to serve as a member of our Board because of
his experience in technology related to regenerative medicine and
related patents and technology and their clinical applications,
which the Company has reviewed for potential
development.
John Stetson, 31
Since 2010, John
Stetson has been the Managing Member of HS Contrarian Investments
LLC, a private investment firm with a focus on early stage
companies. In addition, Mr. Stetson served as Executive Vice
President, Chief Financial Officer, and Director of Marathon Patent
Group, Inc. (MARA), a NASDAQ listed patenting company from June
2012 to February 2015. Mr. Stetson was President and Co-Founder of
Fidelity Property Group, Inc. from April 2010 to July 2014, a
private real estate company. From September 2015 to the present Mr.
Stetson has served as Chief Financial Officer of the Company. Mr.
Stetson received his BA in Economics from the University of
Pennsylvania.
We believe that
Mr. Stetson is qualified to serve as a member of our Board because
of his skills in finance and public company management and
administration.
Item 7.01 Regualation FD
Disclosure
The
Company has made available a presentation about Polarity’s
business, a copy of which is filed as Exhibit 99.1 to this Current
Report on Form 8-K and is hereby incorporated by
reference.
The information contained in the presentation is summary
information that should be considered in the context of the
Company’s filings with the SEC and other public announcements
the Company may make by press release or otherwise from time to
time. The presentation speaks as of the date of this Report. While
the Company may elect to update the presentation in the future to
reflect events and circumstances occurring or existing after the
date of this Report, the Company specifically disclaims any
obligation to do so.
The
presentation contains forward-looking statements, and as a result,
investors should not place undue reliance on these forward-looking
statements.
The information set forth in
this Report, including without limitation the presentation, is not
deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the
“
Exchange Act
”), or incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as may be expressly set forth by specific
reference in such a filing.
Item 9.01 Financial Statements
and Exhibits.
(d) Exhibits.
The
exhibits listed in the following Exhibit Index are filed as part of
this Current Report on Form 8-K.
Exhibit
No.
|
Description
|
2.1
|
Form of
Agreement and Plan of Reorganization by and between the Company,
Majesco Acquisition Corp., PolarityTE, Inc. and Denver Lough dated
December 1, 2016*
|
|
|
3.1
|
Form of
Certificate of Designation of Series E Convertible Preferred
Stock
|
|
|
10.1
|
Form of
Employment Agreement by and between the Company and Denver Lough
dated December 1, 2016
|
|
|
10.2
|
Form of
Employment Agreement by and between the Company and Edward Swanson
dated December 1, 2016
|
|
|
10.3
|
Form of
2017 Equity Incentive Plan
|
|
|
10.4
|
Form of
Stockholders Agreement by and among the Company, Denver Lough,
Edward Swanson, PolarityTE, Inc. and certain stockholders of the
Company dated December 1, 2016
|
|
|
10.5
|
Form of
Voting Agreement by and among the Company, Denver Lough, Edward
Swanson, PolarityTE, Inc. and certain stockholders of the Company
dated December 1 2016
|
|
|
10.6
|
Forn of
Warranty Bill of Sale of Laboratory Equipment by and between Acq
Corp and Q Therapeutics, Inc. dated November 25, 2016
|
|
|
10.7
|
Form of
Lease by and between the Company and Paradigm Resources, L.C. Lough
dated December 1, 2016
|
|
|
99.1
|
PolarityTE,
Inc. presentation dated December 2016
|
|
|
99.2
|
Press
release dated December 8, 2016
|
*
Certain exhibits and schedules to the
Agreement and Plan of Reorganization have been omitted in
accordance with Item 601(b)(2) of
Regulation S-K. The Company agrees to furnish
supplementally a copy of all omitted exhibits and schedules to the
SEC upon its request.
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 hereunto duly authorized.
|
MAJESCO ENTERTAINMENT COMPANY
|
|
|
|
|
Dated:
December 7,
2016
|
/s/
John
Stetson
|
|
John Stetson
|
|
Chief
Financial Officer
|
|
|
Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This
AGREEMENT AND PLAN OF REORGANIZATION (this “
Agreement
”), dated as of
December 1, is by and among Majesco Entertainment
Company
.,
a Delaware
corporation (the “
Parent
”), Majesco
Acquisition Corp., a Nevada corporation and wholly-owned subsidiary
of Parent (“
Merger
Sub
”), Polarityte, Inc., a Nevada Corporation (the
“
Company
”), and Denver
Lough, the owner of 100% of the issued and outstanding shares of
capital stock of Company (the “
Seller
”). Each of the
parties to this Agreement is individually referred to herein as a
“
Party
”
and collectively as the “
Parties
.”
BACKGROUND AND RECITALS
The
Company has Ten Thousand
(10,000)
shares of common stock, par value
$0.001 per share (the “
Company Shares
”)
outstanding, all of which are held by Seller. In connection with a
recapitalization of Parent, and subject to the terms and conditions
of this Agreement, including without limitation the closing of the
Transactions (as defined below) and execution and delivery of the
Constituent Agreements (as defined below), the parties hereto have
agreed to effect the merger of Merger Sub with and into the Company
(the “
Merger
”) pursuant to the
terms of this Agreement.
As a
result of the Merger, among other effects, the Company Shares will
be canceled and exchanged for an aggregate of 7,050 shares of
Series E Preferred Stock (the “
Preferred E Stock
”)
pursuant to a Certificate of Designation substantially in the form
of
Exhibit A
hereto,
convertible into seven million fifty thousand
(7,050,000
)
newly issued shares
of common stock (the “
Parent Stock
”), par value
$0.001 per share, of the Parent, (the “
Parent Common Stock
”) and
the Company will be the entity surviving the Merger, with such
Preferred E Stock having a right to vote on all matters put to vote
of the shareholders of the Company on the basis of 2 votes for
every 1 share of Common Stock into which such Preferred E Stock
shall then be convertible, as adjusted for stock splits,
recapitalization, stock dividends and similar events affecting the
rights of stockholders equally.
The
Merger is intended to constitute a reorganization within the
meaning of the Internal Revenue Code of 1986, as amended (the
“
Code
”), or such other tax
free reorganization or restructuring provisions as may be available
under the Code:
A.
Seller is the owner of that certain
invention described more fully below, and which relates to
“Methods for Development and Use of Minimally Polarized
Functions Cell Micro-Aggregate Units in Tissue Applications Using
LGR4, LGR5 and LGR6 Expressing Epithelial Stem Cells”, (a.k.a
the Purchased Patents); and
B.
Seller has assigned the application
for the Purchased Patents, together with all related intellectual
property, (a.k.a. the Purchased Intellectual Property) to the
Company which is contemplated to be acquired by Parent by virtue of
the transactions contemplated herein, upon satisfaction of the
conditions to Closing set forth herein and in the Transaction
Documents; and
C.
Seller has agreed Company will
merge with Merger Sub, with Company as the surviving entity;
and
D.
Seller and Company acknowledge that the
transactions contemplated hereby are subject to various actions and
events that are not under the control of Seller and Company: (i)
the Parent obtaining approval from its stockholders by the
affirmative approval of the Merger and issuance of the Preferred E
Stock; (ii) acquisition of appropriate laboratory and other
equipment for the business of the Company and the development of
the technology; (iii) leasing of new commercial space for use in
the business of the Company for testing, laboratory work, and other
operational space; (iv) the negotiation and execution by the Parent
of executive employment agreements with certain key employees of
the Company; and (v) raising of additional capital to be used by
the Company in the development of the Patent and the related
intellectual property and for corporate and general working capital
purposes.
E.
Seller intends
that the Merger of Company and Merger Sub, and the Closing of all
related transactions,
will proceed if and
when the conditions described above and the other conditions of
Closin
g
set forth herein,
have been met.
The
Board of Directors of each of the Parent and the Company has
determined that it is desirable to effect this plan of
reorganization and Merger.
Concurrent with and
as a condition to the closing of the Merger, the Parent will enter
into employment agreements with each of Denver Lough and Edward
Swanson (collectively the “
Executives
”), in the
forms attached as
Exhibit B
and
Exhibit C
, respectively,
to serve as Chairman and Chief Executive Officer/Chief Scientific
Officer and President, respectively, of Parent (collectively, the
“
Employment
Agreements
”), the Seller, Company and Executives shall
execute a stockholders agreement, in the form attached hereto as
Exhibit D
(the
“
Stockholder
Agreement”)
and certain holders of Parent capital
stock shall execute a voting agreement, in the form attached hereto
as
Exhibit E
(the
“
Voting
Agreements
”) and the Parent shall have obtained the
affirmative vote of its stockholders approving the transactions in
accordance with NASDAQ Rules which require stockholder approval in
a transaction intended to be tax-free as an “A”
Reorganization of the Company or other exempt transaction. The
Employment Agreements, the Stockholder Agreement and the Voting
Agreements shall collectively be referred to herein as the
“
Constituent
Agreements
”.
Concurrent with and
as a condition to the Merger, Parent will issue authorized but
unissued shares of Preferred E Stock in conjunction with the Merger
and the transactions and recapitalization discussed herein
(collectively the “
Transactions
”).
The
Parties intend for the Transactions to occur at a concurrent
closing upon execution and delivery of this Agreement and the
Constituent Agreements and for the Parent Stock issuable upon
conversion of the Preferred E Stock issued pursuant to the Merger
to represent immediately after the Closing of the Merger 50% issued
and outstanding shares of Parent Common Stock after giving effect
to the Transactions.
Terms
not otherwise defined herein shall have the meanings ascribed to
such terms on
Schedule
A
hereto.
AGREEMENT
NOW
THEREFORE, based on the foregoing premises and for good and
valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the Parties hereto intending to be legally
bound hereby agree as follows:
ARTICLE
I
Exchange of Shares
SECTION
1.01
The Merger
. At
the Closing (as defined in Section 1.02), subject to the terms and
conditions of this Agreement, Merger Sub shall merge with and into
the Company in accordance with applicable provisions of the
Delaware General Corporation law (“
DGCL
”) and the Nevada
Revised Statutes (“
NRS
”), the separate
existence of Merger Sub shall cease and the Company shall survive
and continue to exist as a corporation under the NRS (the
“
Surviving
Company
”) under the name “Polarityte,
Inc.”. The Articles of Incorporation of Surviving Entity as
on file with the Nevada Secretary of State, as in force and effect
immediately prior to the Effective Time of the Merger, shall
continue to be the Articles of Incorporation of Surviving Entity
until duly amended in accordance with the provisions thereof and
applicable law. The managers and officers of the Company shall be
the managers and officers of the Surviving Company. Upon
consummation of the Merger, the Seller, directors and officers of
the Surviving Entity shall take all necessary action to reflect the
Parent as the sole stockholder of the Surviving
Entity.
SECTION
1.02
Effect of the
Merger
. At the Effective Time of the Merger (as defined
herein), the effect of the Merger shall be as provided in the NRS.
Without limiting the generality of the foregoing, at the Effective
Time of the Merger all the property, rights, privileges, powers and
franchise of the Merger Sub shall vest in the Surviving Company,
and all debts, liabilities and duties of the Merger Sub shall
become the debts, liabilities and duties of the Surviving
Company.
SECTION
1.03
Effective Time of the
Merger
. The parties shall cause a Certificate of Merger
required by the NRS relating to the Merger in the form attached
hereto as
Exhibit F
to be
filed with the Secretary of State of the State of Nevada pursuant
to the NRS on the Closing Date and such other documentation and
filings to be filed with the Secretary of State of the State of
Delaware pursuant to the DGCL. The Merger provided for herein shall
become effective upon such filings or on such date as may be
specified therein (the “
Effective Time of the
Merger
”).
SECTION
1.04
Conversion of Company
Shares
. At the Effective Time of the Merger, automatically
by virtue of the Merger and without any action on the part of any
Person: (i) each share of Merger Sub that is issued and outstanding
immediately prior to the Effective Time of the Merger shall, by
virtue of the Merger, be converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving
Company; and (ii) all of the shares of common stock of the Company
shall be converted by virtue of the Merger, into the Preferred E
Stock, as provided herein. A certificate representing the Preferred
E Stock shall be delivered to Seller at the Effective Time of the
Merger pursuant to the terms of this Agreement.
SECTION
1.05
Closing
. The
closing (the “
Closing
”) of the
Transactions shall take place on such date, time and location as
shall be mutually determined by the Company and Parent upon the
satisfaction of all conditions set forth herein (the
“
Closing
Date
”).
ARTICLE
II
Representations and Warranties of Seller
Except
as may be disclosed in Seller’s Disclosure Letter
(“
Seller Disclosure
Schedule
”), (it being understood and agreed that
disclosure of any event, item or occurrence set forth in the Seller
Disclosure Schedule shall apply to, qualify or modify the Section
or subsection to which it corresponds and each of the other
Sections of this Agreement to the extent the relevance of such
disclosure to such other Section or subsection is reasonably
apparent from the text and nature of such disclosure) Seller hereby
represents and warrants to the Parent, as follows:
SECTION
2.01
Good Title
.
Seller is the record and beneficial owner of, and has good and
marketable title to the Company Shares. Seller owns the Company
Shares free and clear of any and all liens, claims, encumbrances,
preemptive rights, right of first refusal and adverse interests of
any kind. Upon registering of the Parent as the new owner of such
Company Shares in the register of the Company, the Parent will
receive good title to such Company Shares, free and clear of all
liens, security interests, pledges, equities and claims of any
kind, voting trusts, agreements among members and other
encumbrances (collectively, “
Liens
”). The Company
Shares are and will be at Closing, all of the Company Shares of the
Company.
SECTION
2.02
Power and
Authority
. Seller has the requisite power and authority to
enter into this Agreement. Seller has obtained all requisite
approvals to enter into this Agreement and consummate the
Transactions contemplated by this Agreement. This Agreement
constitutes a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar Laws relating to or affecting
the enforcement of creditors’ rights in general and by
general principles of equity (regardless of whether enforcement is
sought in equity or at law). No consent, approval or agreement of
any individual or entity is required to be obtained by Seller in
connection with the execution and performance by Seller of this
Agreement or the execution and performance by Seller of any
agreements, instruments or other obligations entered into in
connection with this Agreement.
SECTION
2.03
No Conflicts
.
The execution and delivery of this Agreement by Seller and the
performance by Seller of its obligations hereunder in accordance
with the terms hereof: (i) will not require the consent of any
third party (other than its members) or any federal, state, local
or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign (“
Governmental Entity
”)
under any statutes, laws, ordinances, rules, regulations, orders,
writs, injunctions, judgments, or decrees (collectively,
“
Laws
”); (ii) will not
violate any Laws applicable to the Seller.
SECTION
2.04
No Finder’s
Fee
. Neither Seller nor the Company has created any
obligation for any finder’s, investment banker’s,
financial advisory, or broker’s fee in connection with the
Transactions that the Company or the Parent will be responsible
for.
SECTION
2.05
Purchase Entirely for
Own Account.
The Preferred E Stock and underlying Parent
Stock proposed to be acquired by Seller hereunder will be acquired
for investment for its own accounts, and not with a view to the
resale or distribution of any part thereof, and Seller has no
present intention of selling or otherwise distributing the
Preferred E Stock or underlying Parent Stock except in compliance
with applicable securities laws.
SECTION
2.06
Available
Information
. Seller has such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of an investment in the Parent.
SECTION
2.07
Non-Registration
. Seller
understands that the shares of Preferred E Stock and underlying
Parent Stock have not been registered under the Securities Act of
1933, as amended (the “
Securities Act
”) and, if
issued in accordance with the provisions of this Agreement, will be
issued by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the
accuracy of Seller’s representations as expressed
herein.
SECTION
2.08
Restricted
Securities
. Seller understands that the Preferred E Stock
and underlying Parent Stock is characterized as “restricted
securities” under the Securities Act inasmuch as this
Agreement contemplates that, if acquired by Seller pursuant hereto,
the Preferred E Stock and underlying Parent Stock would be acquired
in a transaction not involving a public offering. Seller further
acknowledges that if the Preferred E Stock and underlying Parent
Stock is issued to Seller in accordance with the provisions of this
Agreement, such Preferred E Stock and underlying Parent Stock may
not be resold without registration under the Securities Act or the
existence of an exemption therefrom. Seller represents that it is
familiar with Rule 144 promulgated under the Securities Act, as
presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act.
SECTION
2.09
Legends
. It is
understood that the shares of Preferred E Stock and underlying
Parent Stock will bear the following legend or another legend that
is similar to the following:
THESE
SECURITIES HAVE 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 AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO
THE COMPANY.
THESE
SECURITIES ARE SUBJECT TO THE TERMS OF A STOCKHOLDERS AGREEMENT AND
MAY NOT BE TRANSFERRED, SOLD OR ASSIGNED OTHER THAN AS PERMITTED
THEREIN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
and any
legend required by the “blue sky” laws of any state to
the extent such laws are applicable to the securities represented
by the certificate so legended.
SECTION
2.10
Accredited
Investor
. Seller is or upon Closing will be an
“accredited investor” within the meaning of Rule 501
under the Securities Act.
Seller and Company have been
furnished with or have had access to such information and materials
as have been requested by Seller and Company. In addition,
Seller and Company may have received in writing from Parent such
other information concerning its operations, financial condition
prospects and other matters as Seller and Company have requested in
writing, (such other information is collectively, the "
Other Written Information
"), and
considered all factors Seller and Company deem material in deciding
on the advisability of entering into the transactions contemplated
herein including investing in the Preferred E Stock and the
underlying Parent Stock.
Information on Seller and
Company
. Seller and Company are experienced in
investments and business matters, have made investments of a
speculative nature and have purchased securities of United States
publicly-owned companies in private placements in the past and,
alone or with their representatives, have such knowledge and
experience in financial, tax and other business matters as to
enable Seller and Company to utilize the information made available
by the Parent and Merger Sub to evaluate the merits and risks of
and to make an informed investment decision with respect to the
proposed purchase and other transactions contemplated herein, which
represents a speculative investment. Seller and Company have
the authority and are duly and legally qualified to purchase and
own the Preferred E Stock and underlying Parent Stock. Seller and
Company are able to bear the risk of such investment for an
indefinite period and to afford a complete loss
thereof.
SECTION
2.11
Litigation.
There is no private or governmental action, suit, proceeding,
claim, arbitration or investigation pending before any agency,
court or tribunal, foreign or domestic, or, to Seller’s
knowledge, threatened against the Company, or any of the
Company’s assets or properties. There is no judgment, decree
or order against Seller or the Company that could prevent, enjoin,
alter or delay any of the transactions contemplated by this
Agreement. There are no material claims, actions, suits,
proceedings, inquiries, labor disputes or investigations pending
or, to Seller’s or Company’s knowledge, threatened
against Seller or the Company or any of the Company's assets, at
law or in equity or by or before any governmental entity or in
arbitration or mediation. No bankruptcy, receivership or debtor
relief proceedings are pending or, to Seller’s knowledge,
threatened against the Company. The Company has complied with, is
not in violation of, and has not received any notices of violation
with respect to, any federal, state, local or foreign Law,
judgment, decree, injunction or order, applicable to it, the
conduct of its business, or the ownership or operation of its
business the violation of which would cause or would reasonably
likely cause a Company Material Adverse Effect (as defined below).
The Seller and Company have access to and has reviewed the
Parent’s filings with the Securities and Exchange Commission,
at WWW.SEC.GOV, including the “Risk Factors” contained
therein.
SECTION
2.12
Stockholder
Agreement
. At Closing, the Seller, Parent, Company and any
other persons or entities receiving securities of the Parent issued
at or in connection with Closing shall execute and deliver a
Stockholder Agreement in the form attached hereto as
Exhibit E
, to the Parent and such other
persons identified therein.
SECTION
2.13
Intellectual Property
Matters
.
(a)
Inventor
. The
inventor listed on the face of the Purchased Patent is the sole
inventor with respect to the Purchased Intellectual
Property.
(b)
Ownership
. Company
exclusively owns all right, title and interest in and to the
Purchased Intellectual Property, including the Patent Technology,
free of all liens, claims, licenses, covenants, encumbrances and
interests. There exist no facts or circumstances that are likely to
give rise to any defect, lien, or encumbrances on the Purchased
Intellectual Property;
(c)
No Rights Granted
.
No right or license has been or is authorized or required to be
granted under or to any Purchased Intellectual Property, and
neither the Seller nor the Company has granted any right, license,
covenant, consent, or privilege to any third party with respect to
the Purchased Intellectual Property, or otherwise undertaken any
action which would conflict in any respect with the rights granted
to Merger Sub set forth in this Agreement;
(d)
Standards Setting
Organizations
. There exists no standards setting
organizations of which Seller or Company, is or was a member or has
participated and which may have intellectual property terms,
conditions or policies that may impact one or more Purchased
Patents;
(e)
Governmental
Rights
. No governmental entity, governmental agency or
university has any right, title, or interest in or to any of the
Purchased Intellectual Property. No governmental entity,
governmental agency or university funding was received, or
resources or facilities from any governmental entity, governmental
agency or university was used, in connection with the conception,
development or reduction to practice of any invention disclosed in
any Purchased Intellectual Property, including any Purchased
Patents;
(f)
Lawsuits and Other
Proceedings
. No Purchased Intellectual Property has been
involved in any past or pending action, suit, investigation, claim
or proceeding (including any reexamination, derivation, or
revocation proceeding), nor to the knowledge of Seller has any
Purchased Intellectual Property been threatened with any such
action, suit, investigation, claim or proceeding, nor do grounds
exist for such action, suit, investigation, claim or proceeding,
other than those set forth in Seller’s Disclosure
Schedules;
(g)
Statutory Bars
. No
acts of Seller or the Company, or any party acting on behalf of or
at the direction of Seller or the Company, have invalidated or will
invalidate any Purchased Patent under the laws of any jurisdiction
(including under 35 U.S.C. §102) including through (i)
disclosure of the invention or circulation of a printed publication
that describes the claimed invention, (ii) public use of the
claimed invention, or (iii) sale or offer for sale of the claimed
invention more than one year prior to the application for such
patent;
(h)
Invalidity and
Unenforceability
. Neither the Company nor the Seller has
received any information, notice, or claim challenging or
questioning the validity or enforceability or alleging the misuse
of any Purchased Patent that has not been disclosed, in writing, to
Seller or the Company. No acts of Seller, Company or Seller’s
or Company’s respective representatives have committed fraud
upon the United States Patent and Trademark Office or any other
patent office with regard to any Purchased Patent. Neither the
Seller nor the Company has any information qualifying as prior art
that would invalidate any of the Purchased Patents. Neither the
Seller nor the Company has committed any illegal tying, illegal
term extension, patent misuse, other illegal anti-competition
activities, laches, estoppel, waiver, inequitable conduct in
violation of 35 CFR 1.56 or other law, in each case, that, if
litigated, would result in the unenforceability or invalidity of
any Purchased Patents;
(i)
No Misappropriation or
Infringement of Purchased Intellectual Property
. No third
party has infringed or misappropriated any Purchased Intellectual
Property. Neither the Seller nor the Company has put any third
party on notice of actual or potential infringement of any
Purchased Intellectual Property, other than those set forth in
Seller’s
Disclosure
Schedules
;
(j)
All Rights
Transferred
. There are no intellectual property or other
rights of Seller or Company that are not assigned hereunder and are
necessary to make, have made, use, sell, offer to sell,
export
or import or otherwise exploit, or transfer physical possession of
or title in the Patent Technology; and
(k)
Freedom to Operate
.
No claim or litigation has been brought or to the knowledge of
Seller, is threatened to be brought by any third party alleging
that use of the Purchased Intellectual Property infringes or
otherwise conflicts or interferes with any intellectual property or
proprietary right of any third party.
(l)
Docket
. The docket
and other Patent Documents provided by Seller are true and correct
in all material respects;
(m)
Fees
. All
maintenance, renewal, application, legal, expert, patent agent and
other fees required to prepare and file or maintain the validity of
the Patent has been paid in full until the date sixty days after
the Closing Date and Seller will indemnify and hold harmless Parent
and Merger Sub for any and all claims;
(n)
Small Entity
Status
. No “small entity” or “micro
entity” fees were paid for any Patent where such fees were
not available for such Patent at such time under applicable
law;
(o)
Upcoming Required
Actions
. There are no known actions that must be taken
within 120 days after the Closing Date, including the payment of
any filing, registration, maintenance or renewal fees or the filing
of any responses to office actions, documents, applications or
certificates for the purposes of obtaining, maintaining, perfecting
or preserving or renewing any Patent;
(p)
Royalties
. There
are no royalties or honoraria payable by Seller or Company to any
third party by reason of the ownership, use, possession, license,
sale, or disposition of any Patent;
(q)
Broker’s
Fees
. Neither Seller, the Company nor any of their
respective Affiliates has knowledge of, and has taken no action
which would give rise to, any claim for a broker’s or
finder’s fee to be paid by Merger Sub in connection with the
consummation of the transactions provided for
hereunder.
(r)
All Rights
Transferred
. There are no intellectual property or other
rights of Seller that are not assigned hereunder and are necessary
to make, have made, use, sell, offer to sell, export or import or
otherwise exploit, or transfer physical possession of or title in
the Purchased Intellectual Property.
ARTICLE
III
Representations and Warranties of the Company and
Seller
The
Company and Seller, jointly and severally, represent and warrant to
the Parent as provided below, except as set forth in a schedule
(the “
Company
Disclosure Schedule
”) (it being understood and agreed
that disclosure of any event, item or occurrence set forth in the
Company Disclosure Letter shall apply to, qualify or modify the
Section or subsection to which it corresponds and each of the other
Sections of this Agreement to the extent the relevance of such
disclosure to such other Section or subsection is reasonably
apparent from the text and nature of such disclosure). For purposes
of this Agreement a “Company Material Adverse Effect”
shall mean a sustained material adverse change or event in the
business, results of operations, or financial condition of the
Company or adversely affecting the ability of the Company to
perform its obligations under this Agreement or on the ability of
the Company to consummate the Transactions. For purposes of this
clause, a “Company Material Adverse Effect” shall not
include any effects, events, developments or changes arising out of
or resulting from (A) changes or conditions in the U.S. or global
economy or capital or financial markets generally, including
changes in interest or exchange rates, (B) changes in the
industries in which the Company operates, (C) changes in general
legal, tax, regulatory, political or general economic conditions
affecting the Company in each case, proposed, adopted or enacted
after the date hereof, or the interpretation or enforcement
thereof, with the exception of any law that would prevent the
business of the Company to be concluded in the ordinary course and
in accordance with past
practice or that
would prevent or substantially impair the consummation of the
Transactions, (D) natural disasters, (E) the commencement,
occurrence, continuation or intensification of any war, sabotage,
armed hostilities or acts of terrorism, (F) any action taken by
Parent or its affiliates in bad faith or in violation of this
Agreement, or (G) any matter fully, fairly, and specifically
disclosed in the Company Disclosure Schedule.
SECTION
3.01
Organization,
Standing and Power
. The Company is duly organized, validly
existing and in good standing under the laws of the State of Nevada
and has the requisite organizational power and authority and
possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease
or otherwise hold its properties and assets and to conduct its
businesses as presently conducted, other than such franchises,
licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect on the
Company. The Company is duly qualified to do business in each
jurisdiction where the nature of its business or its ownership or
leasing of its properties make such qualification necessary, except
where the failure to so qualify would not reasonably be expected to
have a Company Material Adverse Effect. The Company has delivered
to the Parent true and complete copies of the articles of
incorporation and bylaws of the Company, each as amended to the
date of this Agreement (as so amended, the “
Company Charter
Documents
”).
The Company
owns or controls, directly or indirectly, all of the capital stock
or comparable equity interests of each subsidiary (each, a
“
Subsidiary
”)
listed in the Company Disclosure Schedule, free and clear of any
lien, and all issued and outstanding shares of capital stock or
comparable equity interest of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and
similar rights.
SECTION
3.02
Capital
Structure
. The authorized capital structure of the Company
consists of Ten Thousand (10,000) shares of common stock par value
$0.001 per share, all of which are outstanding and owned by Seller.
No other shares of capital stock of the Company are issued,
reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are duly authorized, validly issued,
fully paid and non-assessable and not subject to or issued in
violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right
under any provision of the applicable corporate laws of its state
of formation, the Company Charter Documents or any Contract (as
defined in Section 3.04) to which the Company is a party or
otherwise bound. There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right
to vote) on any matters on which holders of shares of capital stock
of the Company may vote (“
Voting Company Debt
”).
Except as otherwise set forth herein, as of the date of this
Agreement, there are no options, warrants, rights, convertible or
exchangeable securities, “phantom” stock rights, stock
appreciation rights, stock-based performance units, commitments,
Contracts, arrangements or undertakings of any kind to which the
Company is a party or by which the Company is bound (i) obligating
the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, additional capital stock or other equity
interests in, or any security convertible or exercisable for or
exchangeable into any capital stock or other equity interest in,
the Company or any Voting Company Debt, (ii) obligating the Company
to issue, grant, extend or enter into any such option, warrant,
call, right, security, commitment, Contract, arrangement or
undertaking or (iii) that give any person the right to receive any
economic benefit or right similar to or derived from the economic
benefits and rights occurring to holders of capital stock of the
Company.
SECTION
3.03
Authority; Execution
and Delivery; Enforceability
. The Company has all requisite
corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and
delivery by the Company of this Agreement and the performance of
its obligations under this Agreement have been duly authorized and
approved by the Board of Directors of the Company and no other
proceedings on the part of the Company are necessary to authorize
this Agreement and the Transactions. When executed and delivered,
this Agreement will be enforceable against the Company in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar Laws relating to or affecting the enforcement of
creditors’ rights in general and by general principles of
equity (regardless of whether enforcement is sought in equity or at
law). No consent, approval or agreement of any individual or entity
is required to be obtained by the Company in connection with the
execution and performance by the Company of this Agreement or the
Constituent Agreements or the execution and performance by the
Company of any agreements, instruments or other obligations entered
into in connection with this Agreement.
SECTION
3.04
No Conflicts;
Consents
.
(a) The
execution and delivery by the Company of this Agreement does not,
and the consummation of the Transactions and compliance with the
terms hereof and thereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon
any of the properties or assets of the Company under any provision
of (i) the Company Charter Documents, (ii) any material contract,
lease, license, indenture, note, bond, agreement, permit,
concession, franchise or other instrument (a “
Contract
”) to which the
Company is a party or by which any of its respective properties or
assets is bound or (iii) subject to the filings and other matters
referred to in Section 3.04(b), any material judgment, order or
decree (“
Judgment
”) or material
Law applicable to the Company or its properties or assets, other
than, in the case of clauses (ii) and (iii) above, any such items
that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse
Effect.
(b)
Except for required filings with the Securities and Exchange
Commission (the “
SEC
”) and applicable
“Blue Sky” or state securities commissions, no material
consent, approval, license, permit, order or authorization
(“
Consent
”) of, or
registration, declaration or filing with, or permit from, any
Governmental Entity is required to be obtained or made by or with
respect to the Company in connection with the execution, delivery
and performance of this Agreement or the performance by the Company
of its obligations under this Agreement.
SECTION
3.05
Taxes
.
(a) The
Company has timely filed, or has caused to be timely filed on its
behalf, all Tax Returns required to be filed by it, and all such
Tax Returns were correct and complete in all material respects
except to the extent any failure to file or any inaccuracies in any
filed Tax Returns, individually or in the aggregate, have not had
and would not reasonably be expected to have a Company Material
Adverse Effect. All Taxes shown to be due on such Tax Returns, or
otherwise owed, have been timely paid, except to the extent that
any failure to pay, individually or in the aggregate, has not had
and would not reasonably be expected to have a Company Material
Adverse Effect. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and
the officers of the Company know of no basis for any such
claim.
(b) If
applicable, the Company has established an adequate reserve
reflected on its financial statements for all Taxes payable by the
Company (in addition to any reserve for deferred Taxes to reflect
timing differences between book and Tax items) for all Taxable
periods and portions thereof through the date of such financial
statements. No deficiency with respect to any Taxes has been
proposed, asserted or assessed against the Company, and no requests
for waivers of the time to assess any such Taxes are pending,
except to the extent any such deficiency or request for waiver,
individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse
Effect.
(c) For
purposes of this Agreement:
“
Taxes
” includes all forms
of taxation, whenever created or imposed, and whether of the United
States or elsewhere, and whether imposed by a local, municipal,
governmental, state, foreign, federal or other Governmental Entity,
or in connection with any agreement with respect to Taxes,
including all interest, penalties and additions imposed with
respect to such amounts.
“
Tax Return
” means all
federal, state, local, provincial and foreign Tax returns,
declarations, statements, reports, schedules, forms and information
returns and any amended Tax return relating to Taxes.
SECTION
3.06
Benefit Plans
.
Except as set forth in the Company Disclosure Schedule, the Company
does not have or maintain any collective bargaining agreement or
any bonus, pension, profit sharing, deferred compensation,
incentive compensation, share ownership, share purchase, share
option, phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan, arrangement
or understanding (whether or not legally binding) providing
benefits to any current or former employee, officer or director of
the Company (collectively, “
Company Benefit Plans
”).
As of the date of this Agreement, except as set forth in the
Company Disclosure Schedule, there are no employment, consulting,
indemnification, severance or termination agreements or
arrangements between the Company and any current or former
employee, officer or director of the Company, nor does the Company
have any general severance plan or policy.
SECTION
3.07
Litigation
.
There is no action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or
investigation pending or threatened in writing against or affecting
the Company, or any of its properties before or by any court,
arbitrator, governmental or administrative agency, regulatory
authority (federal, state, county, local or foreign), stock market,
stock exchange or trading facility (“
Action
”). Neither the
Company nor any director or officer thereof (in his or her capacity
as such), is or has been the subject of any Action involving a
claim or violation of or liability under federal or state
securities laws or a claim of breach of fiduciary
duty.
SECTION
3.08
Compliance with
Applicable Laws
. To the best of its knowledge, the Company
is in material compliance with all applicable Laws, except for
instances of noncompliance that, individually and in the aggregate,
have not had and would not reasonably be expected to have a Company
Material Adverse Effect. This Section 3.08 does not relate to
matters with respect to Taxes, which are the subject of Section
3.05.
SECTION
3.09
Brokers; Schedule of
Fees and Expenses
. No broker, investment banker, financial
advisor or other person is entitled to any broker’s,
finder’s, financial advisor’s or other similar fee or
commission for which Parent or the Company is obligated in
connection with the Transactions based upon arrangements made by or
on behalf of the Company.
SECTION
3.10
Contracts
.
Except as disclosed in the Company Disclosure Schedule, there are
no Contracts that are material to the business, properties, assets,
financial condition, results of operations or prospects of the
Company and its Subsidiaries taken as a whole. The Company is not
in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice
would cause such a violation of or default under) any Contract to
which it is a party or by which it or any of its properties or
assets is bound, except for violations or defaults that would not,
individually or in the aggregate, reasonably be expected to result
in a Company Material Adverse Effect. The Company’s execution
of this Agreement and the consummation of the Transactions
contemplated herein would not violate any Contract to which the
Company or any of its Subsidiaries is a party nor will the
execution of this Agreement or the consummation of the Transactions
consummated hereby violate or trigger any “change in
control” provision or covenant in any Contract to which the
Company or any Subsidiary is a party.
SECTION
3.11
Title to
Properties
. Except as set forth in the Company Disclosure
Schedule, the Company does not own any real property. The Company
has sufficient title to, or valid leasehold interests in, all of
its properties and assets used in the conduct of its businesses.
All such assets and properties, other than assets and properties in
which the Company has leasehold interests, are free and clear of
all Liens other than those Liens that, in the aggregate, do not and
will not materially interfere with the ability of the Company to
conduct business as currently conducted or result in or would
reasonably be expected to result in a Company Material Adverse
Effect.
SECTION
3.12
Intentionally
omitted.
SECTION
3.13
Insurance
.
Except as set forth on the Company Disclosure Schedule, the Company
does not hold any insurance policy.
SECTION
3.14
Transactions With
Affiliates and Employees
. Except as set forth in the Company
Disclosure Schedule, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees
of the Company is presently a party to any transaction with the
Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any entity in which
any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or
partner.
SECTION
3.15
Application of
Takeover Protections
. The Company is not subject to any
control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company Charter Documents
or the laws of its state of incorporation that is or could become
applicable to Seller as a result of Seller, the Parent and the
Company fulfilling their obligations or exercising their rights
under this Agreement, including, without limitation, the issuance
of the Preferred E Stock and underlying Parent Stock and
Seller’ ownership of the Preferred E Stock and underlying
Parent Stock.
SECTION
3.16
Labor Matters
.
Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or employs any member of a
union. The Company believes that its and its
Subsidiaries’ relations with their respective employees are
good. The Company and its Subsidiaries are in compliance with
all federal, state, local and foreign laws and regulations
respecting labor, employment and employment practices and benefits,
terms and conditions of employment and wages and hours, except
where failure to be in compliance would not, either individually or
in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect.
SECTION
3.17
ERISA Compliance;
Excess Parachute Payments
. The Company does not, and since
its inception never has, maintained, or contributed to any
“employee pension benefit plans” (as defined in Section
3(2) of ERISA), “employee welfare benefit plans” (as
defined in Section 3(1) of ERISA) or any other Company Benefit Plan
for the benefit of any current or former employees, consultants,
officers or directors of Company.
SECTION
3.18
No Additional
Agreements
. The Company does not have any agreement or
understanding with Seller with respect to the Transactions other
than as specified in this Agreement.
SECTION
3.19
Investment
Company
. The Company is not, and is not an affiliate of, and
immediately following the Closing will not have become, an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended.
SECTION
3.20
Disclosure
.
All disclosure provided to the Parent regarding the Company, its
business and the Transactions, furnished by or on behalf of the
Company (including the Seller’s and Company’s
representations and warranties set forth in this Agreement and the
Company Disclosure Schedule) are true and correct in all material
respects and do not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which
they were made, not misleading.
SECTION
3.21
Absence of Certain
Changes or Events
. Except in connection with the
Transactions and as disclosed in the Company Disclosure Schedule,
since inception, the Company has conducted its business only in the
ordinary course, and there has not been:
(a) any
change in the assets, liabilities, financial condition or operating
results of the Company, except changes in the ordinary course of
business that have not caused, in the aggregate, a Company Material
Adverse Effect;
(b) any
damage, destruction or loss, whether or not covered by insurance,
that would have a Company Material Adverse Effect;
(c) any
waiver or compromise by the Company of a valuable right or of a
material debt owed to it;
(d) any
satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Company, except in the ordinary
course of business and the satisfaction or discharge of which would
not have a Company Material Adverse Effect;
(e) any
material change to a material Contract by which the Company or any
of its assets is bound or subject;
(f) any
mortgage, pledge, transfer of a security interest in, or lien,
created by the Company, with respect to any of its material
properties or assets, except liens for taxes not yet due or payable
and liens that arise in the ordinary course of business and does
not materially impair the Company’s ownership or use of such
property or assets;
(g) any
loans or guarantees made by the Company to or for the benefit of
its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances
made in the ordinary course of its business;
(h) any
alteration of the Company’s method of accounting or the
identity of its auditors;
(i) any
declaration or payment of dividend or distribution of cash or other
property to Seller or any purchase, redemption or agreements to
purchase or redeem any Company Shares;
(j) any
issuance of equity securities to any officer, director or
affiliate; or
(k) any
arrangement or commitment by the Company to do any of the things
described in this Section.
SECTION
3.22
Foreign Corrupt
Practices
. Neither the Company, nor, to the Company’s
knowledge, any director, officer, agent, employee or other person
acting on behalf of the Company has, in the course of its actions
for, or on behalf of, the Company (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices
Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or
employee.
SECTION
3.23
Licenses and
Permits
. The Company has obtained and maintains all federal,
state, local and foreign licenses, permits, consents, approvals,
registrations, memberships, authorizations and qualifications
required to be maintained in connection with the operations of the
Company as presently conducted and as proposed to be conducted the
absence of which has caused or is reasonably likely to cause a
Company Material Adverse Effect. The Company is not in default
under any of such licenses, permits, consents, approvals,
registrations, memberships, authorizations and qualifications
except for such defaults that have not caused or would not
reasonably be likely to result in a Company Material Adverse
Effect.
SECTION
3.24
Environmental
Laws
. The Company and each Subsidiary (i) is in compliance
in all material respects with any and all Environmental Laws (as
hereinafter defined), (ii) has received all permits, licenses
or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) is in
compliance in all material respects with all terms and conditions
of any such permit, license or approval where, in each of the
foregoing clauses (i), (ii) and (iii), the failure to so comply
would be reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect. The term
“
Environmental
Laws
” means all federal, state, local or foreign laws
relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes
(collectively, “
Hazardous Materials
”)
into the environment, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated
or approved thereunder.
SECTION
3.25
Indebtedness
.
Except as disclosed in the Company Disclosure Schedule, neither the
Company nor any Subsidiary (i) has any outstanding Indebtedness (as
defined below), (ii) is in violation of any term of or is in
default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not
result, individually or in the aggregate, in a Company Material
Adverse Effect, and (iii) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which,
in the judgment of the Company's officers, has or is expected to
have a Company Material Adverse Effect. For purposes of this
Agreement: (x) “
Indebtedness
” of any
Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed
as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business),
(C) all reimbursement or payment obligations with respect to
letters of credit, surety bonds and other similar instruments, (D)
all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in
either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property), (F)
all monetary obligations under any leasing or similar arrangement
which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified
as a capital lease, (G) all indebtedness referred to in
clauses (A) through (F) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or
assets (including accounts and contract rights) owned by any
Person, even though the Person which owns such assets or property
has not assumed or become liable for the payment of such
indebtedness, and (H) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in
clauses (A) through (G) above; (y) “
Contingent Obligation
”
means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person
if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid
or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto;
and (z) “
Person
” means an
individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, a
government or any department or agency thereof and any other legal
entity.
SECTION
3.26
Money
Laundering
. The Company and its Subsidiaries are in
compliance with, and have not previously violated, the USA Patriot
Act of 2001 and all other applicable U.S. and non-U.S. anti-money
laundering laws and regulations, including, but not limited to, the
laws, regulations and Executive Orders and sanctions programs
administered by the U.S. Office of Foreign Assets Control,
including, but not limited, to (i) Executive Order 13224 of
September 23, 2001 entitled, “Blocking Property and
Prohibiting
Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism”
(66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in
31 CFR, Subtitle B, Chapter V.
SECTION
3.27
Management
.
During the past five year period, no current officer or director
or, to the knowledge of the Company, no former officer or director
or current ten percent (10%) or greater member of the Company or
any of its Subsidiaries has been the subject of:
(a) a
petition under bankruptcy laws or any other insolvency or
moratorium law or the appointment by a court of a receiver, fiscal
agent or similar officer for such Person, or any partnership in
which such person was a general partner at or within two years
before the filing of such petition or such appointment, or any
corporation or business association of which such person was an
executive officer at or within two years before the time of the
filing of such petition or such appointment;
(b) a
conviction in a criminal proceeding or a named subject of a pending
criminal proceeding (excluding traffic violations that do not
relate to driving while intoxicated or driving under the
influence);
(c) any
order, judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining any such person from, or otherwise limiting,
the following activities:
(i)
Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
United States Commodity Futures Trading Commission or an associated
person of any of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as an affiliated
person, director or employee of any investment company, bank,
savings and loan association or insurance company, or engaging in
or continuing any conduct or practice in connection with such
activity;
(ii)
Engaging in any type of business practice; or
(iii)
Engaging in any activity in connection with the purchase or sale of
any security or commodity or in connection with any violation of
securities laws or commodities laws;
(d) any
order, judgment or decree, not subsequently reversed, suspended or
vacated, of any authority barring, suspending or otherwise limiting
for more than 60 days the right of any such person to engage in any
activity described in the preceding sub paragraph, or to be
associated with persons engaged in any such activity;
(e) a
finding by a court of competent jurisdiction in a civil action or
by the SEC or other authority to have violated any securities law,
regulation or decree and the judgment in such civil action or
finding by the SEC or any other authority has not been subsequently
reversed, suspended or vacated; or
(f) a
finding by a court of competent jurisdiction in a civil action or
by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or
finding has not been subsequently reversed, suspended or
vacated.
SECTION
3.28
Public Utility
Holding Act
. None of the Company nor any of its Subsidiaries
is a “holding company,” or an “affiliate”
of a “holding company,” as such terms are defined in
the Public Utility Holding Act of 2005.
SECTION
3.29
Federal Power
Act
. None of the Company nor any of its Subsidiaries is
subject to regulation as a “public utility” under the
Federal Power Act, as amended.
SECTION
3.30
No Undisclosed
Events, Liabilities, Developments or Circumstances
. To the
best knowledge of the Company or the Seller, no event, liability,
development or circumstance has occurred or exists, or is
reasonably expected to exist or occur with respect to the Company,
any of its Subsidiaries or any of their respective businesses,
properties, liabilities, prospects, operations (including results
thereof) or condition (financial or otherwise), that in the
reasonable judgment of the Company (i) has not already been made
known to the Parent; or (ii) could have a Company Material Adverse
Effect. Except as set forth in the Company Disclosure Schedule, the
Company has no liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise). The Company Disclosure
Schedule sets forth all financial and contractual obligations and
liabilities (including any obligations to issue membership
interests or other securities of the Company) due after the date
hereof.
SECTION
3.31
No Other
Representations or Warranties
. Except for the
representations and warranties contained in Article II and Article
III of this Agreement, neither Seller nor the Company has made any
representation or warranty, express or implied, concerning the
Company, its financial condition, results of operations, assets, or
prospects, and such representations and warranties supersede any
prior statements made by any person regarding the
Transactions.
ARTICLE
IV
Representations and Warranties of the Parent and Merger
Sub
Representations and Warranties of
Parent and Merger Sub
. Parent and Merger Sub, jointly and
severally, represent and warrant to Seller that all of the
statements contained in this Article IV are true as of the date of
this Agreement (or, if made as of a specified date, as of such
date) except, in each case, as (a) set forth in Parent Disclosure
Schedules attached to this Agreement (the “
Parent Disclosure Schedules
”); or
(b) as otherwise provided in this Agreement. For purposes of the
representations and warranties of Parent contained in this Article
IV, disclosure in any SEC filing or report of Parent and disclosure
in any section of Parent Disclosure Schedules (which may reference
specific public reports of Parent which are applicable to the
particular section hereof) of any facts or circumstances shall be
deemed to be an adequate response and disclosure of such facts or
circumstances with respect to all representations or warranties by
Parent calling for disclosure of such information, whether or not
such disclosure is specifically associated with or purports to
respond to one or more or all of such representations or
warranties, if it is reasonably apparent on the face of Parent
Disclosure Schedules such disclosure is applicable. The inclusion
of any information in any section of Parent Disclosure Schedules by
Parent shall not be deemed to be an admission or evidence of
materiality of such item, nor shall it establish a standard of
materiality for any purpose whatsoever.
SECTION
4.01
Organization
. Parent is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware and its wholly-owned
subsidiary, Merger Sub, is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Nevada. Parent and Merger Sub are referred to collectively in this
Agreement as the “
Majesco
Entities
.” Each of the Majesco Entities has the
corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and
orders of public authorities to own all of its properties and
assets and to carry on its business in all material respects as it
is now being conducted, and there are no other jurisdictions in
which it is not so qualified in which the character and location of
the assets owned by it or the nature of the material business
transacted by it requires qualification, except where failure to do
so would not have a material adverse effect on its business,
operations, properties, assets or condition. The execution and
delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement in accordance with the
terms hereof will not, violate any provision of the
articles/certificate of incorporation or bylaws of any of the
Majesco Entities or other agreement to which any Majesco Entity is
a party or by which it is bound. True, correct and complete copies
of the articles/certificate of Incorporation and Bylaws of each of
the Majesco Entities, each as amended or restated as of the date
hereof, have been provided to Seller and are included in Parent
Disclosure Schedules. Except for the ownership of Merger Sub by
Parent or as otherwise set forth in the
Parent SEC
Documents, none of the Majesco Entities has any wholly or partially
owned subsidiaries, or owns any economic, voting or management
interests in any other person.
SECTION
4.02
Due Authorization
. Subject to
approval by its stockholders, the Majesco Entities have full power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and
performance by the Majesco Entities of this Agreement have been
duly and validly authorized by the board of directors of the
Majesco Entities, and, other than approval by its stockholders and
by The NASDAQ Stock Market of the listing of the Parent Stock
underlying the Preferred E Stock, which shall have occurred prior,
and as a condition to, the Closing, no other actions or proceedings
on the part of the Majesco Entities are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding obligation of each of the
Majesco Entities, enforceable in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, moratorium, reorganization or
other laws from time to time in effect which affect
creditors’ rights generally and by general principles of
equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
SECTION
4.03
Capitalization of Parent
. The
authorized capitalization of Parent consists of 250,000,000 shares
of common stock, $0.001 par value, of which 2,782,963 shares are
issued and outstanding as of the date of this Agreement and
10,000,000 shares of preferred stock, par value $0.001 of which, as
of the date of this Agreement: (i) 8,830,000 shares are designated
as Series A Convertible Preferred Stock of which 7,138,158 are
outstanding and convertible into 1,189,693 shares of Parent Stock;
(ii) 54,250 shares are designated as Series B Convertible Preferred
Stock of which 54,201.71 are outstanding and convertible into
903,362 shares of Parent Stock; (iii) 26,000 shares are designated
as Series C Convertible Preferred Stock of which 25,763.53 are
outstanding and convertible into 429,392 shares of Parent Stock;
and (iv) 170,000 shares are designated as Series D Convertible
Preferred Stock of which 156,332 are outstanding and convertible
into 260,553 shares of Parent Stock. All issued and outstanding
shares of Parent are legally issued, fully paid, and non-assessable
and not issued in violation of the preemptive or other right of any
person. There are no dividends or other amounts due or payable with
respect to any of the shares of capital stock of Parent. There are
no existing warrants, options, calls, or commitments of any nature
relating to the authorized and unissued shares of Parent to which
Parent is a party, except for (i) outstanding common stock purchase
warrants that entitle the holders to purchase up to 187,500 shares
of Parent common stock at an exercise price of $6.90 per share at
any time on or before April 19, 2018, which will be exercised prior
to Closing and (ii) outstanding options to purchase up to 390,346
shares of Parent Stock of which 171,349 of such options are
unvested as of the date hereof.
SECTION
4.04
SEC Reports; Financial
Statements
.
(a)
Parent has filed all forms, reports and documents (including all
Exhibits) required to be filed by it with the SEC since it became
subject to the reporting requirements of section 13 or 15(d) of the
Exchange Act, including any amendments or supplements thereto
(collectively, including any such forms, reports and documents
filed after the date hereof, the “
Parent SEC Reports
”) and, with
respect to Parent SEC Reports filed by Parent after the execution
hereof and prior to the Closing Date, will deliver or make
available, to Seller all of its Parent SEC Reports in the form
filed with the SEC. Parent SEC Reports (i) were (and any Parent SEC
Reports filed after the execution hereof will be) in all material
respects prepared in accordance with the requirements of the
Securities Act or the Securities Exchange Act of 1934, as amended
(the “
Exchange
Act
”), as the case may be, and the rules and
regulations promulgated thereunder, and (ii) as of their respective
filing dates, did not (and any Parent SEC Reports filed after the
execution hereof and prior to the Closing Date will not) contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading. On the Closing Date, Parent
shall be current in the filing of the Parent SEC
Reports.
(b) The
audited consolidated balance sheets of Parent as of October 31,
2015 and 2014, and the related audited consolidated statements of
operations, stockholders’ equity (deficit), and cash flows
for the fiscal years ended October 31, 2015 and 2014, including the
notes thereto, and the accompanying report of Parent’s
independent registered accountants are included in the SEC
Reports.
(c) The
financial statements of Parent referenced in Section 4.04(b) have
been prepared in accordance with generally accepted accounting
principles applicable to issuers filing financial statements and
reports with the SEC in the United States (“US GAAP”),
consistently applied throughout the periods involved as explained
in the notes to such financial statements. The Parent financial
statements present fairly, in all material respects, as of their
respective dates, the financial condition of Parent. Parent did not
have, as of the date of any such financial statements, except as
and to the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which should be
reflected in any financial statement or the notes thereto prepared
in accordance with US GAAP, and all assets reflected therein
present fairly the assets of Parent in accordance with US GAAP. The
statements of operations and cash flows present fairly the
financial position and results of operations of Parent as of their
respective dates and for the respective periods covered
thereby.
(d) The
books and records, financial and otherwise, of Parent are in all
material respects complete and correct and have been maintained in
accordance with sound business and bookkeeping practices so as to
accurately and fairly reflect, in reasonable detail, the
transactions and dispositions of the assets of Parent, and, except
as described in the Parent SEC Reports, Parent has maintained a
system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions have been and are
executed in accordance with management’s general or specific
authorization; (ii) transactions are recorded as necessary to
permit the preparation of financial statements in conformity with
generally accepted accounting principles or any other criteria
applicable to such statements and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals, and appropriate action is taken
with respect to any differences.
SECTION
4.05
Information
. The information
concerning the Majesco Entities set forth in this Agreement and in
the Parent Disclosure Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a
material fact or omit to state a material fact required to make the
statements made, in light of the circumstances under which they
were made, not misleading. The Majesco Entities shall cause the
Parent Disclosure Schedules to be updated after the execution
hereof up to and including the Closing Date.
SECTION
4.06
Absence of Certain Changes or
Events
. Except as set forth in this Agreement, a subsequent
Parent SEC Report or the Parent Disclosure Schedules, since July
31, 2016:
(a)
There has not been (i) any adverse change in the business,
operations, properties, level of inventory, assets, or condition of
the Majesco Entities or (ii) any damage, destruction, or loss to
the Majesco Entities (whether or not covered by insurance)
adversely affecting the business, operations, properties, assets,
or condition of the Majesco Entities;
(b)
Except as set forth in the Parent Disclosure Schedules, none of the
Majesco Entities has (i) amended its articles/certificate of
incorporation or bylaws; (ii) declared or made, or agreed to
declare or make, any payment of dividends or distributions of any
assets of any kind whatsoever to stockholders or purchased or
redeemed, or agreed to purchase or redeem, any of its capital
stock; (iii) waived any rights of value which in the aggregate are
extraordinary or material considering the business of Parent; (iv)
made any change in its method of management, operation, or
accounting; (v) entered into any other transactions; (vi) made any
accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination payment to
any present or former officer or employee; (vii) increased the rate
of compensation payable or to become payable by it to any of its
officers or directors or any of its employees; or (viii)
established any profit-sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan,
payment, or arrangement made to, for, or with its officers,
directors, or employees;
(c)
Except as set forth in the Parent Disclosure Schedules, none of the
Majesco Entities has (i) granted or agreed to grant any options,
warrants, or other rights for its stocks, bonds, or other corporate
securities calling for the issuance thereof; (ii) borrowed or
agreed to borrow any funds or incurred, or become subject to, any
material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (iii) paid
any material obligation or liability (absolute or contingent) other
than current liabilities reflected in or shown on the most recent
Parent balance sheet and current liabilities incurred since that
date in the ordinary course of business; (iv) sold or transferred,
or agreed to sell or transfer, any of its assets, properties, or
rights; (v) canceled, or agreed to cancel, any debts or claims;
(vi) made or permitted any amendment or termination of any
contract, agreement, or license to which it is a party if such
amendment or termination is material, considering the business of
Parent; or (vii) issued, delivered, or agreed to issue or deliver
any stock, bonds, or other corporate securities including
debentures (whether authorized and unissued or held as treasury
stock); and
(d) The
Majesco Entities have not become subject to any law or regulation
which materially and adversely affects, or in the future would be
reasonably expected to adversely affect, the business, operations,
properties, assets, or condition of the Majesco
Entities.
SECTION 4.07
Title and Related Matters
.
Except as provided herein or disclosed in the Parent balance sheet
and the notes thereto, the Majesco Entities have good and
marketable title to all of their properties, inventory, interests
in properties, and assets, which are reflected in the most recent
Parent balance sheet or acquired after that date (except
properties, interests in properties, and assets sold or otherwise
disposed of since such date in the ordinary course of business),
free and clear of all mortgages, liens, pledges, charges, or
encumbrances, except (i) statutory liens or claims not yet
delinquent; and (ii) such imperfections of title and easements as
do not, and will not, materially detract from, or interfere with,
the present or proposed use of the properties subject thereto or
affected thereby or otherwise materially impair present business
operations on such properties. To the best knowledge of the Majesco
Entities, other than as set forth in the Parent Disclosure
Schedules, the business of the Majesco Entities as currently
conducted does not infringe on the copyright, patent, trade secret,
know-how, or other proprietary right of any other person or entity
and comprises all such rights necessary to permit the operation of
the businesses of the Majesco Entities as now being conducted or as
contemplated.
SECTION 4.08
Litigation and Proceedings
.
Except as set forth in the Parent Disclosure Schedules or the
Parent SEC Reports, there are no actions, suits, or administrative
or other proceedings pending or, threatened by or against the
Majesco Entities or adversely affecting the Majesco Entities or
their properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind. None of the Majesco Entities has
any knowledge of any default on the part of the Majesco Entities
with respect to any judgment, order, writ, injunction, decree,
award, rule, or regulation of any court, arbitrator, or
governmental agency or instrumentality.
SECTION 4.09
Contracts
. Except as disclosed
in the Parent SEC Reports or the Parent Disclosure
Schedules:
(a)
There are no material contracts, agreements, franchises, license
agreements, or other commitments to which any of the Majesco
Entities is a party or by which any of the Majesco Entities or
their properties are bound;
(b) All
contracts, agreements, franchises, license agreements, and other
commitments to which any of the Majesco Entities is a party or by
which its properties are bound and which are material to the
consolidated operations or financial condition of Parent are valid
and enforceable by the Majesco Entities in all material
respects;
(c) The
Majesco Entities are not a party to or bound by, and its properties
are not subject to, any material contract, agreement, other
commitment or instrument; any charter or other corporate
restriction; or any judgment, order, writ, injunction, decree, or
award which materially and adversely affects, or in the future may
(as far as Parent can now foresee) materially and adversely affect,
the business, operations, properties, assets, or condition of the
Majesco Entities; and
(d)
None of the Majesco Entities is a party to any oral or written (i)
contract for the employment of any officer, director, or employee
which is not terminable on 30 days (or less) notice; (ii)
profit-sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan, agreement, or
arrangement covered by Title IV of the Employee Retirement Income
Security Act, as amended; (iii) agreement, contract, or indenture
relating to the borrowing of money; (iv) guarantee of any
obligation, other than one on which a Majesco Entity is a primary
obligor, for the borrowing of money or otherwise, excluding
endorsements made for collection and other guarantees of
obligations, which, in the aggregate do not exceed $5,000; (v)
consulting or other similar contract with an unexpired term of more
than one year or providing for payments in excess of $5,000 in the
aggregate; (vi) collective bargaining agreement; (vii) agreement
with any present or former officer or director of Parent or any
subsidiary; or (viii) contract, agreement, or other commitment
involving payments by it of more than $5,000 in the
aggregate.
SECTION 4.10
Material Contract Defaults
.
None of the Majesco Entities is in default in any material respect
under the terms of any outstanding contract, agreement, lease, or
other commitment which is material to the business, operations,
properties, assets, or condition of the Majesco Entities considered
as whole, and there is no event of default or other event which,
with notice or lapse of time or both, would constitute a default in
any material respect under any such contract, agreement, lease, or
other commitment in respect of which the Majesco Entities have not
taken adequate steps to prevent such a default from
occurring.
SECTION 4.11
Intellectual Property
. Except
as disclosed on the Parent Disclosure Schedules:
(a) All
of the Majesco Entities’ material Intellectual Property is
either licensed or owned by the Majesco Entities, in each case free
and clear of all liens other than any right of any third party as
owner or licensor or licensee under a contract affecting such
Intellectual Property, with royalties as set forth on Parent
Disclosure Schedules;
(b)
None of the Majesco Entities’ material Intellectual Property
is the subject of any pending or, to the knowledge of Parent,
threatened litigation or claim of infringement;
(c) The
Majesco Entities have not granted any license, or agreed to pay or
receive any royalty in respect of, any intellectual property except
as set forth on Parent Disclosure Schedule;
(d) No
material license or royalty agreement to which any Majesco Entity
is a party is in breach or default by such Majesco Entity or, to
the knowledge of Parent or its officers or directors, any other
party thereto; and no such license or royalty agreement is or has
been the subject of any notice of termination given or threatened
in writing by any person;
(e) The
Majesco Entities have not received any notice contesting their
rights to use any intellectual property as set forth on the Parent
Disclosure Schedules;
(f) No
Majesco Entity has granted any license or agreed to pay or receive
any royalty in respect of any material Intellectual Property except
as set forth on the Parent Disclosure Schedules; and
(g) No
Majesco Entity has knowingly violated the Intellectual Property
rights of any third party.
SECTION 4.12
Tax Matters
.
(a) The
Majesco Entities have complied in all material respects with all
applicable laws relating to taxes. The Majesco Entities have timely
filed all tax returns that they were required to file. All such tax
returns were true, correct, and complete in all material respects.
All taxes of the Majesco Entities due and payable with respect to
all tax returns have been paid in a timely manner.
(b)
There are no liens for taxes on any assets of the Majesco
Entities.
(c) The
Majesco Entities have properly withheld in a timely manner (i) all
required amounts from payments to its employees, agents,
contractors, nonresidents, shareholders, lenders, and other persons
and (ii) all sales, use, ad valorem, and value added taxes. The
Majesco Entities remitted in a timely manner all withheld taxes to
the proper governmental authority in accordance with all applicable
laws.
(d) No
audits or other legal proceedings are in progress, pending, or to
the knowledge of the Majesco Entities or their officers or
directors, threatened with regard to any taxes or tax returns of or
with respect to, the business, or any employee (including, but not
limited to, all key employees and retained employees). The Majesco
Entities have not received in the past five (5) years a written
notice from any governmental authority that either of the Majesco
Entities is required to pay taxes or file tax returns in a
jurisdiction in which such Majesco Entity does not file tax returns
or pays taxes.
(e) The
Majesco Entities have not executed or filed with any governmental
authority any agreement or other document extending or having the
effect of extending the statute of limitations for assessment,
collection or other imposition of any tax.
(f)
Neither of the Majesco Entities is a party to or bound by any
contract that could require it to share any tax benefits, and
neither of the Majesco Entities is party to or bound by any
contract that could require it to indemnify any other person with
respect to taxes.
(g)
Neither of the Majesco Entities (i) has ever been a member of any
group of entities that files a tax return as an affiliated,
consolidated, combined, or unitary group, and (ii) has any
liability for the taxes of any person as a result of successor
liability, transferee liability, joint or several liability
(including pursuant to Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign law)), contractual
liability, or otherwise.
(h) The
Majesco Entities have provided to Seller true, correct, and
complete copies of (i) all material federal, state, local, and
foreign tax returns filed in the past three (3) years by either of
the Majesco Entities (or their affiliates) with respect to the
business of Parent or any employee, and (ii) all material notices,
correspondence, and similar material received by either of the
Majesco Entities Seller (or their affiliates) from any governmental
authority relating to the Business of Parent or any
employee.
(i) No
assets of either of the Majesco Entities are “tax-exempt use
property” within the meaning of Section 168(h)(1) of the
Code.
(j)
Neither of the Majesco Entities has participated in any listed
transaction required to be disclosed under Treasury Regulation
Section 1.6011-4.
(k) No
tax holiday or tax incentive or grant in any jurisdiction with
respect to taxes relating to the Business of Parent or any employee
will terminate (or be subject to a clawback or recapture that is
payable by either Parent or the Merger Sub or Seller) as a result
of any transaction contemplated by this Agreement.
(l)
Parent’s “non-qualified deferred compensation
plans” are not expected to give rise to an acceleration of
income or an additional Tax under Section 409A of the Code as a
result of any transaction contemplated by this Agreement. Neither
of the Majesco Entities is obligated to pay, gross up, or otherwise
indemnify any contractor or employee for his or her taxes,
including taxes imposed under Section 409A of the
Code.
(m) The
Purchased Intellectual Property which are the subject of this
Agreement will not cause Parent to recognize an item of income, or
exclude a deduction, following the Closing Date as a result of (i)
an installment sale occurring prior to the Closing Date that was
governed by Section 453 of the Code (or similar provision of other
applicable laws); (ii) a sale occurring prior to the Closing that
was reported as an open transaction for any applicable laws; (iii)
a change of method of accounting requested or occurring prior to
the Closing Date (or required as a result of the transactions
contemplated by this Agreement); (iv) a “closing
agreement” or other agreement entered with a governmental
authority; (v) any prepaid amounts received on or prior to the
Closing Date; or (vi) an election under Section 108(i) of the Code
(or similar provision of other applicable Laws).
SECTION
4.13
No Conflict With Other
Instruments
. The execution of this Agreement and the
consummation of the transactions contemplated by this Agreement
will not result in the breach of any term or provision of, or
constitute an event of default under, any indenture, mortgage, deed
of trust, or other contract, agreement, or instrument to which any
of the Majesco Entities is a party or to which any of its
properties or operations are subject.
SECTION
4.14
Governmental Authorizations
.
The Majesco Entities have all licenses, franchises, permits, and
other governmental authorizations that are legally required to
enable them to conduct their business in all material respects as
conducted on the date of this Agreement. Except for compliance with
federal and state securities and corporation laws, as hereinafter
provided, no authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or other
governmental body is required in connection with the execution and
delivery by Parent and/or Merger Sub of this Agreement and the
consummation by Parent and/or Merger Sub of the transactions
contemplated hereby.
SECTION
4.15
Compliance With Laws and
Regulations
. The Majesco Entities have complied with all
applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the
business, operations, properties, assets, or condition of the
Majesco Entities or except to the extent that noncompliance would
not result in the occurrence of any material liability for the
Majesco Entities.
SECTION
4.16
Insurance
. All of the Majesco
Entities’ insurance policies are in full force and effect,
all premiums with respect thereto covering all periods up to and
including the Closing Date have been, or prior to the Closing Date,
will be, paid, and no notice of cancellation or termination has
been received with respect to any such policy. Such insurance
policies provide the types and amounts of insurance customarily
obtained by businesses of similar size and character of operations
to the businesses of the Majesco Entities. None of the Majesco
Entities has been refused any insurance with respect to its assets
or operations; and its insurance coverage has not been limited by
any insurance carrier to which it has applied for any such
insurance, or with which it has carried insurance, in each case
during the two years preceding the date hereof.
SECTION
4.17
Environmental
. Each Majesco
Entity is in compliance in all material respects with all
applicable federal, state and local laws and regulations governing
the environment, public health and safety and employee health and
safety (including all provisions of the Occupational Safety and
Health Administration (“
OSHA
”) and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand or
notice has been filed or commenced against any Majesco Entity and,
to the knowledge of Parent and its officers and directors, no such
charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand or notice is pending or has been
threatened.
SECTION
4.18
Employee Relations
. Each of the
Majesco Entities has complied in all material respects with all
applicable laws, rules, and regulations that relate to prices,
wages, hours, harassment, disabled access, and discrimination in
employment and collective bargaining and to the operation of its
business and is not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing. Parent
and its officers and directors believe that the relationships
between the Majesco Entities and their employees are
satisfactory.
SECTION
4.19
Officer, Director and Promoter’s
Information
. Except as set forth on the Parent Disclosure
Schedules, during the past five (5) years, no Majesco Entity, nor
any of its respective officers, directors or promoters, has been
the subject of:
(a) a
bankruptcy petition filed by or against any business of which the
Majesco Entity or such other person was a general partner or
executive officer either at the time of the bankruptcy or within
two years prior to that time;
(b) a
conviction in a criminal proceeding or a pending criminal
proceeding (excluding traffic violations and other minor
offenses);
(c) any
order, judgment, or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting
the Majesco Entity or any such other person from involvement in any
type of business, securities or banking activities; or
(d) a
finding by a court of competent jurisdiction (in a civil action),
the SEC, or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated.
SECTION
4.20
Broker Fees
. The Majesco
Entities have not incurred, nor will they incur, directly or
indirectly, any liability for brokerage or finders’ fees or
agents’ commissions or investment bankers’ fees or any
similar charges in connection with this Agreement or any
transaction contemplated hereby.
SECTION
4.21
Board Approval
. The board of
directors of both Parent and Merger Sub have duly adopted
resolutions: (a) approving and declaring advisable this Agreement
and the transactions contemplated hereby (such approvals having
been made in accordance with the Delaware General Corporation Law
and the Nevada Revised Statutes, respectively); (b) determining
that the terms of the transaction contemplated hereby are fair to
and in the best interests of Parent and its stockholders from a
financial point of view; and (c) recommending that the stockholders
of Parent approve and adopt this Agreement and the issuance of the
Preferred E Stock, which resolutions have not been modified,
supplemented or rescinded and remain in full force and
effect.
SECTION
4.22
Employee Benefit Plans and Material
Documents
.
(a)
Parent Disclosure Schedules set forth a list of all Benefit Plans
with respect to which Parent has any obligation or liability or
which are maintained, contributed to or sponsored by Parent for the
benefit of any current or former employee, officer or director of
Parent. Except as disclosed in Parent Disclosure Schedules, Parent
does not have any obligation or liability with respect to any
Benefit Plan maintained, contributed to or sponsored by any ERISA
Affiliate for the benefit of any current or former employee,
officer or director of Parent or any ERISA Affiliate. With respect
to each Benefit Plan subject to ERISA which is maintained,
contributed to or sponsored by Parent or with respect to which
Parent has any obligation or liability, Parent has delivered or
made available to Seller a true and complete copy of each such
Benefit Plan (including all amendments thereto) and a true and
complete copy of each material document (including all amendments
thereto) prepared in connection with each such Benefit Plan
including (i) a copy of each trust or other funding arrangement,
(ii) each summary plan description and summary of material
modifications,
(iii) the most recently filed IRS Form 5500 for each such Benefit
Plan, if any, and (iv) the most recent determination letter, if
any. For purposes of this Agreement, “
Benefit Plan
” means any
employee benefit plan within the meaning of Section 3(3) of ERISA,
and any other plan, program, agreement, arrangement, policy,
contract, commitment or scheme, written or oral, statutory or
contractual, that provides for compensation or benefits, including
any deferred compensation, executive compensation, bonus or
incentive plan, any cafeteria plan or any holiday or vacation plan
or practice as currently in effect.
(b)
Except as disclosed in Parent Disclosure Schedules, none of the
Benefit Plans is a plan that is or has ever been subject to Title
IV of ERISA, Section 302 of ERISA or Section 412 of the Code. None
of the Benefit Plans is a “multiemployer plan” as
defined in Section 3(37) of ERISA. Except as disclosed in Parent
Disclosure Schedules, none of the Benefit Plans provides for the
payment of separation, severance, termination or similar-type
benefits to any person or provides for or, except to the extent
required by law, promises retiree medical or life insurance
benefits to any current or former employee, officer or director of
Seller or any ERISA Affiliate. For purposes of this Agreement, the
term “ERISA Affiliate” means any person that, together
with Parent, would be considered a single employer within the
meaning of Section 4001 of ERISA or Section 414 of the Internal
Revenue Code of 1986, as amended (the
“Code”).
(c)
Except as disclosed in Parent Disclosure Schedules, each Benefit
Plan is in compliance in all material respects with, and has been
operated in accordance with, its terms and the requirements of all
applicable law, and Parent and the ERISA Affiliates have satisfied
in all material respects all of their statutory, regulatory and
contractual obligations with respect to each such Benefit Plan. No
legal action, suit or claim is pending or, to Seller’s
Knowledge, threatened with respect to any Benefit Plan (other than
claims for benefits in the ordinary course).
(d)
Except as disclosed in Parent Disclosure Schedules, each Benefit
Plan or trust which is intended to be qualified or exempt from
taxation under Section 401(a), 401(k) or 501(a) of the Code has
received a favorable determination letter from the IRS that it is
so qualified or exempt.
(e)
There has been no non-exempt prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with
respect to any Benefit Plan. Neither Parent nor any ERISA Affiliate
has incurred any liability for any excise tax arising under the
Code with respect to a Benefit Plan.
(
f)
Except as disclosed in Parent Disclosure Schedules, no employee or
former employee of Parent will become entitled to any bonus,
retirement, severance, or similar benefit (including acceleration
of vesting or exercise of an incentive award) as a result of the
transactions contemplated by this Agreement.
SECTION
4.23
Other Employment
Matters
.
(a)
Parent Disclosure Schedules contain a complete list of all
employees of Parent, including each employee on leave of absence or
layoff status (collectively, the “
”), and all
officers and managers of Parent, with the following information for
each Parent Employee, officer and manager: name; job title; current
compensation paid or payable and any change in compensation since
the most recent balance sheet date; bonuses paid in the previous
twelve month period; vacation accrued as of a recent date; and
service credited as of a recent date for purposes of vesting and
eligibility to participate under any Benefit Plan of Parent; and
all bonuses and any other amounts to be paid by Parent at or in
connection with the Closing.
(b)
Except as set forth in Parent Disclosure Schedules, to the
knowledge of Parent and its officers and directors, no Parent
Employee, officer, or director of Parent is a party to, or is
otherwise bound by, any confidentiality, non-competition,
proprietary rights agreement or similar agreement that would affect
(i) the performance of his or her duties as an employee, officer or
director or (ii) the ability to conduct the business of Parent
after the Closing Date.
(c)
Parent is not a party to any labor or collective bargaining
agreement; there are no labor or collective bargaining agreements
which pertain to any Parent Employee; and no Parent Employee is
represented by any labor organization.
(d) No
labor organization or group of Parent Employees has made a pending
demand for recognition, there are no representation proceedings or
petitions seeking a representation proceeding presently pending or,
to the knowledge of Parent and its officers and directors,
threatened to be brought or filed with the National Labor Relations
Board or other labor relations tribunal, and there is no organizing
activity involving Parent pending or, to the knowledge of Parent
and its officers and directors, threatened by any labor
organization or group of Parent Employees.
(e)
There are no (i) strikes, work stoppages, slow-downs, lockouts or
arbitrations or (ii) grievances or other labor disputes pending or,
to the knowledge of Parent and its officers and directors,
threatened against or involving Parent.
(f)
There are no complaints, charges or claims against Parent pending
or, to the knowledge of Parent and its officers and directors,
threatened to be brought or filed with any Governmental Authority
based on, arising out of, in connection with, or otherwise relating
to the employment by Parent, of any Parent Employee, including any
claim for workers’ compensation.
(g)
Parent is in compliance in all material respects with all laws and
orders in respect of employment and employment practices and the
terms and conditions of employment and wages and hours, and has
not, and is not, engaged in any unfair labor practice.
SECTION
4.24
Finders’ Fees
. Except as
set forth in Parent Disclosure Schedule, there is no investment
banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Parent or any of
the shareholders of Parent or Merger Sub who might be entitled to
any fee or other commission in connection with the transactions
contemplated by this Agreement or any of the Ancillary
Agreements.
ARTICLE
V
Deliveries
SECTION
5.01
Deliveries of
Seller
. At Closing as a further condition thereof,
concurrently with the Closing, the Seller shall deliver or cause to
be delivered to the Parent:
(a)
this Agreement duly executed by an authorized signatory of the
Seller;
(b) a
certificate evidencing the Company Shares along with a duly
executed stock power for transfer to Parent or other evidence of
the Seller’s ownership of the Company Shares and that upon
Closing, Seller shall have the rights to receive the Preferred E
Stock and underlying Parent Stock and Seller shall be the only
owner of Company Shares (or any other ownership interest of any
class or character) of the Company;
(c) a
Stockholder Agreement, substantially in the form attached hereto as
Exhibit D
executed by the
Seller;
(d) a
certificate, in a form reasonably acceptable to the Parent,
executed by the Seller, dated as of the Closing Date, certifying
the representations and warranties set forth in Article II are
true, complete and accurate in all material respects;
(e) the
Constituent Agreements, duly executed by the applicable signatories
thereto.
(f)
Evidence that, at Closing, the Company owns and possesses valid
title to each of the patents and applications set forth on the
Company Disclosure Schedule and all of the Intellectual
Property
Rights and the
Seller shall deliver a certificate certified attesting to the
foregoing.
SECTION
5.02
Deliveries of the
Parent
. At Closing, as a further condition thereof,
concurrently with the Closing, the Parent shall deliver to Seller
and the Company:
(a) a
certificate to the Company and Seller from the Parent, signed by
its Secretary or Assistant Secretary certifying that the attached
copies of the Parent Charter, Parent Bylaws and resolutions of the
Board of Directors of the Parent approving this Agreement and the
transactions contemplated hereunder, including any required
amendments to the Parent Charter, are all true, complete and
correct and remain in full force and effect;
(b) a
certificate executed by the Chief Executive Officer of the Parent,
dated as of the Closing Date, certifying the representations and
warranties set forth in Article IV are true, complete and accurate
in all material respects
(c) a
certificate representing the new shares of Preferred E Stock issued
to the Seller;
(d) the
Constituent Agreements, duly executed by the Parent (or such other
parties as are parties thereto);
(e)
Evidence of the resignations, to be effective on the eleventh day
following the date on which Parent meets its information
obligations under the Exchange Act (as applicable), of the
following officers and directors of the Parent: Barry Honig,
Michael Brauser, Edward Karr, Andrew Kaplan, Mohit Bhansali, David
Rector and Michael Beeghley, _______________;
(f)
Evidence of termination of the employment agreements of Barry
Honig;
(g)
Evidence of the appointment of the following individuals as
officers of the Parent, at such positions as are set forth
below:
(i)
Denver Lough- Chairman, President and Chief Executive
Officer
(ii)
John Stetson- Chief Financial Officer
(iii)
Christine Hashimoto- General Counsel
(iv)
Edward Swanson- Executive Vice President, Chief Operating Officer
and Secretary
(v)
Michael Neumeister- Chief Medical Officer
(vi)
Jeff Dyer- Chief Strategist
(vii)
Devin Miller- Director of Translational Medicine and Regulatory
Strategy
(viii)
Mary Dyer- Office Manager and Clinical Research
Coordinator
(ix)
Anthony Blum- Laboratory Manager
(x)
Carrie Harrison- Clinical Research Coordinator
(h)
Evidence of the election of the following individuals to the
Parent’s Board of Directors, which shall become effective on
the eleventh day following the date on which Parent meets its
information obligations under the Exchange Act: John Stetson,
[TBD], Denver Lough, Edward Swanson, Jeff
Dyer and Michael
Neumeister.
(i) A
pro-forma capitalization table as of the Closing reflecting the
capitalization of the Company on a fully-diluted and converted
basis after giving effect to the transactions contemplated in this
Agreement reflecting that the Preferred E Stock and underlying
Parent Stock issued to Seller in the Merger represents 50% of the
issued and outstanding shares of Parent Common Stock, on an
as-converted basis.
(j) A
pro-forma balance sheet of Parent immediately after the Closing
which reflects the sum of cash on hand plus the proceeds from the
private placement described in Section 7.03
less
the payment or allocation
of funds for the payment of accounts payable as provided in Section
4.26 of not less than $1,500,000 (“
Parent Closing Cash
Amount
”); and no Indebtedness except as set forth on
the Parent Disclosure Schedule 406(c).
(k)
Bank statements as of the latest practical date evidencing
Parent’s cash balance of at least $7,500,000 or, in the
alternative, evidence or confirmation of proceeds from the sale of
the Parent Common Stock described in Section 7.03 that has been
wired to the Parent’s bank account that, when added to the
Parent’s current cash balance is equal to at least
$7,500,000.
(l) A
filed stamped copy of the Certificate of Designation of the
Preferred E Stock, as filed with the Secretary of State of the
State of Delaware.
SECTION
5.03
Deliveries of the
Company
. At Closing, as a further condition thereof,
concurrently with the Closing, the Company shall
deliver:
(a) to
the Parent and Seller this Agreement executed by the
Company;
(b) to
the Parent, a certificate from the Company, signed by its Secretary
or Assistant Secretary certifying that the attached copies of the
Company’s Charter Documents and resolutions of the Board of
Directors or Manager of the Company approving this Agreement and
the Transactions, are all true, complete and correct and remain in
full force and effect;
(c)
certificate, in a form reasonably acceptable to the Parent,
executed by the Chief Executive Officer of the Company, dated as of
the Closing Date, certifying the representations and warranties set
forth in Article III are true, complete and accurate in all
material respects;
(d) if
requested by the Parent, the results of UCC, judgment lien and tax
lien searches with respect to the Company, the results of which
indicate no liens on the assets of the Company; and
(e)
bank statement or other form of confirmation reasonably acceptable
to Parent confirming that Company has cash on hand or immediately
available funds as of the Closing Date in an amount equal to the
Parent Closing Cash Amount.
(f) A
pro-forma balance sheet of Company immediately after the Closing
which shall reflect immediately after the Closing only those
payables and Indebtedness disclosed in the Company Disclosure
Schedules and cash equal to the Parent Closing Cash
Amount.
ARTICLE
VI
Covenants
SECTION
6.01
Public
Announcements
. The Parent and the Company will consult with
each other before issuing, and provide each other the opportunity
to review and comment upon, any press releases or other public
statements with respect to the Agreement, the Merger and the
Transactions and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be
required by
applicable Law,
court process or by obligations pursuant to any listing agreement
with any national securities exchanges.
SECTION
6.02
Fees and
Expenses
. All fees and expenses incurred in connection with
this Agreement shall be paid by the Party incurring such fees or
expenses, whether or not this Agreement is
consummated.
SECTION
6.03
Exclusivity
.
The Company shall not (and shall not cause or permit any of their
affiliates to) engage in any discussions or negotiations with any
person or take any action that would be inconsistent with the
Transactions. The Company shall notify the Parent immediately if
any person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
SECTION
6.04
Audit of Company
Financial Statements
. The Company shall cooperate and, if
required, assist Parent in compiling and preparing audited
financial statements for the Company’s most recently
completed last two fiscal years and unaudited financial statements
for any subsequent interim period no later than 30 days from the
Closing Date, which shall be prepared by Parent and the cost
thereof shall be borne by Parent, or such shorter period as Company
has been organized.
SECTION
6.05
Intentionally
omitted
.
SECTION
6.06
NASDAQ
Approval
. As soon as practicable following the execution of
this Agreement, and as condition to closing of the Merger, Parent
shall obtain approval by The NASDAQ Stock Market LLC of the listing
of the Parent Stock underlying the Preferred E Stock on The NASDAQ
Capital Market and the issuance of the Preferred E Stock pursuant
to this Agreement as well as evidence that The NASDAQ Stock Market
LLC has completed its review of the Listing of Additional Shares
application related to the Parent Stock underlying the Preferred E
Stock (collectively, “
NASDAQ
Approval
”).
SECTION
6.07
Stockholder
Action
. As soon as practicable following the execution of
this Agreement, and as condition to closing of the Merger, Parent
shall obtain approval by its stockholders of the purchase of the
Purchased Patents, this Agreement, the issuance of the Preferred E
Stock , and the transactions contemplated hereby.
SECTION
6.08
Pre-Closing
Activities of Parent
.
From and after the
date of this Agreement until the Closing Date and except as set
forth in the respective schedules to be delivered by Parent
pursuant hereto or as permitted or contemplated by this Agreement,
Parent will:
(a)
Carry on its business in substantially the same manner as it has
heretofore;
(b)
Maintain in full force and effect insurance comparable in amount
and in scope of coverage to that now maintained by it;
(c)
Perform in all material respects all of its obligations under
material contracts, leases, and instruments relating to or
affecting its assets, properties, and business;
(d) Use
its best efforts to maintain and preserve its business organization
intact, to retain its key employees, and to maintain its
relationships with its material suppliers and
customers;
(e)
Duly and timely file for all taxable periods ending on or prior to
the Closing Date all federal, state, county, and local tax returns
required to be filed by or on behalf of such entity or for which
such entity may be held responsible and shall pay, or cause to pay,
all taxes required to be shown as due and payable on such returns,
as well as all installments of tax due and payable during the
period commencing on the date of this Agreement and ending on the
Closing Date; and
(f)
Fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state laws
and all rules, regulations, and orders imposed by federal or state
governmental authorities.
From
and after the date of execution of this Agreement and except as
provided herein until the Closing Date, Parent will not, without
the prior written approval of Seller or as otherwise contemplated
or required in order to effectuate the intents and purposes of this
Agreement with respect to a-c and Seller with respect to
b-c:
(a)
Make any change in its certificate of incorporation or bylaws or
effect any recapitalization except as specifically provided
herein;
(b)
Enter into or amend any material contract, agreement, or other
instrument of any of the types described in the Parent Disclosure
Schedules, except that Parent may enter into or amend any contract,
agreement, or other instrument in the ordinary course of business;
or
(c)
Sell or enter into any agreement for the sale of Parent
securities.
SECTION
6.09
Notices of
Significant Events
. From and after the date of the execution
of this Agreement until the Closing Date, each Party hereto shall
promptly notify the other Parties hereto of: (a) the occurrence, or
non-occurrence, of any event that would be likely to cause any
condition to the obligations of any party to effect the purchase of
the Purchased Intellectual Property or the issuance of the
Preferred E Stock, and the other transactions contemplated by this
Agreement not to be satisfied; or (b) the failure of Seller or
Parent or Merger Sub, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or
satisfied by it pursuant to this Agreement which would reasonably
be expected to result in any condition to the obligations of any
party to complete the purchase of the Purchased Patents and the
other transactions contemplated by this Agreement not to be
satisfied; provided, however, that the delivery of any notice
pursuant to this Section 6.09 shall not cure any breach of any
representation or warranty requiring disclosure of such matter
prior to the date of this Agreement or otherwise limit or affect
the remedies available hereunder to the party receiving such
notice.
SECTION
6.10
Consents and
Approvals
. Parent shall use commercially reasonable efforts
to obtain all consents, approvals, certificates and other documents
required in connection with the performance by it of this Agreement
and the consummation of the transactions contemplated hereby.
Parent shall make all filings, applications, statements and reports
to all governmental authorities and other persons that are required
to be made prior to the Closing Date by or on behalf of Parent and
Merger Sub pursuant to applicable law or a material contract of
Parent in connection with this Agreement and the transactions
contemplated hereby.
SECTION
6.11
Indemnification
. Parent will
indemnify and hold harmless Seller from and against any and all
losses, claims, damages, expenses, liabilities, or actions to which
Seller may become subject under applicable law (including the
Securities Act and the Exchange Act) and will reimburse Seller for
any legal or other expenses reasonably incurred by Seller in
connection with investigating or defending any claims or actions,
whether or not resulting in liability, insofar as such losses,
claims, damages, expenses, liabilities, or actions arise out of or
are based upon any untrue statement or alleged untrue statement of
a material fact contained in any application or statement filed
with a governmental body or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein, or necessary in order to make the
statements therein not misleading, but only insofar as any such
statement or omission was made in reliance upon and in conformity
with information furnished in writing by Parent or Merger Sub
expressly for use therein. The indemnity agreement contained in
this Section 6.11 shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of
Seller and shall survive the consummation of the transactions
contemplated by this Agreement for a period of two (2)
years.
SECTION
6.12
The Acquisition of
Preferred E Common Stock
. Parent and Seller understand and
agree that the consummation of this Agreement including the
issuance of the Preferred E Stock and Parent Stock to Seller in
consideration for the Merger as contemplated hereby, constitutes
the offer and sale of securities under the Securities Act and
applicable state statutes. Parent and Seller agree that such
transactions shall be consummated in reliance on exemptions from
the registration and prospectus delivery requirements of such
statutes which depend, among other items, on the circumstances
under which such securities are acquired.
(a) In
connection with the transaction contemplated by this Agreement,
Parent shall file, with the assistance of legal counsel, such
notices, applications, reports, or other instruments as may be
deemed by them to be necessary or appropriate in an effort to
document reliance on such exemptions, and the appropriate
regulatory authority in the state where Seller resides, all to the
extent and in the manner as may be deemed by Parent to be
appropriate.
(b) In
order to more fully document reliance on the exemptions as provided
herein, Merger Sub, Seller and Parent shall execute and deliver to
the other, at or prior to the Closing, such further letters of
representation, acknowledgment, suitability, or the like as Parent
or Seller and their respective counsel may reasonably request in
connection with reliance on exemptions from registration under such
securities laws.
ARTICLE
VII
Closing Conditions: Parent and Merger Sub Obligations.
The
obligations of Company and Seller under this Agreement are subject
to the satisfaction, at or before the Closing Date, of the
following conditions:
SECTION
7.01
Stockholder and NASDAQ
Approval
. This Agreement, the issuances of the Preferred E
Stock and Parent Stock, and the transactions contemplated hereby
shall have been approved by the stockholders of Parent in the
manner required by the applicable laws of the state of Delaware and
Nevada and Parent shall have received NASDAQ Approval.
SECTION
7.02
Conversion of Outstanding Preferred
Stock into Common Stock
. Prior to the Closing, Parent shall
have worked with the holders of all series of Parent’s
outstanding preferred stock to effectuate a conversion of those
shares of preferred stock into shares of Parent Stock, unless as a
result of any such conversion the holder would beneficially own 5%
or more of such Common stock in which case, the conversion may be
deferred and effected following Closing in accordance with the
terms of the certificate of designation governing such Preferred
Stock.
SECTION
7.03
Capital Raise of One Million Five
Hundred Thousand Dollars; Lease and Equipment
. Prior to
Closing, Parent shall have raised a minimum of $1,500,000 in cash
and current assets as contemplated in the Term Sheet originally
executed between Parent and Seller; Parent or Merger Sub shall have
entered into one of more leases for commercial space suitable to
the business of the Company; and Parent or Merger Sub shall have
acquired or initiate the process of equipping a suitable laboratory
pursuant to specifications provided by Seller and/or
Company.
SECTION
7.04
Adoption and Approval of Stock Option
Plan.
Parent shall have adopted a stock incentive plan (the
“
Stock and Option
Plan
”) and shall have received approval of the Stock
and Option Plan from Parent’s Board of Directors and
stockholders. At Closing, Parent shall issue ten year options to
those persons in those amounts as have been recommended by Seller
under the Stock and Option Plan, at market price pursuant to NASDAQ
rules.
SECTION
7.05
Accuracy of Representations
.
The representations and warranties made by Parent and Merger Sub,
in this Agreement were true when made and shall be true at the
Closing Date with the same force and effect as if such
representations and warranties were made at and as of the Closing
Date (except for changes therein permitted by this Agreement), and
Parent and Merger Sub shall have performed or complied with all
covenants and conditions required by this Agreement to be performed
or complied with by Parent or Merger Sub prior to or at the
Closing. Seller shall be furnished with certificates, signed by
duly authorized officers of Parent and Merger Sub, and dated the
Closing Date, to the foregoing effect.
SECTION
7.06
Officer’s Certificates
.
Seller shall have been furnished with certificates dated the
Closing Date and signed by the duly authorized chief executive
officer of Parent to the effect that to such officer’s
knowledge no litigation, proceeding, investigation, or inquiry is
pending or, to the best knowledge of Parent, threatened, which
might result in an action to enjoin or prevent the consummation of
the transactions contemplated by this Agreement. Furthermore, based
on certificates of good standing, representations of government
agencies, and Parent’s own documents and information, the
certificate shall represent, to the best knowledge of the officer,
that:
(a)
This Agreement has been duly approved by Parent’s board of
directors and stockholders and has been duly executed and delivered
in the name and on behalf of Parent by its duly authorized officers
pursuant to, and in compliance with, authority granted by the board
of directors of Parent pursuant to a unanimous
consent;
(b)
This Agreement has been duly approved by Merger Sub’s board
of directors and stockholders and has been duly executed and
delivered in the name and on behalf of Merger Sub by its duly
authorized officers pursuant to, and in compliance with, authority
granted by the board of directors of Merger Sub pursuant to a
unanimous consent;
(c)
There have been no material adverse changes in the financial
condition, business or operations of Parent or Merger Sub up to and
including the date of the certificate;
(d) All
conditions required by this Agreement have been met, satisfied, or
performed by Parent and Merger Sub;
(e) All
authorizations, consents, approvals, registrations, and/or filings
with any governmental body, agency, or court required in connection
with the execution and delivery of the documents by Parent and
Merger Sub have been obtained and are in full force and effect or,
if not required to have been obtained, will be in full force and
effect by such time as may be required; and
(f)
There is no material action, suit, proceeding, inquiry, or
investigation at law or in equity by any public board or body
pending or threatened against Parent or Merger Sub, wherein an
unfavorable decision, ruling, or finding could have an adverse
effect on the financial condition of Parent or Merger Sub, the
operation of Parent or Merger Sub or the acquisition of the
Purchased Intellectual Property contemplated herein, or any
agreement or instrument by which Parent or Merger Sub is bound or
in any way contests the existence of Parent or Merger
Sub.
SECTION
7.07
No Material Adverse Change
.
Prior to the Closing Date, there shall not have occurred any
material adverse change in the financial condition, business, or
operations of Parent, nor shall any event have occurred which, with
the lapse of time or the giving of notice, may cause or create any
material adverse change in the financial condition, business, or
operations of Parent.
SECTION
7.08
Good Standing
. Seller shall
have received a certificate of good standing from the secretary of
state of Delaware, dated as of the date within five days prior to
the Closing Date, certifying that Parent is in good standing as a
corporation in the State of Delaware.
SECTION
7.09
Actions or Proceedings
. No
action or proceeding by any governmental authority or other person
shall have been instituted or threatened which: (a) is likely to
have a material adverse effect on the
business or
operations of Parent; or (b) could enjoin, restrain or prohibit, or
could result in substantial damages in respect of, any provision of
this Agreement or the consummation of the transactions contemplated
hereby.
SECTION
7.10
Representations and Warranties True at
the Closing Date
. All of the representations and warranties
of the Parent and the Merger Sub contained in this Agreement shall
have been true and correct in all material respects on and as of
the execution date hereof and shall be true and correct in all
material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made
on and as of such date (provided that those representations and
warranties that are specifically made as of a particular calendar
date or as of the date hereof shall be true, correct and complete
in all material respects as of such date. The Parent, Merger Sub
and Seller shall have executed and delivered to the a certificate
as of the Closing to such effect.
SECTION
7.11
Other Items
. Seller shall have
received such further documents, certificates, or instruments
relating to the transactions contemplated hereby as Seller may
reasonably request.
ARTICLE
VIII
Closing Conditions: Seller Obligations
The
obligations of Parent and Merger Sub under this Agreement are
subject to the satisfaction, at or before the Closing Date, of the
following conditions:
SECTION
8.01
Accuracy of Representations
.
The representations and warranties made by Seller in this Agreement
were true when made and shall be true at the Closing Date with the
same force and effect as if such representations and warranties
were made at and as of the Closing Date (except for changes therein
permitted by this Agreement), and Seller shall have performed or
complied with all covenants and conditions required by this
Agreement to be performed or complied with by Seller prior to or at
the Closing. Parent shall be furnished with a certificate, signed
by Seller and dated the Closing Date, to the foregoing
effect.
SECTION
8.02
Actions or Proceedings
. No
action or proceeding by any governmental authority or other person
shall have been instituted or threatened which: (a) is likely to
have a material adverse effect on the Purchased Patents or the
ownership of the Purchased Patents by Seller; or (b) could enjoin,
restrain or prohibit, or could result in substantial damages in
respect of, any provision of this Agreement or the consummation of
the transactions contemplated hereby.
SECTION
8.03
Other Items
. Parent shall have
received such further documents, certificates, or instruments
relating to the transactions contemplated hereby as Parent may
reasonably request.
ARTICLE
IX
Confidentiality,
Non-Solicitation and Non-Competition.
SECTION
9.01
Non-Disclosure.
Except
as set forth in this Section 9.01, the receiving party shall not
disclose or use the disclosing party’s Confidential
Information. Each Party hereto may: (a) use the other
Party’s Confidential Information to the extent reasonably
necessary to perform its obligations hereunder; and (b) use the
other Party’s Confidential Information to the extent
reasonably necessary to (i) exercise the rights granted hereunder,
(ii) prosecute or defend litigation, or (iii) comply with
applicable laws, governmental regulations or court orders or
submitting information to tax or other governmental entities
(including the SEC); in each case, provided that if a Party is
required to make any such disclosure, other than pursuant to a
non-use and non-disclosure agreement, it will give reasonable
advance notice in writing to the other Party of such disclosure
requirement, will use reasonable efforts to secure confidential
treatment of such information (whether through protective order or
otherwise), except to the extent inappropriate with respect to
patent applications, and use reasonable efforts to permit the other
Party an opportunity to maintain confidentiality of its affected
Confidential Information. It is understood that either
Party may also disclose the Confidential Information of the other
Party upon receipt of the prior express written consent to such
disclosure by a duly authorized
representative of
the other Party. Notwithstanding anything to the
contrary, upon assignment of the Purchased Patents to Merger Sub
hereunder, the Patent Documents to the extent that such documents
are not publicly available, will be deemed to be the Confidential
Information of Merger Sub and not the Confidential Information of
Seller, and Merger Sub shall be free to use and disclose all such
Patent Documents without restriction.
SECTION
9.02
Confidential
Agreement
. Each Party shall not to disclose the
terms, but may disclose the existence, hereof to any third party
without the prior written consent of this other
Party. Each Party may disclose the terms hereof (a) to
such Party’s affiliates and to such Party’s attorneys,
accountants, advisors and others on a need to know basis under
circumstances that reasonably ensure the confidentiality thereof,
(b) to the extent required by law, (c) as necessary to exercise,
perfect or enforce this Agreement or rights hereunder, including
recordation by Merger Sub of assignments of the Purchased Patents,
(d) by Merger Sub in connection with a sale or license of any
Purchased Patent, (e) in connection with a merger, acquisition or
financing transaction or proposed merger, acquisition or financing
transaction, or the like, involving a Party to this Agreement or an
affiliate thereof and under circumstances that reasonably ensure
the confidentiality of such terms or (f) in a press release
substantially in the form exchanged by the Parties concurrently
with the execution of this Agreement.
SECTION
9.03
Further
Agreements by Seller
. Seller hereby agrees that until the
later of one (1) year after separation of Seller as an employee or
consultant of the Surviving Entity or Parent, and two (2) years
from the Closing Date, it will not:
(a)
Engage, own, manage, operate, control, be employed by, consult for,
participate in, or be connected in any manner with the ownership,
management, operation or control of any business in competition
with the Business of Parent or the Surviving Company, as defined in
the next sentence. For purposes hereof, Parent/Surviving Company
Business shall mean research, development, techniques and
technology in any manner involving or related to regeneration of
functionally polarized tissue by use of Leucine-rich
repeat-containing G-protein coupled Receptor (LGR) expressing cells
and any and all inventions, technology and trade secrets related
thereto or a result of the Purchased Intellectual Property
hereunder, as well as all activities that involve the making, use
or licensing thereof. For the absence of doubt, the business shall
not involve technology or techniques not developed by the Company
or on its behalf, not relying on the inventions or technology
described in the Purchased Intellectual Property, nor any actions
or activities involving the practice of medicine and treatment of
patients as a physician even if reliant upon the Purchased
Intellectual Property involving the delivery of medical
services.
(b)
Recruit, solicit or hire, or attempt to recruit, solicit or hire,
any employee, or independent contractor, vendor, contract research
organization, officer or director of Parent or the Surviving
Company to leave the employment (or other relationship) thereof,
whether or not any such person or entity is party to an employment
agreement, for the purpose of competing with Parent/ Surviving
Company or providing services the same as or similar to that
provided to Parent or Surviving Company .
(c)
Attempt in any manner to solicit or accept from any customer of
Parent or the Surviving Company, business of the kind or
competitive with the business done by Parent or the Surviving
Company with such customer or to persuade or attempt to persuade
any such customer to cease to do business or to reduce the amount
of business which such customer has customarily done or might do
with Parent or the Surviving Company, or if any such customer
elects to move its business to a person other than Parent or
Surviving Company, provide any services of the kind or competitive
with the business of Parent or Surviving Company for such customer,
or have any discussions regarding any such service with such
customer, on behalf of such other person for the purpose of
competing with Parent/ Surviving Company Business; or
(d)
Interfere with any relationship, contractual or otherwise, between
Parent or the Surviving Company and any other party, including,
without limitation, any supplier, distributor, co-venturer or joint
venturer of Parent or the Surviving Company, for the purpose of
soliciting such other party to discontinue or reduce its business
with Parent or the Surviving Company for the purpose of competing
with Parent/ Surviving Company Business.
ARTICLE
X
Termination
SECTION
10.01
Termination.
This
Agreement may be terminated at any time prior to the
Closing:
(a) by
the mutual written consent of Seller, the Company, Merger Sub and
Parent;
(b) by
Parent or Merger Sub by written notice to Seller and Company
if:
(i)
Merger Sub is not then in material breach of any provision of this
Agreement and there has been a breach, inaccuracy in or failure to
perform any representation, warranty, covenant or agreement made by
Seller or the Company pursuant to this Agreement that would give
rise to the failure of any of the conditions specified in Article
II or III and such breach, inaccuracy or failure has not been cured
by Seller or the Company, as the case may be, within ten (10) days
of Seller’s or the Company’s receipt of written notice
of such breach from Merger Sub or Parent; or
(ii)
any of the conditions set forth in Article VIII shall not have
been, or if it becomes apparent that any of such conditions will
not be, fulfilled by February 28, 2017, unless such failure shall
be due to the failure of Merger Sub to perform or comply with any
of the covenants, agreements or conditions hereof to be performed
or complied with by it prior to the Closing.
(c) by
Seller by written notice to Merger Sub and Parent if:
(i)
Seller is not then in material breach of any provision of this
Agreement and there has been a breach, inaccuracy in or failure to
perform any representation, warranty, covenant or agreement made by
Merger Sub pursuant to this Agreement that would give rise to the
failure of any of the conditions specified in Article III and such
breach, inaccuracy or failure has not been cured by Merger Sub
within ten (10) days of Merger Sub’s receipt of written
notice of such breach from Seller; or
(ii)
any of the conditions set forth in Article VII shall not have been,
or if it becomes apparent that any of such conditions will not be,
fulfilled by February 28, 2017, unless such failure shall be due to
the failure of Seller or the Company to perform or comply with any
of the covenants, agreements or conditions hereof to be performed
or complied with by it prior to the Closing.
(d) by
Merger Sub or Seller in the event that (i) there shall be any legal
requirement that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited or
(ii) any Governmental authority shall have issued an order
restraining or enjoining the transactions contemplated by this
Agreement, and such Governmental order shall have become final and
non-appealable.
SECTION
10.02
Effect of
Termination
.
In the
event of the termination of this Agreement in accordance with this
Section, this Agreement shall forthwith become void and there shall
be no liability on the part of any party hereto
except:
(a) as
set forth in this Article 10 and Section 11.8 hereof;
and
(b)
that nothing herein shall relieve any party hereto from liability
for any willful breach of any provision hereof.
ARTICLE
XI
Miscellaneous
SECTION
11.01
Notices
. All
notices, requests, claims, demands and other communications under
this Agreement shall be in writing and shall be deemed given upon
receipt by the Parties at the following addresses (or at such other
address for a Party as shall be specified by like
notice):
If to
the Parent or Merger Sub, to:
Majesco
Entertainment Company
4041-T
Hadley Road
S.
Plainfield, New Jersey 07080
Attn:
Chief Financial Officer
With a
copy to (which shall not constitute notice):
Sichenzia Ross
Ference Kesner, LLP.
61
Broadway, 32
nd
Floor
New
York, NY 10006
Att:
Harvey J. Kesner, Esq.
hkesner@srfkllp.com
212-930-9700
If to
the Seller or Company, to:
Polarityte,
Inc.
106 S.
Gilmor Street
Baltimore, MD
21223
With a
copy to (which shall not constitute notice):
Kirton
McConkie
50 East
South Temple, Suite 400
Salt
Lake City, UT 84111
Attn:
Adam D. Stevens, Esq.
SECTION
11.02
Amendments; Waivers;
No Additional Consideration
. No provision of this Agreement
may be waived or amended except in a written instrument signed by
the Company, Parent and Seller. No waiver of any default with
respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or
omission of any Party to exercise any right hereunder in any manner
impair the exercise of any such right.
SECTION
11.03
Replacement of
Securities
. If any certificate or instrument evidencing any
Preferred E Stock and underlying Parent Stock is mutilated, lost,
stolen or destroyed, the Parent shall issue or cause to be issued
in exchange and substitution for and upon cancellation thereof, or
in lieu of and substitution therefore, a new certificate or
instrument, but only upon receipt of evidence reasonably
satisfactory to the Parent of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants
for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs associated with the
issuance of such replacement certificate or instrument. If a
replacement certificate or instrument evidencing any Preferred E
Stock and underlying Parent Stock is requested due to a mutilation
thereof, the Parent may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance
of a replacement.
SECTION
11.04
Remedies
. In
addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, Seller, Parent
and the Company will be entitled to specific performance under this
Agreement. The Parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach
of obligations described in the foregoing sentence and hereby
agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be
adequate.
SECTION
11.05
Interpretation
. When a
reference is made in this Agreement to an Article or Section, such
reference shall be to an Article or Section of this Agreement
unless otherwise indicated. Whenever the words
“include,” “includes” or
“including” are used in this Agreement, they shall be
deemed to be followed by the words “without
limitation.”
SECTION
11.06
Severability
.
If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule or Law, or
public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the Transactions
contemplated hereby is not affected in any manner materially
adverse to any Party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced,
the Parties shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the Parties as closely as
possible in an acceptable manner to the end that Transactions
contemplated hereby are fulfilled to the extent
possible.
SECTION
11.07
Counterparts;
Facsimile Execution.
This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more
counterparts have been signed by each of the Parties and delivered
to the other Parties. Facsimile execution and facsimile or
electronic delivery of this Agreement is legal, valid and binding
for all purposes.
SECTION
11.08
Entire Agreement;
Third Party Beneficiaries.
This Agreement, taken together
with all exhibits attached hereto and the Company Disclosure
Schedule and the Parent Disclosure Schedule, (a) constitute the
entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the Parties with
respect to the Transactions and (b) are not intended to confer upon
any person other than the Parties any rights or remedies. The
representations and warranties of Seller and the Company contained
in this Agreement shall survive the Closing and the
termination of this
Agreement.
SECTION
11.09
Governing
Law.
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York,
without reference to principles of conflicts of laws. Any action or
proceeding brought for the purpose of enforcement of any term or
provision of this Agreement shall be brought only in the Federal or
state courts sitting in the Southern District of New York and the
parties hereby waive any and all rights to trial by
jury.
SECTION
11.10
Assignment
.
Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the
Parties
without the prior written consent of the other Parties. Any
purported assignment without such consent shall be void. Subject to
the preceding sentences, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the Parties and their
respective successors and assigns.
IN
WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement and Plan of Reorganization as of the date first
above written.
|
The
Parent:
|
MAJESCO
ENTERTAINMENT COMPANY
|
|
|
|
|
|
By:
________________________
Name: John Stetson
Title: Chief Financial Officer
|
|
The
Company:
|
POLARITYTE, INC.
By:
_________________________
Name:
Title:
|
|
The
Seller:
|
DENVER LOUGH
____________________________
|
|
Merger
Sub
|
By:____________________________
Name:
Address:
|
Schedule
A
Definitions
“Affiliate”
means, with
respect to any specified Person, any other Person that directly or
on directly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such specified
Person. “
Person
” means an association,
corporation, an individual, a partnership, a limited liability
company, a trust or any other entity or organization.
“Ancillary Agreements”
means, that certain Executive Employment Agreement between Parent
and Seller (the “
Executive
Employment Agreement
”), that certain Voting Agreement
among various stockholders of Parent (the “
Voting Agreement
”) and all other
documents related to the transactions contemplated by this
Agreement.
“Confidential Information”
means any information, whether in electronic, written, graphic,
oral, machine readable or other tangible or intangible form, that
is marked or identified at the time of disclosure as
“Confidential” or “Proprietary” or in some
other manner so as to clearly indicate its confidential
nature. In order to be treated as “Confidential
Information,” information that is disclosed orally must be
identified at the time of disclosure or promptly thereafter as
confidential or proprietary. The obligations under
Article 8 shall not apply to the extent that the disclosing party
establishes by competent proof that such information: (a) was
publicly known and made generally available in the public domain
prior to the time of disclosure by the disclosing party;
(b) becomes publicly known and made generally available after
disclosure by the disclosing party to the receiving party through
no act or omission of the receiving party; (c) was already in
the possession of the receiving party without confidentiality
obligations at the time of disclosure hereunder by the disclosing
party; (d) is obtained by the receiving party without
confidentiality obligations from a third party without a breach of
such third party’s obligations of confidentiality; or
(e) is independently developed by the receiving party without
use of or reference to the disclosing party’s Confidential
Information.
“Disclaimer Issue”
means a
terminal disclaimer (including under 35 U.S.C. § 253 or 37 CFR
1.321 or the equivalent laws or regulation of any other patent
authority, a “
Terminal
Disclaimer
”) that exists or is or should reasonably be
required to be made in a patent or patent application to address a
double patenting issue, including such an issue raised in a
judicial or administrative proceeding (including any proceeding
with the U.S. Patent and Trademark Office or any corresponding
foreign patent authority).
“Patent Documents”
means
documents, records and files relating to the Purchased Patents,
including (b) complete prosecution files and docketing reports
(including patent listing, current status, actions due and
deadlines), including materials filed with the U.S. Patent and
Trademark Office (or the equivalent authority in any other country)
with respect to such Purchased Patents, (c) originals (or, if the
original is not available, a copy) of all assignment agreements in
its possession relating to the Purchased Patents, including a
written assignment to Seller from each inventor for each Purchased
Patent, and (d) inventor notebooks and other documents (including,
but not limited to, those showing the conception and reduction to
practice of the inventions disclosed in the Purchased Patents or
related to the Patent Technology), and (e) any other materials or
information in the possession or control of, or known to, Seller
that, is material to the enforcement of such Purchased
Patents.
“Know-How”
means all
technical information, know-how and data, including inventions
(whether patentable or not), discoveries, trade secrets,
specifications, regulatory filings and supporting documents,
instructions, processes, formulae, materials, expertise and other
technology applicable to compounds, formulations, compositions,
products or to their manufacture, development, registration, use or
commercialization or methods of assaying or testing them or
processes for their manufacture, formulations containing them,
compositions incorporating or comprising them and including all
biological, chemical, pharmacological, biochemical, toxicological,
pharmaceutical, physical and analytical, safety, quality control,
manufacturing, preclinical and clinical data, instructions,
processes, formulae, expertise and information, regulatory filings
and copies thereof, relevant to the development, manufacture, use
or commercialization of and/or which may be useful in studying,
testing, development, production or formulation of products, or
intermediates for the synthesis thereof.
“Patent Technology”
refers
to the technology described and claimed in the Purchased Patents
and related technology directed to regeneration of functionally
polarized tissue by use of Leucine-rich repeat-containing G-protein
coupled Receptor (LGR) expressing cells, including, but not limited
to, that described in the Purchased Patents.
“Purchased Intellectual
Property”
refers to the Patent Technology, the
Purchased Patents, the Patent Documents and the Know-How related to
the Patent Technology and the Purchased Patents.
“Purchased Patents”
means
(a) the patents and patent applications identified in the preambles
hereto and on
Exhibit G
(“
Patents
”) and the rights to
inventions in the Know-How including all applications and rights to
apply for and be granted, renewals or extensions of, and rights to
claim priority from, such rights and all similar or equivalent
rights or forms of protection which subsist or will subsist now or
in the future in any part of the world,
(b) all reissues,
divisionals, continuations, continuations-in-part, extensions,
renewals, reexaminations and foreign counterparts thereof, and all
other patents, patent applications, certificates of invention and
other governmental grants resulting from the Patents, (c) all
patents and applications which claim priority to or have common
disclosure or common priority with any such patents or patent
applications (for the avoidance of doubt, patents which include
partial commonalities such as figures or patents whose features of
the inventions are different from those of Purchased Patents may be
excluded), (d) all paper and electronic versions of files,
documents, instruments, papers, books, ledgers, plans,
correspondence, memoranda, maps, diagrams, photographs, and
videotapes, to the extent related to the Purchased Patents; (e) all
goodwill related to the Purchased Intellectual Property, (f) all
claims, causes of action and other legal rights and remedies,
whether or not known as of the Closing Date, relating to the
Purchased Patents or Seller’s ownership of the Purchased
Patents but excluding causes of action and other legal rights and
remedies of Seller (1) against Merger Sub with respect to the
transactions contemplated by this Agreement; or (2) relating
exclusively to Seller’s liabilities not assigned hereunder;
and (g) all rights corresponding to any of the foregoing throughout
the world (including the right to claim the priority date of any of
such patents and patent applications and the right to sue for and
recover damages for any past, present or future infringement of
such patents and patent applications); in each case, regardless of
whether in existence prior to, as of or after the Closing
Date.
“Transfer Documents”
means
fully executed, original patent transfer documents, in a form
agreed to by the Parties and suitable for filing with the relevant
governmental entity, in each jurisdiction where the Purchased
Patents have been filed, as the case may be, in each case to record
the change of ownership of the Purchased Patents from Seller to
Merger Sub. Unless otherwise directed by Merger Sub,
Transfer Documents for U.S. Purchased Patents shall be provided in
the form of
Exhibit
H
.
Exhibit 3.1
CERTIFICATE
OF DESIGNATIONS, PREFERENCES AND RIGHTS OF THE
0%
SERIES E CONVERTIBLE PREFERRED STOCK OF
MAJESCO
ENTERTAINMENT COMPANY
I,
[ ],
hereby certify that I am the
[ ]
of Majesco Entertainment Company (the “
Company
”), a corporation organized
and existing under the Delaware General Corporation Law (the
“
DGCL
”), and
further do hereby certify:
That
pursuant to the authority expressly conferred upon the Board of
Directors of the Company (the “
Board
”) by the Company’s
Restated Certificate of Incorporation, as amended, (the
“
Certificate of
Incorporation
”), the Board on December 1, 2016,
adopted the following resolutions creating a series of shares of
Preferred Stock designated as 0% Series E Convertible Preferred
Stock, none of which shares have been issued:
RESOLVED, that the
Board designates the 0% Series E Convertible Preferred Stock and
the number of shares constituting such series, and fixes the
rights, powers, preferences, privileges and restrictions relating
to such series in addition to any set forth in the Certificate of
Incorporation as follows:
TERMS
OF SERIES E CONVERTIBLE PREFERRED STOCK
1.
Designation and Number of
Shares
. There shall hereby be created and established by
this Certificate of Designations, Preferences and Rights of the 0%
Series E Convertible Preferred Stock (this “
Certificate of Designations
”) a
series of preferred stock of the Company designated as “0%
Series E Convertible Preferred Stock” (the
“
Preferred
Shares
”). The authorized number of Preferred Shares
shall be 7,050 shares
. Each Preferred
Share shall have $
0.001
par
value (the “
Par Value
”). Capitalized terms not defined herein
shall have the meaning as set forth in Section
22
below.
2.
Liquidation and Ranking
. (i)
Upon the liquidation, dissolution or
winding up of the business of the Company, whether voluntary or
involuntary, each holder of Preferred Shares shall be entitled to
receive, for each share thereof, out of assets of the Company
legally available therefor, a preferential amount in cash equal to
(and not more than) the Par Value. All preferential amounts to be
paid to the holders of Preferred Shares in connection with such
liquidation, dissolution or winding up shall be paid before the
payment or setting apart for payment of any amount for, or the
distribution of any assets of the Company to the holders of (i) any
other class or series of capital stock whose terms expressly
provide that the holders of Preferred Shares should receive
preferential payment with respect to such distribution (to the
extent of such preference) and (ii) the Common
Stock
. If upon any such
distribution the assets of the Company shall be insufficient to pay
the holders of the Preferred Shares (or the holders of any class or
series of capital stock ranking on a parity with the Preferred
Shares as to distributions in the event of a liquidation,
dissolution or winding up of the Company) the full amounts to which
they shall be entitled, such holders shall share ratably in any
distribution of assets in accordance with the sums which would be
payable on such distribution if all sums payable thereon were paid
in full. Any distribution in connection with the liquidation,
dissolution or winding up of the Company, or any bankruptcy or
insolvency proceeding, shall be made in cash to the extent
possible. Whenever any such distribution shall be paid in property
other than cash, the value of such distribution shall be the fair
market value of such property as determined in good faith by the
Board.
(ii)
Ranking
. Except to
the extent that the holders of at least 60% of the outstanding
Preferred Shares (the “
Required Holders
”) expressly
consent to the creation of Parity Stock (as defined below) or
Senior Preferred Stock (as defined below) in accordance with
Section 11, all shares of capital stock of the Company other than
the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock shall be junior in
rank to all Preferred Shares with respect to the preferences as to
dividends, distributions and payments upon the liquidation,
dissolution and winding-up of the Company (such junior stock is
referred to herein collectively as “
Junior Stock
”). The rights of all
such shares of capital stock of the Company shall be subject to the
rights, powers, preferences and privileges of the Preferred Shares.
Without limiting any other provision of this Certificate of
Designation, without the prior express consent of the Required
Holders, voting separate as a single class, the Company shall not
hereafter authorize or issue any additional or other shares of
capital stock that is (i) of senior rank to the Preferred Shares in
respect of the preferences as to dividends, distributions and
payments upon the
liquidation,
dissolution and winding-up of the Company (collectively, the
“
Senior Preferred
Stock
”), (ii) of pari passu rank to the Preferred
Shares in respect of the preferences as to dividends, distributions
and payments upon the liquidation, dissolution and winding-up of
the Company (collectively, the “
Parity Stock
”) or (iii) any Junior
Stock having a maturity date (or any other date requiring
redemption or repayment of such shares of Junior Stock) that is
prior to the date on which any Preferred Shares remain outstanding.
In the event of the merger or consolidation of the Company with or
into another corporation, the Preferred Shares shall maintain their
relative rights, powers, designations, privileges and preferences
provided for herein and no such merger or consolidation shall
result inconsistent therewith
3.
Dividends
. In addition to
Sections 5(a) and 10 below, from and after the first date of
issuance of any Preferred Shares (the “
Initial Issuance Date
”), each
holder of a Preferred Share (each, a “
Holder
” and collectively, the
“
Holders
”) shall
be entitled to receive dividends (“
Dividends
”) when and as declared
by the Board, from time to time, in its sole discretion, which
Dividends shall be paid by the Company out of funds legally
available therefor, payable, subject to the conditions and other
terms hereof, in cash on the Stated Value of such Preferred Share.
In addition to the foregoing, the Preferred Shares shall
participate on an “as converted” basis, with all
Dividends declared on the Common Stock (as defined below) of the
Company as provided herein.
4.
Conversion
. Each Preferred
Share shall be convertible into validly issued, fully paid and
non-assessable shares of Common Stock on the terms and conditions
set forth in this Section 4.
(a)
Holder’s Conversion
Right
. At any time or times on or after the Initial Issuance
Date, each Holder shall be entitled to convert any whole number of
Preferred Shares into validly issued, fully paid and non-assessable
shares of Common Stock in accordance with Section 4(c) at the
Conversion Rate (as defined below).
(b)
Conversion Rate
. The number of
validly issued, fully paid and non-assessable shares of Common
Stock issuable upon conversion of each Preferred Share pursuant to
Section 4(a) shall be determined according to the following formula
(the “
Conversion
Rate
”):
Base Amount
Conversion
Price
No
fractional shares of Common Stock are to be issued upon the
conversion of any Preferred Shares. If the issuance would result in
the issuance of a fraction of a share of Common Stock, the Company
shall round such fraction of a share of Common Stock up to the
nearest whole share.
(c)
Mechanics of Conversion
. The
conversion of each Preferred Share shall be conducted in the
following manner:
(i)
Holder’s
Conversion
. To convert a Preferred Share into validly
issued, fully paid and non-assessable shares of Common Stock on any
date (a “
Conversion
Date
”), a Holder shall deliver (whether via facsimile
or otherwise), for receipt on or prior to 11:59 p.m., New York
time, on such date, a copy of an executed notice of conversion of
the share(s) of Preferred Shares subject to such conversion in the
form attached hereto as
Exhibit I
(the “
Conversion
Notice
”) to the Company. If required by Section
4(c)(vi), within five (5) Trading Days following a conversion of
any such Preferred Shares as aforesaid, such Holder shall surrender
to a nationally recognized overnight delivery service for delivery
to the Company the original certificates representing the share(s)
of Preferred Shares (the “
Preferred Share Certificates
”) so
converted as aforesaid.
(ii)
Company’s
Response
. On or before the first (1
st
) Trading Day
following the date of receipt of a Conversion Notice, the Company
shall transmit by facsimile an acknowledgment of confirmation, in
the form attached hereto as
Exhibit II
,
of receipt of such Conversion Notice to such Holder and the
transfer agent for the Company’s Common Stock (the
“
Transfer
Agent
”), which confirmation shall constitute an
instruction to the Transfer Agent to process such Conversion Notice
in accordance with the terms herein. On or before the second
(2
nd
)
Trading Day following the date of receipt by the Company of such
Conversion Notice, the Company shall (1) provided that the Transfer
Agent is participating in DTC Fast Automated Securities Transfer
Program, credit such aggregate number of shares of Common Stock to
which such Holder shall be entitled to such Holder’s or its
designee’s balance account with DTC through its Deposit and
Withdrawal at Custodian system, or (2) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer
Program, issue and deliver (via reputable overnight courier) to
the
address as
specified in such Conversion Notice, a certificate, registered in
the name of such Holder or its designee, for the number of shares
of Common Stock to which such Holder shall be entitled. If the
number of Preferred Shares represented by the Preferred Share
Certificate(s) submitted for conversion pursuant to Section
4(c)(vi) is greater than the number of Preferred Shares being
converted, then the Company shall if requested by such Holder, as
soon as practicable and in no event later than three (3) Trading
Days after receipt of the Preferred Share Certificate(s) and at its
own expense, issue and deliver to such Holder (or its designee) a
new Preferred Share Certificate representing the number of
Preferred Shares not converted.
(iii)
Record
Holder
. The Person or Persons entitled to receive the shares
of Common Stock issuable upon a conversion of Preferred Shares
shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on the Conversion Date.
(iv)
Company’s
Failure to Timely Convert
. If the Company shall fail, for
any reason or for no reason, except in the case that the relevant
Preferred Share Certificate is required to be and shall not have
been timely received by the Transfer Agent, to issue to a Holder
within three (3) Trading Days after the Company’s receipt of
a Conversion Notice (whether via facsimile or otherwise) (the
“
Share Delivery
Deadline
”), a certificate for the number of shares of
Common Stock to which such Holder is entitled and register such
shares of Common Stock on the Company’s share register or to
credit such Holder’s or its designee’s balance account
with DTC for such number of shares of Common Stock to which such
Holder is entitled upon such Holder’s conversion of any
Preferred Shares (as the case may be) (a “
Conversion Failure
”), then, in
addition to all other remedies available to such Holder, such
Holder, upon written notice to the Company, (x) may void its
Conversion Notice with respect to, and retain or have returned (as
the case may be) any Preferred Shares that have not been converted
pursuant to such Holder’s Conversion Notice, provided that
the voiding of a Conversion Notice shall not affect the
Company’s obligations to make any payments which have accrued
prior to the date of such notice pursuant to the terms of this
Certificate of Designations or otherwise and (y) the Company shall
pay in cash to such Holder on each day after such third
(3
rd
)
Trading Day that the issuance of such shares of Common Stock is not
timely effected an amount equal to 1.0% of the greater of (y) the
Stated Value of the Preferred Shares subject to the Conversion
Failure and (z) the product of (A) the aggregate number of shares
of Common Stock not issued to such Holder on a timely basis and to
which the Holder is entitled and (B) the Closing Sale Price of the
Common Stock on the Trading Day immediately preceding the last
possible date on which the Company could have issued such shares of
Common Stock to the Holder without violating Section 4(c). In
addition to the foregoing, if within three (3) Trading Days after
the Company’s receipt of a Conversion Notice (whether via
facsimile or otherwise), the Company shall fail to issue and
deliver a certificate to such Holder and register such shares of
Common Stock on the Company’s share register or credit such
Holder’s or its designee’s balance account with DTC for
the number of shares of Common Stock to which such Holder is
entitled upon such Holder’s conversion hereunder (as the case
may be), and if on or after such third (3
rd
) Trading Day such
Holder (or any other Person in respect, or on behalf, of such
Holder) purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such
Holder 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, issuable
upon such conversion that such Holder so anticipated receiving from
the Company, then, in addition to all other remedies available to
such Holder, the Company shall, within three (3) Business Days
after such Holder’s request and in such Holder’s
discretion, either (i) pay cash to such Holder in an amount equal
to such Holder’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (including, without limitation,
by any other Person in respect, or on behalf, of such Holder) (the
“
Buy-In Price
”),
at which point the Company’s obligation to so issue and
deliver such certificate or credit such Holder’s balance
account with DTC for the number of shares of Common Stock to which
such Holder is entitled upon such Holder’s conversion
hereunder (as the case may be) (and to issue such shares of Common
Stock) shall terminate, or (ii) promptly honor its obligation to so
issue and deliver to such Holder a certificate or certificates
representing such shares of Common Stock or credit such
Holder’s balance account with DTC for the number of shares of
Common Stock to which such Holder is entitled upon such
Holder’s conversion hereunder (as the case may be) and pay
cash to such Holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of shares of
Common Stock 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 applicable Conversion Notice and ending on the date of
such issuance and payment under this clause (ii).
(v)
Pro
Rata Conversion; Disputes
. In the event the Company receives
a Conversion Notice from more than one Holder for the same
Conversion Date and the Company can convert some, but not all, of
such Preferred Shares submitted for conversion, the Company shall
convert from each Holder electing to have Preferred Shares
converted on such date a pro rata amount of such Holder’s
Preferred Shares submitted for conversion on such date based on the
number of Preferred Shares submitted for conversion on such date by
such Holder relative to the aggregate number of Preferred Shares
submitted for conversion on such date. In the event of a dispute as
to the number of shares of Common Stock issuable to a Holder in
connection with a conversion of Preferred Shares, the Company shall
issue to such Holder the number of shares of Common Stock not in
dispute and resolve such dispute in accordance with Section
21.
(vi)
Book-Entry
. Notwithstanding
anything to the contrary set forth in this Section 4, upon
conversion of any Preferred Shares in accordance with the terms
hereof, no Holder thereof shall be required to physically surrender
the certificate representing the Preferred Shares to the Company
following conversion thereof unless (A) the full or remaining
number of Preferred Shares represented by the certificate are being
converted (in which event such certificate(s) shall be delivered to
the Company as contemplated by this Section 4(c)(vi)) or (B) such
Holder has provided the Company with prior written notice (which
notice may be included in a Conversion Notice) requesting
reissuance of Preferred Shares upon physical surrender of any
Preferred Shares. Each Holder and the Company shall maintain
records showing the number of Preferred Shares so converted by such
Holder and the dates of such conversions or shall use such other
method, reasonably satisfactory to such Holder and the Company, so
as not to require physical surrender of the certificate
representing the Preferred Shares upon each such conversion. In the
event of any dispute or discrepancy, such records of the Company
establishing the number of Preferred Shares to which the record
holder is entitled shall be controlling and determinative in the
absence of manifest error. A Holder and any transferee or assignee,
by acceptance of a certificate, acknowledge and agree that, by
reason of the provisions of this paragraph, following conversion of
any Preferred Shares, the number of Preferred Shares represented by
such certificate may be less than the number of Preferred Shares
stated on the face thereof. Each certificate for Preferred Shares
shall bear the following legend:
ANY
TRANSFEREE OR ASSIGNEE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW
THE TERMS OF THE CORPORATION’S CERTIFICATE OF DESIGNATIONS
RELATING TO THE SHARES OF SERIES E PREFERRED STOCK REPRESENTED BY
THIS CERTIFICATE, INCLUDING SECTION 4(c)(vi) THEREOF. THE NUMBER OF
SHARES OF SERIES E PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE
MAY BE LESS THAN THE NUMBER OF SHARES OF SERIES E PREFERRED STOCK
STATED ON THE FACE HEREOF PURSUANT TO SECTION 4(c)(vi) OF THE
CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES E
PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE.
(d)
Taxes
. The Company shall pay
any and all documentary, stamp, transfer (but only in respect of
the registered holder thereof), issuance and other similar taxes
that may be payable with respect to the issuance and delivery of
shares of Common Stock upon the conversion of Preferred
Shares.
5.
Rights Upon Issuance of Purchase
Rights and Other Corporate Events
.
(a)
Purchase Rights
. In addition to
any adjustments pursuant to Section 7 below, if at any time the
Company grants, issues or sells any Options, Convertible Securities
or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of Common Stock
(the
“
Purchase Rights
”), then each
Holder will be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights which such
Holder could have acquired if such Holder had held the number of
shares of Common Stock acquirable upon complete conversion of all
the Preferred Shares held by such Holder immediately before the
date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights.
(b)
Other Corporate Events
. In
addition to and not in substitution for any other rights hereunder,
prior to the consummation of any Fundamental Transaction pursuant
to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for
shares of Common Stock (a “
Corporate Event
”), the Company
shall make appropriate provision to insure that each Holder will
thereafter have the right to receive upon a conversion of all the
Preferred Shares held by such Holder (i) in addition to the shares
of Common Stock receivable upon such conversion, such securities or
other assets to which such Holder would have been entitled with
respect to such shares of Common Stock had such shares of Common
Stock been held by such Holder upon the consummation of such
Corporate Event (without taking into account any limitations or
restrictions on the convertibility of the Preferred Shares
contained in this Certificate of Designations) or (ii) in lieu of
the shares of Common Stock otherwise receivable upon such
conversion, such securities or other assets received by the holders
of shares of Common Stock in connection with the consummation of
such Corporate Event in such amounts as such Holder would have been
entitled to receive had the Preferred Shares held by such Holder
initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a
conversion rate for such consideration commensurate with the
Conversion Rate. The provisions of this Section 5(b) shall apply
similarly and equally to successive Corporate Events and shall be
applied without regard to any limitations on the conversion of the
Preferred Shares contained in this Certificate of
Designations.
6.
Rights Upon Fundamental
Transactions
.
(a)
Assumption
. The Company shall
not enter into or be party to a Fundamental Transaction unless
(i) the Successor Entity assumes in writing all of the
obligations of the Company under this Certificate of Designations
and the other Transaction Documents in accordance with the
provisions of this Section 6 pursuant to written agreements in form
and substance satisfactory to holders of Preferred Shares
representing the Required Holders and approved by the Required
Holders prior to such Fundamental Transaction, including agreements
to deliver to each holder of Preferred Shares in exchange for such
Preferred Shares a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to
this Certificate of Designations, including, without limitation,
having a stated value and dividend rate equal to the stated value
and dividend rate of the Preferred Shares held by the Holders and
having similar ranking to the Preferred Shares, and reasonably
satisfactory to the Required Holders and (ii) the Successor
Entity (including its Parent Entity) is a publicly traded
corporation whose shares of common stock are quoted on or listed
for trading on an Eligible Market. Upon the occurrence of any
Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Certificate of
Designations and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Certificate
of Designations and the other Transaction Documents with the same
effect as if such Successor Entity had been named as the Company
herein and therein. In addition to the foregoing, upon consummation
of a Fundamental Transaction, the Successor Entity shall deliver to
each Holder confirmation that there shall be issued upon conversion
of the Preferred Shares at any time after the consummation of such
Fundamental Transaction, in lieu of the shares of Common Stock (or
other securities, cash, assets or other property (except such items
still issuable under Sections 5 and 10, which shall continue to be
receivable thereafter)) issuable upon the conversion of the
Preferred Shares prior to such Fundamental Transaction, such shares
of publicly traded common stock (or their equivalent) of the
Successor Entity (including its Parent Entity) which each Holder
would have been entitled to receive upon the happening of such
Fundamental Transaction had all the Preferred Shares held by each
Holder been converted immediately prior to such Fundamental
Transaction (without regard to any limitations on the conversion of
the Preferred Shares contained in this Certificate of
Designations), as adjusted in accordance with the provisions of
this Certificate of Designations. The provisions of this Section 6
shall apply similarly and equally to successive Fundamental
Transactions and shall be applied without regard to any limitations
on the conversion of the Preferred Shares.
7.
Rights Upon Issuance of Other
Securities
.
(a)
Intentionally
Omitted.
(b)
Adjustment of Conversion Price upon
Subdivision or Combination of Common Stock
. Without limiting
any provision of Sections 5 and 10, if the Company at any time on
or after the Initial Issuance Date subdivides (by any stock split,
stock dividend, recapitalization or otherwise) one or more classes
of its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced. Without limiting any
provision of Sections 5 and 10, if the Company at any time on or
after the Initial Issuance Date combines (by combination, reverse
stock split or otherwise) one or more classes of its outstanding
shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination
will be proportionately increased. Any adjustment pursuant to this
Section 7(a) shall become effective immediately after the effective
date of such subdivision or combination. If any event requiring an
adjustment under this Section 7(a) occurs during the period that a
Conversion Price is calculated hereunder, then the calculation of
such Conversion Price shall be adjusted appropriately to reflect
such event.
(c)
Intentionally
Omitted.
(d)
Calculations
. All calculations
under this Section 7 shall be made by rounding to the nearest
one-hundred thousandth of a cent or the nearest 1/100
th
of a share, as
applicable. 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 Company, and the disposition of any such shares,
other than a return thereof to the Company’s treasury for
cancellation shall be considered an issue or sale of Common
Stock.
(a)
Reservation
. The Company shall
initially reserve out of its authorized and unissued Common Stock a
number of shares of Common Stock equal to 100% of the Conversion
Rate with respect to the Base Amount of each Preferred Share as of
the Initial Issuance Date (assuming for purposes hereof, that all
the Preferred Shares issuable pursuant to the Agreement and Plan of
Reorganization have been issued, such Preferred Shares are
convertible at the Conversion Price and without taking into account
any limitations on the conversion of such Preferred Shares set
forth in herein) issuable pursuant to the terms of this Certificate
of Designations from the Initial Issuance Date through the second
anniversary of the Initial Issuance Date assuming (assuming for
purposes hereof, that all the Preferred Shares issuable pursuant to
the Agreement and Plan of Reorganization have been issued and
without taking into account any limitations on the issuance of
securities set forth herein). So long as any of the Preferred
Shares are outstanding, the Company shall take all action necessary
to reserve and keep available out of its authorized and unissued
shares of Common Stock, solely for the purpose of effecting the
conversion of the Preferred Shares, as of any given date, 100% of
the number of shares of Common Stock as shall from time to time be
necessary to effect the conversion of all of the Preferred Shares
issued or issuable pursuant to the Agreement and Plan of
Reorganization assuming for purposes hereof, that all the Preferred
Shares issuable pursuant to the Agreement and Plan of
Reorganization have been issued and without taking into account any
limitations on the issuance of securities set forth herein),
provided that at no time shall the number of shares of Common Stock
so available be less than the number of shares required to be
reserved by the previous sentence (without regard to any
limitations on conversions contained in this Certificate of
Designations) (the “
Required
Amount
”). The initial number of shares of Common Stock
reserved for conversions of the Preferred Shares and each increase
in the number of shares so reserved shall be allocated pro rata
among the Holders based on the number of Preferred Shares held by
each Holder on the Initial Issuance Date or increase in the number
of reserved shares (as the case may be) (the “
Authorized Share Allocation
”). In
the event a Holder shall sell or otherwise transfer any of such
Holder’s Preferred Shares,
each transferee
shall be allocated a pro rata portion of such Holder’s
Authorized Share Allocation. Any shares of Common Stock reserved
and allocated to any Person which ceases to hold any Preferred
Shares shall be allocated to the remaining Holders of Preferred
Shares, pro rata based on the number of Preferred Shares then held
by such Holders.
(b)
Insufficient Authorized Shares
.
If, notwithstanding Section 8(a) and not in limitation thereof, at
any time while any of the Preferred Shares remain outstanding the
Company does not have a sufficient number of authorized and
unissued shares of Common Stock to satisfy its obligation to have
available for issuance upon conversion of the Preferred Shares at
least a number of shares of Common Stock equal to the Required
Amount (an “
Authorized Share
Failure
”), then the Company shall promptly take all
action necessary to increase the Company’s authorized shares
of Common Stock to an amount sufficient to allow the Company to
reserve and have available the Required Amount for all of the
Preferred Shares then outstanding. Without limiting the generality
of the foregoing sentence, as soon as practicable after the date of
the occurrence of an Authorized Share Failure, but in no event
later than ninety (90) days after the occurrence of such Authorized
Share Failure, the Company shall hold a meeting of its stockholders
or conduct a consent solicitation for the approval of an increase
in the number of authorized shares of Common Stock. In connection
with such meeting, the Company shall provide each stockholder with
a proxy statement (or consent solicitation statement, as the case
may be) and shall use its best efforts to solicit its
stockholders’ approval of such increase in authorized shares
of Common Stock and to cause its Board to recommend to the
stockholders that they approve such proposal. Nothing contained in
this Section 8 shall limit any obligations of the Company under any
provision of the Agreement and Plan of Reorganization. In the event
that the Company is prohibited from issuing shares of Common Stock
upon a conversion of any Preferred Share due to the failure by the
Company to have sufficient shares of Common Stock available out of
the authorized but unissued shares of Common Stock (such
unavailable number of shares of Common Stock, the
“
Authorization Failure
Shares
”), in lieu of delivering such Authorization
Failure Shares to such Holder of such Preferred Shares, the Company
shall pay cash in exchange for the cancellation of such Preferred
Shares convertible into such Authorized Failure Shares at a price
equal to the greater of (y) the Stated Value of the Preferred
Shares subject to the Conversion Notice with respect to such
Authorization Failure Shares and (z) the sum of (i) the product of
(x) such number of Authorization Failure Shares and (y) the Closing
Sale Price on the Trading Day immediately preceding the date such
Holder delivers the applicable Conversion Notice with respect to
such Authorization Failure Shares to the Company and (ii) to the
extent such Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a
sale by such Holder of Authorization Failure Shares, any brokerage
commissions and other out-of-pocket expenses, if any, of such
Holder incurred in connection therewith.
9.
Voting Rights
. Except as
otherwise expressly required by law, each holder of Preferred
Shares shall be entitled to vote on all matters submitted to
shareholders of the Company and shall be entitled to such number of
votes
equal to two votes for every one
share of Common Stock into which such Preferred Stock shall be
convertible into
at the record date for the determination of
shareholders entitled to vote on such matter or, if no such record
date is established, at the date such vote is taken or any written
consent of shareholders is solicited. Except as otherwise required
by law, the holders of Preferred Shares shall vote together with
the holders of Common Stock on all matters and shall not vote as a
separate class.
10.
Participation
. The Holders
shall, as holders of Preferred Shares, be entitled to receive such
dividends paid and distributions made to the holders of shares of
Common Stock to the same extent as if such Holders had converted
each Preferred Share held by each of them into shares of Common
Stock and had held such shares of Common Stock on the record date
for such dividends and distributions. Payments under the preceding
sentence shall be made concurrently with the dividend or
distribution to the holders of shares of Common Stock.
11.
Vote to Change the Terms of or Issue
Preferred Shares
. In addition to any other rights provided
by law, except where the vote or written consent of the holders of
a greater number of shares is required by law or by another
provision of the Certificate of Incorporation, without first
obtaining the affirmative vote at a meeting duly called for such
purpose or the written consent without a meeting of the Required
Holders, voting together as a single class, the Company shall not:
(a) amend or repeal any provision of, or add any provision to, its
Certificate of Incorporation or bylaws, or file any certificate of
designations or articles of amendment of any series of shares of
preferred stock, if such action would adversely alter or change in
any respect the preferences, rights, privileges or powers, or
restrictions provided for the benefit, of the Preferred Shares,
regardless of whether any such action shall be by means of
amendment to the Certificate of Incorporation or by merger,
consolidation or otherwise; (b) increase or decrease (other than by
conversion) the authorized number of Preferred Shares; (c) without
limiting any provision of Section 2, create or authorize (by
reclassification or otherwise) any new class or series of shares
that has a preference over or is on a parity with the Preferred
Shares with respect to dividends or the distribution of assets on
the liquidation, dissolution or winding-up of the Company; (d)
purchase, repurchase or redeem any shares of capital stock of the
Company junior in rank to the Preferred Shares (other than pursuant
to equity incentive agreements (that have in good faith been
approved by the Board) with employees giving the Company the right
to repurchase shares upon the termination of services); (e) without
limiting any provision of Section 2, pay dividends or make any
other distribution on any shares of any capital stock of the
Company junior in rank to the Preferred Shares; or (f) without
limiting any provision of Section 15, whether or not prohibited by
the terms of the Preferred Shares, circumvent a right of the
Preferred Shares.
12.
Intentionally
Omitted
.
13.
Lost or Stolen Certificates
.
Upon receipt by the Company of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of any
certificates representing Preferred Shares (as to which a written
certification and the indemnification contemplated below shall
suffice as such evidence), and, in the case of loss, theft or
destruction, of an indemnification undertaking by the applicable
Holder to the Company in customary and reasonable form and, in the
case of mutilation, upon surrender and cancellation of the
certificate(s), the Company shall execute and deliver new
certificate(s) of like tenor and date.
14.
Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief.
The remedies
provided in this Certificate of Designations shall be cumulative
and in addition to all other remedies available under this
Certificate of Designations and any of the other Transaction
Documents, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and no remedy
contained herein shall be deemed a waiver of compliance with the
provisions giving rise to such remedy. Nothing herein shall limit
any Holder’s right to pursue actual and consequential damages
for any failure by the Company to comply with the terms of this
Certificate of Designations. The Company covenants to each Holder
that there shall be no characterization concerning this instrument
other than as expressly provided herein. Amounts set forth or
provided for herein with respect to payments, conversion and the
like (and the computation thereof) shall be the amounts to be
received by a Holder and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the
performance thereof). The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the
Holders and that the remedy at law for any such breach may be
inadequate. The Company therefore agrees that, in the event of any
such breach or threatened breach, each Holder shall be entitled, in
addition to all other available remedies, to an injunction
restraining any such breach or any such threatened breach, without
the necessity of showing economic loss and without any bond or
other security being required. The Company shall provide all
information and documentation to a Holder that is requested by such
Holder to enable such Holder to confirm the Company’s
compliance with the terms and conditions of this Certificate of
Designations.
15.
Noncircumvention
. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Certificate of Incorporation, bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, 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 Certificate of
Designations, and will at all times in good faith carry out all the
provisions of this Certificate of Designations and take all action
as may be required to protect the rights of the Holders. Without
limiting the generality of the foregoing or any other provision of
this Certificate of Designations, the Company (i) shall not
increase the par value of any shares of Common Stock receivable
upon the conversion of any Preferred Shares above the Conversion
Price then in effect, (ii) shall take all such actions as may
be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares of Common
Stock upon the conversion of Preferred Shares and (iii) shall, so
long as any Preferred Shares are outstanding, take all action
necessary to reserve and keep available out of its authorized and
unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the Preferred Shares, the maximum
number of shares of Common Stock as shall from time to time be
necessary to effect the conversion of the Preferred Shares then
outstanding (without regard to any limitations on conversion
contained herein).
16.
Failure or Indulgence Not
Waiver
. No failure or delay on the part of a Holder in the
exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. No
waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party. This Certificate of
Designations shall be deemed to be jointly drafted by the Company
and all Holders and shall not be construed against any Person as
the drafter hereof.
17.
Notices
. The Company shall
provide each Holder of Preferred Shares with prompt written notice
of all actions taken pursuant to the terms of this Certificate of
Designations, including in reasonable detail a description of such
action and the reason therefor. Whenever notice is required to be
given under this Certificate of Designations, unless otherwise
provided herein, such notice must be in writing and shall be given
in accordance with the Agreement and Plan of Reorganization.
Without limiting the generality of the foregoing, the Company shall
give written notice to each Holder (i) promptly following any
adjustment of the Conversion Price, setting forth in reasonable
detail, and certifying, the calculation of such adjustment and (ii)
at least fifteen (15) days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend
or distribution upon the Common Stock, (B) with respect to any
grant, issuances, or sales of any Options, Convertible Securities
or rights to purchase stock, warrants, securities or other property
to all holders of shares of Common Stock as a class or (C) for
determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided, in each case,
that such information shall be made known to the public prior to,
or simultaneously with, such notice being provided to any
Holder.
18.
Transfer of Preferred Shares
.
The Holder may transfer some or all of its Preferred Shares without
the consent of the Company.
19.
Preferred Shares Register
. The
Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice
to the Holders), a register for the Preferred Shares, in which the
Company shall record the name, address and facsimile number of the
Persons in whose name the Preferred Shares have been issued, as
well as the name and address of each transferee. The Company may
treat the Person in whose name any Preferred Shares is registered
on the register as the owner and holder thereof for all purposes,
notwithstanding any notice to the contrary, but in all events
recognizing any properly made transfers.
20.
Stockholder Matters;
Amendment
.
(a)
Stockholder Matters
. Any
stockholder action, approval or consent required, desired or
otherwise sought by the Company pursuant to the DGCL, the
Certificate of Incorporation, this Certificate of Designations or
otherwise with respect to the issuance of Preferred Shares may be
effected by written consent of the Company’s stockholders or
at a duly called meeting of the Company’s stockholders, all
in accordance with the applicable rules and regulations of the
DGCL. This provision is intended to comply with the applicable
sections of the DGCL permitting stockholder action, approval and
consent affected by written consent in lieu of a
meeting.
(b)
Amendment
. This Certificate of
Designations or any provision hereof may be amended by obtaining
the affirmative vote at a meeting duly called for such purpose, or
written consent without a meeting in accordance with the DGCL, of
the Required Holders, voting separate as a single class, and with
such other stockholder approval, if any, as may then be required
pursuant to the DGCL and the Certificate of
Incorporation.
(a)
Disputes Over Closing Bid
Price, Closing Sale Price, Conversion Price, VWAP or Fair Market
Value.
(i)
In the case of a dispute relating to a
Closing Bid Price, a Closing Sale Price, a Conversion Price, a VWAP
or fair market value (as the case may be) (including, without
limitation, a dispute relating to the determination of any of the
foregoing), the Company or such applicable Holder (as the case may
be) shall submit the dispute via facsimile (I) within two (2)
Business Days after delivery of the applicable notice giving rise
to such dispute to the Company or such Holder (as the case may be)
or (II) if no notice gave rise to such dispute, at any time after
such Holder learned of the circumstances giving rise to such
dispute. If such Holder and the Company are unable to resolve such
dispute relating to such Closing Bid Price, such Closing Sale
Price, such Conversion Price, such VWAP or such fair market value
(as the case may be) by 5:00 p.m. (New York time) on the third
(3
rd
)
Business Day following such delivery by the Company or such Holder
(as the case may be) of such dispute to the Company or such Holder
(as the case may be), then such Holder shall select an independent,
reputable investment bank to resolve such dispute.
(ii)
Such Holder and the Company shall
each deliver to such investment bank (x) a copy of the initial
dispute submission so delivered in accordance with the first
sentence of this Section 22(a) and (y) written documentation
supporting its position with respect to such dispute, in each case,
no later than 5:00 p.m. (New York time) by the fifth (5
th
) Business Day
immediately following the date on which such Holder selected such
investment bank (the “
Dispute
Submission Deadline
”) (the documents referred to in
the immediately preceding clauses (x) and (y) are collectively
referred to herein as the “
Required Dispute Documentation
”)
(it being understood and agreed that if either such Holder or the
Company fails to so deliver all of the Required Dispute
Documentation by the Dispute Submission Deadline, then the party
who fails to so submit all of the Required Dispute Documentation
shall no longer be entitled to (and hereby waives its right to)
deliver or submit any written documentation or other support to
such investment bank with respect to such dispute and such
investment bank shall resolve such dispute based solely on the
Required Dispute Documentation that was delivered to such
investment bank prior to the Dispute Submission Deadline). Unless
otherwise agreed to in writing by both the Company and such Holder
or otherwise requested by such
investment bank,
neither the Company nor such Holder shall be entitled to deliver or
submit any written documentation or other support to such
investment bank in connection with such dispute (other than the
Required Dispute Documentation).
(iii)
The Company and such Holder shall
cause such investment bank to determine the resolution of such
dispute and notify the Company and such Holder of such resolution
no later than ten (10) Business Days immediately following the
Dispute Submission Deadline. The fees and expenses of such
investment bank shall be borne solely by the Company, and such
investment bank’s resolution of such dispute shall be final
and binding upon all parties absent manifest error.
(b)
Disputes Over Arithmetic Calculation
of the Conversion Rate.
(i)
In the case of a dispute as to the
arithmetic calculation of a Conversion Rate, the Company or such
Holder (as the case may be) shall submit the disputed arithmetic
calculation via facsimile (i) within two (2) Business Days after
delivery of the applicable notice giving rise to such dispute to
the Company or such Holder (as the case may be) or (ii) if no
notice gave rise to such dispute, at any time after such Holder
learned of the circumstances giving rise to such dispute. If such
Holder and the Company are unable to resolve such disputed
arithmetic calculation of such Conversion Rate by 5:00 p.m. (New
York time) on the third (3
rd
) Business Day
following such delivery by the Company or such Holder (as the case
may be) of such disputed arithmetic calculation, then such Holder
shall select an independent, reputable accountant or accounting
firm to perform such disputed arithmetic calculation.
(ii)
Such Holder and the Company shall
each deliver to such accountant or accounting firm (as the case may
be) (x) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section 22(a) and (y)
written documentation supporting its position with respect to such
disputed arithmetic calculation, in each case, no later than 5:00
p.m. (New York time) by the fifth (5
th
) Business Day
immediately following the date on which such Holder selected such
accountant or accounting firm (as the case may be) (the
“
Submission
Deadline
”) (the documents referred to in the
immediately preceding clauses (x) and (y) are collectively referred
to herein as the “
Required
Documentation
”) (it being understood and agreed that
if either such Holder or the Company fails to so deliver all of the
Required Documentation by the Submission Deadline, then the party
who fails to so submit all of the Required Documentation shall no
longer be entitled to (and hereby waives its right to) deliver or
submit any written documentation or other support to such
accountant or accounting firm (as the case may be) with respect to
such disputed arithmetic calculation and such accountant or
accounting firm (as the case may be) shall perform such disputed
arithmetic calculation based solely on the Required Documentation
that was delivered to such accountant or accounting firm (as the
case may be) prior to the Submission Deadline). Unless otherwise
agreed to in writing by both the Company and such Holder or
otherwise requested by such accountant or accounting firm (as the
case may be), neither the Company nor such Holder shall be entitled
to deliver or submit any written documentation or other support to
such accountant or accounting firm (as the case may be) in
connection with such disputed arithmetic calculation of the
Conversion Rate (other than the Required
Documentation).
(iii)
The Company and such Holder shall
cause such accountant or accounting firm (as the case may be) to
perform such disputed arithmetic calculation and notify the Company
and such Holder of the results no later than ten (10) Business Days
immediately following the Submission Deadline. The fees and
expenses of such accountant or accounting firm (as the case may be)
shall be borne solely by the Company, and such accountant’s
or accounting firm’s (as the case may be) arithmetic
calculation shall be final and binding upon all parties absent
manifest error.
(c)
Miscellaneous. The Company expressly acknowledges and agrees that
(i) this Section 22 constitutes an agreement to arbitrate between
the Company and such Holder (and constitutes an arbitration
agreement) under § 7501, et seq. of the New York Civil
Practice Law and Rules (“
CPLR
”) and that each party shall
be entitled to compel arbitration pursuant to CPLR § 7503(a)
in order to compel compliance with this Section 22, (ii) the terms
of this Certificate of Designations and each other applicable
Transaction Document shall serve as the basis for the selected
investment bank’s resolution of the applicable dispute, such
investment bank shall be entitled (and is hereby expressly
authorized) to make all findings, determinations and the like that
such investment bank determines are required to be made by such
investment bank in connection with its resolution of such dispute
and in resolving such dispute such investment bank shall apply such
findings, determinations and the like to the terms of this
Certificate of Designations and any other applicable Transaction
Documents, (iii) the terms of this Certificate of Designations and
each other applicable Transaction Document shall serve as the basis
for the selected accountant’s or accounting firm’s
performance of the applicable arithmetic calculation, (iv) for
clarification purposes and without implication that the contrary
would otherwise be true, disputes relating to matters described in
Section 22(a) shall be governed by Section 22(a) and not by Section
22(b), (v) such Holder (and only such Holder), in its sole
discretion, shall have the right to submit any dispute described in
this Section 22 to any state or federal court sitting in The City
of New York, Borough of Manhattan in lieu of utilizing the
procedures set forth in this Section 22 and (vi) nothing in this
Section 22 shall limit such Holder from obtaining any injunctive
relief or other equitable remedies (including, without limitation,
with respect to any matters described in Section 22(a) or Section
22(b)).
22.
Certain Defined Terms
. For
purposes of this Certificate of Designations, the following terms
shall have the following meanings:
(a)
“
1934 Act
”
means
the Securities Exchange Act of
1934, as amended.
(b)
“
Affiliate
” as applied to any
Person, means any other Person directly or indirectly controlling,
controlled by, or under common control with, that Person. For the
purposes of this definition, “
control
” (including, with
correlative meanings, the terms “
controlling
”, “
controlled by
” and
“
under common control
with
”), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract
or otherwise. For purposes of this definition, a Person shall be
deemed to be “
controlled by
” a Person
if such latter Person possesses, directly or indirectly, power to
vote 10% or more of the securities having ordinary voting power for
the election of directors of such former Person
(c)
“
Agreement and Plan of
Reorganization
” means the Agreement and Plan of
Reorganization
by and among the
Company, Majesco Acquisition Corp., a Nevada corporation and
wholly-owned subsidiary of the Company PolarityTE, Inc., a Nevada
corporation and Denver Lough dated December 1,
2016
(d)
“
Base Amount
” means, with respect
to each Preferred Share, as of the applicable date of
determination, the sum of (1) the Stated Value thereof, plus (2)
the Unpaid Dividend Amount thereon as of such date of
determination.
(e)
“
Bloomberg
” means Bloomberg,
L.P.
(f)
“
Business Day
” means any day other
than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain
closed.
(g)
“
Closing Bid Price
” and
“
Closing Sale
Price
” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively,
for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price
or the closing trade price (as the case may be) then the last bid
price or last trade price, respectively, of such security prior to
4:00:00 p.m., New York time, as reported by Bloomberg, or, if the
Principal Market is not the principal securities exchange or
trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed
or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price,
respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the
average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).
If the Closing Bid Price or the Closing Sale Price cannot be
calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price or the Closing Sale Price
(as the case may be) of such security on such date shall be the
fair market value as mutually determined by the Company and the
applicable Holder. If the Company and such Holder are unable to
agree upon the fair market value of such security, then such
dispute shall be resolved in accordance with the procedures in
Section 21. All such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination or other
similar transaction during such period.
(h)
“
Common Stock
” means (i) the
Company’s shares of common stock, $0.001 par value per share,
and (ii) any capital stock into which such common stock shall have
been changed or any share capital resulting from a reclassification
of such common stock.
(i)
“
Conversion Price
” means, with
respect to each Preferred Share, as of any Conversion Date or other
applicable date of determination, $1.00, subject to adjustment as
provided herein.
(j)
“
Convertible Securities
” means any
stock or other security (other than Options) that is at any time
and under any circumstances, directly or indirectly, convertible
into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any shares of Common
Stock.
(k)
“
Eligible Market
” means the
Principal Market, The New York Stock Exchange, the NYSE MKT, the
NASDAQ Capital Market, the Nasdaq Global Select Market, the Nasdaq
Global Market, the OTCQX and the OTCQB (or any successor
thereto).
(l)
“
Fundamental Transaction
” “
means that (i) the Company or any of its Subsidiaries shall,
directly or indirectly, in one or more related transactions, (1)
consolidate or merge with or into (whether or not the Company or
any of its Subsidiaries is the surviving corporation) any other
Person, or (2) sell, lease, license, assign, transfer, convey or
otherwise dispose of all or substantially all of its respective
properties or assets to any other Person, or (3) allow any other
Person to make a purchase, tender or exchange offer that is
accepted by the holders of more than 50% of the outstanding shares
of Voting Stock of the Company (not including any shares of Voting
Stock of the Company held by the Person or Persons making or party
to, or associated or affiliated with the Persons making or party
to, such purchase, tender or exchange offer), or (4) consummate a
stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with any other Person whereby
such other Person acquires more than 50% of the outstanding shares
of Voting Stock of the Company (not including any shares of Voting
Stock of the Company held by the other Person or other Persons
making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement
or other business combination), or (5) reorganize, recapitalize or
reclassify the Common Stock, or (ii) any “person” or
“group” (as these terms are used for purposes of
Sections 13(d) and 14(d) of the 1934 Act and the rules and
regulations promulgated
thereunder) is or
shall become the “beneficial owner” (as defined in Rule
13d-3 under the 1934 Act), directly or indirectly, of 50% of the
aggregate ordinary voting power represented by issued and
outstanding Voting Stock of the Company.
(m)
“
Options
” means any rights,
warrants or options to subscribe for or purchase shares of Common
Stock or Convertible Securities.
(n)
“
Parent Entity
” of a Person means
an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is
quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with
the largest public market capitalization as of the date of
consummation of the Fundamental Transaction.
(o)
“
Person
” means an individual, a
limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other
entity or a government or any department or agency
thereof.
(p)
“
Principal Market
” means the NASDAQ
Capital Market.
(q)
“
SEC
” means the Securities and
Exchange Commission or the successor thereto.
(r)
“
Stated Value
” shall mean $1,000
per share, subject to adjustment for stock splits, stock dividends,
recapitalizations, reorganizations, reclassifications,
combinations, subdivisions or other similar events occurring after
the Initial Issuance Date with respect to the Preferred
Shares.
(s)
“
Subsidiaries
” shall
means any corporation, partnership, limited
liability company, joint venture, trust, association or other
entity of which the Company owns, directly or indirectly, (i) 50%
or more of the stock or other equity interests the holders of which
are generally entitled to elect at least a majority of the board of
directors or other governing body of such corporation, partnership,
limited liability company, joint venture, trust, association or
other entity or (ii) if there are no such voting interests, 50% or
more of the equity interests in such corporation, partnership,
limited liability company, joint venture, trust, association or
other entity.
(t)
“
Successor Entity
” means the Person
(or, if so elected by the Required Holders, the Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction
or the Person (or, if so elected by the Required Holders, the
Parent Entity) with which such Fundamental Transaction shall have
been entered into.
(u)
“
Trading Day
” means, as applicable,
(x) with respect to all price determinations relating to the Common
Stock, any day on which the Common Stock is traded on the Principal
Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include
any day on which the Common Stock is scheduled to trade on such
exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such
exchange or market, then during the hour ending at 4:00:00 p.m.,
New York time) unless such day is otherwise designated as a Trading
Day in writing by the Required Holders or (y) with respect to all
determinations other than price determinations relating to the
Common Stock, any day on which The New York Stock Exchange (or any
successor thereto) is open for trading of securities.
(v)
“
Transaction Documents
” means the
Agreement and Plan of
Reorganization
(w)
and each of the other agreements and
instruments entered into or delivered by the Company or any of the
Holders in connection with the transactions contemplated by the
Agreement and Plan of
Reorganization
, all as may be amended from time to time in
accordance with the terms thereof.
(x)
“
Unpaid Dividend Amount
” means, as
of the applicable date of determination, with respect to each
Preferred Share, all accrued and unpaid Dividends on such Preferred
Share.
(y)
“
Voting Stock
” of a Person means
capital stock of such Person of the class or classes pursuant to
which the holders thereof have the general voting power to elect,
or the general power to appoint, at least a majority of the board
of directors, managers, trustees or other similar governing body of
such Person (irrespective of whether or not at the time capital
stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
(z)
“
VWAP
” means, for any security as
of any date, the dollar volume-weighted average price for such
security on the Principal Market (or, if the Principal Market is
not the principal trading market for such security, then on the
principal securities exchange or securities market on which such
security is then traded) during the period beginning at 9:30:01
a.m., New York time, and ending at 4:00:00 p.m., New York time, as
reported by Bloomberg through its “HP” function set to
“weighted average” or, if the foregoing does not apply,
the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such
security during the period beginning at 9:30:01 a.m., New York
time, and ending at 4:00:00 p.m., New York time, as reported by
Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average
of the highest closing bid price and the lowest closing ask price
of any of the market makers for such security as reported in the
“pink sheets” by OTC Markets Group Inc. (formerly Pink
Sheets LLC). If the VWAP cannot be calculated for such security on
such date on any of the foregoing bases, the VWAP of such security
on such date shall be the fair market value as mutually determined
by the Company and such Holder. If the Company and such Holder are
unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in
Section 22. All such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination or other
similar transaction during such period.
23.
Disclosure
. Upon receipt or
delivery by the Company of any notice in accordance with the terms
of this Certificate of Designations, unless the Company has in good
faith determined that the matters relating to such notice do not
constitute material, non-public information relating to the Company
or any of its Subsidiaries, the Company shall simultaneously with
any such receipt or delivery publicly disclose such material,
non-public information on a Current Report on Form 8-K or
otherwise. In the event that the Company believes that a notice
contains material, non-public information relating to the Company
or any of its Subsidiaries, the Company so shall indicate to each
Holder contemporaneously with delivery of such notice, and in the
absence of any such indication, each Holder shall be allowed to
presume that all matters relating to such notice do not constitute
material, non-public information relating to the Company or its
Subsidiaries. Nothing contained in this Section 23 shall limit any
obligations of the Company, or any rights of any Holder, under the
Subscription Agreements.
* * * *
*
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations of 0% Series E Convertible Preferred Stock of Majesco
Entertainment Company to be signed by its [___] on this [___] day
of [____], 2016.
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MAJESCO
ENTERTAINMENT COMPANY
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By:
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Name:
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Title:
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EXHIBIT I
MAJESCO ENTERTAINMENT COMPANY
CONVERSION
NOTICE
Reference is made
to the Certificate of Designations, Preferences and Rights of the
0% Series E Convertible Preferred Stock of Majesco Entertainment
Company (the “
Certificate of
Designations
”). In accordance with and pursuant to the
Certificate of Designations, the undersigned hereby elects to
convert the number of shares of Series E Convertible Preferred
Stock, $0.001 par value per share (the “
Preferred Shares
”), of Majesco
Entertainment Company, a Delaware corporation (the
“
Company
”),
indicated below into shares of common stock, $0.001 par value per
share (the “
Common
Stock
”), of the Company, as of the date specified
below.
Date of
Conversion:
Number
of Preferred Shares to be
converted:
Share
certificate no(s). of Preferred Shares to be
converted:
Tax ID
Number (If
applicable):
Conversion
Price:_________________________________________________________
Number
of shares of Common Stock to be
issued:
Please
issue the shares of Common Stock into which the Preferred Shares
are being converted in the following name and to the following
address:
Issue
to:
Address:
_________________________________________
Telephone Number:
________________________________
Facsimile
Number:
Holder:
By:
Title:
Dated:_____________________________
Account
Number (if electronic book entry
transfer):
Transaction Code
Number (if electronic book entry
transfer):
EXHIBIT II
ACKNOWLEDGMENT
The
Company hereby acknowledges this Conversion Notice and hereby
directs
[ ]
to issue the above indicated number of shares of Common Stock in
accordance with the Irrevocable Transfer Agent Instructions dated
__________, 2016 from the Company and acknowledged and agreed to by
[ ].
MAJESCO
ENTERTAINMENT COMPANY
Name:
Title:
Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This
EXECUTIVE EMPLOYMENT AGREEMENT (“
Agreement
”) is made and
entered into as of the 1st day of December 2016, by and between
Majesco Entertainment Company, a Delaware corporation headquartered
at 404I-T Hadley Road, S. Plainfield, New Jersey 07080
(“
Parent
”) and Denver
Lough, an individual (“
Executive
”). As used
herein, the “
Effective Date
” of this
Agreement shall mean the Closing date as defined in that certain
Merger Agreement (as defined below) and executed contemporaneously
herewith.
W I T N
E S S E T H:
WHEREAS, the
Executive desires to be employed by the Parent as its Chief
Executive Officer and Chief Scientific Officer and the Parent
wishes to employ the Executive in such capacities, in each case,
commencing on and as of the Effective Date.
WHEREAS, the
Executive and Parent are entering into this Agreement and the
Merger Agreement and the additional Transaction Documents which
describes the acquisition of Polarityte, Inc., a Nevada corporation
(the “
Company
”) and certain
Patent(s) (as defined below) by the Parent, including
recapitalization of the Parent in a transaction intended to be
tax-free to the Executive, establishing control of at least a
majority of the Parent’s issued an outstanding voting capital
stock by Executive immediately following Closing, election of a
board of directors, prosecution of the Patents (as defined below),
and commercial development of the Patents and related
technology.
WHEREAS,
contemporaneously with the execution of this Agreement by
Executive, and as a condition to the effectiveness hereof,
Executive has irrevocably assigned Patent No. WO/2016/089825 and
PCT/US2015/063114 (the “Patents”) pursuant to that
certain Assignment Agreement to the Company (the
“
Assignment
Agreement
”). .
Terms
not otherwise defined herein shall have the meanings ascribed to
such terms in the Merger Agreement.
NOW,
THEREFORE, in consideration of the foregoing and their respective
covenants and agreements contained in this document, the Parent and
the Executive hereby agree as follows:
1.
Employment and
Duties
. The Parent agrees to employ and the Executive agrees
to serve as the Parent’s Chief Executive Officer, Chief
Scientific Officer and Chairman of the Board. The duties and
responsibilities of the Executive shall include the duties and
responsibilities as the Parent’s Board of Directors
(“
Board
”) may from time to
time assign to the Executive.
Upon the Effective Date of this Agreement (or as promptly as
practicable thereafter), Executive shall be appointed to serve as a
member of the Board, pursuant to the terms and conditions of the
Parent’s bylaws, as amended. For so long as Executive is
Chief Executive Officer, the Parent shall use commercially
reasonable efforts, subject to applicable law and regulations of
the The NASDAQ Stock Market LLC, to cause Executive to be nominated
for election as a director and to be recommended to the
stockholders for election as a director.
The
Executive shall devote his full time efforts and services to the
business and affairs of the Parent and its subsidiaries. Nothing in
this Section 1 shall prohibit the Executive from: (A) serving as a
director or member of any other board, committee thereof of any
other entity or organization; (B) delivering lectures, fulfilling
speaking engagements, and any writing or publication relating to
his area of expertise; (C) serving as a director or trustee of any
governmental, charitable or educational organization; (D) engaging
in additional activities in connection with personal investments
and community affairs, including, without limitation, professional
or charitable or similar organization committees, boards,
memberships or similar associations or affiliations (E) serving in
health care facilities as a physician in order to maintain his
license to practice medicine, or (F) performing advisory
activities, provided, however, such activities are not in
competition with the business and affairs of the Parent or would
tend to cast executive of Parent in a negative light in the
reasonable judgment of the Board.
2.
Term
. The term of
this Agreement shall commence on the Effective Date and shall
continue for a period of one (1) year following the Effective Date
and shall be automatically renewed for successive one (1) year
periods thereafter unless either party provides the other party
with written notice of his or its intention not to renew this
Agreement at least three (3) months prior to the expiration of the
initial term or any renewal term of this Agreement.
“
Employment
Period
” shall mean the initial one (1) year term plus
renewals, if any.
3.
Place of
Employment
. The Executive’s services shall be
performed at such location or locations as Executive shall
determine, in his sole discretion.
4.
Base Salary and Board
Fees
. The Parent agrees to pay the Executive a base salary
(“
Base
Salary
”) of $350,000.00 per annum for the position(s)
of Chief Executive Officer and Chief Scientific Officer. Annual
adjustments after the first year of the Employment Period shall be
determined by the Board. The Base Salary shall be paid in periodic
installments in accordance with the Parent’s regular payroll
practices. Executive shall, subject to policies and procedures of
the Parent’s Board of Directors, be eligible to additional
fees for service on the Parent’s Board.
5.
Incentive Compensation and
Bonuses
.
(a)
Executive Employment Agreement Signing
Bonus:
Upon execution of this Agreement, the Parent shall
pay to Executive an initial signing bonus of
$100,000.00
(b)
Annual Bonus:
For each fiscal year
during the term of employment, the Executive shall be eligible to
receive a bonus in the amount of 100% of annual salary, if any, as
may be determined from time to time by the Board in its
discretion.
The Annual Bonus shall be paid by the Parent to
the Executive promptly after determination that the relevant
targets, if any, have been met, it being understood that the
attainment of any financial targets associated with any bonus shall
not be determined until following the completion of the
Parent’s annual audit and public announcement of such results
and shall be paid promptly following the Parent’s
announcement of earnings. In the event that the Compensation
Committee is unable to act or if there shall be no such
Compensation Committee, then all references herein to the
Compensation Committee (except in the proviso to this sentence)
shall be deemed to be references to the Board. Upon his termination
from employment, the Executive shall be entitled to receive a
pro-rata portion of the Annual Bonus calculated based upon his
final day of employment, regardless of whether he is employed by
the Parent through the conclusion of the fiscal quarter or year, as
the case may be, on which the Annual Bonus is based.
(c)
Equity Awards and Incentive
Compensation
: During the term of employment, the Executive
shall be eligible to participate in any equity-based incentive
compensation plan or program adopted by the Parent (such awards
under such plan or program, the “
Share Awards
”) as the
Compensation Committee or Board may from time to time determine.
Share Awards shall be subject to applicable plan terms and
conditions. And any additional terms and conditions as determined
by the Compensation Committee or the Board. On the Effective Date,
the Board of Directors of Parent shall award and reserve for
issuance 10 year options to purchase 3,000,000 shares of common
stock pursuant to the Parent’s Incentive Stock and Option
Plan at the fair market value thereof (as determined by NASDAQ) to
such persons eligible for such awards to be determined by
Executive.
6.
Severance
Compensation
:
(A)
Separation Payment
.
Upon termination of employment for any reason, the Executive shall
be entitled to: (A) the sum of his annual Base Salary from the date
of termination to be paid according to Section 4; (B) any and all
reasonable expenses paid or incurred by the Executive in connection
with and related to the performance of his duties and
responsibilities for the Parent during the period ending on the
termination date to be paid according to Section 8; (C) any accrued
but unused vacation time through the termination date in accordance
with Parent policy; and (D) the sum of his annual Bonus from the
date of termination to be paid according to Section 5(a); and (E)
all Share Awards earned and vested prior to termination. With
respect to any Share Awards held by the Executive as of his death
that are not vested and exercisable as of such date, the Parent
shall fully accelerate the vesting and exercisability of such Share
Awards, so that all such Share Awards shall be fully vested
and
exercisable as of the Executive’s death, such options (as
well as any Share Awards that previously became vested and
exercisable) to remain exercisable, notwithstanding anything in any
other agreement governing such options, until the earlier of (A) a
period of one (1) year after the Executive’s death or (B) the
original term of the option, if such Share Awards is an
option.
Additionally, if
the Executive’s employment is terminated prior to expiration
of the Employment Period (including due to his death or Disability,
as defined in Section 11(b)) unless the Executive’s
employment is terminated for Cause (as defined in Section 11(c)) or
the Executive terminates his employment without Good Reason (as
defined in Section 11(d) and other than for a Change in Control as
provided in Section 11(d) and Section 11(f)), the Executive shall
be entitled to receive a cash amount equal to the sum of the
Executive’s Base Salary, Annual Bonus and Share Awards earned
during the year immediately preceding the date of termination
(herein the “
Separation Payment
”), or
the amount payable (including Executive’s Base Salary, Annual
Bonus and Share Awards) for the remainder of the Employment Period
then in effect, if greater; provided, that the Executive executes
an agreement releasing Parent and its affiliates from any liability
associated with this Agreement and such release is irrevocable at
the time the Separation Payment is first payable under this Section
6 and the Executive complies with his other obligations under
Section 13 of this Agreement. Subject to the terms hereof, 100% of
the Separation Payment shall be paid within thirty (30) days of the
Executive’s termination of employment (“Initial
Payment”), provided that the Executive has executed a
release.
The
Executive may continue coverage with respect to the Parent’s
group health plans as permitted by the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”) for himself and
each of his “
Qualified Beneficiaries
”
as defined by COBRA (“
COBRA Coverage
”). The
Parent shall reimburse the amount of any COBRA premium paid for
COBRA Coverage timely elected by and for the Executive and any
Qualified Beneficiary of the Executive, and not otherwise
reimbursed, during the period that ends on the earliest of (x) the
date the Executive or the Qualified Beneficiary, as the case may
be, ceases to be eligible for COBRA Coverage, (y) the last day of
the consecutive eighteen (18) month period following the date of
the Executive’s termination of employment and (z) the date
the Executive or the Qualified Beneficiary, as the case may be, is
covered by another group health plan. To reimburse any COBRA
premium payment under this paragraph, the Parent must receive
documentation of the COBRA premium payment within ninety (90) days
of its payment.
(B)
Special Participation
Payment upon Involuntary Termination of Executive
. Provided
Executive shall not be in material breach of this Agreement,
Executive shall have the right to Participation Payments (as
defined below) paid to Parent (or any Affiliate) from commercial
transactions associated with the Patents and intellectual property
rights associated with the Patents (sales or licenses to third
parties), net of Deductible Purchaser Expenses (as defined below)
(“
Profits
”) on and
following the final issuance to the Parent (or an Affiliate) by the
USPTO of a United States Patent under the pending Patent
application and assigned to the Company upon either: (A)
termination of Executive’s employment by Executive with Good
Reason, or (B) upon termination of Executive’s employment by
Parent without Cause (as such terms are defined
below).
The
Parent will wire transfer within thirty (30) days following the end
of each calendar quarter, to the account specified by Executive or
such other account as most recently specified in writing by
Executive, an amount equal to the product of (A) the applicable
Participation Percentage multiplied by (B) the Participation Income
for the most recently completed calendar quarter (
“
Participation
Payments
”
),
“
Deductible
Purchaser Expenses
,”
for any
particular calendar quarter, means (i) the cumulative amount of all
charges and out-of-pocket costs and expenses (including research
and development, patenting, operating expenses, allocable portion
of overhead, insurance, samples, models, training, discounts,
allowances, givebacks and similar items of value) incurred by the
Parent and its Affiliates where such costs are incurred from the
business of the Parent and such Affiliates related to the Patents
and any intellectual property associated with the Patents on and
following the Closing and (ii) costs and expenses associated with
assertion and/or litigation of the Patents or any intellectual
property associated with the Patents.
“
Participation
Income
”
for any
particular calendar quarter means the Profits of Parent and its
Affiliates (as reported and in accordance with US GAAP) received
for each calendar quarter minus Deductible Purchaser
Expenses.
“
Participation
Percentage
”
for any
particular calendar quarter means five (5%) percent of
Participation Income.
Parent
shall keep full, clear and accurate records with respect to the
Participation Income and Participation Payments and shall furnish
any information which Seller may reasonably prescribe from time to
time to enable Seller to ascertain the proper Participation
Payments due under this Agreement. Parent shall retain such records
with respect to the Participation Payments for at least three (3)
years from each such payment. Executive shall have the right,
annually, through a national auditing firm, to make an examination,
during normal business hours, of all records and accounts bearing
upon the amount of Participation Payments payable under this
Agreement. Prompt adjustment shall be made to compensate for any
errors or omissions disclosed by such examination. Parent shall be
responsible for all its costs of any such audit unless the audit
reveals an underpayment by Parent of at least $100,000 for the
audited period. In such an event, Parent shall be responsible for
Executive’s costs of the audit. Based on audited financials,
Parent will provide Executive with a calculation of the amounts due
with respect to each of the quarters in such recently ended
calendar year (a “
Year End Statement
”). The
Year End Statement is due to Executive within fifteen (15) days of
Parent’s receipt of audited financial statements certified by
Parent’s auditor. Within ten (10) days following receipt of
such Year End Statement, Parent or Executive., as the case may be,
will pay, (without interest) to the other, any amounts in excess of
or remaining due as shown in the Year End Statement.
If a
dispute arises with respect to the amounts of Participation
Payments due, the parties will negotiate the matter in good faith
during a four (4) week period. If a dispute remains after such good
faith negotiations, the parties will as expeditiously as possible
(in any event within sixty days) seek mediation to resolve the
remaining matters. If no agreement is reached, the parties may
exercise all rights available hereunder at law.
7.
Clawback Rights
. The Annual
Bonus, and any and all stock based compensation (such as options
and equity awards) (collectively, the “
Clawback Benefits
”) shall
be subject to “
Clawback Rights
” as
follows: during the period that the Executive is employed by the
Parent and upon the termination of the Executive’s employment
and for a period of three (3) years thereafter, if there is a
restatement of any financial results from which any Clawback
Benefits to the Executive shall have been determined, the Executive
agrees to repay any amounts which were determined by reference to
any Parent financial results which were later restated (as defined
below), to the extent the Clawback Benefits amounts paid exceed the
Clawback Benefits amounts that would have been paid, based on the
restatement of the Parent’s financial information. All
Clawback Benefits amounts resulting from such restated financial
results shall be retroactively adjusted by the Compensation
Committee to take into account the restated results, and any excess
portion of the Clawback Benefits resulting from such restated
results shall be immediately surrendered to the Parent and if not
so surrendered within ninety (90) days of the revised calculation
being provided to the Executive by the Compensation Committee
following a publicly announced restatement, the Parent shall have
the right to take any and all action to effectuate such adjustment.
The calculation of the revised Clawback Benefits amount shall be
determined by the Compensation Committee in good faith and in
accordance with applicable law, rules and regulations. All
determinations by the Compensation Committee with respect to the
Clawback Rights shall be final and binding on the Parent and the
Executive. The Clawback Rights shall terminate following a Change
of Control as defined in Section 12(f), subject to applicable law,
rules and regulations. For purposes of this Section 7, a
restatement of financial results that requires a repayment of a
portion of the Clawback Benefits amounts shall mean a restatement
resulting from material non-compliance of the Parent with any
financial reporting requirement under the federal securities laws
and shall not include a restatement of financial results resulting
from subsequent changes in accounting pronouncements or
requirements which were not in effect on the date the financial
statements were originally prepared (“
Restatements
”). The
parties acknowledge it is their intention that the foregoing
Clawback Rights as relates to Restatements conform in all respects
to the provisions of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (“
Dodd-Frank Act
”) and
require recovery of all “incentive-based” compensation,
pursuant to the provisions of the Dodd-Frank Act and any and all
rules and regulations promulgated thereunder from time to time in
effect. Accordingly, the terms and provisions of this Agreement
shall be deemed automatically amended from time to time to assure
compliance with the Dodd-Frank Act and such rules and regulations
as hereafter may be adopted and in effect.
8.
Expenses
. The
Executive shall be entitled to prompt reimbursement by the Parent
for all reasonable ordinary and necessary travel, entertainment,
and other expenses incurred by the Executive while employed (in
accordance with the policies and procedures established by the
Parent for its senior executive officers) in the performance of his
duties and responsibilities under this Agreement; provided, that
the Executive shall properly account for such expenses in
accordance with Parent policies and procedures.
9.
Other Benefits
.
During the term of this Agreement, the Executive shall be eligible
to participate in incentive, stock purchase, savings, retirement
(401(k)), and welfare benefit plans, including, without limitation,
health, medical, dental, vision, life (including accidental death
and dismemberment) and disability insurance plans (collectively,
“
Benefit
Plans
”), in substantially the same manner and at
substantially the same levels as the Parent makes such
opportunities available to the Parent’s managerial or
salaried executive employees and/or its senior
executives.
The
Parent shall pay one hundred percent (100%) of the cost for any
group medical, vision and/or dental coverage elected by and for the
Executive and fifty percent (100%) of the additional incremental
cost for any group medical, vision and/or dental coverage elected
by the Executive for the Executive’s family.
The
Executive shall be entitled to air travel, including travel by
business class, as is reasonable and necessary for the performance
of his duties and responsibilities, in accordance with the
Parent’s policies as approved by the Board.
10.
Vacation
. During
the term of this Agreement, the Executive shall be entitled to
accrue, on a pro rata basis, twenty (20) paid vacation days per
year. Vacation shall be taken at such times as are mutually
convenient to the Executive and the Parent and no more than ten
(10) consecutive days shall be taken at any one time without Parent
approval in advance.
11.
Termination of
Employment:
(a)
Death
. If the Executive dies
during the Employment Period, this Agreement and the
Executive’s employment with the Parent shall automatically
terminate and the Parent’s obligations to the
Executive’s estate and to the Executive’s Qualified
Beneficiaries shall be those set forth in Section 6 regarding
severance compensation.
(b)
Disability
. In the event that,
during the term of this Agreement the Executive shall be prevented
from performing his essential functions hereunder to the full
extent required by the Parent by reason of Disability (as defined
below), this Agreement and the Executive’s employment with
the Parent shall automatically terminate. The Parent’s
obligation to the Executive under such circumstances shall be those
set forth in Section 6 regarding severance compensation. For
purposes of this Agreement, “
Disability
” shall mean a
physical or mental disability that prevents the performance by the
Executive, with or without reasonable accommodation, of his
essential functions hereunder for an aggregate of ninety (90) days
or longer during any twelve (12) consecutive months. The
determination of the Executive’s Disability shall be made by
an independent physician who is reasonably acceptable to the Parent
and the Executive (or his representative), be final and binding on
the parties hereto and be made taking into account such competent
medical evidence as shall be presented to such independent
physician by the Executive and/or the Parent or by any physician or
group of physicians or other competent medical experts employed by
the Executive and/or the Parent to advise such independent
physician.
(c)
Cause
.
(1) At
any time during the Employment Period, the Parent may terminate
this Agreement and the Executive’s employment hereunder for
Cause. For purposes of this Agreement, “
Cause
” shall mean: (a)
the willful and continued failure of the Executive to perform
substantially his duties and responsibilities for the Parent (other
than any such failure resulting from the Executive’s death or
Disability) after a written demand by the Board for substantial
performance is delivered to the Executive by the Parent, which
specifically identifies the manner in which the Board believes that
the Executive has not substantially performed his duties and
responsibilities, which willful and continued failure is not cured
by the Executive within thirty (30) days following his receipt of
such written demand; (b) the conviction of, or plea of guilty or
nolo contendere
to, a
felony, or (c) fraud, dishonesty or gross misconduct which is
materially and demonstratively injurious to the Parent. Termination
under clauses (b) or (c) of this Section 11(c)(1) shall not be
subject to cure.
(2) For
purposes of this Section 11(c), no act, or failure to act, on the
part of the Executive shall be considered “willful”
unless done, or omitted to be done, by him in bad faith and without
reasonable belief that his action or omission was in, or not
opposed to, the best interest of the Parent. Between the time the
Executive receives written demand regarding substantial
performance, as set forth in subparagraph (1) above, and prior to
an actual termination for Cause, the Executive will be entitled to
appear (with counsel) before the full Board to present information
regarding his views on the Cause event. After such hearing,
termination for Cause must be approved by a majority vote of the
full Board (other than the Executive). After providing the written
demand regarding substantial performance, the Board may suspend the
Executive with full pay and benefits until a final determination by
the full Board has been made.
(3)
Upon termination of this Agreement for Cause, the Parent shall have
no further obligations or liability to the Executive or his heirs,
administrators or executors with respect to compensation and
benefits thereafter, except for the obligation to pay the Executive
any Base Salary earned through the date of termination to be paid
according to Section 4; any unpaid Annual Bonus to be paid
according to Section 5; reimbursement of any and all reasonable
expenses paid or incurred by the Executive in connection with and
related to the performance of his duties and responsibilities for
the Parent during the period ending on the termination date to be
paid according to Section 8; and any accrued but unused vacation
time through the termination date in accordance with Parent policy.
The Parent shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other
appropriate deductions.
(d)
For Good Reason or a
Change of Control or Without Cause
.
(1) At
any time during the term of this Agreement and subject to the
conditions set forth in Section 12(d)(2) below the Executive may
terminate this Agreement and the Executive’s employment with
the Parent for “Good Reason” or for a “Change of
Control” (as defined in Section 12(f)). For purposes of this
Agreement, “
Good
Reason
” shall mean the occurrence of any of the
following events without Executive’s consent: (A) the
assignment to the Executive of duties that are significantly
different from, and/or that result in a substantial diminution of,
the duties that he assumed on the Effective Date (including
reporting to anyone other than solely and directly to the Board);
(B) the assignment to the Executive of a title that is different
from and subordinate to the title Chief Executive Officer of the
Parent, provided, however, for the absence of doubt following a
Change of Control, should the Executive be required to serve in a
diminished capacity in a division or unit of another entity
(including the acquiring entity), such event shall constitute Good
Reason regardless of the title of the Executive in such acquiring
company, division or unit; or (C) material breach by the Parent of
this Agreement.
(2) The
Executive shall not be entitled to terminate this Agreement for
Good Reason unless and until he shall have delivered written notice
to the Parent within ninety (90) days of the date upon which the
facts giving rise to Good Reason occurred of his intention to
terminate this Agreement and his employment with the Parent for
Good Reason, which notice specifies in reasonable detail the
circumstances claimed to provide the basis for such termination for
Good Reason, and the Parent shall not have eliminated the
circumstances constituting Good Reason within thirty (30) days of
its receipt from the Executive of such written notice. In the event
the Executive elects to terminate this Agreement for Good Reason in
accordance with Section 11(d)(1), such election must be made within
the twenty-four (24) months following the initial existence of one
or more of the conditions constituting Good Reason as provided in
Section 11(d)(1). In the event the Executive elects to terminate
this Agreement for a Change in Control in accordance with Section
11(d)(1), such election must be made within one hundred eighty
(180) days of the occurrence of the Change of Control.
(3) In
the event that the Executive terminates this Agreement and his
employment with the Parent for Good Reason or for a Change of
Control or the Parent terminates this Agreement and the
Executive’s employment with the Parent without Cause, the
Parent shall pay or provide to the Executive (or, following his
death, to the Executive’s heirs, administrators or executors)
the severance compensation set forth in Section 6 above. The Parent
shall deduct, from all payments made hereunder, all applicable
taxes, including income tax, FICA and FUTA, and other appropriate
deductions.
(4) The
Executive shall not be required to mitigate the amount of any
payment provided for in this Section 11(d) by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Section 11(d) be reduced by any compensation
earned by the Executive as the result of employment by another
employer or business or by profits earned by the Executive from any
other source at any time before and after the termination date. The
Parent’s obligation to make any payment pursuant to, and
otherwise to perform its obligations under, this Agreement shall
not be affected by any offset, counterclaim or other right that the
Parent may have against the Executive for any reason.
(e)
Without “Good
Reason” by the Executive
. At any time during the term
of this Agreement, the Executive shall be entitled to terminate
this Agreement and the Executive’s employment with the Parent
without Good Reason and other than for a Change of Control by
providing prior written notice of at least thirty (30) days to the
Parent. Upon termination by the Executive of this Agreement or the
Executive’s employment with the Parent without Good Reason
and other than for a Change of Control, the Parent shall have no
further obligations or liability to the Executive or his heirs,
administrators or executors with respect to compensation and
benefits thereafter, except for the obligation to pay the Executive
any Base Salary earned through the date of termination to be paid
according to Section 4; any unpaid Annual Bonus to be paid
according to Section 5; reimbursement of any and all reasonable
expenses paid or incurred by the Executive in connection with and
related to the performance of his duties and responsibilities for
the Parent during the period ending on the termination date to be
paid according to Section 8; and any accrued but unused vacation
time through the termination date in accordance with Parent policy.
The Parent shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other
appropriate deductions.
(f)
Change of Control
.
For purposes of this Agreement, “
Change of Control
” shall
mean the occurrence of any one or more of the following: (i) the
accumulation (if over time, in any consecutive twelve (12) month
period), whether directly, indirectly, beneficially or of record,
by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended) of more than fifty percent (50%) or more of the shares of
the outstanding Common Stock of the Parent, whether by merger,
consolidation, sale or other transfer of shares of Common Stock
(other than a merger or consolidation where the stockholders of the
Parent prior to the merger or consolidation are the holders of a
majority of the voting securities of the entity that survives such
merger or consolidation), (ii) a sale of all or substantially
all of the assets of the Parent or (iii) during any period of
twelve (12) consecutive months, the individuals who, at the
beginning of such period, constitute the Board, and any new
director whose election by the Board or nomination for election by
the Parent’s stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the twelve (12) month period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority of
the Board; provided that the following acquisitions shall not
constitute a Change of Control for the purposes of this Agreement:
any acquisition of Common Stock or securities convertible into
Common Stock by any employee benefit plan (or related trust)
sponsored by or maintained by the Parent.
(g) Any
termination of the Executive’s employment by the Parent or by
the Executive (other than termination by reason of the
Executive’s death) shall be communicated by written Notice of
Termination to the other party of this Agreement. For purposes of
this Agreement, a “
Notice of Termination
”
shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment
under the provision so indicated, provided, however, failure to
provide timely notification shall not affect the employment status
of the Executive.
12.
Confidential
Information
.
(a)
Disclosure of Confidential
Information.
The Executive recognizes, acknowledges and
agrees that he has had and will continue to have access to secret
and confidential information regarding the Parent, its subsidiaries
and their respective businesses (“
Confidential
Information
”), including but not limited to, its
products, methods, formulas, software code, patents, sources of
supply, customer dealings, data, know-how, trade secrets and
business plans, provided such information is not in or does not
hereafter become part of the public domain, or become known to
others through no fault of the Executive. The Executive
acknowledges that such information is of great value to the Parent,
is the sole property of the Parent, and has been and will be
acquired by him in confidence. In consideration of the obligations
undertaken by the Parent herein, the Executive will not, at any
time, during or after his employment hereunder, reveal, divulge or
make known to any person, any information acquired by the Executive
during the course of his employment, which is treated as
confidential by the Parent, and not otherwise in the public domain.
The provisions of this Section 13 shall survive the termination of
the Executive’s employment hereunder.
(b) The
Executive affirms that he does not possess and will not rely upon
the protected trade secrets or confidential or proprietary
information of any prior employer(s) in providing services to the
Parent or its subsidiaries.
(c) In
the event that the Executive’s employment with the Parent
terminates for any reason, the Executive shall deliver forthwith to
the Parent any and all originals and copies, including those in
electronic or digital formats, of Confidential Information;
provided, however, the Executive shall be entitled to retain (i)
papers and other materials of a personal nature, including, but not
limited to, photographs, correspondence, personal diaries,
calendars and rolodexes, personal files and phone books, (ii)
information showing his compensation or relating to reimbursement
of expenses, (iii) information that he reasonably believes may be
needed for tax purposes and (iv) copies of plans, programs and
agreements relating to his employment, or termination thereof, with
the Parent. The covenants and agreements in this Section 12 shall
exclude excludes information (A) which is in the public domain
through no unauthorized act or omission of Executive or (B) which
becomes available to Executive on a non-confidential basis from a
source other than Parent or its affiliates without breach of such
source’s confidentiality or non-disclosure obligations to
Parent or any of its affiliates.
13.
Non-Competition and
Non-Solicitation.
(a) The
Executive agrees and acknowledges that the Confidential Information
that the Executive has already received and will receive is
valuable to the Parent and that its protection and maintenance
constitutes a legitimate business interest of the Parent, to be
protected by the non-competition restrictions set forth herein. The
Executive agrees and acknowledges that the non-competition
restrictions set forth herein are reasonable and necessary and do
not impose undue hardship or burdens on the Executive. The
Executive also acknowledges that the Parent’s Business (as
defined in Section 13(b) (1) below) is conducted worldwide (the
“
Territory
”), and that the
Territory, scope of prohibited competition, and time duration set
forth in the non-competition restrictions set forth below are
reasonable and necessary to maintain the value of the Confidential
Information of, and to protect the goodwill and other legitimate
business interests of, the Parent, its affiliates and/or its
clients or customers. The provisions of this Section 13 shall
survive the termination of the Executive’s employment
hereunder for the time periods specified below.
(b) The
Executive hereby agrees and covenants that he shall not without the
prior written consent of the Parent, directly or indirectly, in any
capacity whatsoever, including, without limitation, as an employee,
employer, consultant, principal, partner, shareholder, officer,
director or any other individual or representative capacity (other
than (i) as a holder of less than two (2%) percent of the
outstanding securities of a company whose shares are traded on any
national securities exchange or (ii) as a limited partner, passive
minority interest holder in a venture capital fund, private equity
fund or similar investment entity which holds or may hold an equity
or debt position in portfolio companies that are competitive with
the Parent; provided however, that the Executive shall be precluded
from serving as an operating partner, general partner, manager or
governing board designee with respect to such portfolio companies),
or whether on the Executive's own behalf or on behalf of any other
person or entity or otherwise howsoever, during the Term and
thereafter to the extent described below, within the
Territory:
(1)
Engage, own, manage, operate, control, be employed by, consult for,
participate in, or be connected in any manner with the ownership,
management, operation or control of any business in competition
with the Business of the Parent, as defined in the next sentence.
For purposes hereof, the Parent’s “Business”
shall mean research, development, techniques and technology in any
manner involving or related to regeneration of functionally
polarized tissue by use of Leucine-rich repeat-containing G-protein
coupled Receptor (LGR) expressing cells and any and all inventions,
technology and trade secrets related thereto or a result of the
services of Employee hereunder, as well as all activities that
involve the making, use or licensing thereof.
(2)
Recruit, solicit or hire, or attempt to recruit, solicit or hire,
any employee, or independent contractor of the Parent to leave the
employment (or independent contractor relationship) thereof,
whether or not any such employee or independent contractor is party
to an employment agreement, for the purpose of competing with the
Business of the Parent;
(3)
Attempt in any manner to solicit or accept from any customer of the
Parent, with whom Executive had significant contact during
Executive’s employment by the Parent (whether under this
Agreement or otherwise), business of the kind or competitive with
the business done by the Parent with such customer or to persuade
or attempt to persuade any such customer to cease to do business or
to reduce the amount of business which such customer has
customarily done or might do with the Parent, or if any such
customer elects to move its business to a person other than the
Parent, provide any services of the kind or competitive with the
business of the Parent for such customer, or have any discussions
regarding any such service with such customer, on behalf of such
other person for the purpose of competing with the Business of the
Parent; or
(4)
Interfere with any relationship, contractual or otherwise, between
the Parent and any other party, including, without limitation, any
supplier, distributor, co-venturer or joint venturer of the Parent,
for the purpose of soliciting such other party to discontinue or
reduce its business with the Parent for the purpose of competing
with the Business of the Parent.
With
respect to the activities described in Paragraphs (1), (2), (3) and
(4) above, the restrictions of this Section 13(b) shall continue
during the Term of this Agreement and for a period of two (2) years
thereafter.
14.
Section
409A
.
The
provisions of this Agreement are intended to comply with or are
exempt from Section 409A of the Code (“
Section 409A
”) and the
related Treasury Regulations and shall be construed in a manner
consistent with the requirements for avoiding taxes or penalties
under Section 409A. The Parent and the Executive agree to work
together in good faith to consider amendments to this Agreement and
to take such reasonable actions necessary, appropriate or desirable
to avoid imposition of any additional tax under Section 409A or
income recognition prior to actual payment to the Executive under
this Agreement.
It is
intended that any expense reimbursement made under this Agreement
shall be exempt from Section 409A. Notwithstanding the foregoing,
if any expense reimbursement made under this Agreement shall be
determined to be “deferred compensation” subject to
Section 409A (“
Deferred Compensation
”),
then (a) the right to reimbursement or in-kind benefits is not
subject to liquidation or exchange for another benefit, (b) the
amount of expenses eligible for reimbursement, or in-kind benefits,
provided during any taxable year shall not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in
any other taxable year (provided that this clause (b) shall not be
violated with regard to expenses reimbursed under any arrangement
covered by Section 105(b) of the Code solely because such expenses
are subject to a limit related to the period the arrangement is in
effect) and (c) such payments shall be made on or before the last
day of the taxable year following the taxable year in which the
expense was incurred.
With
respect to the time of payments of any amount under this Agreement
that is Deferred Compensation, references in the Agreement to
“termination of employment” and substantially similar
phrases, including a termination of employment due to the
Executive’s Disability, shall mean “
Separation from Service
”
from the Parent within the meaning of Section 409A (determined
after applying the presumptions set forth in Treasury Regulation
Section 1.409A-1(h)(1)). Each installment payable hereunder shall
constitute a separate payment for purposes of Treasury Regulation
Section 1.409A-2(b), including Treasury Regulation Section
1.409A-2(b)(2)(iii). Each payment that is made within the terms of
the “short-term deferral” rule set forth in Treasury
Regulation Section 1.409A-1(b)(4) is intended to meet the
“short-term deferral” rule. Each other payment is
intended to be a payment upon an involuntary termination from
service and payable pursuant to Treasury Regulation Section
1.409A-1(b)(9)(iii), et. seq., to the maximum extent permitted by
that regulation, with any amount that is not exempt from Code
Section 409A being subject to Code Section 409A.
Notwithstanding
anything to the contrary in this Agreement, if the Executive is a
“specified employee” within the meaning of Section 409A
at the time of the Executive’s termination, then only that
portion of the severance and benefits payable to the Executive
pursuant to this Agreement, if any, and any other severance
payments or separation benefits which may be considered Deferred
Compensation (together, the “
Deferred Separation
Benefits
”), which (when considered together) do not
exceed the Section 409A Limit (as defined herein) may be made
within the first six (6) months following the Executive’s
termination of employment in accordance with the payment schedule
applicable to each payment or benefit. Any portion of the Deferred
Separation Benefits in excess of the Section 409A Limit otherwise
due to the Executive on or within the six (6) month period
following the Executive’s termination will accrue during such
six (6) month period and will become payable in one lump sum cash
payment on the date six (6) months and one (1) day following the
date of the Executive’s termination of employment. All
subsequent Deferred Separation Benefits, if any, will be payable in
accordance with the payment schedule applicable to each payment or
benefit. Notwithstanding anything herein to the contrary, if the
Executive dies following termination but prior to the six (6) month
anniversary of the Executive’s termination date, then any
payments delayed in accordance with this paragraph will be payable
in a lump sum as soon as administratively practicable after the
date of the Executive’s death and all other Deferred
Separation Benefits will be payable in accordance with the payment
schedule applicable to each payment or benefit.
For
purposes of this Agreement, “
Section 409A Limit
” shall
mean a sum equal to (x) the amounts payable within the terms of the
“short-term deferral” rule under Treasury Regulation
Section 1.409A-1(b)(4) plus (y) the amount payable as
“separation pay due to involuntary separation from
service” under Treasury Regulation Section
1.409A-1(b)(9)(iii) equal to the lesser of two (2) times: (i) the
Executive’s annualized compensation from the Parent based
upon his annual rate of pay during the Executive’s taxable
year preceding his taxable year when his employment terminated, as
determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1); and
(ii) the maximum amount that may be taken into account under a
qualified plan pursuant to Section 401(a)(17) of the Code for the
year in which the Executive’s employment is
terminated.
15.
Miscellaneous.
(a) Neither
the Executive nor the Parent may assign or delegate any of their
rights or duties under this Agreement without the express written
consent of the other; provided, however, that the Parent shall have
the right to delegate its obligation of payment of all sums due to
the Executive hereunder, provided that such delegation shall not
relieve the Parent of any of its obligations
hereunder.
(b)
During the term of this Agreement, the Parent (i) shall indemnify
and hold harmless the Executive and his heirs and representatives
to the maximum extent provided by the laws of the State of Delaware
and by Parent’s bylaws and (ii) shall cover the Executive
under the Parent’s directors’ and officers’
liability insurance on the same basis as it covers other senior
executive officers and directors of the Parent.
(c)
This Agreement constitutes and embodies the full and complete
understanding and agreement of the parties with respect to the
Executive’s employment by the Parent, supersedes all prior
understandings and agreements, whether oral or written, between the
Executive and the Parent, and shall not be amended, modified or
changed except by an instrument in writing executed by the party to
be charged. If any provision of this Agreement, or the application
thereof, shall for any reason and to any extent be invalid or
unenforceable, then the remainder of this Agreement and the
application of such provision to other persons or circumstances
shall be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and
enforceable provision that shall achieve, to the extent possible,
the economic, business and other purposes of the void or
unenforceable provision. No waiver by either party of any provision
or condition to be performed shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or any prior
or subsequent time.
(d)
This Agreement shall inure to the benefit of, be binding upon and
enforceable against, the parties hereto and their respective
successors, heirs, beneficiaries and permitted
assigns.
(e) The
headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) All
notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by
registered or certified mail, return receipt requested, postage
prepaid, or by reputable national overnight delivery service (e.g.,
Federal Express) for overnight delivery to the party at the address
set forth in the preamble to this Agreement, or to such other
address as either party may hereafter give the other party notice
of in accordance with the provisions hereof. Notices shall be
deemed given on the sooner of the date actually received or the
third business day after deposited in the mail or one business day
after deposited with an overnight delivery service for overnight
delivery.
(g)
This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, and each of the
parties hereto irrevocably consents to the jurisdiction and venue
of the federal and state courts located in the State of New York,
County of New York, for any disputes arising out of this Agreement,
or the Executive’s employment with the Parent. The prevailing
party in any dispute arising out of this Agreement shall be
entitled to his or its reasonable attorney’s fees and
costs.
(h)
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one of the same instrument. The
parties hereto have executed this Agreement as of the date set
forth above.
(i) The
Executive represents and warrants to the Parent, that he has the
full power and authority to enter into this Agreement and to
perform his obligations hereunder and that the execution and
delivery of this Agreement and the performance of his obligations
hereunder will not conflict with any agreement to which the
Executive is a party.
(j) The
Parent represents and warrants to the Executive that it has the
full power and authority to enter into this Agreement and to
perform its obligations hereunder and that the execution and
delivery of this Agreement and the performance of its obligations
hereunder will not conflict with any agreement to which the Parent
is a party.
[Signature
page follows immediately]
IN
WITNESS WHEREOF, the Executive and the Parent have caused this
Executive Employment Agreement to be executed as of the date first
above written.
|
MAJESCO
ENTERTAINMENT COMPANY
By:
Name:
__________________________________
Title: ______________________________
Date
Signed: _____________________________
|
|
Executive
Date
Signed: ____________________________
|
Exhibit 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
This
EXECUTIVE EMPLOYMENT AGREEMENT (“
Agreement
”) is made and
entered into as of the 1st day of December 2016, by and between
Majesco Entertainment Company, a Delaware corporation headquartered
at 404I-T Hadley Road, S. Plainfield, New Jersey 07080
(“
Parent
”) and Edward
Swanson, an individual (“
Executive
”). As used
herein, the “
Effective Date
” of this
Agreement shall mean the Closing date as defined in that certain
Merger Agreement (as defined below) and executed contemporaneously
herewith.
W I T N
E S S E T H:
WHEREAS, the
Executive desires to be employed by the Parent as its Chief
Operating Officer and the Parent wishes to employ the Executive in
such capacities, in each case, commencing on and as of the
Effective Date.
WHEREAS, the
Executive and Parent are entering into this Agreement and the
Merger Agreement and the additional Transaction Documents which
describes the acquisition of Polarityte, Inc. (the
“
Company
”) and certain
patent(s) as assets by the Parent, including recapitalization of
the Parent, establishing control of the Parent board of directors,
acquisition of certain patents, and commercial development of the
patents and related technology.
WHEREAS,
contemporaneously with the execution of this Agreement by
Executive, and as a condition to the effectiveness hereof, Denver
Lough has assigned Patent No. WO/2016/089825 and PCT/US2015/063114
pursuant to that certain Assignment Agreement to the Company (the
“Assignment
Agreement
”).
.
Terms
not otherwise defined herein shall have the meanings ascribed to
such terms in the Merger Agreement.
NOW,
THEREFORE, in consideration of the foregoing and their respective
covenants and agreements contained in this document, the Parent and
the Executive hereby agree as follows:
1.
Employment and
Duties
. The Parent agrees to employ and the Executive agrees
to serve as the Parent’s Chief Operating Officer The duties
and responsibilities of the Executive shall include the duties and
responsibilities as the Parent’s Board of Directors
(“
Board
”) and Chief
Executive Officer may from time to time assign to the
Executive.
Upon the Effective Date
of this Agreement (or as promptly as practicable thereafter),
Executive shall be appointed to serve as a member of the Board,
pursuant to the terms and conditions of the Parent’s bylaws,
as amended. For so long as Executive is
Chief Operating
Officer
,
the Parent shall use commercially reasonable efforts, subject to
applicable law and regulations of the The NASDAQ Stock Market LLC,
to cause Executive to be nominated for election as a director and
to be recommended to the stockholders for election as a
director.
The
Executive shall devote his full time efforts and services to the
business and affairs of the Parent and its subsidiaries. Nothing in
this Section 1 shall prohibit the Executive from: (A) serving as a
director or member of any other board, committee thereof of any
other entity or organization; (B) delivering lectures, fulfilling
speaking engagements, and any writing or publication relating to
his area of expertise; (C) serving as a director or trustee of any
governmental, charitable or educational organization; (D) engaging
in additional activities in connection with personal investments
and community affairs, including, without limitation, professional
or charitable or similar organization committees, boards,
memberships or similar associations or affiliations (E) serving in
health care facilities as a physician in order to maintain his
license to practice medicine, or (F) performing advisory
activities, provided, however, such activities are not in
competition with the business and affairs of the Parent or would
tend to cast executive of Parent in a negative light in the
reasonable judgment of the Board.
2.
Term
. The term of
this Agreement shall commence on the Effective Date and shall
continue for a period of one (1) year following the Effective Date
and shall be automatically renewed for successive one (1) year
periods thereafter unless either party provides the other party
with written notice of his or its intention not to
renew
this Agreement at least three (3) months prior to the expiration of
the initial term or any renewal term of this Agreement.
“
Employment
Period
” shall mean the initial one (1) year term plus
renewals, if any.
3.
Place of
Employment
. The Executive’s services shall be
performed at such location or locations as Executive shall
determine, in his sole discretion.
4.
Base Salary and Board
Fees
. The Parent agrees to pay the Executive a base salary
(“
Base
Salary
”) of $300,000 per annum for the position(s) of
Chief Operating Officer. Annual adjustments after the first year of
the Employment Period shall be determined by the Board. The Base
Salary shall be paid in periodic installments in accordance with
the Parent’s regular payroll practices. Executive shall,
subject to policies and procedures of the Parent’s Board of
Directors, be eligible to additional fees for service on the
Parent’s Board.
5.
Incentive Compensation and
Bonuses
.
(a)
Executive Employment
Agreement Signing Bonus:
Upon execution of this Agreement,
the Parent shall pay to Executive an initial signing bonus of
$100,000.
(b)
Annual Bonus:
For each
fiscal year during the term of employment, the Executive shall be
eligible to receive a bonus in the amount of 100% of annual salary,
if any, as may be determined from time to time by the Board in its
discretion.
The Annual Bonus shall be paid by the Parent to
the Executive promptly after determination that the relevant
targets, if any, have been met, it being understood that the
attainment of any financial targets associated with any bonus shall
not be determined until following the completion of the
Parent’s annual audit and public announcement of such results
and shall be paid promptly following the Parent’s
announcement of earnings. In the event that the Compensation
Committee is unable to act or if there shall be no such
Compensation Committee, then all references herein to the
Compensation Committee (except in the proviso to this sentence)
shall be deemed to be references to the Board. Upon his termination
from employment, the Executive shall be entitled to receive a
pro-rata portion of the Annual Bonus calculated based upon his
final day of employment, regardless of whether he is employed by
the Parent through the conclusion of the fiscal quarter or year, as
the case may be, on which the Annual Bonus is based.
(c)
Equity Awards and
Incentive Compensation
: During the term of employment, the
Executive shall be eligible to participate in any equity-based
incentive compensation plan or program adopted by the Parent (such
awards under such plan or program, the “
Share Awards
”) as the
Compensation Committee or Board may from time to time determine.
Share Awards shall be subject to applicable plan terms and
conditions. And any additional terms and conditions as determined
by the Compensation Committee or the Board. On the Effective Date,
the Board of Directors of Parent shall award and reserve for
issuance 10 year options to purchase 846,000 shares of common stock
pursuant to the Parent’s Incentive Stock and Option Plan at
the fair market value thereof (as determined by NASDAQ) to
Executive.
6.
Severance
Compensation
:
Upon
termination of employment for any reason, the Executive shall be
entitled to: (A) the sum of his annual Base Salary from the date of
termination to be paid according to Section 4; (B) any and all
reasonable expenses paid or incurred by the Executive in connection
with and related to the performance of his duties and
responsibilities for the Parent during the period ending on the
termination date to be paid according to Section 8; (C) any accrued
but unused vacation time through the termination date in accordance
with Parent policy; and (D) the sum of his annual Bonus from the
date of termination to be paid according to Section 5(a); and (E)
all Share Awards earned and vested prior to termination. With
respect to any Share Awards held by the Executive as of his death
that are not vested and exercisable as of such date, the Parent
shall fully accelerate the vesting and exercisability of such Share
Awards, so that all such Share Awards shall be fully vested and
exercisable as of the Executive’s death, such options (as
well as any Share Awards that previously became vested and
exercisable) to remain exercisable, notwithstanding anything in any
other agreement governing such options, until the earlier of
(A) a
period of one (1) year after the Executive’s death or (B) the
original term of the option, if such Share Awards is an
option.
Additionally, if
the Executive’s employment is terminated prior to expiration
of the Employment Period (including due to his death or Disability,
as defined in Section 11(b)) unless the Executive’s
employment is terminated for Cause (as defined in Section 11(c)) or
the Executive terminates his employment without Good Reason (as
defined in Section 11(d) and other than for a Change in Control as
provided in Section 11(d) and Section 11(f)), the Executive shall
be entitled to receive a cash amount equal to the sum of the
Executive’s Base Salary, Annual Bonus and Share Awards earned
during the year immediately preceding the date of termination
(herein the “
Separation Payment
”), or
the amount payable (including Executive’s Base Salary, Annual
Bonus and Share Awards) for the remainder of the Employment Period
then in effect, if greater; provided, that the Executive executes
an agreement releasing Parent and its affiliates from any liability
associated with this Agreement and such release is irrevocable at
the time the Separation Payment is first payable under this Section
6 and the Executive complies with his other obligations under
Section 13 of this Agreement. Subject to the terms hereof, 100% of
the Separation Payment shall be paid within thirty (30) days of the
Executive’s termination of employment (“Initial
Payment”), provided that the Executive has executed a
release.
The
Executive may continue coverage with respect to the Parent’s
group health plans as permitted by the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”) for himself and
each of his “
Qualified Beneficiaries
”
as defined by COBRA (“
COBRA Coverage
”). The
Parent shall reimburse the amount of any COBRA premium paid for
COBRA Coverage timely elected by and for the Executive and any
Qualified Beneficiary of the Executive, and not otherwise
reimbursed, during the period that ends on the earliest of (x) the
date the Executive or the Qualified Beneficiary, as the case may
be, ceases to be eligible for COBRA Coverage, (y) the last day of
the consecutive eighteen (18) month period following the date of
the Executive’s termination of employment and (z) the date
the Executive or the Qualified Beneficiary, as the case may be, is
covered by another group health plan. To reimburse any COBRA
premium payment under this paragraph, the Parent must receive
documentation of the COBRA premium payment within ninety (90) days
of its payment.
7.
Clawback Rights
.
The Annual Bonus, and any and all stock based compensation (such as
options and equity awards) (collectively, the “
Clawback Benefits
”) shall
be subject to “
Clawback Rights
” as
follows: during the period that the Executive is employed by the
Parent and upon the termination of the Executive’s employment
and for a period of three (3) years thereafter, if there is a
restatement of any financial results from which any Clawback
Benefits to the Executive shall have been determined, the Executive
agrees to repay any amounts which were determined by reference to
any Parent financial results which were later restated (as defined
below), to the extent the Clawback Benefits amounts paid exceed the
Clawback Benefits amounts that would have been paid, based on the
restatement of the Parent’s financial information. All
Clawback Benefits amounts resulting from such restated financial
results shall be retroactively adjusted by the Compensation
Committee to take into account the restated results, and any excess
portion of the Clawback Benefits resulting from such restated
results shall be immediately surrendered to the Parent and if not
so surrendered within ninety (90) days of the revised calculation
being provided to the Executive by the Compensation Committee
following a publicly announced restatement, the Parent shall have
the right to take any and all action to effectuate such adjustment.
The calculation of the revised Clawback Benefits amount shall be
determined by the Compensation Committee in good faith and in
accordance with applicable law, rules and regulations. All
determinations by the Compensation Committee with respect to the
Clawback Rights shall be final and binding on the Parent and the
Executive. The Clawback Rights shall terminate following a Change
of Control as defined in Section 12(f), subject to applicable law,
rules and regulations. For purposes of this Section 7, a
restatement of financial results that requires a repayment of a
portion of the Clawback Benefits amounts shall mean a restatement
resulting from material non-compliance of the Parent with any
financial reporting requirement under the federal securities laws
and shall not include a restatement of financial results resulting
from subsequent changes in accounting pronouncements or
requirements which were not in effect on the date the financial
statements were originally prepared (“
Restatements
”). The
parties acknowledge it is their intention that the foregoing
Clawback Rights as relates to Restatements conform in all respects
to the provisions of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (“
Dodd-Frank Act
”) and
require recovery of all “incentive-based” compensation,
pursuant to the provisions of the Dodd-Frank Act and any and all
rules and regulations promulgated thereunder
from time to time
in effect. Accordingly, the terms and provisions of this Agreement
shall be deemed automatically amended from time to time to assure
compliance with the Dodd-Frank Act and such rules and regulations
as hereafter may be adopted and in effect.
8.
Expenses
. The
Executive shall be entitled to prompt reimbursement by the Parent
for all reasonable ordinary and necessary travel, entertainment,
and other expenses incurred by the Executive while employed (in
accordance with the policies and procedures established by the
Parent for its senior executive officers) in the performance of his
duties and responsibilities under this Agreement; provided, that
the Executive shall properly account for such expenses in
accordance with Parent policies and procedures.
9.
Other Benefits
.
During the term of this Agreement, the Executive shall be eligible
to participate in incentive, stock purchase, savings, retirement
(401(k)), and welfare benefit plans, including, without limitation,
health, medical, dental, vision, life (including accidental death
and dismemberment) and disability insurance plans (collectively,
“
Benefit
Plans
”), in substantially the same manner and at
substantially the same levels as the Parent makes such
opportunities available to the Parent’s managerial or
salaried executive employees and/or its senior
executives.
The
Parent shall pay one hundred percent (100%) of the cost for any
group medical, vision and/or dental coverage elected by and for the
Executive and fifty percent (50%) of the additional incremental
cost for any group medical, vision and/or dental coverage elected
by the Executive for the Executive’s family.
The
Executive shall be entitled to air travel, including travel by
business class, as is reasonable and necessary for the performance
of his duties and responsibilities, in accordance with the
Parent’s policies as approved by the Board.
10.
Vacation
. During
the term of this Agreement, the Executive shall be entitled to
accrue, on a pro rata basis, twenty (20) paid vacation days per
year. Vacation shall be taken at such times as are mutually
convenient to the Executive and the Parent and no more than ten
(10) consecutive days shall be taken at any one time without Parent
approval in advance.
11.
Termination of
Employment:
(a)
Death
. If the
Executive dies during the Employment Period, this Agreement and the
Executive’s employment with the Parent shall automatically
terminate and the Parent’s obligations to the
Executive’s estate and to the Executive’s Qualified
Beneficiaries shall be those set forth in Section 6 regarding
severance compensation.
(b)
Disability
. In the
event that, during the term of this Agreement the Executive shall
be prevented from performing his essential functions hereunder to
the full extent required by the Parent by reason of Disability (as
defined below), this Agreement and the Executive’s employment
with the Parent shall automatically terminate. The Parent’s
obligation to the Executive under such circumstances shall be those
set forth in Section 6 regarding severance compensation. For
purposes of this Agreement, “
Disability
” shall mean a
physical or mental disability that prevents the performance by the
Executive, with or without reasonable accommodation, of his
essential functions hereunder for an aggregate of ninety (90) days
or longer during any twelve (12) consecutive months. The
determination of the Executive’s Disability shall be made by
an independent physician who is reasonably acceptable to the Parent
and the Executive (or his representative), be final and binding on
the parties hereto and be made taking into account such competent
medical evidence as shall be presented to such independent
physician by the Executive and/or the Parent or by any physician or
group of physicians or other competent medical experts employed by
the Executive and/or the Parent to advise such independent
physician.
(c)
Cause
.
(1) At
any time during the Employment Period, the Parent may terminate
this Agreement and the Executive’s employment hereunder for
Cause. For purposes of this Agreement, “
Cause
” shall mean: (a)
the willful and continued failure of the Executive to perform
substantially his duties and responsibilities for the Parent
(other
than any such
failure resulting from the Executive’s death or Disability)
after a written demand by the Board for substantial performance is
delivered to the Executive by the Parent, which specifically
identifies the manner in which the Board believes that the
Executive has not substantially performed his duties and
responsibilities, which willful and continued failure is not cured
by the Executive within thirty (30) days following his receipt of
such written demand; (b) the conviction of, or plea of guilty or
nolo contendere
to, a
felony, or (c) fraud, dishonesty or gross misconduct which is
materially and demonstratively injurious to the Parent. Termination
under clauses (b) or (c) of this Section 11(c)(1) shall not be
subject to cure.
(2) For
purposes of this Section 11(c), no act, or failure to act, on the
part of the Executive shall be considered “willful”
unless done, or omitted to be done, by him in bad faith and without
reasonable belief that his action or omission was in, or not
opposed to, the best interest of the Parent. Between the time the
Executive receives written demand regarding substantial
performance, as set forth in subparagraph (1) above, and prior to
an actual termination for Cause, the Executive will be entitled to
appear (with counsel) before the full Board to present information
regarding his views on the Cause event. After such hearing,
termination for Cause must be approved by a majority vote of the
full Board (other than the Executive). After providing the written
demand regarding substantial performance, the Board may suspend the
Executive with full pay and benefits until a final determination by
the full Board has been made.
(3)
Upon termination of this Agreement for Cause, the Parent shall have
no further obligations or liability to the Executive or his heirs,
administrators or executors with respect to compensation and
benefits thereafter, except for the obligation to pay the Executive
any Base Salary earned through the date of termination to be paid
according to Section 4; any unpaid Annual Bonus to be paid
according to Section 5; reimbursement of any and all reasonable
expenses paid or incurred by the Executive in connection with and
related to the performance of his duties and responsibilities for
the Parent during the period ending on the termination date to be
paid according to Section 8; and any accrued but unused vacation
time through the termination date in accordance with Parent policy.
The Parent shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other
appropriate deductions.
(d)
For Good Reason or a
Change of Control or Without Cause
.
(1) At
any time during the term of this Agreement and subject to the
conditions set forth in Section 12(d)(2) below the Executive may
terminate this Agreement and the Executive’s employment with
the Parent for “Good Reason” or for a “Change of
Control” (as defined in Section 12(f)). For purposes of this
Agreement, “
Good
Reason
” shall mean the occurrence of any of the
following events without Executive’s consent: (A) the
assignment to the Executive of duties that are significantly
different from, and/or that result in a substantial diminution of,
the duties that he assumed on the Effective Date (including
reporting to anyone other than solely and directly to the Board);
(B) the assignment to the Executive of a title that is different
from and subordinate to the title Chief Operating Officer of the
Parent, provided, however, for the absence of doubt following a
Change of Control, should the Executive be required to serve in a
diminished capacity in a division or unit of another entity
(including the acquiring entity), such event shall constitute Good
Reason regardless of the title of the Executive in such acquiring
company, division or unit; or (C) material breach by the Parent of
this Agreement.
(2) The
Executive shall not be entitled to terminate this Agreement for
Good Reason unless and until he shall have delivered written notice
to the Parent within ninety (90) days of the date upon which the
facts giving rise to Good Reason occurred of his intention to
terminate this Agreement and his employment with the Parent for
Good Reason, which notice specifies in reasonable detail the
circumstances claimed to provide the basis for such termination for
Good Reason, and the Parent shall not have eliminated the
circumstances constituting Good Reason within thirty (30) days of
its receipt from the Executive of such written notice. In the event
the Executive elects to terminate this Agreement for Good Reason in
accordance with Section 11(d)(1), such election must be made within
the twenty-four (24) months following the initial existence of one
or more of the conditions constituting Good Reason as provided in
Section 11(d)(1). In the event the Executive elects to terminate
this Agreement for a Change in Control in accordance with Section
11(d)(1), such election must be made within one hundred eighty
(180) days of the occurrence of the Change of Control.
(3) In
the event that the Executive terminates this Agreement and his
employment with the Parent for Good Reason or for a Change of
Control or the Parent terminates this Agreement and the
Executive’s employment with the Parent without Cause, the
Parent shall pay or provide to the Executive (or, following his
death, to the Executive’s heirs, administrators or executors)
the severance compensation set forth in Section 6 above. The
Parent
shall deduct, from
all payments made hereunder, all applicable taxes, including income
tax, FICA and FUTA, and other appropriate deductions.
(4) The
Executive shall not be required to mitigate the amount of any
payment provided for in this Section 11(d) by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Section 11(d) be reduced by any compensation
earned by the Executive as the result of employment by another
employer or business or by profits earned by the Executive from any
other source at any time before and after the termination date. The
Parent’s obligation to make any payment pursuant to, and
otherwise to perform its obligations under, this Agreement shall
not be affected by any offset, counterclaim or other right that the
Parent may have against the Executive for any reason.
(e)
Without “Good
Reason” by the Executive
. At any time during the term
of this Agreement, the Executive shall be entitled to terminate
this Agreement and the Executive’s employment with the Parent
without Good Reason and other than for a Change of Control by
providing prior written notice of at least thirty (30) days to the
Parent. Upon termination by the Executive of this Agreement or the
Executive’s employment with the Parent without Good Reason
and other than for a Change of Control, the Parent shall have no
further obligations or liability to the Executive or his heirs,
administrators or executors with respect to compensation and
benefits thereafter, except for the obligation to pay the Executive
any Base Salary earned through the date of termination to be paid
according to Section 4; any unpaid Annual Bonus to be paid
according to Section 5; reimbursement of any and all reasonable
expenses paid or incurred by the Executive in connection with and
related to the performance of his duties and responsibilities for
the Parent during the period ending on the termination date to be
paid according to Section 8; and any accrued but unused vacation
time through the termination date in accordance with Parent policy.
The Parent shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other
appropriate deductions.
(f)
Change of Control
.
For purposes of this Agreement, “
Change of Control
” shall
mean the occurrence of any one or more of the following: (i) the
accumulation (if over time, in any consecutive twelve (12) month
period), whether directly, indirectly, beneficially or of record,
by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended) of more than fifty percent (50%) or more of the shares of
the outstanding Common Stock of the Parent, whether by merger,
consolidation, sale or other transfer of shares of Common Stock
(other than a merger or consolidation where the stockholders of the
Parent prior to the merger or consolidation are the holders of a
majority of the voting securities of the entity that survives such
merger or consolidation), (ii) a sale of all or substantially
all of the assets of the Parent or (iii) during any period of
twelve (12) consecutive months, the individuals who, at the
beginning of such period, constitute the Board, and any new
director whose election by the Board or nomination for election by
the Parent’s stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the twelve (12) month period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority of
the Board; provided that the following acquisitions shall not
constitute a Change of Control for the purposes of this Agreement:
any acquisition of Common Stock or securities convertible into
Common Stock by any employee benefit plan (or related trust)
sponsored by or maintained by the Parent.
(g) Any
termination of the Executive’s employment by the Parent or by
the Executive (other than termination by reason of the
Executive’s death) shall be communicated by written Notice of
Termination to the other party of this Agreement. For purposes of
this Agreement, a “
Notice of Termination
”
shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment
under the provision so indicated, provided, however, failure to
provide timely notification shall not affect the employment status
of the Executive.
12.
Confidential
Information
.
(a)
Disclosure of Confidential
Information.
The Executive recognizes, acknowledges and
agrees that he has had and will continue to have access to secret
and confidential information regarding the Parent, its subsidiaries
and their respective businesses (“
Confidential
Information
”), including but not limited to, its
products, methods, formulas, software code, patents, sources of
supply, customer dealings, data, know-how, trade secrets and
business plans, provided such information is not in or does not
hereafter become part of the public domain, or become known to
others through no fault of the Executive. The Executive
acknowledges that such information is of great value to the Parent,
is the sole property of the Parent, and has been and will be
acquired by him in confidence. In consideration of the obligations
undertaken by the Parent herein, the Executive will not, at any
time, during or after his employment hereunder, reveal, divulge or
make known to any person, any information acquired by the Executive
during the course of his employment, which is treated as
confidential by the Parent, and not otherwise in the public domain.
The provisions of this Section 13 shall survive the termination of
the Executive’s employment hereunder.
(b) The
Executive affirms that he does not possess and will not rely upon
the protected trade secrets or confidential or proprietary
information of any prior employer(s) in providing services to the
Parent or its subsidiaries.
(c) In
the event that the Executive’s employment with the Parent
terminates for any reason, the Executive shall deliver forthwith to
the Parent any and all originals and copies, including those in
electronic or digital formats, of Confidential Information;
provided, however, the Executive shall be entitled to retain (i)
papers and other materials of a personal nature, including, but not
limited to, photographs, correspondence, personal diaries,
calendars and rolodexes, personal files and phone books, (ii)
information showing his compensation or relating to reimbursement
of expenses, (iii) information that he reasonably believes may be
needed for tax purposes and (iv) copies of plans, programs and
agreements relating to his employment, or termination thereof, with
the Parent. The covenants and agreements in this Section 12 shall
exclude excludes information (A) which is in the public domain
through no unauthorized act or omission of Executive or (B) which
becomes available to Executive on a non-confidential basis from a
source other than Parent or its affiliates without breach of such
source’s confidentiality or non-disclosure obligations to
Parent or any of its affiliates.
13.
Non-Competition and
Non-Solicitation.
(a)
The Executive
agrees and acknowledges that the Confidential Information that the
Executive has already received and will receive is valuable to the
Parent and that its protection and maintenance constitutes a
legitimate business interest of the Parent, to be protected by the
non-competition restrictions set forth herein. The Executive agrees
and acknowledges that the non-competition restrictions set forth
herein are reasonable and necessary and do not impose undue
hardship or burdens on the Executive. The Executive also
acknowledges that the Parent’s Business (as defined in
Section 13(b) (1) below) is conducted worldwide (the
“
Territory
”), and that the
Territory, scope of prohibited competition, and time duration set
forth in the non-competition restrictions set forth below are
reasonable and necessary to maintain the value of the Confidential
Information of, and to protect the goodwill and other legitimate
business interests of, the Parent, its affiliates and/or its
clients or customers. The provisions of this Section 13 shall
survive the termination of the Executive’s employment
hereunder for the time periods specified below.
(b) The
Executive hereby agrees and covenants that he shall not without the
prior written consent of the Parent, directly or indirectly, in any
capacity whatsoever, including, without limitation, as an employee,
employer, consultant, principal, partner, shareholder, officer,
director or any other individual or representative capacity (other
than (i) as a holder of less than two (2%) percent of the
outstanding securities of a company whose shares are traded on any
national securities exchange or (ii) as a limited partner, passive
minority interest holder in a venture capital fund, private equity
fund or similar investment entity which holds or may hold an equity
or debt position in portfolio companies that are competitive with
the Parent; provided however, that the Executive shall be precluded
from serving as an operating partner, general partner, manager or
governing board designee with respect to such portfolio companies),
or whether on the Executive's own behalf or on behalf of any other
person or entity or otherwise howsoever, during the Term and
thereafter to the extent described below, within the
Territory:
(1)
Engage, own, manage, operate, control, be employed by, consult for,
participate in, or be connected in any manner with the ownership,
management, operation or control of any business in competition
with the Business of the Parent, as defined in the next sentence.
For purposes hereof, the Parent’s “Business”
shall mean research, development, techniques and technology in any
manner involving or related to regeneration of functionally
polarized tissue by use of Leucine-rich repeat-containing G-protein
coupled Receptor (LGR) expressing cells and any and all inventions,
technology and trade secrets related thereto or a result of the
services of Employee hereunder, as well as all activities that
involve the making, use or licensing thereof.
(2)
Recruit, solicit or hire, or attempt to recruit, solicit or hire,
any employee, or independent contractor of the Parent to leave the
employment (or independent contractor relationship) thereof,
whether or not any such employee or independent contractor is party
to an employment agreement, for the purpose of competing with the
Business of the Parent;
(3)
Attempt in any manner to solicit or accept from any customer of the
Parent, with whom Executive had significant contact during
Executive’s employment by the Parent (whether under this
Agreement or otherwise), business of the kind or competitive with
the business done by the Parent with such customer or to persuade
or attempt to persuade any such customer to cease to do business or
to reduce the amount of business which such customer has
customarily done or might do with the Parent, or if any such
customer elects to move its business to a person other than the
Parent, provide any services of the kind or competitive with the
business of the Parent for such customer, or have any discussions
regarding any such service with such customer, on behalf of such
other person for the purpose of competing with the Business of the
Parent; or
(4)
Interfere with any relationship, contractual or otherwise, between
the Parent and any other party, including, without limitation, any
supplier, distributor, co-venturer or joint venturer of the Parent,
for the purpose of soliciting such other party to discontinue or
reduce its business with the Parent for the purpose of competing
with the Business of the Parent.
With
respect to the activities described in Paragraphs (1), (2), (3) and
(4) above, the restrictions of this Section 13(b) shall continue
during the Term of this Agreement and for a period of two (2) years
thereafter.
14.
Section
409A
.
The
provisions of this Agreement are intended to comply with or are
exempt from Section 409A of the Code (“
Section 409A
”) and the
related Treasury Regulations and shall be construed in a manner
consistent with the requirements for avoiding taxes or penalties
under Section 409A. The Parent and the Executive agree to work
together in good faith to consider amendments to this Agreement and
to take such reasonable actions necessary, appropriate or desirable
to avoid imposition of any additional tax under Section 409A or
income recognition prior to actual payment to the Executive under
this Agreement.
It is
intended that any expense reimbursement made under this Agreement
shall be exempt from Section 409A. Notwithstanding the foregoing,
if any expense reimbursement made under this Agreement shall be
determined to be “deferred compensation” subject to
Section 409A (“
Deferred Compensation
”),
then (a) the right to reimbursement or in-kind benefits is not
subject to liquidation or exchange for another benefit, (b) the
amount of expenses eligible for reimbursement, or in-kind benefits,
provided during any taxable year shall not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in
any other taxable year (provided that this clause (b) shall not be
violated with regard to expenses reimbursed under any arrangement
covered by Section 105(b) of the Code solely because such expenses
are subject to a limit related to the period the arrangement is in
effect) and (c) such payments shall be made on or before the last
day of the taxable year following the taxable year in which the
expense was incurred.
With
respect to the time of payments of any amount under this Agreement
that is Deferred Compensation, references in the Agreement to
“termination of employment” and substantially similar
phrases, including a termination of employment due to the
Executive’s Disability, shall mean “
Separation from Service
”
from the Parent within the meaning of Section 409A (determined
after applying the presumptions set forth in Treasury Regulation
Section 1.409A-1(h)(1)). Each installment payable hereunder shall
constitute a separate payment for purposes of Treasury Regulation
Section 1.409A-2(b), including Treasury Regulation Section
1.409A-2(b)(2)(iii). Each payment that is made within the terms of
the “short-term deferral” rule set forth in Treasury
Regulation Section 1.409A-1(b)(4) is intended to meet the
“short-term deferral” rule. Each other payment is
intended to be a
payment upon an
involuntary termination from service and payable pursuant to
Treasury Regulation Section 1.409A-1(b)(9)(iii), et. seq., to the
maximum extent permitted by that regulation, with any amount that
is not exempt from Code Section 409A being subject to Code Section
409A.
Notwithstanding
anything to the contrary in this Agreement, if the Executive is a
“specified employee” within the meaning of Section 409A
at the time of the Executive’s termination, then only that
portion of the severance and benefits payable to the Executive
pursuant to this Agreement, if any, and any other severance
payments or separation benefits which may be considered Deferred
Compensation (together, the “
Deferred Separation
Benefits
”), which (when considered together) do not
exceed the Section 409A Limit (as defined herein) may be made
within the first six (6) months following the Executive’s
termination of employment in accordance with the payment schedule
applicable to each payment or benefit. Any portion of the Deferred
Separation Benefits in excess of the Section 409A Limit otherwise
due to the Executive on or within the six (6) month period
following the Executive’s termination will accrue during such
six (6) month period and will become payable in one lump sum cash
payment on the date six (6) months and one (1) day following the
date of the Executive’s termination of employment. All
subsequent Deferred Separation Benefits, if any, will be payable in
accordance with the payment schedule applicable to each payment or
benefit. Notwithstanding anything herein to the contrary, if the
Executive dies following termination but prior to the six (6) month
anniversary of the Executive’s termination date, then any
payments delayed in accordance with this paragraph will be payable
in a lump sum as soon as administratively practicable after the
date of the Executive’s death and all other Deferred
Separation Benefits will be payable in accordance with the payment
schedule applicable to each payment or benefit.
For
purposes of this Agreement, “
Section 409A Limit
” shall
mean a sum equal to (x) the amounts payable within the terms of the
“short-term deferral” rule under Treasury Regulation
Section 1.409A-1(b)(4) plus (y) the amount payable as
“separation pay due to involuntary separation from
service” under Treasury Regulation Section
1.409A-1(b)(9)(iii) equal to the lesser of two (2) times: (i) the
Executive’s annualized compensation from the Parent based
upon his annual rate of pay during the Executive’s taxable
year preceding his taxable year when his employment terminated, as
determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1); and
(ii) the maximum amount that may be taken into account under a
qualified plan pursuant to Section 401(a)(17) of the Code for the
year in which the Executive’s employment is terminated.
15.
Miscellaneous.
(a) Neither
the Executive nor the Parent may assign or delegate any of their
rights or duties under this Agreement without the express written
consent of the other; provided, however, that the Parent shall have
the right to delegate its obligation of payment of all sums due to
the Executive hereunder, provided that such delegation shall not
relieve the Parent of any of its obligations
hereunder.
(b)
During the term of this Agreement, the Parent (i) shall indemnify
and hold harmless the Executive and his heirs and representatives
to the maximum extent provided by the laws of the State of Delaware
and by Parent’s bylaws and (ii) shall cover the Executive
under the Parent’s directors’ and officers’
liability insurance on the same basis as it covers other senior
executive officers and directors of the Parent.
(c)
This Agreement constitutes and embodies the full and complete
understanding and agreement of the parties with respect to the
Executive’s employment by the Parent, supersedes all prior
understandings and agreements, whether oral or written, between the
Executive and the Parent, and shall not be amended, modified or
changed except by an instrument in writing executed by the party to
be charged. If any provision of this Agreement, or the application
thereof, shall for any reason and to any extent be invalid or
unenforceable, then the remainder of this Agreement and the
application of such provision to other persons or circumstances
shall be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and
enforceable provision that shall achieve, to the extent possible,
the economic, business and other purposes of the void or
unenforceable provision. No waiver by either party of any provision
or condition to be performed shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or any prior
or subsequent time.
(d)
This Agreement shall inure to the benefit of, be binding upon and
enforceable against, the parties hereto and their respective
successors, heirs, beneficiaries and permitted
assigns.
(e) The
headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) All
notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by
registered or certified mail, return receipt requested, postage
prepaid, or by reputable national overnight delivery service (e.g.,
Federal Express) for overnight delivery to the party at the address
set forth in the preamble to this Agreement, or to such other
address as either party may hereafter give the other party notice
of in accordance with the provisions hereof. Notices shall be
deemed given on the sooner of the date actually received or the
third business day after deposited in the mail or one business day
after deposited with an overnight delivery service for overnight
delivery.
(g)
This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, and each of the
parties hereto irrevocably consents to the jurisdiction and venue
of the federal and state courts located in the State of New York,
County of New York, for any disputes arising out of this Agreement,
or the Executive’s employment with the Parent. The prevailing
party in any dispute arising out of this Agreement shall be
entitled to his or its reasonable attorney’s fees and
costs.
(h)
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one of the same instrument. The
parties hereto have executed this Agreement as of the date set
forth above.
(i) The
Executive represents and warrants to the Parent, that he has the
full power and authority to enter into this Agreement and to
perform his obligations hereunder and that the execution and
delivery of this Agreement and the performance of his obligations
hereunder will not conflict with any agreement to which the
Executive is a party.
(j) The
Parent represents and warrants to the Executive that it has the
full power and authority to enter into this Agreement and to
perform its obligations hereunder and that the execution and
delivery of this Agreement and the performance of its obligations
hereunder will not conflict with any agreement to which the Parent
is a party.
[Signature
page follows immediately]
IN
WITNESS WHEREOF, the Executive and the Parent have caused this
Executive Employment Agreement to be executed as of the date first
above written.
|
MAJESCO
ENTERTAINMENT COMPANY
By:
Name:
_____________________________
Title: _____________________________
Date
Signed: ________________________
|
|
Executive
Date
Signed: _________________________
|
Exhibit 10.3
MAJESCO ENTERTAINMENT COMPANY
2017 EQUITY INCENTIVE PLAN
1.1
The purpose of this 2017 Equity Incentive Plan
(this “
Plan
”) of Majesco Entertainment Company, a
Delaware corporation (the “
Corporation
”), is to promote the success of the
Corporation and to increase stockholder value by providing an
additional means through the grant of awards to attract, motivate,
retain and reward selected employees and other eligible
persons.
2.1
The Administrator (as such term is defined
in Section 3.1) may grant awards under this Plan only to those
persons that the Administrator determines to be Eligible Persons.
An “
Eligible
Person
” is any person who
is either: (a) an officer (whether or not a director) or
employee of the Corporation or one of its Subsidiaries; (b) a
director of the Corporation or one of its Subsidiaries; or
(c) an individual consultant who renders bona fide services
(other than services in connection with the offering or sale of
securities of the Corporation or one of its Subsidiaries in a
capital-raising transaction or as a market maker or promoter of
securities of the Corporation or one of its Subsidiaries) to the
Corporation or one of its Subsidiaries and who is selected to
participate in this Plan by the
Administrator;
provided,
however,
that a person who
is otherwise an Eligible Person under clause (c) above may
participate in this Plan only if such participation would not
adversely affect either the Corporation’s eligibility to use
Form S-8 to register under the Securities Act of 1933, as
amended (the “
Securities
Act
”), the offering and
sale of shares issuable under this Plan by the Corporation, or the
Corporation’s compliance with any other applicable
laws. An Eligible Person who has been granted an award
(a “
participant
”) may, if otherwise eligible, be granted
additional awards if the Administrator shall so determine. As used
herein, “
Subsidiary
” means any corporation or other entity a
majority of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Corporation; and
“
Board
” means the Board of Directors of the
Corporation.
3.1
The
Administrator
. This
Plan shall be administered by and all awards under this Plan shall
be authorized by the Administrator. The “
Administrator
”
means the Board or one or more committees appointed by the Board or
another committee (within its delegated authority) to administer
all or certain aspects of this Plan. Any such committee shall be
comprised solely of one or more directors or such number of
directors as may be required under applicable law. A committee may
delegate some or all of its authority to another committee so
constituted. The Board or a committee comprised solely of directors
may also delegate, to the extent permitted by Section 157 of the
Delaware General Corporation Law and any other applicable law, to
one or more officers of the Corporation, its powers under this Plan
(a) to Eligible Persons who will receive grants of awards
under this Plan, and (b) to determine the number of shares
subject to, and the other terms and conditions of, such awards. The
Board may delegate different levels of authority to different
committees with administrative and grant authority under this Plan.
Unless otherwise provided in the bylaws of the Corporation or the
applicable charter of any Administrator: (a) a majority of the
members of the acting Administrator shall constitute a quorum, and
(b) the affirmative vote of a majority of the members present
assuming the presence of a quorum or the unanimous written consent
of the members of the Administrator shall constitute due
authorization of an action by the acting
Administrator.
With respect to awards intended to satisfy the
requirements for performance-based compensation under
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “
Code
”), this Plan shall be administered by a
committee consisting solely of two or more outside directors (as
this requirement is applied under Section 162(m) of the
Code);
provided,
however,
that the failure
to satisfy such requirement shall not affect the validity of the
action of any committee otherwise duly authorized and acting in the
matter. Award grants, and transactions in or involving awards,
intended to be exempt under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the “
Exchange Act
”), must be duly and timely authorized by
the Board or a committee consisting solely of two or more
non-employee directors (as this requirement is applied under
Rule 16b-3 promulgated under the Exchange Act). To the extent
required by any applicable stock exchange, this Plan shall be
administered by a committee composed entirely of independent
directors (within the meaning of the applicable stock exchange).
Awards granted to non-employee directors shall not be subject to
the discretion of any officer or employee of the Corporation and
shall be administered exclusively by a committee consisting solely
of independent directors.
3.
2
Powers of
the Administrator
. Subject to the express provisions of
this Plan, the Administrator is authorized and empowered to do all
things necessary or desirable in connection with the authorization
of awards and the administration of this Plan (in the case of a
committee or delegation to one or more officers, within the
authority delegated to that committee or person(s)), including,
without limitation, the authority to:
(a)
determine eligibility and, from among those persons determined to
be eligible, the particular Eligible Persons who will receive
awards under this Plan;
(b
)
grant awards to Eligible Persons, determine the price at which
securities will be offered or awarded and the number of securities
to be offered or awarded to any of such persons, determine the
other specific terms and conditions of such awards consistent with
the express limits of this Plan, establish the installments (if
any) in which such awards shall become exercisable or shall vest
(which may include, without limitation, performance and/or
time-based schedules), or determine that no delayed exercisability
or vesting is required, establish any applicable performance
targets, and establish the events of termination or reversion of
such awards;
(c
)
approve the forms of award agreements (which need not be identical
either as to type of award or among participants);
(d
)
construe and interpret this Plan and any agreements defining the
rights and obligations of the Corporation, its Subsidiaries, and
participants under this Plan, further define the terms used in this
Plan, and prescribe, amend and rescind rules and regulations
relating to the administration of this Plan or the awards granted
under this Plan;
(e
)
cancel, modify, or waive the Corporation’s rights with
respect to, or modify, discontinue, suspend, or terminate any or
all outstanding awards, subject to any required consent under
Section 8.6.5;
(f
)
accelerate or extend the vesting or exercisability or extend the
term of any or all such outstanding awards (in the case of options
or stock appreciation rights, within the maximum ten-year term of
such awards) in such circumstances as the Administrator may deem
appropriate (including, without limitation, in connection with a
termination of employment or services or other events of a personal
nature) subject to any required consent under
Section 8.6.5;
(g
)
adjust the number of shares of Common Stock subject to any award,
adjust the price of any or all outstanding awards or otherwise
change previously imposed terms and conditions, in such
circumstances as the Administrator may deem appropriate, in each
case subject to compliance with applicable stock exchange
requirements, Sections 4 and 8.6 and the applicable
requirements of Code Section 162(m) and treasury regulations
thereunder with respect to awards that are intended to satisfy the
requirements for performance-based compensation under
Section 162(m), and provided that in no case (except due to an
adjustment contemplated by Section 7 or any repricing that may
be approved by stockholders) shall such an adjustment constitute a
repricing (by amendment, cancellation and re-grant, exchange or
other means) of the per share exercise or base price of any stock
option or stock appreciation right or other award granted under
this Plan, and further provided that any adjustment or change in
terms made pursuant to this Section 3.2(g) shall be made in a
manner that, in the good faith determination of the Administrator
will not likely result in the imposition of additional taxes or
interest under Section 409A of the Code;
(h
)
determine the date of grant of an award, which may be a designated
date after but not before the date of the Administrator’s
action (unless otherwise designated by the Administrator, the date
of grant of an award shall be the date upon which the Administrator
took the action granting an award);
(i
)
determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof and authorize the
termination, conversion, substitution, acceleration or succession
of awards upon the occurrence of an event of the type described in
Section 7;
(j
)
acquire or settle (subject to Sections 7 and 8.6) rights under
awards in cash, stock of equivalent value, or other consideration;
and
(k
)
determine the Fair Market Value (as defined in Section 5.6) of
the Common Stock or awards under this Plan from time to time and/or
the manner in which such value will be determined.
3.3
Binding
Determinations.
Any
action taken by, or inaction of, the Corporation, any Subsidiary,
or the Administrator relating or pursuant to this Plan and within
its authority hereunder or under applicable law shall be within the
absolute discretion of that entity or body and shall be conclusive
and binding upon all persons. Neither the Board, the Administrator,
nor any Board committee, nor any member thereof or person acting at
the direction thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in
connection with this Plan (or any award made under this Plan), and
all such persons shall be entitled to indemnification and
reimbursement by the Corporation in respect of any claim, loss,
damage or expense (including, without limitation, legal fees)
arising or resulting therefrom to the fullest extent permitted by
law and/or under any directors and officers liability insurance
coverage that may be in effect from time to
time.
3.4
Reliance on
Experts.
In making
any determination or in taking or not taking any action under this
Plan, the Administrator may obtain and may rely upon the advice of
experts, including professional advisors to the Corporation. The
Administrator shall not be liable for any such action or
determination taken or made or omitted in good faith based upon
such advice.
3.5
Delegation
of Non-Discretionary Functions.
In addition to the ability to delegate
certain grant authority to officers of the Corporation as set forth
in Section 3.1, the Administrator may also delegate ministerial,
non-discretionary functions to individuals who are officers or
employees of the Corporation or any of its Subsidiaries or to third
parties.
4.
|
SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE
LIMIT
|
4.1
Shares
Available.
Subject
to the provisions of Section 7.1, the capital stock available
for issuance under this Plan shall be shares of the
Corporation’s authorized but unissued Common
Stock. For purposes of this Plan,
“
Common Stock
” shall mean the common stock of the
Corporation and such other securities or property as may become the
subject of awards under this Plan, or may become subject to such
awards, pursuant to an adjustment made under
Section 7.1.
4.2
Share
Limit.
The maximum
number of shares of Common Stock that may be delivered pursuant to
awards granted to Eligible Persons under this Plan may not exceed
3,450,000 shares of Common Stock (the “
Share Limit
”).
The
foregoing Share Limit is subject to adjustment as contemplated by
Section 4.3, Section 7.1, and
Section 8.10.
4.3
Awards
Settled in Cash, Reissue of Awards and Shares.
The Administrator may adopt reasonable
counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute
awards) and make adjustments in accordance with this
Section 4.3. Shares shall be counted against those reserved to
the extent such shares have been delivered and are no longer
subject to a substantial risk of forfeiture. Accordingly,
(i) to the extent that an award under the Plan, in whole or in
part, is canceled, expired, forfeited, settled in cash, settled by
delivery of fewer shares than the number of shares underlying the
award, or otherwise terminated without delivery of shares to the
participant, the shares retained by or returned to the Corporation
will not be deemed to have been delivered under the Plan and will
be deemed to remain or to become available under this Plan; and
(ii) shares that are withheld from such an award or separately
surrendered by the participant in payment of the exercise price or
taxes relating to such an award shall be deemed to constitute
shares not delivered and will be deemed to remain or to become
available under the Plan. The foregoing adjustments to the Share
Limit of this Plan are subject to any applicable limitations under
Section 162(m) of the Code with respect to awards intended as
performance-based compensation thereunder.
4.4
Reservation
of Shares; No Fractional Shares.
The Corporation shall at all times
reserve a number of shares of Common Stock sufficient to cover the
Corporation’s obligations and contingent obligations to
deliver shares with respect to awards then outstanding under this
Plan (exclusive of any dividend equivalent obligations to the
extent the Corporation has the right to settle such rights in
cash). No fractional shares shall be delivered under this Plan. The
Administrator may pay cash in lieu of any fractional shares in
settlements of awards under this Plan.
5.1
Type and
Form of Awards.
The
Administrator shall determine the type or types of award(s) to be
made to each selected Eligible Person. Awards may be granted
singly, in combination or in tandem. Awards also may be made in
combination or in tandem with, in replacement of, as alternatives
to, or as the payment form for grants or rights under any other
employee or compensation plan of the Corporation or one of its
Subsidiaries. The types of awards that may be granted under this
Plan are:
5.1.1
Stock
Options.
A stock
option is the grant of a right to purchase a specified number of
shares of Common Stock during a specified period as determined by
the Administrator. An option may be intended as an incentive stock
option within the meaning of Section 422 of the Code (an
“
ISO
”) or a nonqualified stock option (an option
not intended to be an ISO). The award agreement for an option will
indicate if the option is intended as an ISO; otherwise it will be
deemed to be a nonqualified stock option. The maximum term of each
option (ISO or nonqualified) shall be ten (10) years. The per
share exercise price for each option shall be not less than 100% of
the Fair Market Value of a share of Common Stock on the date of
grant of the option. When an option is exercised, the exercise
price for the shares to be purchased shall be paid in full in cash
or such other method permitted by the Administrator consistent with
Section 5.5.
5.1.2
Additional
Rules Applicable to ISOs.
To the extent that the aggregate Fair
Market Value (determined at the time of grant of the applicable
option) of stock with respect to which ISOs first become
exercisable by a participant in any calendar year exceeds $100,000,
taking into account both Common Stock subject to ISOs under this
Plan and stock subject to ISOs under all other plans of the
Corporation or one of its Subsidiaries (or any parent or
predecessor corporation to the extent required by and within the
meaning of Section 422 of the Code and the regulations
promulgated thereunder), such options shall be treated as
nonqualified stock options. In reducing the number of options
treated as ISOs to meet the $100,000 limit, the most recently
granted options shall be reduced first. To the extent a reduction
of simultaneously granted options is necessary to meet the $100,000
limit, the Administrator may, in the manner and to the extent
permitted by law, designate which shares of Common Stock are to be
treated as shares acquired pursuant to the exercise of an ISO. ISOs
may only be granted to employees of the Corporation or one of its
subsidiaries (for this purpose, the term “subsidiary”
is used as defined in Section 424(f) of the Code, which
generally requires an unbroken chain of ownership of at least 50%
of the total combined voting power of all classes of stock of each
subsidiary in the chain beginning with the Corporation and ending
with the subsidiary in question). There shall be imposed in any
award agreement relating to ISOs such other terms and conditions as
from time to time are required in order that the option be an
“incentive stock option” as that term is defined in
Section 422 of the Code. No ISO may be granted to any person
who, at the time the option is granted, owns (or is deemed to own
under Section 424(d) of the Code) shares of outstanding Common
Stock possessing more than 10% of the total combined voting power
of all classes of stock of the Corporation, unless the exercise
price of such option is at least 110% of the Fair Market Value of
the stock subject to the option and such option by its terms is not
exercisable after the expiration of five years from the date such
option is granted.
5.1.3
Stock
Appreciation Rights.
A stock appreciation right or
“
SAR
” is a right to receive a payment, in cash
and/or Common Stock, equal to the number of shares of Common Stock
being exercised multiplied by the excess of (i) the Fair Market
Value of a share of Common Stock on the date the SAR is exercised,
over (ii) the Fair Market Value of a share of Common Stock on the
date the SAR was granted as specified in the applicable award
agreement (the “
base price
”). The maximum term of a SAR shall be ten
(10) years.
5.1.4
Restricted
Shares
.
(a
)
Restrictions
.
Restricted shares are shares of Common Stock subject to such
restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Administrator may impose, which
restrictions may lapse separately or in combination at such times,
under such circumstances (including based on achievement of
performance goals and/or future service requirements), in such
installments or otherwise, as the Administrator may determine at
the date of grant or thereafter. Except to the extent
restricted under the terms of this Plan and the applicable award
agreement relating to the restricted stock, a participant granted
restricted stock shall have all of the rights of a shareholder,
including the right to vote the restricted stock and the right to
receive dividends thereon (subject to any mandatory reinvestment or
other requirement imposed by the
Administrator).
(b
)
Certificates for
Shares
. Restricted shares
granted under this Plan may be evidenced in such manner as the
Administrator shall determine. If certificates representing
restricted stock are registered in the name of the participant, the
Administrator may require that such certificates bear an
appropriate legend referring to the terms, conditions and
restrictions applicable to such restricted stock, that the
Corporation retain physical possession of the certificates, and
that the participant deliver a stock power to the Corporation,
endorsed in blank, relating to the restricted stock. The
Administrator may require that restricted shares are held in escrow
until all restrictions lapse
(c
)
Dividends and
Splits
. As a condition to the
grant of an award of restricted stock, subject to applicable law,
the Administrator may require or permit a participant to elect that
any cash dividends paid on a share of restricted stock be
automatically reinvested in additional shares of restricted stock
or applied to the purchase of additional awards under this Plan.
Unless otherwise determined by the Administrator, stock distributed
in connection with a stock split or stock dividend, and other
property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the
restricted stock with respect to which such stock or other property
has been distributed.
5.1.5
Restricted Share
Units
.
(a
)
Grant of
Restricted Share Units
.
A restricted share unit, or
“
RSU
”, represents the right to receive from the
Corporation on the respective scheduled vesting or payment date for
such RSU, one Common Share. An award of RSUs may be subject to the
attainment of specified performance goals or targets,
forfeitability provisions and such other terms and conditions as
the Administrator may determine, subject to the provisions of this
Plan. At the time an award of RSUs is made, the
Administrator shall establish a period of time during which the
restricted share units shall vest and the timing for settlement of
the RSU.
(b
)
Dividend
Equivalent Accounts
. Subject to
the terms and conditions of the Plan and the applicable award
agreement, as well as any procedures established by the
Administrator, prior to the expiration of the applicable vesting
period of an RSU, the Administrator may determine to pay dividend
equivalent rights with respect to RSUs, in which case, the
Corporation shall establish an account for the participant and
reflect in that account any securities, cash or other property
comprising any dividend or property distribution with respect to
the shares of Common Stock underlying each RSU. Each
amount or other property credited to any such account shall be
subject to the same vesting conditions as the RSU to which it
relates. The participant shall have the right to be paid
the amounts or other property credited to such account upon vesting
of the subject RSU.
(c
)
Rights as a
Shareholder
.
Subject to the restrictions imposed under the
terms and conditions of this Plan and the applicable award
agreement, each participant receiving RSUs shall have no rights as
a shareholder with respect to such RSUs until such time as shares
of Common Stock are issued to the participant. No shares
of Common Stock shall be issued at the time a RSU is granted, and
the Company will not be required to set aside a fund for the
payment of any such award. Except as otherwise
provided in the applicable award agreement, shares of Common Stock
issuable under an RSU shall be treated as issued on the first date
that the holder of the RSU is no longer subject to a substantial
risk of forfeiture as determined for purposes of Section 409A of
the Code, and the holder shall be the owner of such shares of
Common Stock on such date. An award agreement may
provide that issuance of shares of Common Stock under an RSU may be
deferred beyond the first date that the RSU is no longer subject to
a substantial risk of forfeiture, provided that such deferral is
structured in a manner that is intended to comply with the
requirements of Section 409A of the Code.
5.1.6
Cash
Awards
.
The
Administrator may, from time to time, subject to the provisions of
the Plan and such other terms and conditions as it may determine,
grant cash bonuses (including without limitation, discretionary
awards, awards based on objective or subjective performance
criteria, awards subject to other vesting criteria or awards
granted consistent with Section 5.2 below). Cash awards
shall be awarded in such amount and at such times during the term
of the Plan as the Administrator shall
determine.
5.1.7
ther
Awards.
The other
types of awards that may be granted under this Plan include:
(a) stock bonuses, performance stock, performance units,
dividend equivalents, or similar rights to purchase or acquire
shares, whether at a fixed or variable price or ratio related to
the Common Stock (subject to the requirements of Section 5.1.1
and in compliance with applicable laws), upon the passage of time,
the occurrence of one or more events, or the satisfaction of
performance criteria or other conditions, or any combination
thereof; or (b) any similar securities with a value derived
from the value of or related to the Common Stock and/or returns
thereon.
5.2
Section 162(m)
Performance-Based Awards
.
Without limiting the generality of the
foregoing, any of the types of awards listed in Sections 5.1.4
through 5.1.7 above may be, and options and SARs granted with an
exercise or base price not less than the Fair Market Value of a
share of Common Stock at the date of grant
(“
Qualifying
Options
” and
“
Qualifying
SARs
,” respectively)
typically will be, granted as awards intended to satisfy the
requirements for “performance-based compensation”
within the meaning of Section 162(m) of the Code
(“
Performance-Based
Awards
”). The grant,
vesting, exercisability or payment of Performance-Based Awards may
depend (or, in the case of Qualifying Options or Qualifying SARs,
may also depend) on the degree of achievement of one or more
performance goals relative to a pre-established targeted level or
levels using the Business Criteria provided for below for the
Corporation on a consolidated basis or for one or more of the
Corporation’s subsidiaries, segments, divisions or business
units, or any combination of the foregoing. Such criteria may be
evaluated on an absolute basis or relative to prior periods,
industry peers, or stock market indices. Any Qualifying Option or
Qualifying SAR shall be subject to the requirements of
Section 5.2.1 and 5.2.3 in order for such award to satisfy the
requirements for “performance-based compensation” under
Section 162(m) of the Code. Any other Performance-Based Award
shall be subject to all of the following provisions of this
Section 5.2.
5.2.1
Class;
Administrator.
The
eligible class of persons for Performance-Based Awards under this
Section 5.2 shall be officers and employees of the Corporation
or one of its Subsidiaries. The Administrator approving
Performance-Based Awards or making any certification required
pursuant to Section 5.2.4 must be constituted as provided in
Section 3.1 for awards that are intended as performance-based
compensation under Section 162(m) of the
Code.
5.2.2
Performance
Goals.
The specific
performance goals for Performance-Based Awards (other than
Qualifying Options and Qualifying SARs) shall be, on an absolute or
relative basis, established based on such business criteria as
selected by the Administrator in its sole discretion
(“
Business
Criteria
”), including the
following: (1) earnings per share, (2) cash flow (which means cash
and cash equivalents derived from either (i) net cash flow from
operations or (ii) net cash flow from operations, financing and
investing activities), (3) total stockholder return, (4) price per
share of Common Stock, (5) gross revenue, (6) revenue growth, (7)
operating income (before or after taxes), (8) net earnings (before
or after interest, taxes, depreciation and/or amortization), (9)
return on equity, (10) capital employed, or on assets or on net
investment, (11) cost containment or reduction, (12) cash cost per
ounce of production, (13) operating margin, (14) debt reduction,
(15) resource amounts, (16) production or production growth, (17)
resource replacement or resource growth, (18) successful completion
of financings, or (19) any combination of the
foregoing. To qualify awards as performance-based under
Section 162(m), the applicable Business Criterion (or Business
Criteria, as the case may be) and specific performance goal or
goals (“targets”) must be established and approved by
the Administrator during the first 90 days of the performance
period (and, in the case of performance periods of less than one
year, in no event after 25% or more of the performance period has
elapsed) and while performance relating to such target(s) remains
substantially uncertain within the meaning of Section 162(m)
of the Code. Performance targets shall be adjusted to mitigate the
unbudgeted impact of material, unusual or nonrecurring gains and
losses, accounting changes or other extraordinary events not
foreseen at the time the targets were set unless the Administrator
provides otherwise at the time of establishing the targets;
provided that the Administrator may not make any adjustment to the
extent it would adversely affect the qualification of any
compensation payable under such performance targets as
“performance-based compensation” under
Section 162(m) of Code. The applicable performance measurement
period may not be less than 3 months nor more than
10 years.
5.2.3
Form of
Payment.
Grants or awards
intended to qualify under this Section 5.2 may be paid in cash
or shares of Common Stock or any combination
thereof.
5.2.4
Certification
of Payment.
Before
any Performance-Based Award under this Section 5.2 (other than
Qualifying Options and Qualifying SARs) is paid and to the extent
required to qualify the award as performance-based compensation
within the meaning of Section 162(m) of the Code, the
Administrator must certify in writing that the performance
target(s) and any other material terms of the Performance-Based
Award were in fact timely satisfied.
5.2.5
Reservation
of Discretion
.
The Administrator will have the
discretion to determine the restrictions or other limitations of
the individual awards granted under this Section 5.2 including
the authority to reduce awards, payouts or vesting or to pay no
awards, in its sole discretion, if the Administrator preserves such
authority at the time of grant by language to this effect in its
authorizing resolutions or otherwise.
5.2.6
Expiration
of Grant Authority
.
As required pursuant to
Section 162(m) of the Code and the regulations promulgated
thereunder, the Administrator’s authority to grant new awards
that are intended to qualify as performance-based compensation
within the meaning of Section 162(m) of the Code (other than
Qualifying Options and Qualifying SARs) shall terminate upon the
first meeting of the Corporation’s stockholders that occurs
in the fifth year following the year in which the
Corporation’s stockholders first approve this Plan (the
“
162(m) Term
”).
5.2.7
Compensation
Limitations
.
The maximum aggregate number of shares
of Common Stock that may be issued to any Eligible Person during
the term of this Plan pursuant to Qualifying Options and Qualifying
SARs may not exceed the Share Limit. The maximum
aggregate number of shares of Common Stock that may be issued to
any Eligible Person pursuant to Performance-Based Awards granted
during the 162(m) Term (other than cash awards granted pursuant to
Section 5.1.6 and Qualifying Options or Qualifying SARs) may not
exceed the Share Limit. The maximum amount that may be
paid to any Eligible Person pursuant to Performance-Based Awards
granted pursuant to Sections 5.1.6 (cash awards) during the 162(m)
Term may not exceed $1,000,000.
5.3
Award
Agreements.
Each
award shall be evidenced by a written or electronic award agreement
in the form approved by the Administrator and, if required by the
Administrator, executed by the recipient of the award. The
Administrator may authorize any officer of the Corporation (other
than the particular award recipient) to execute any or all award
agreements on behalf of the Corporation (electronically or
otherwise). The award agreement shall set forth the material terms
and conditions of the award as established by the Administrator
consistent with the express limitations of this
Plan.
5.4
Deferrals
and Settlements.
Payment of awards may be in the form
of cash, Common Stock, other awards or combinations thereof as the
Administrator shall determine, and with such restrictions as it may
impose. The Administrator may also require or permit participants
to elect to defer the issuance of shares of Common Stock or the
settlement of awards in cash under such rules and procedures as it
may establish under this Plan. The Administrator may also provide
that deferred settlements include the payment or crediting of
interest or other earnings on the deferral amounts, or the payment
or crediting of dividend equivalents where the deferred amounts are
denominated in shares. All mandatory or elective
deferrals of the issuance of shares of Common Stock or the
settlement of cash awards shall be structured in a manner that is
intended to comply with the requirements of Section 409A of the
Code.
5.5
Consideration
for Common Stock or Awards.
The purchase price for any award
granted under this Plan or the Common Stock to be delivered
pursuant to an award, as applicable, may be paid by means of any
lawful consideration as determined by the Administrator and subject
to compliance with applicable laws, including, without limitation,
one or a combination of the following methods:
●
services rendered
by the recipient of such award;
●
cash,
check payable to the order of the Corporation, or electronic funds
transfer;
●
notice
and third party payment in such manner as may be authorized by the
Administrator;
●
the
delivery of previously owned shares of Common Stock that are fully
vested and unencumbered;
●
by a
reduction in the number of shares otherwise deliverable pursuant to
the award; or
●
subject to such
procedures as the Administrator may adopt, pursuant to a
“cashless exercise” with a third party who provides
financing for the purposes of (or who otherwise facilitates) the
purchase or exercise of awards.
In
the event that the Administrator allows a participant to exercise
an award by delivering shares of Common Stock previously owned by
such participant and unless otherwise expressly provided by the
Administrator, any shares delivered which were initially acquired
by the participant from the Corporation (upon exercise of a stock
option or otherwise) must have been owned by the participant at
least six months as of the date of delivery (or such other period
as may be required by the Administrator in order to avoid adverse
accounting treatment). Shares of Common Stock used to satisfy the
exercise price of an option shall be valued at their Fair Market
Value on the date of exercise. The Corporation will not be
obligated to deliver any shares unless and until it receives full
payment of the exercise or purchase price therefor and any related
withholding obligations under Section 8.5 and any other
conditions to exercise or purchase, as established from time to
time by the Administrator, have been satisfied. Unless otherwise
expressly provided in the applicable award agreement, the
Administrator may at any time eliminate or limit a
participant’s ability to pay the purchase or exercise price
of any award by any method other than cash payment to the
Corporation.
5.6
Definition
of Fair Market Value.
For purposes of this Plan
“
Fair
Market Value
” shall mean,
unless otherwise determined or provided by the Administrator in the
circumstances, the closing price for a share of Common Stock on the
trading day immediately before the grant date, as furnished by the
NASDAQ Stock Market or other principal stock exchange on which the
Common Stock is then listed for the date in question, or if the
Common Stock is no longer listed on a principal stock exchange,
then by the Over-the-Counter Bulletin Board or OTC Markets. If the
Common Stock is no longer listed on the NASDAQ Capital Market or
listed on a principal stock exchange or is no longer actively
traded on the Over-the-Counter Bulletin Board or OTC Markets as of
the applicable date, the Fair Market Value of the Common Stock
shall be the value as reasonably determined by the Administrator
for purposes of the award in the circumstances.
5.7
Transfer
Restrictions.
5.7.1
Limitations
on Exercise and Transfer.
Unless otherwise expressly provided in
(or pursuant to) this Section 5.7, by applicable law and by
the award agreement, as the same may be amended, (a) all
awards are non-transferable and shall not be subject in any manner
to sale, transfer, anticipation, alienation, assignment, pledge,
encumbrance or charge; (b) awards shall be exercised only by
the participant; and (c) amounts payable or shares issuable
pursuant to any award shall be delivered only to (or for the
account of) the participant.
5.7.2
Exceptions.
The
Administrator may permit awards to be exercised by and paid to, or
otherwise transferred to, other persons or entities pursuant to
such conditions and procedures, including limitations on subsequent
transfers, as the Administrator may, in its sole discretion,
establish in writing (provided that any such transfers of ISOs
shall be limited to the extent permitted under the federal tax laws
governing ISOs). Any permitted transfer shall be subject to
compliance with applicable federal and state securities
laws.
5.7.3
Further
Exceptions to Limits on Transfer.
The exercise and transfer restrictions
in Section 5.7.1 shall not apply to:
(a
)
transfers to the Corporation,
(b
)
the
designation of a beneficiary to receive benefits in the event of
the participant’s death or, if the participant has died,
transfers to or exercise by the participant’s beneficiary,
or, in the absence of a validly designated beneficiary, transfers
by will or the laws of descent and
distribution,
(c
)
subject to any applicable limitations on ISOs, transfers to a
family member (or former family member) pursuant to a domestic
relations order if approved or ratified by the
Administrator,
(d
)
subject to any applicable limitations on ISOs, if the participant
has suffered a disability, permitted transfers or exercises on
behalf of the participant by his or her legal representative,
or
(e
)
the
authorization by the Administrator of “cashless
exercise” procedures with third parties who provide financing
for the purpose of (or who otherwise facilitate) the exercise of
awards consistent with applicable laws and the express
authorization of the
Administrator.
5.8
International
Awards.
One or more
awards may be granted to Eligible Persons who provide services to
the Corporation or one of its Subsidiaries outside of the United
States. Any awards granted to such persons may, if deemed necessary
or advisable by the Administrator, be granted pursuant to the terms
and conditions of any applicable sub-plans, if any, appended to
this Plan and approved by the Administrator.
5.9
V
esting
. Subject
to Section 5.1.2 hereof, awards shall vest at such time or
times and subject to such terms and conditions as shall be
determined by the Administrator at the time of
grant;
provided,
however
, that in the absence of
any award vesting periods designated by the Administrator at the
time of grant in the applicable award agreement, awards shall vest
as to one-third of the total number of shares subject to the award
on each of the first, second and third anniversaries of the date of
grant.
6.
|
EFFECT OF TERMINATION OF SERVICE ON AWARDS
|
6.1
Termination of
Employment.
6.1.1
The Administrator shall establish the
effect of a termination of employment or service on the rights and
benefits under each award under this Plan and in so doing may make
distinctions based upon, inter alia, the cause of termination and
type of award. If the participant is not an employee of the
Corporation or one of its Subsidiaries and provides other services
to the Corporation or one of its Subsidiaries, the Administrator
shall be the sole judge for purposes of this Plan (unless a
contract or the award agreement otherwise provides) of whether the
participant continues to render services to the Corporation or one
of its Subsidiaries and the date, if any, upon which such services
shall be deemed to have terminated.
6.1.2
For awards of stock options or SARs,
unless the award agreement provides otherwise, the exercise period
of such options or SARs shall expire: (1) three months
after the last day that the participant is employed by or provides
services to the Corporation or a Subsidiary (provided; however,
that in the event of the participant’s death during this
period, those persons entitled to exercise the option or SAR
pursuant to the laws of descent and distribution shall have one
year following the date of death within which to exercise such
option or SAR); (2) in the case of a participant whose
termination of employment is due to death or disability (as defined
in the applicable award agreement), 12 months after the last
day that the participant is employed by or provides services to the
Corporation or a Subsidiary; and (3) immediately upon a
participant’s termination for “cause”. The
Administrator will, in its absolute discretion, determine the
effect of all matters and questions relating to a termination of
employment, including, but not by way of limitation, the question
of whether a leave of absence constitutes a termination of
employment and whether a participant’s termination is for
“cause.”
If not defined in the applicable award agreement,
“
Cause
” shall mean:
(i) conviction
of a felony or a crime involving fraud or moral turpitude;
or
(ii) theft,
material act of dishonesty or fraud, intentional falsification of
any employment or Company records, or commission of any criminal
act which impairs participant’s ability to perform
appropriate employment duties for the Corporation; or
(iii) intentional
or reckless conduct or gross negligence materially harmful to the
Company or the successor to the Corporation after a Change in
Control , including violation of a non-competition or
confidentiality agreement; or
(iv) willful
failure to follow lawful instructions of the person or body to
which participant reports; or
(v) gross
negligence or willful misconduct in the performance of
participant’s assigned duties. Cause
shall
not
include mere unsatisfactory performance in
the achievement of participant’s job
objectives.
6.1.3
For awards of restricted shares,
unless the award agreement provides otherwise, restricted shares
that are subject to restrictions at the time that a participant
whose employment or service is terminated shall be forfeited and
reacquired by the Corporation;
provided
that,
the Administrator
may provide, by rule or regulation or in any award agreement, or
may determine in any individual case, that restrictions or
forfeiture conditions relating to restricted shares shall be waived
in whole or in part in the event of terminations resulting from
specified causes, and the Administrator may in other cases waive in
whole or in part the forfeiture of restricted
shares. Similar rules shall apply in respect of
RSUs.
6.2
Events Not
Deemed Terminations of Service.
Unless the express policy of the
Corporation or one of its Subsidiaries, or the Administrator,
otherwise provides, the employment relationship shall not be
considered terminated in the case of (a) sick leave,
(b) military leave, or (c) any other leave of absence
authorized by the Corporation or one of its Subsidiaries, or the
Administrator; provided that unless reemployment upon the
expiration of such leave is guaranteed by contract or law, such
leave is for a period of not more than 3 months. In the case
of any employee of the Corporation or one of its Subsidiaries on an
approved leave of absence, continued vesting of the award while on
leave from the employ of the Corporation or one of its Subsidiaries
may be suspended until the employee returns to service, unless the
Administrator otherwise provides or applicable law otherwise
requires. In no event shall an award be exercised after the
expiration of the term set forth in the award
agreement.
6.3
Effect of
Change of Subsidiary Status.
For purposes of this Plan and any
award, if an entity ceases to be a Subsidiary of the Corporation, a
termination of employment or service shall be deemed to have
occurred with respect to each Eligible Person in respect of such
Subsidiary who does not continue as an Eligible Person in respect
of another entity within the Corporation or another Subsidiary that
continues as such after giving effect to the transaction or other
event giving rise to the change in status.
7.
|
ADJUSTMENTS;
ACCELERATION
|
7.1
Adjustments
. Upon
or in contemplation of any of the following events described in
this Section 7.1,: any reclassification, recapitalization,
stock split (including a stock split in the form of a stock
dividend) or reverse stock split (“
stock split
”); any merger, arrangement, combination,
consolidation, or other reorganization; any spin-off, split-up, or
similar extraordinary dividend distribution in respect of the
Common Stock (whether in the form of securities or property); any
exchange of Common Stock or other securities of the Corporation, or
any similar, unusual or extraordinary corporate transaction in
respect of the Common Stock; then the Administrator shall in such
manner, to such extent and at such time as it deems
appropriate and equitable in the circumstances (but subject to
compliance with applicable laws and stock exchange requirements)
proportionately adjust any or all of (1) the number and type
of shares of Common Stock (or other securities) that thereafter may
be made the subject of awards (including the number of shares
provided for in this Plan), (2) the number, amount and type of
shares of Common Stock (or other securities or property) subject to
any or all outstanding awards, (3) the grant, purchase, or
exercise price (which term includes the base price of any SAR or
similar right) of any or all outstanding awards, (4) the
securities, cash or other property deliverable upon exercise or
payment of any outstanding awards, and (5) the 162(m)
compensation limitations set forth in Section 5.2.7 and (subject to
Section 8.8.3(a)) the performance standards applicable to any
outstanding awards (provided that no adjustment shall be allowed to
the extent inconsistent with the requirements of Code
section 162(m)). Any adjustment made pursuant to this Section
7.1 shall be made in a manner that, in the good faith determination
of the Administrator, will not likely result in the imposition of
additional taxes or interest under Section 409A of the
Code. With respect to any award of an ISO, the
Administrator may make such an adjustment that causes the option to
cease to qualify as an ISO without the consent of the affected
participant.
7.2
Change in
Control
. Upon a
Change in Control, each then-outstanding option and SAR shall
automatically become fully vested, all restricted shares then
outstanding shall automatically fully vest free of restrictions,
and each other award granted under this Plan that is then
outstanding shall automatically become vested and payable to the
holder of such award
unless
the
Administrator has made appropriate provision for the substitution,
assumption, exchange or other continuation of the award pursuant to
the Change in Control. Notwithstanding the foregoing,
the Administrator, in its sole and absolute discretion, may choose
(in an award agreement or otherwise) to provide for full or partial
accelerated vesting of any award upon a Change In Control (or upon
any other event or other circumstance related to the Change in
Control, such as an involuntary termination of employment occurring
after such Change in Control, as the Administrator may determine),
irrespective of whether such any such award has been substituted,
assumed, exchanged or otherwise continued pursuant to the Change in
Control.
For purposes of this Plan,
“
Change in
Control
” shall be deemed
to have occurred if:
(i) a
tender offer (or series of related offers) shall be made and
consummated for the ownership of 50% or more of the outstanding
voting securities of the Corporation, unless as a result of such
tender offer more than 50% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Corporation (as of the time
immediately prior to the commencement of such offer), any employee
benefit plan of the Corporation or its Subsidiaries, and their
affiliates;
(ii) the
Corporation shall be merged or consolidated with another entity,
unless as a result of such merger or consolidation more than 50% of
the outstanding voting securities of the surviving or resulting
entity shall be owned in the aggregate by the stockholders of the
Corporation (as of the time immediately prior to such transaction),
any employee benefit plan of the Corporation or its Subsidiaries,
and their affiliates;
(iii) the
Corporation shall sell substantially all of its assets to another
entity that is not wholly owned by the Corporation, unless as a
result of such sale more than 50% of such assets shall be owned in
the aggregate by the stockholders of the Corporation (as of the
time immediately prior to such transaction), any employee benefit
plan of the Corporation or its Subsidiaries and their affiliates;
or
(iv) a
Person (as defined below) shall acquire 50% or more of the
outstanding voting securities of the Corporation (whether directly,
indirectly, beneficially or of record), unless as a result of such
acquisition more than 50% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Corporation (as of the time
immediately prior to the first acquisition of such securities by
such Person), any employee benefit plan of the Corporation or its
Subsidiaries, and their affiliates.
For purposes of this Section 5(c), ownership of
voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule
13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange
Act. In addition, for such purposes,
“Person” shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof;
provided
,
however
,
that a Person shall not include (A) the Company or any of its
Subsidiaries; (B) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its
Subsidiaries; (C) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (D) a corporation
owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportion as their ownership of stock of
the Company.
Notwithstanding
the foregoing, (1) the Administrator may waive the requirement
described in paragraph (iv) above that a Person must acquire
more than 50% of the outstanding voting securities of the
Corporation for a Change in Control to have occurred if the
Administrator determines that the percentage acquired by a person
is significant (as determined by the Administrator in its
discretion) and that waiving such condition is appropriate in light
of all facts and circumstances, and (2) no compensation that has
been deferred for purposes of Section 409A of the Code shall be
payable as a result of a Change in Control unless the Change in
Control qualifies as a change in ownership or effective control of
the Corporation within the meaning of Section 409A of the
Code.
7.3
Early
Termination of Awards
. Any award that has been accelerated
as required or permitted by Section 7.2 upon a Change in
Control (or would have been so accelerated but for Section 7.4
or 7.5) shall terminate upon such event, subject to any provision
that has been expressly made by the Administrator, through a plan
of reorganization or otherwise, for the survival, substitution,
assumption, exchange or other continuation of such award and
provided that, in the case of options and SARs that will not
survive, be substituted for, assumed, exchanged, or otherwise
continued in the transaction, the holder of such award shall be
given reasonable advance notice of the impending termination and a
reasonable opportunity to exercise his or her outstanding options
and SARs in accordance with their terms before the termination of
such awards (except that in no case shall more than ten days’
notice of accelerated vesting and the impending termination be
required and any acceleration may be made contingent upon the
actual occurrence of the event).
The
Administrator may make provision for payment in cash or property
(or both) in respect of awards terminated pursuant to this section
as a result of the Change in Control and may adopt such valuation
methodologies for outstanding awards as it deems reasonable and, in
the case of options, SARs or similar rights, and without limiting
other methodologies, may base such settlement solely upon the
excess if any of the per share amount payable upon or in respect of
such event over the exercise or base price of the
award.
7.4
Other
Acceleration Rules
. Any acceleration of awards pursuant
to this Section 7 shall comply with applicable legal and stock
exchange requirements and, if necessary to accomplish the purposes
of the acceleration or if the circumstances require, may be deemed
by the Administrator to occur a limited period of time not greater
than 30 days before the event. Without limiting the generality
of the foregoing, the Administrator may deem an acceleration to
occur immediately prior to the applicable event and/or reinstate
the original terms of an award if an event giving rise to the
acceleration does not occur. Notwithstanding any other provision of
the Plan to the contrary, the Administrator may override the
provisions of Section 7.2, 7.3, and/or 7.5 by express
provision in the award agreement or otherwise. The portion of any
ISO accelerated pursuant to Section 7.2 or any other action
permitted hereunder shall remain exercisable as an ISO only to the
extent the applicable $100,000 limitation on ISOs is not exceeded.
To the extent exceeded, the accelerated portion of the option shall
be exercisable as a nonqualified stock option under the
Code.
7.5
Possible
Rescission of Acceleration
. If the vesting of an award has been
accelerated expressly in anticipation of an event and the
Administrator later determines that the event will not occur, the
Administrator may rescind the effect of the acceleration as to any
then outstanding and unexercised or otherwise unvested
awards;
provided,
that
, in the case of any
compensation that has been deferred for purposes of Section 409A of
the Code, the Administrator determines that such
rescission will not likely result in the imposition of additional
tax or interest under Code Section 409A.
8.1
Compliance
with Laws.
This
Plan, the granting and vesting of awards under this Plan, the
offer, issuance and delivery of shares of Common Stock, the
acceptance of promissory notes and/or the payment of money under
this Plan or under awards are subject to compliance with all
applicable federal and state laws, rules and regulations (including
but not limited to state and federal securities law, federal margin
requirements) and to such approvals by any applicable stock
exchange listing, regulatory or governmental authority as may, in
the opinion of counsel for the Corporation, be necessary or
advisable in connection therewith. The person acquiring any
securities under this Plan will, if requested by the Corporation or
one of its Subsidiaries, provide such assurances and
representations to the Corporation or one of its Subsidiaries as
the Administrator may deem necessary or desirable to assure
compliance with all applicable legal and accounting
requirements.
8.2
Future
Awards/Other Rights.
No person shall have any claim or
rights to be granted an award (or additional awards, as the case
may be) under this Plan, subject to any express contractual rights
(set forth in a document other than this Plan) to the
contrary.
8.3
No
Employment/Service Contract.
Nothing contained in this Plan (or in
any other documents under this Plan or in any award) shall confer
upon any Eligible Person or other participant any right to continue
in the employ or other service of the Corporation or one of its
Subsidiaries, constitute any contract or agreement of employment or
other service or affect an employee’s status as an employee
at will, nor shall interfere in any way with the right of the
Corporation or one of its Subsidiaries to change a person’s
compensation or other benefits, or to terminate his or her
employment or other service, with or without
cause. Nothing in this Section 8.3, however, is
intended to adversely affect any express independent right of such
person under a separate employment or service contract other than
an award agreement.
8.4
Plan Not
Funded.
Awards
payable under this Plan shall be payable in shares or from the
general assets of the Corporation, and no special or separate
reserve, fund or deposit shall be made to assure payment of such
awards. No participant, beneficiary or other person shall have any
right, title or interest in any fund or in any specific asset
(including shares of Common Stock, except as expressly otherwise
provided) of the Corporation or one of its Subsidiaries by reason
of any award hereunder. Neither the provisions of this Plan (or of
any related documents), nor the creation or adoption of this Plan,
nor any action taken pursuant to the provisions of this Plan shall
create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Corporation or one of its
Subsidiaries and any participant, beneficiary or other person. To
the extent that a participant, beneficiary or other person acquires
a right to receive payment pursuant to any award hereunder, such
right shall be no greater than the right of any unsecured general
creditor of the Corporation.
8.5
Tax
Withholding.
Upon
any exercise, vesting, or payment of any award, the Corporation or
one of its Subsidiaries shall have the right at its option
to:
(a
)
require the participant (or the participant’s personal
representative or beneficiary, as the case may be) to pay or
provide for payment of at least the minimum amount of any taxes
which the Corporation or one of its Subsidiaries may be required to
withhold with respect to such award event or payment;
or
(b
)
deduct from any amount otherwise payable in cash to the participant
(or the participant’s personal representative or beneficiary,
as the case may be) the minimum amount of any taxes which the
Corporation or one of its Subsidiaries may be required to withhold
with respect to such cash payment.
In
any case where a tax is required to be withheld in connection with
the delivery of shares of Common Stock under this Plan, the
Administrator may in its sole discretion (subject to
Section 8.1) grant (either at the time of the award or
thereafter) to the participant the right to elect, pursuant to such
rules and subject to such conditions as the Administrator may
establish, to have the Corporation reduce the number of shares to
be delivered by (or otherwise reacquire) the appropriate number of
shares, valued in a consistent manner at their Fair Market Value or
at the sales price in accordance with authorized procedures for
cashless exercises, necessary to satisfy the minimum applicable
withholding obligation on exercise, vesting or payment. In no event
shall the shares withheld exceed the minimum whole number of shares
required for tax withholding under applicable law.
8.6
Effective Date, Termination
and Suspension, Amendments.
8.6.1
Effective
Date and Termination.
This Plan was approved by the Board
and became effective on [ ]. Unless earlier terminated
by the Board, this Plan shall terminate at the close of business on
[ ], 2026. After the termination of this Plan either upon such
stated expiration date or its earlier termination by the Board, no
additional awards may be granted under this Plan, but previously
granted awards (and the authority of the Administrator with respect
thereto, including the authority to amend such awards) shall remain
outstanding in accordance with their applicable terms and
conditions and the terms and conditions of this
Plan.
8.6.2
Board
Authorization.
The
Board may, at any time, terminate or, from time to time, amend,
modify or suspend this Plan, in whole or in part. No awards may be
granted during any period that the Board suspends this
Plan.
8.6.3
Stockholder
Approval.
To the
extent then required by applicable law or any applicable stock
exchange or required under Sections 162, 422 or 424 of the
Code to preserve the intended tax consequences of this Plan, or
deemed necessary or advisable by the Board, this Plan and any
amendment to this Plan shall be subject to stockholder
approval.
8.6.4
Amendments
to Awards.
Without
limiting any other express authority of the Administrator under
(but subject to) the express limits of this Plan, the Administrator
by agreement or resolution may waive conditions of or limitations
on awards to participants that the Administrator in the prior
exercise of its discretion has imposed, without the consent of a
participant, and (subject to the requirements of Sections 3.2
and 8.6.5) may make other changes to the terms and conditions of
awards. Any amendment or other action that would constitute a
repricing of an award is subject to the limitations set forth in
Section 3.2(g).
8.6.5
Limitations
on Amendments to Plan and Awards.
No amendment, suspension or
termination of this Plan or change of or affecting any outstanding
award shall, without written consent of the participant, affect in
any manner materially adverse to the participant any rights or
benefits of the participant or obligations of the Corporation under
any award granted under this Plan prior to the effective date of
such change. Changes, settlements and other actions contemplated by
Section 7 shall not be deemed to constitute changes or
amendments for purposes of this
Section 8.6.
8.7
Privileges
of Stock Ownership.
Except as otherwise expressly
authorized by the Administrator or this Plan, a participant shall
not be entitled to any privilege of stock ownership as to any
shares of Common Stock not actually delivered to and held of record
by the participant. No adjustment will be made for dividends or
other rights as a stockholder for which a record date is prior to
such date of delivery.
8.8
Governing Law; Construction;
Severability.
8.8.1
Choice of
Law.
This Plan, the
awards, all documents evidencing awards and all other related
documents shall be governed by, and construed in accordance with
the laws of the State of Delaware
8.8.2
Severability.
If
a court of competent jurisdiction holds any provision invalid and
unenforceable, the remaining provisions of this Plan shall continue
in effect.
8.8.3
Plan
Construction.
(a)
Rule 16b-3.
It
is the intent of the Corporation that the awards and transactions
permitted by awards be interpreted in a manner that, in the case of
participants who are or may be subject to Section 16 of the
Exchange Act, qualify, to the maximum extent compatible with the
express terms of the award, for exemption from matching liability
under Rule 16b-3 promulgated under the Exchange Act.
Notwithstanding the foregoing, the Corporation shall have no
liability to any participant for Section 16 consequences of
awards or events under awards if an award or event does not so
qualify.
(b)
Section 162(m).
Awards
under Sections 5.1.4 through 5.1.7 to persons described in
Section 5.2 that are either granted or become vested,
exercisable or payable based on attainment of one or more
performance goals related to the Business Criteria, as well as
Qualifying Options and Qualifying SARs granted to persons described
in Section 5.2, that are approved by a committee composed
solely of two or more outside directors (as this requirement is
applied under Section 162(m) of the Code) shall be deemed to
be intended as performance-based compensation within the meaning of
Section 162(m) of the Code unless such committee provides
otherwise at the time of grant of the award. It is the further
intent of the Corporation that (to the extent the Corporation or
one of its Subsidiaries or awards under this Plan may be or become
subject to limitations on deductibility under Section 162(m)
of the Code) any such awards and any other Performance-Based Awards
under Section 5.2 that are granted to or held by a person
subject to Section 162(m) will qualify as performance-based
compensation or otherwise be exempt from deductibility limitations
under Section 162(m).
(c)
Code
Section 409A Compliance.
The Board intends that, except as may
be otherwise determined by the Administrator, any awards under the
Plan are either exempt from or satisfy the requirements of
Section 409A of the Code and related regulations and Treasury
pronouncements (“
Section 409A
”)
to avoid the imposition of any taxes, including additional income
or penalty taxes, thereunder. If the Administrator determines that
an award, award agreement, acceleration, adjustment to the terms of
an award, payment, distribution, deferral election, transaction or
any other action or arrangement contemplated by the provisions of
the Plan would, if undertaken, cause a participant’s award to
become subject to Section 409A, unless the Administrator
expressly determines otherwise, such award, award agreement,
payment, acceleration, adjustment, distribution, deferral election,
transaction or other action or arrangement shall not be undertaken
and the related provisions of the Plan and/or award agreement will
be deemed modified or, if necessary, rescinded in order to comply
with the requirements of Section 409A to the extent determined
by the Administrator without the content or notice to the
participant. Notwithstanding the foregoing, neither the Company nor
the Administrator shall have any obligation to take any action to
prevent the assessment of any excise tax or penalty on any
participant under Section 409A and neither the Company nor the
Administrator will have any liability to any participant for such
tax or penalty.
(d)
No Guarantee of Favorable Tax
Treatment.
Although
the Company intends that awards under the Plan will be exempt from,
or will comply with, the requirements of Section 409A of the
Code, the Company does not warrant that any award under the Plan
will qualify for favorable tax treatment under Section 409A of
the Code or any other provision of federal, state, local or foreign
law. The Company shall not be liable to any participant for any
tax, interest or penalties the participant might owe as a result of
the grant, holding, vesting, exercise or payment of any award under
the Plan
8.9
Captions.
Captions
and headings are given to the sections and subsections of this Plan
solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the
construction or interpretation of this Plan or any provision
thereof.
8.10
Stock-Based
Awards in Substitution for Stock Options or Awards Granted by Other
Corporation.
Awards
may be granted to Eligible Persons in substitution for or in
connection with an assumption of employee stock options, SARs,
restricted stock or other stock-based awards granted by other
entities to persons who are or who will become Eligible Persons in
respect of the Corporation or one of its Subsidiaries, in
connection with a distribution, arrangement, business combination,
merger or other reorganization by or with the granting entity or an
affiliated entity, or the acquisition by the Corporation or one of
its Subsidiaries, directly or indirectly, of all or a substantial
part of the stock or assets of the employing entity. The awards so
granted need not comply with other specific terms of this Plan,
provided the awards reflect only adjustments giving effect to the
assumption or substitution consistent with the conversion
applicable to the Common Stock in the transaction and any change in
the issuer of the security. Any shares that are delivered and any
awards that are granted by, or become obligations of, the
Corporation, as a result of the assumption by the Corporation of,
or in substitution for, outstanding awards previously granted by an
acquired company (or previously granted by a predecessor employer
(or direct or indirect parent thereof) in the case of persons that
become employed by the Corporation or one of its Subsidiaries in
connection with a business or asset acquisition or similar
transaction) shall not be counted against the Share Limit or other
limits on the number of shares available for issuance under this
Plan, except as may otherwise be provided by the Administrator at
the time of such assumption or substitution or as may be required
to comply with the requirements of any applicable stock
exchange.
8.11
Non-Exclusivity
of Plan.
Nothing in
this Plan shall limit or be deemed to limit the authority of the
Board or the Administrator to grant awards or authorize any other
compensation, with or without reference to the Common Stock, under
any other plan or authority.
8.12
No
Corporate Action Restriction.
The existence of this Plan, the award
agreements and the awards granted hereunder shall not limit, affect
or restrict in any way the right or power of the Board or the
stockholders of the Corporation to make or authorize: (a) any
adjustment, recapitalization, reorganization or other change in the
capital structure or business of the Corporation or any Subsidiary,
(b) any merger, arrangement, business combination,
amalgamation, consolidation or change in the ownership of the
Corporation or any Subsidiary, (c) any issue of bonds,
debentures, capital, preferred or prior preference stock ahead of
or affecting the capital stock (or the rights thereof) of the
Corporation or any Subsidiary, (d) any dissolution or
liquidation of the Corporation or any Subsidiary, (e) any sale
or transfer of all or any part of the assets or business of the
Corporation or any Subsidiary, or (f) any other corporate act
or proceeding by the Corporation or any Subsidiary. No participant,
beneficiary or any other person shall have any claim under any
award or award agreement against any member of the Board or the
Administrator, or the Corporation or any employees, officers or
agents of the Corporation or any Subsidiary, as a result of any
such action.
8.13
Other
Corporation Benefit and Compensation Programs.
Payments and other benefits received
by a participant under an award made pursuant to this Plan shall
not be deemed a part of a participant’s compensation for
purposes of the determination of benefits under any other employee
welfare or benefit plans or arrangements, if any, provided by the
Corporation or any Subsidiary, except where the Administrator
expressly otherwise provides or authorizes in writing or except as
otherwise specifically set forth in the terms and conditions of
such other employee welfare or benefit plan or arrangement. Awards
under this Plan may be made in addition to, in combination with, as
alternatives to or in payment of grants, awards or commitments
under any other plans or arrangements of the Corporation or its
Subsidiaries.
8.14
Prohibition
on Repricing
.
Subject to Section 4, the
Administrator shall not, without the approval of the stockholders
of the Corporation (i) reduce the exercise price, or cancel and
reissue options so as to in effect reduce the exercise price or
(ii) change the manner of determining the exercise price so that
the exercise price is less than the fair market value per share of
Common Stock.
As adopted by the Board of Directors of Majesco Entertainment
Company on [ ], 2016.
Exhibit 10.4
STOCKHOLDERS
AGREEMENT
THIS STOCKHOLDERS AGREEMENT
(this
“
Agreement
”), is
dated as of December 1, 2016, by and among Majesco Entertainment
Company, a Delaware corporation (the “Parent”), Denver
Lough (“
Lough
”),
Edward Swanson (“
Swanson
”), and Polarityte, Inc, a
Nevada corporation (the “
Company
”), and the undersigned
stockholders ("
Stockholders
") of
Parent.
WHEREAS
, on December 1, 2016 the Parent,
Lough and Company entered into an Agreement and Plan of
Reorganization (as the same may be amended from time to time, the
("
Merger Agreement
"),
providing, among other things, for the sale, assignment, transfer
and conveyance to the Company of the right, title and interest in
and to the Purchased Intellectual Property (as defined in the
Merger Agreement) and the acquisition of the Company by Purchaser
and issuance of Parent securities to Lough (collectively with
Swanson, the “
Restricted
Stockholders
”) pursuant to the terms and conditions of
the Merger Agreement (the “Acquisition”) in
consideration for an aggregate of 7,050 shares of Series E
Preferred Stock, par value $0.001 per share, of the Parent,
convertible into Seven Million Fifty Thousand (7,050,000) shares
(the “
Shares
”)
of the Parent’s common stock, par value $0.001 per share (the
“
Common
Stock
”);
WHEREAS
, on December 1, 2016 the Parent
and each of Lough and Swanson entered into employment agreements
(each, and “
Employment
Agreement
”) pursuant to which each of Lough and
Swanson received a non-qualified incentive option award (each, an
“
Option Award
”
exercisable into Common Stock, such Option Awards, Common Stock,
collectively with the Shares, the “
Seller Stock
”), as set forth on
Schedule I
hereto,
in consideration of the agreement of Parent and each of Lough and
Swanson for employment by the Parent;
NOW, THEREFORE
, in consideration of the
mutual covenants, representations, warranties and obligations set
forth in this Agreement, Parent, Lough, Swanson and Company hereby
agree as follows:
1.
Restrictions on Transfer
of Stock
.
1.1
Restrictions on Transfers to Third
Parties of Seller Stock
. No Seller Stock or any interest
therein now or hereafter owned may be Transferred, unless such
transfer conforms with the provisions of this Agreement, and each
share of Restricted Stock shall contain an appropriate Stock
Certificate Legend.
1.2
Permitted
Transferees.
(a)
Affiliates, Trusts, etc
. Seller
Stock may be Transferred to an Affiliate of the holder, or any
spouse or member of the holder’s immediate family, or to a
custodian, trustee (including a trustee of a voting trust),
executor or other fiduciary for the account of the holder’s
spouse or members of the holder’s immediate family, or to a
trust for the holder’s own self, or a charitable remainder
trust (each, a “
Permitted
Transferee
”). In addition to the foregoing, any
Permitted Transferee may Transfer Seller Stock back to the
transferring holder or to another Permitted Transferee of such
transferring holder. Prior to the completion of any sale, transfer
or assignment pursuant to this Section 1.2, the Permitted
Transferee shall have executed documents assuming the obligations
of the applicable holder under this Agreement with respect to the
transferred securities.
2.
Right of Parent and
Stockholders to Re-Purchase
.
2.1
Right to Purchase
. Subject to
the termination provisions of Section 9 herein and the Right to
Purchase under Section 3 hereof, the Parent and the Stockholders of
Parent signatory hereto shall have the right to purchase from each
Restricted Stockholder and such Restricted Stockholder shall have
the obligation to sell, all, but not less than all, of such
Restricted Stockholder’s Seller Stock if such Restricted
Stockholder’s employment with the Company is terminated
“
with Cause
” or
by the Restricted Stockholder “
without Good Reason
” (as such
terms are defined in the respective Employment Agreements) at the
Fair Market Value of the Seller Stock to be purchased.
2.2
Notice
. If the Parent desires
to purchase Seller Stock from a Restricted Stockholder pursuant to
Section 2.1, it shall notify such Restricted Stockholder (or
such Restricted Stockholder’s estate, trust or corporation,
as the case may be) not more than thirty (30) days after the
occurrence of the event giving rise to the Company’s right to
acquire such Restricted Stockholder’s shares of Seller Stock.
If Parent does not notify the Restricted Stockholders of its
intention to purchase Seller Stock, within such thirty (30) day
period, Parent shall notify the undersigned Stockholders who shall
notify such Restricted Stockholder (or such Restricted
Stockholder’s estate, trust or corporation, as the case may
be) not more than fifteen (15) days after the notice from
Parent of the election to repurchase such Seller Stock, pro rata.
Any Stockholder who does elect shall also have the pro rata right
to purchase Seller Stock with respect to the Stockholder who does
not elect, on a pro rata basis.
2.3
Payment
. Payment for shares of
Seller Stock purchased pursuant to Section 2.1 or 2.2 shall be
made on the date thirty (30) days (or the first business day
thereafter if the thirtieth (30
th
) day is not a
business day) following the date of the determination of Fair
Market Value. Such payment will be made by wire transfer of funds
or certified or official bank check against surrender of the
certificates for such shares. Any payments based on Fair Market
Value required to be made by the Company under Section 2 shall
accrue simple interest at five percent (5%) per annum from the
due date for payment to the date Parent has paid in full for all of
the Seller Stock being purchased. All payments of interest accrued
hereunder shall be paid only at the date of payment by the Parent
for the Seller Stock being purchased.
2.4
Rights
. From and after the date
of election to purchase Seller Stock by Parent or Stockholders, the
rights of the Restricted Stockholder as a stockholder of Parent, to
hold, vote or otherwise dispose of Seller Stock, shall immediately
terminate and be vested in the purchaser(s) thereof, and ownership
thereof shall be vested in the purchaser and recorded on the
transfer records of the Parent. Any Stockholder who may exercise
the right to repurchase Seller Stock as provided herein, may
designate one or more third-parties as purchaser of such Seller
Stock.
3.
Right of Parent to
Re-Purchase Seller Stock Upon Breach – Employment
Agreement/Merger Agreement Breach..
3.1
Right to Purchase
.
Subject to the termination provisions of Section 9 herein, Parent
shall have the right to purchase from each Restricted Stockholder
and such Restricted Stockholder shall have the obligation to sell,
all, but not less than all, of such Restricted Stockholder’s
Seller Stock if: (A) such Restricted Stockholder breaches Section
13 of such Restricted Stockholder’s Employment Agreement or
(B) such Restricted Stockholder breaches Article IX of the Merger
Agreement, at a per share price of $0.001 per share to be purchased
(the “
Par
Value
”).
3.2
Notice
. If the Company desires
to purchase shares of Seller Stock from a Restricted Stockholder
pursuant to Section 4.1, it shall notify such Restricted
Stockholder (or such Restricted Stockholder’s estate, trust
or corporation, as the case may be) not more than thirty (30)
days after the occurrence of the event giving rise to the
Parent’s right to acquire such Restricted Stockholder’s
Seller Stock.
3.3
Payment
. Payment for shares of
Seller Stock purchased by the Parent pursuant to Section 3.1
based on Par Value shall be made within ten (10) days of
determination of such breach. Such payment will be made by wire
transfer of funds or certified or official bank check against
surrender of the certificates for such shares.
3.4
Rights
. From and
after the date of election to purchase Seller Stock by Parent, the
rights of the Restricted Stockholder as a stockholder of Parent, to
hold, vote or otherwise dispose of Seller Stock, shall immediately
terminate and be vested in the purchaser(s) thereof, and ownership
thereof shall be vested in the purchaser and recorded on the
transfer records of the Parent.
4.
Determination of Fair
Market Value
.
4.1
Appraisals
. The Parent and the
Restricted Stockholder shall seek to determine Fair Market Value be
agreement within fifteen (15) days of the date any such
determination is required and, in the absence of agreement, shall,
submit to an expert in valuation or appraiser the determination of
Fair Market Value. The Parent shall engage an independent valuation
expert or appraiser of recognized national standing reasonably
acceptable to the Restricted Stockholder who’s shares of
Stock are subject to repurchase to appraise the Fair Market Value
of the shares of Seller Stock as of the last day of the fiscal
period then most recently ended or, at the request of the Parent,
as of any more recent date (the “
Appraisal Date
”), and to prepare
and deliver a report to the Company describing the results of such
appraisal (the “
Appraisal
”). The cost of Appraisal
shall be shared equally between the Parent and the Restricted
Stockholder(s) subject to the determination.
4.2
Calculation
.
“
Fair Market
Value
” of any share of Common Stock (or preferred
stock on an “as converted” basis) shall be the fair
market value per share of the entire Common Stock equity interest
of the Company taken as a whole, after giving effect to any
increase or option price in respect of all then outstanding
warrants, options, convertible stock or other rights or securities
to purchase shares of Common Stock, together with the number of
shares of Common Stock into which any issued and outstanding
warrants, options, or other rights or securities to purchase or
acquire shares of Common Stock would be convertible as of the most
recent Appraisal Date, without premiums for control or discounts
for minority interests or restrictions on transfer, and shall be as
of the most recent Appraisal Date and determined with reference to
the most recent Appraisal, and after giving effect to any agreement
breach or termination of the Restricted Stockholder’s
employment.
4.3
Notice to Stockholders
. After
receipt of each Appraisal, the Parent shall promptly deliver to
each Restricted Stockholder a copy of the report as to value
included with such Appraisal.
5.
Defined Terms
. As
used in this Agreement, the following terms shall have the meanings
ascribed to them below:
(a)
Affiliate
. The term
“Affiliate” means, with respect to any Person, any
Person who, directly or indirectly, controls, is controlled by or
is under common control with that Person. For purposes of this
definition, “control” when used with respect to any
Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, including any
subsidiary, parent, partner, limited partner, retired partner or
shareholder of such Person, with the exception of any of those
subsidiaries, parents, partners, limited partners, retired partners
or shareholders of such Person which are direct competitors of the
Company.
(b)
Board
. The term
“Board” shall mean the Board of Directors of the Parent
from time to time.
(c)
Certificate of
Incorporation
. The term “Certificate of
Incorporation” shall mean the Restated Certificate of
Incorporation of the Parent filed with the Secretary of State of
the State of Delaware, as amended, amended and restated, modified
or otherwise supplemented from time to time in accordance with the
terms of this Agreement
(d)
Person
. The term
“Person” means an individual, corporation, partnership,
limited liability company, association, trust or other entity or
organization, including a government or political subdivision or an
agency or instrumentality thereof.
(e)
Transaction
Documents
. The term “Transaction Documents”
means any agreement pursuant to which any Restricted Stockholder
acquired or acquires Seller Stock or as to which such Seller Stock
is subject.
(f)
Transfer
. The term
“Transfer” means any direct or indirect sale,
assignment, mortgage, transfer, pledge, hypothecation or other
disposition or transfer.
5.
Stock Certificate
Legends
. A copy of this Agreement shall be filed with the
Secretary of the Parent and kept with the records of the Parent.
Each certificate representing shares of Seller Stock owned by the
Restricted Stockholders shall bear the following
legends:
(i) The
securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any
state securities laws, and may not be sold, transferred, offered
for sale, pledged, hypothecated or otherwise disposed of without
registration under the Securities Act of 1933, as amended, and
under applicable state securities law, unless the issuer shall have
received an opinion of counsel reasonably satisfactory to the
issuer that the securities represented by this certificate may be
legally sold or distributed pursuant to exemption from registration
under the Securities Act of 1933, as amended, and without
registration under then applicable state and federal
laws.
(ii)
The securities represented by this certificate are also subject to
certain restriction on transfer contained in a Stockholders
Agreement dated as of December 1, 2016, copies of which may be
obtained from the issuer or from the holder of this certificate, as
well as the rights of certain persons under such Stockholders
Agreement to purchase such securities on the terms and conditions
set forth therein. No transfer of such securities will be made on
the books of the issuer unless accompanied by evidence of
compliance with the terms of such Stockholders
Agreement.
6.
No Other Arrangements or
Agreements
. Each of the Restricted Stockholders hereby
represents and warrants to the Parent, that he has not entered into
or agreed to be bound by any other arrangements or agreements of
any kind with any other Person (other than the Parent) with respect
to his shares of Seller Stock, or any interest therein, including,
but not limited to, arrangements or agreements with respect to the
acquisition, disposition or voting of shares of Seller Stock
(whether or not such agreements and arrangements are with the
Parent, other Stockholders or other Persons), except for the
Transaction Documents. Each of the Restricted Stockholders agrees
with the Parent that he will not be a party to or enter into any
such other arrangements or agreements as described above with any
other Person as long as any of the terms of this Agreement remain
in effect without the prior written consent of the
Parent.
7.
Amendment and
Modification
. This Agreement may be amended, modified or
supplemented only by written agreement of the Parent and a majority
of the Stockholders signatory hereto. Upon amendment, modification
or supplement of this Agreement, the Parent shall notify all
Restricted Stockholders promptly of such amendment, modification or
supplement.
8.
Assignment
.
8.1
Assignment Generally
. The
provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns;
provided
that, except in
connection with Transfers explicitly permitted hereunder, no
Restricted Stockholder shall assign any of its rights pursuant to
this Agreement without the prior written agreement of the
Parent.
8.2
Agreements to be Bound
.
Notwithstanding anything to the contrary contained in this
Agreement, any Transfer by the Restricted Stockholders to any
Permitted Transferee or other third party (whether or not such
third party is Affiliated with such transferor), shall be permitted
under the terms of this Agreement only if such Permitted Transferee
or third party, as the case may be, shall agree in writing to be
bound by the terms and conditions of this Agreement pursuant to an
instrument of assumption reasonably satisfactory in substance and
form to the Parent. Upon the execution of such instrument by such
third party, such third party shall be deemed to be a Restricted
Stockholder for all purposes of this Agreement, subject to the same
obligations as the other Stockholders;
provided
further
, that the requirement
to execute and deliver an assumption agreement shall not apply in
the case of any Transfer pursuant to which the transferee is
entitled to have the legend removed.
9.
Termination
.
9.1
Termination Generally
. Any
party to, or Person who is subject to, this Agreement who ceases to
own any shares of Restricted Stock or any interest therein in
accordance with the terms of this Agreement shall cease to be a
party to, or Person who is subject to, this Agreement and
thereafter shall have no rights or obligations hereunder;
provided
that any
Transfer of shares of Stock by any Restricted Stockholder in breach
of this Agreement shall not relieve such Restricted Stockholder of
liability for any such breach.
9.2
Termination of Rights and
Obligations
. All rights and obligations of this
Agreement shall terminate (other than obligations which have arisen
and are outstanding prior to termination) with respect to any given
Restricted Stockholder on the date that such Restricted Stockholder
has satisfied each of his or its obligations to the Parent,
pursuant to any Transaction Documents.
9.3
Termination upon Purchase
. Upon
purchase of any Seller Stock by Parent or any other Stockholder
signatory hereto (or their designee) such Seller Stock shall not be
subject to the terms and provisions of this Agreement.
10.
Tag-Along Rights,
Drag-Along Rights
.
10.1
Tag-Along Rights
. No Restricted
Stockholder (for purposes of this Section 11.1, the
“
Offering
Stockholder
”) may sell any shares of Seller Stock to
any third party, unless the Parent and the Stockholders signatory
hereto are first offered the right to participate in any such sale
for a purchase price per share of Common Stock and on other terms
and conditions not less favorable to the Parent and those
Stockholders signatory hereto, than those applicable to the
Offering Stockholder.
11.
Recapitalization,
Exchanges, etc. Affecting the Stock
. The provisions of
this Agreement shall apply to any and all shares of capital stock
of the Parent or any successor or assignee of the Parent (whether
by merger, consolidation, sale of assets or otherwise) which may be
issued in respect of, in exchange for, or in substitution for the
shares of Stock, by reason of any stock dividend, split, reverse
split, combination, recapitalization, reclassification, merger,
consolidation, or otherwise in such a manner as to reflect the
intent and meaning of the provisions hereof.
12.
Third-Party
Beneficiaries
. This Agreement is not intended to confer upon
any Person, except for the parties hereto, any rights or remedies
hereunder.
13.
Transfer of Stock
.
If at any time the Parent purchases any shares of Stock pursuant to
this Agreement, the Parent may pay the purchase price determined
under this Agreement for the shares of Seller Stock it purchases by
wire transfer of funds or bank check in the amount of the purchase
price, and upon receipt of such purchase price, the Restricted
Stockholder shall deliver the certificates representing the number
of shares of Seller Stock being purchased in a form suitable for
transfer, duly endorsed in blank, and free and clear of any lien,
claim or encumbrance. Notwithstanding anything in this Agreement to
the contrary, the Parent shall not be required to make any payment
for shares of Seller Stock purchased hereunder until delivery to it
of the certificates representing such shares. If the purchaser is
purchasing less than all of the shares of Seller Stock represented
by a single certificate, the Parent shall deliver to the Restricted
Stockholder a certificate for any unpurchased shares of Seller
Stock.
14.
Further Assurances
.
Each party hereto shall do and perform or cause to be done and
performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and
documents as any other party hereto or Person subject hereto may
reasonably request in order to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
15.
Governing Law
. This
Agreement shall be governed by and construed in accordance with the
laws of the State of New York irrespective of any conflict of laws
principles. The parties hereby agree that any action or proceeding
with respect to this Agreement (and any action or proceeding with
respect to any amendments or replacements hereof or transactions
relating hereto) may be brought only in a federal or state court
located in New York, State of New York and having jurisdiction with
respect to such action or proceeding. Each of the parties hereto
irrevocably consents and submits to the jurisdiction of such
courts.
16.
Invalidity of
Provision
. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect
the validity or enforceability of the remainder of this Agreement
in that jurisdiction or the validity or enforceability of this
Agreement, including that provision, in any other
jurisdiction.
17.
Notices
. All
notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been duly given if
(a) delivered personally, (b) mailed, certified or
registered mail with postage prepaid, (c) sent by next-day or
overnight mail or delivery or (d) sent by telecopier as
follows:
(i)
If to the
Company
:
Majesco
Entertainment Company
4041I-T
Hadley Road.
S.
Plainfield, NJ 07080
Attn.:
Chief Executive Officer
Facsimile:
with a copy to
:
Sichenzia Ross
Ference Kesner, LLP
61
Broadway
Suite
3200
New
York, New York 10006
Attn.:
Harvey Kesner, Esq.
Facsimile: (212) 930-9725
(ii) If
to any Restricted Stockholder or Stockholder, to its address or
telecopier number as listed on the signature pages hereto or set
forth in the Transaction Documents;
provided
, that if for any
reason such address is not listed on the signature pages hereto, to
such Restricted Stockholder or Stockholder’s address or
telecopier number as is shown on the books and records of the
Parent.
(iii)
If to any other Person who becomes a Restricted Stockholder after
the date hereof, to its address or telecopier number set forth in
the counterpart of this Agreement executed and delivered by such
Stockholder or to such other person or address as any party shall
specify by notice in writing to the Company.
All such
notices, requests, demands, waivers and other communications shall
be deemed to have been received (w) if by personal delivery on
the day of such delivery, (x) if by certified or registered
mail, on the third (3
rd
) business day after
the mailing thereof, (y) if by next-day or overnight mail or
delivery, on the day after deposit with such overnight mail or
delivery courier, (z) if by telecopier on the day on which
such telecopy was sent,
provided
that a copy is also
sent by certified or registered mail.
18.
Headings; Execution in
Counterparts
. The headings and captions contained herein are
for convenience and shall not control or affect the meaning or
construction of any provision hereof. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original and which together shall constitute one
and the same instrument.
19.
Entire Agreement
.
This Agreement embodies the entire agreement and understanding of
the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements and understandings among
the parties with respect to such subject matter. There are no
restrictions, promises, representations, warranties, covenants or
undertakings relating to the shares of Seller Stock, other than
those expressly set forth or referred to herein or in the foregoing
agreements, the Transaction Documents, and the Certificate of
Incorporation or By-Laws.
20.
Injunctive Relief
.
The shares of Seller Stock cannot readily be purchased or sold in
the open market, and for that reason, among others, the Parent and
Stockholders signatory hereto will be irreparably damaged in the
event this Agreement is not specifically enforced. Each of the
parties therefore agrees that in the event of a breach of any
provision of this Agreement the aggrieved party may elect to
institute and prosecute proceedings in any court of competent
jurisdiction to enforce specific performance or to enjoin the
continuing breach of this Agreement. Such remedies shall, however,
be cumulative and not exclusive, and shall be in addition to any
other remedy which the Parent or any Stockholder signatory hereto
may have. Each Restricted Stockholder hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal
courts in New York for the purposes of any suit, action or other
proceeding arising out of or based upon this Agreement or the
subject matter hereof. Each Restricted Stockholder hereby consents
to service of process by mail made in accordance with
Section 17.
[SIGNATURES APPEAR ON THE FOLLOWING PAGES]
IN
WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
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COMPANY
:
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Attest:
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MAJESCO
ENTERTAINMENT
COMPANY
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By:_________________________________
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By:________________________________
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Chief
Executive Officer
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IN
WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
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OTHER STOCKHOLDERS:
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___________________________________
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Address:
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___________________________________
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Address:
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RESTRICTED STOCKHOLDERS:
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___________________________________
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Address:
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___________________________________
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Address:
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___________________________________
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Address:
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___________________________________
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Exhibit 10.5
VOTING
AGREEMENT
This
Voting Agreement (this "
Agreement
"), dated as of
December 1, 2016, is entered into by and among Majesco
Entertainment Company, a Delaware corporation (the
“
Parent
”),
Denver Lough (“
Lough
”), Edward Swanson
(“
Swanson
”), and
Polarityte, Inc., a Nevada corporation (the “
Company
”), and the undersigned
stockholders ("
Stockholders
") of
Parent.
WHEREAS
, concurrently with or following
the execution of this Agreement, the Parent, Majesco Acquisition
Corp., a Nevada corporation and wholly-owned subsidiary of the
Parent (the “
Purchaser
”)
,
Lough and Company have entered, or
will enter, into an Agreement and Plan of Reorganization (as the
same may be amended from time to time, the "
Merger Agreement
"),
following, among other things, for the sale, assignment, transfer
and conveyance to the Company of the right, title and interest in
and to the Purchased Intellectual Property (as defined in the
Merger Agreement) and the acquisition of the Company by Purchaser
and issuance of Parent securities to Lough and Swanson pursuant to
the terms and conditions of the Merger Agreement (the
“
Acquisition
”);
WHEREAS
, as a condition to its
willingness to enter into the Merger Agreement, the Parent has
required that Lough and Swanson and the Stockholders execute and
deliver this Agreement; and
WHEREAS,
in order to induce Lough and
Company to enter into the Merger Agreement, the Stockholders are
willing to make certain representations, warranties, covenants and
agreements with respect to the shares of common stock, par value
$0.001 per share, of Parent ("
Parent Common Stock
"),
Series A Preferred Stock ("
Parent
Series A Preferred Stock
"), Series B Preferred Stock
("
Parent Series B Preferred
Stock
") and Series C Preferred Stock ("
Parent Series C Preferred Stock
" and,
together with the Parent Common Stock, the Parent Series A
Preferred Stock and the Parent Series B Preferred Stock,
Parent Capital Stock
")
beneficially owned by the Stockholders and set forth below
Stockholders’ signature on the signature page hereto (the
"
Original
Shares
" and, together with any additional shares of Parent
Capital Stock acquired by the Stockholders pursuant to
Section 4
hereof, the "
Shares
").
NOW, THEREFORE
, in consideration of the
premises and for other good and valuable consideration, the
receipt, sufficiency and adequacy of which are hereby acknowledged,
the parties hereto agree as follows:
For
purposes of this Agreement, capitalized terms used and not defined
herein shall have the respective meanings ascribed to them in the
Merger Agreement.
2.
Agreement
to Vote Shares.
Stockholders agree
during the term of this Agreement to vote the Shares at any annual
or special meeting of stockholders of Parent, or execute a written
consent or consents if stockholders of Parent are requested to vote
their Shares through the execution of an action by written consent
in lieu of any such annual or special meeting of stockholders of
Parent, and to cause any holder of record of Shares to vote: (i) in
favor of: (1) approval of the Acquisition and the issuance of
Preferred E Stock and Parent Stock into which convertible in such
amount that exceeds 19.99% of the Parent’s Common Stock
outstanding prior to the Effective Date pursuant to NASDAQ Rule
5635 as contemplated in the Merger Agreement (the
“
Acquisition
Consideration
”) and the transactions contemplated
thereunder, at every meeting (or in connection with any action by
written consent) of the stockholders of Parent at which such
matters are considered and at every lawful adjournment or
postponement thereof and (2) approval of any proposal to adjourn or
postpone the meeting to a later date during the term of this
Agreement, if there are not sufficient votes for the approval of
the Acquisition Consideration and transactions contemplated in the
Merger Agreement on the date on which such meeting is held; (ii)
against any action, proposal, transaction or agreement which could
reasonably be expected to result in a breach of any covenant,
representation or warranty or any other obligation or agreement of
Parent under the Merger Agreement or of the Stockholders under this
Agreement or which would reasonably be expected to result in any of
the conditions to Parent’s obligations under the Merger
Agreement not being fulfilled. This Agreement is intended to bind
the Stockholders as stockholders of Parent only with respect to the
specific matters set forth herein. Except as set forth in clauses
(i) and (ii) of this
Section 2
, the Stockholders shall not be
restricted from voting in favor of, against or abstaining with
respect to any other matter presented to the stockholders of
Parent.
3.
No Voting Trusts or Other
Arrangement
.
The
Stockholders agree that during the term of this Agreement, the
Stockholders will not, and will not permit any entity under
Stockholders’ control to, deposit any of the Shares in a
voting trust, or grant any proxies with respect to the Shares or
subject any of the Shares to any arrangement with respect to the
voting of the Shares in favor of the matters required hereunder,
except as provided herein.
The
Stockholders agree that all Shares that the Stockholders purchase
or acquire the right to vote or otherwise acquire beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) after
the execution of this Agreement shall be subject to the terms of
this Agreement and shall constitute Shares for all purposes of this
Agreement until termination of this Agreement.
5.
Documentation and
Information
.
Except
as required by applicable law, the Stockholders shall not make any
public announcement regarding this Agreement without the prior
written consent of the Company; provided, that if the Stockholder
determines, that a public announcement is required by applicable
law, rule or regulation, then the Stockholders shall use their
commercially reasonable efforts to provide the Company with
reasonable advance notice of such determination and reasonable time
to comment on such announcement in advance of such issuance. The
Stockholders consent to and hereby
authorize Parent to publish and disclose in all documents and
schedules filed with the SEC to the extent required by law, and any
press release or other disclosure document that Parent reasonably
determines to be necessary
,
in
connection with the transactions contemplated by the Merger
Agreement, and in each case only to the extent so required or
necess
ary, the Stockholders’ identity and ownership of
the Shares, the existence of this Agreement and the nature of the
Stockholders’ commitments and obligations under this
Agreement, and the Stockholders acknowledges that the Parent may,
in its sole discretion, file a form hereof with the SEC or any
other governmental body during the term of this Agreement and only
to the extent required by law. The Company, Lough and Swanson agree
that except as required by law, the Company, Lough and Swanson
shall not make any public announcement which indicates that the
Stockholders have entered into this Agreement without the prior
written consent of the Stockholders.
This
Agreement shall terminate automatically without a need for any
further action upon the earliest to occur of (i) approval of the
matters contemplated herein by stockholders in accordance with
NASDAQ Rule 5635 and (ii) the date on which the Merger Agreement is
terminated in accordance with its terms or amended in a manner
adverse to the Stockholder.
7.
Specific
Performance
.
Each
party hereto acknowledges that it will be impossible to measure in
money the damage to the other party if a party hereto fails to
comply with any of the obligations imposed by this Agreement, that
every such obligation is material and that, in the event of any
such failure, the other party will not have an adequate remedy at
law or damages. Accordingly, each party hereto agrees that
injunctive relief or other equitable remedy, in addition to
remedies at law or damages, is the appropriate remedy for any such
failure and will not oppose the seeking of such relief on the basis
that the other party has an adequate remedy at law. Each party
hereto agrees that it will not seek, and agrees to waive any
requirement for, the securing or posting of a bond in connection
with the other party's seeking or obtaining such equitable
relief.
This
Agreement supersedes all prior agreements, written or oral, between
the parties hereto with respect to the subject matter hereof and
contains the entire agreement between the parties with respect to
the subject matter hereof. This Agreement may not be amended or
supplemented, and no provisions hereof may be modified or waived,
except by an instrument in writing signed by both of the parties
hereto. No waiver of any provisions hereof by either party shall be
deemed a waiver of any other provisions hereof by such party, nor
shall any such waiver be deemed a continuing waiver of any
provision hereof by such party.
All
notices, requests, claims, demands, and other communications
hereunder shall be in writing and shall be deemed to have been
given (a) when delivered by hand (with written confirmation of
receipt), (b) when received by the addressee if sent by a
nationally recognized overnight courier (receipt requested), (c) on
the date sent by facsimile or e-mail of a PDF document (with
confirmation of transmission) if sent during normal business hours
of the recipient, and on the next Business Day if sent after normal
business hours of the recipient, or (d) on the third day after the
date mailed, by certified or registered mail, return receipt
requested, postage prepaid. Such communications must be sent to the
respective parties at the following addresses (or at such other
address for a party as shall be specified in a notice given in
accordance with this
Section
9
):
If to
the Parent, to:
Majesco
Entertainment Company
4041-T
Hadley Road
S.
Plainfield, New Jersey 07080
Attn:
Chief Financial Officer
With a
copy to (which shall not constitute notice):
Sichenzia Ross
Ference Kesner, LLP.
61
Broadway, 32
nd
Floor
New
York, NY 10006
Att:
Harvey J. Kesner, Esq.
hkesner@srfkllp.com
212-930-9700
If to
the Company, to:
With a
copy to (which shall not constitute notice)
:
Kirton
McConkie
50 East
South Temple, Suite 400
Salt
Lake City, UT 84111
Attn:
Adam D. Stevens, Esq.
If to
the Stockholders, to the addresses or facsimile numbers set forth
for the Stockholders on the signature page hereof.
(a)
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 choice
or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of
laws of any jurisdiction other than those of the State of New
York.
(b)
Each of the parties
hereto irrevocably agrees that any legal action or proceeding with
respect to this Agreement and the rights and obligations arising
hereunder, or for recognition and enforcement of any judgment in
respect of this Agreement and the rights and obligations arising
hereunder brought by the other party hereto or its successors or
assigns shall be brought and determined exclusively in the federal
or state courts located in New York, New York or in the event (but
only in the event) that such court does not have subject matter
jurisdiction over such action or proceeding, in any state or
federal court within the State of New York and any direct appellate
court therefrom. Each of the parties hereto agrees that mailing of
process or other papers in connection with any such action or
proceeding in the manner provided in
Section 9
or in such other manner as may
be permitted by applicable laws, will be valid and sufficient
service thereof. Each of the parties hereto hereby irrevocably
submits with regard to any such action or proceeding for itself and
in respect of its property, generally and unconditionally, to the
personal jurisdiction of the aforesaid courts and agrees that it
will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court or
tribunal other than the aforesaid courts. Each of the parties
hereto hereby irrevocably waives, and agrees not to assert, by way
of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement
of any judgment in respect of this Agreement and the rights and
obligations arising hereunder (i) any claim that it is not
personally subject to the jurisdiction of the above named courts
for any reason other than the failure to serve process in
accordance with this
Section
10(b
), (ii) any claim that it or its property is exempt or
immune from jurisdiction of any such court or from any legal
process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and
(iii) to the fullest extent permitted by the applicable law, any
claim that (x) the suit, action or proceeding in such court is
brought in an inconvenient forum, (y) the venue of such suit,
action or proceeding is improper, or (z) this Agreement, or the
subject matter hereof, may not be enforced in or by such
courts.
(c)
EACH PARTY
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE
FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES
THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10(c)
.
(d)
If any term or
provision of this Agreement is invalid, illegal or unenforceable in
any jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other term or provision of this Agreement or
invalidate or render unenforceable such term or provision in any
other jurisdiction. Upon such determination that any term or other
provision is invalid, illegal or unenforceable, the parties hereto
shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in
a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to
the greatest extent possible.
(e)
This Agreement may
be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together shall constitute
one and the same instrument.
(f)
Each party hereto
shall execute and deliver such additional documents as may be
necessary or desirable to effect the transactions contemplated by
this Agreement.
(g)
All section
headings herein are for convenience of reference only and are not
part of this Agreement, and no construction or reference shall be
derived therefrom.
(h)
The obligations of
the Stockholders set forth in this Agreement shall not be effective
or binding upon the Stockholders until after such time as the
Purchase Agreement is executed and delivered by the Parent, the
Seller and the Purchaser, and the parties agree that there is not
and has not been any other agreement, arrangement or understanding
between the parties hereto with respect to the matters set forth
herein.
(i)
The parties to this
Agreement may not assign any of their rights or obligations under
this Agreement without the prior written consent of the other party
hereto. Any assignment contrary to the provisions of this
Section 10(i)
shall be null
and void.
11.
No Ownership Interest; No Unspecified
Obligations
.
Nothing
contained in this Agreement shall be deemed to vest in any other
party any direct or indirect ownership or incidence of ownership of
or with respect to any Shares. All rights, ownership and economic
benefits of and relating to the Shares shall remain vested in and
belong to the Stockholders, and no other Party shall have any
authority to direct the Stockholders in, and the Stockholders will
in no way be limited from the voting or disposition of, or the
taking of any other action in connection with, any of the Shares,
except as otherwise specifically provided herein.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written
above.
|
POLARITYTE, INC.
|
|
By:
______________________________________
Name:
Denver Lough, individually and behalf of the Company
By:
______________________________________
Name:
Edward Swanson, individually and on behalf of the
Company
|
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STOCKHOLDERS:
|
|
By:
_____________________________________
Name:
Street
Address: __________________________
City/State/Zip
Code: ______________________
Fax:
___________________________________
|
|
By:
_____________________________________
Name:
Street
Address: __________________________
City/State/Zip
Code: ______________________
Fax:
___________________________________
|
|
By:
_____________________________________
Name:
Street
Address: __________________________
City/State/Zip
Code: ______________________
Fax:
___________________________________
|
|
By:
_____________________________________
Name:
Street
Address: __________________________
City/State/Zip
Code: ______________________
Fax:
___________________________________
|
|
By:
_____________________________________
Name:
Street
Address: __________________________
City/State/Zip
Code: ______________________
Fax:
___________________________________
|
AGREE AND ACCEPTED:
MAJESCO ENTERTAINMENT COMPANY
|
|
By:
______________________________________
Name:
Barry Honig
Title:
Chief Executive Officer
|
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Exhibit 10.6
WARRANTY BILL OF SALE of LABORATORY
EQUIPMENT
BE IT
KNOWN, that on November 25, 2016 that for good consideration and
subject to the terms and conditions herein, and in payment of the
sum of $80,000.00, the receipt and sufficiency of which is
acknowledged, Q Therapeutics, Inc., (“Seller”) hereby
sells and transfers to Majesco Acquisition II Corp.,
(“Buyer”) and its successors and assigned forever, the
(“Property”) which is located at the site of Q
Therapeutics, Inc. at 615 Arapeen Drive, Suite 102, Salt Lake City,
Utah, 84108 (“Salt Lake City Facility”).
TERMS AND CONDITIONS
I.
Sale of Property:
The Seller
hereby sells to the Buyer the following-described Property, located
at the site of Q Therapeutics, Inc. at 615 Arapeen Drive, Suite
102, Salt Lake City, Utah, 84108. Such property includes the
tangible “Laboratory Equipment” as described in
(Appendix A), as well as but not limited to the assignment of all
warranties, claims, agreements, operating instructions, serial
identification numbers, safety and handling notices, labels and
warnings and service contracts for said property and furthermore to
deliver all property safely, without damage and in functional
working order. This bill of sale is intended to pass title to the
Property from the Seller to the Buyer effective immediately
following execution of this document and the transfer of
funds.
II.
Payment
. Buyer shall pay Seller
the entire sum of
$80,000.00
upon
execution of this instrument. The sales price includes all
appropriate federal, state and local taxes. Payment shall be made
by wire transfer to “Q Therapeutics,
Inc.”.
III.
Commitment to Transfer Laboratory
Equipment
. Seller shall sell, transfer and assign to Buyer,
and Buyer shall acquire and accept all right, title, and possession
to, the Property, which is located at Seller’s Q
Therapeutics, Inc. Facility at 615 Arapeen Drive, Suite 102, Salt
Lake City, Utah, 84108 as of the date of complete execution of this
instrument.
IV.
Compliance with Laws
. Buyer
shall comply with, and cause its employees, contractors and agents
to comply with, all applicable federal, state and local laws and
regulations, orders, and ordinances and the like, relative to any
use, maintenance, or transfer / transport of the Property including
but not limited to, environmental, health and safety, and
transportation laws and regulations.
V.
Inventory
of Laboratory
Equipment
. Buyer and Seller agree that the list attached
hereto as Appendix A shall comprise the inventory of all Laboratory
Equipment sold to Buyer.
VI.
Seller’s
Grant of Access
. While Seller
is occupying the Salt Lake Facility, Seller shall grant
Buyer’s employees, contractors and agents, reasonable access
to Seller’s Salt Lake City Facility to inspect, service or
remove Laboratory Equipment. Buyer shall notify Seller at lease
twenty-four (24) hours in advance of its need to access the
Seller’s Salt Lake City Facility.
VII.
Health
& Safety
. Buyer
acknowledges that it is familiar with the potential environmental,
health and safety risks associated with the Laboratory Equipment
and the Seller’s Salt Lake City Facility. Except as otherwise
provided herein, Buyer shall be solely responsible for the health
and safety of its employees, contractors, and agents during the
performance of its transfer operations.
VIII.
Representations, Warranties
&
Indemnifications
.
IX.
Seller warrants to
Buyer that Seller has full authority to sell and transfer said
Laboratory Equipment described in Appendix A, and that said
property is sold free of all liens, encumbrances, liabilities, and
adverse claims of every nature and description
whatsoever.
X.
Seller warrants
that it has title to the Laboratory Equipment described in Appendix
A free of any claim or encumbrance by others.
XI.
Seller warrants
that upon assignment of said property all warranties, claims,
agreements, operating instructions, serial identification numbers,
safety and handling notices, labels and warnings and service
contracts will be delivered to the Buyer in a complete
file.
XII.
The Seller and
Buyer each represent and warrant that the individuals executing
this instrument on behalf of their respective entities have been
duly authorized to do so.
XIII.
Seller represents,
warrants and indemnifies that all Laboratory Equipment in Appendix
A is in working condition and capable of full operation. Seller has
no knowledge of any hidden defects in and to the Laboratory
Equipment, and believes to the best of the Seller's knowledge that
the Equipment being sold is in good operating condition. If within
60 days following the execution of this sale, it is discovered by
the Buyer that any piece of equipment is not in working condition
or capable of full operation, then Seller agrees to a full refund
of that specific piece of equipment according to the price listed
in Appendix A.
XIV.
Seller represents
that there are no known violations of federal, state or local laws,
rules or regulations with respect to the property or its prior use
by Seller and that there are no known prior, present or perceived
future liabilities of said property.
XV.
Buyer represents
that the Laboratory Equipment sold to Buyer is intended for use in
lawful Research & Development operations.
XVI.
Entire Agreement
. The language
contained herein constitutes the entire agreement of the Parties
with respect to the matters contained herein and may only be
modified in writing.
XVII.
No Waiver
. The failure of
either Party to insist on strict performance of the terms hereunder
shall not be deemed as a waiver of any rights or remedies that such
Party may have for any subsequent breach, default, or
non-performance and either Party’s right to insist on strict
performance of this instrument. No waiver is valid unless set forth
in writing signed by the waiving Party.
XVIII.
Governing Law
. This instrument
and the legal relations between the parties hereto shall be
governed by and construed in accordance with the laws of the State
of Utah.
XIX.
Successors and Assigns
. This
instrument shall be binding upon and inure to the benefit of the
Parties and their successors and assigns.
IN
WITNESS WHEREOF, this instrument has been executed as of the last
date provided below.
|
Q
Therapeutics, Inc.
By:
______________________________________
Printed
Name: Steven J. Borst
Title:
President and CEO
Date:
November 25, 2016
Majesco
Acquisition II Corp
By:
______________________________________
Printed
Name: John Stetson
Title:
President
Date:
November 25, 2016
|
APPENDIX A “Laboratory Equipment”
Item
|
|
|
|
Animal Care
Systems M.I.C.E rodent caging system 56-Cages
|
$
745
|
1
|
$
745
|
Animal Care
Systems M.I.C.E rodent caging system 84-Cages
|
$
1,000
|
1
|
$
1,000
|
Beckman GS6R
Centrifuge
|
$
700
|
1
|
$
700
|
Beckton Dickinson
Analytical FACScan
|
$
500
|
1
|
$
500
|
Break Room Tables
(5 square, 1 round)
|
$
25
|
6
|
$
150
|
Castle 55C biosign
incubator steam
|
$
92
|
1
|
$
92
|
Corning hot
plate/stirrer
|
$
150
|
2
|
$
300
|
DuPont RC 58
Refrigerated Sorvall Centrifuge
|
$
3,000
|
1
|
$
3,000
|
Fisher Scientific
Dry Batch Incubator
|
$
100
|
1
|
$
100
|
Fisher Scientific
Isotemp oven
|
$
1,000
|
1
|
$
1,000
|
Fisher Scientific
Micro 17 Accuspin Centrifuge
|
$
900
|
1
|
$
900
|
Fisher Vortex
Genie (X5)
|
$
100
|
5
|
$
500
|
Forma Scientific
Biol Safety Cab Tissue Cult Hood Class 2A 4ft.
|
$
100
|
1
|
$
100
|
Forma Scientific
Biol Safety Cab Tissue Cult Hood Class 2A 6ft.
|
$
500
|
1
|
$
500
|
Forma Scientific
CO2 water jacket Incubators (X4)
|
$
2,500
|
4
|
$
10,000
|
Frigidaire
Deli-Box Freezer
|
$
300
|
1
|
$
300
|
GeneMate Ho400
hybridization oven
|
$
300
|
1
|
$
300
|
Getinge Castle -
Vacuum Steam Sterilizer 233 Autoclave, Steam Boiler, Loading Cart,
Transfer Carriage
|
$
10,000
|
1
|
$
10,000
|
Glassware Storage
Cabinets with Glassware
|
$
300
|
1
|
$
300
|
Hosizaka America
Ice Machine
|
$
2,000
|
1
|
$
2,000
|
Iso temp 202
Fisher scientific water bath
|
$
250
|
2
|
$
500
|
Iso Temp 210 water
bath
|
$
250
|
2
|
$
500
|
Jet Tech F-18 DP
Dishwasher for Mouse Room
|
$
1,500
|
1
|
$
1,500
|
Lab Stools
delux
|
$
50
|
16
|
$
800
|
Lab Utility
Cart
|
$
25
|
3
|
$
75
|
Labnet C-1200 Mini
Centrifuge
|
$
150
|
2
|
$
300
|
Leica DMLB
Microscope with Olympus Camera
|
$
12,500
|
1
|
$
12,500
|
Microm Accu-Edge
Cryostat Blade Holder, Universal
|
$
500
|
1
|
$
500
|
Microm HM 500
Cryostat
|
$
4,000
|
1
|
$
4,000
|
MJ Research
Optican II PCR Analyzer
|
$
1,000
|
1
|
$
1,000
|
Molecular Devices
SprectraMax M2 Micro Plate Reader
|
$
4,500
|
1
|
$
4,500
|
Nikon TMS
microscope
|
$
2,000
|
1
|
$
2,000
|
Nuaire Biological
Safety Cab 425.600 6ft tissue culture hood
|
$
1,300
|
1
|
$
1,300
|
Olympus BX41
fluorescent Microscope system
|
$
10,000
|
1
|
$
10,000
|
Olympus CKX41
fluorescent microscope system
|
$
10,000
|
1
|
$
10,000
|
PLAPON2X, 2x Plan
Apochromatic Objective
|
$
500
|
1
|
$
500
|
PolyScience H20
water Bath
|
$
100
|
1
|
$
100
|
ProStar 363
Flourescent Detector w/ Galaxie CDS
|
$
100
|
1
|
$
100
|
Sorvall GSA
Benchtop Centrifuge
|
$
200
|
1
|
$
200
|
Spectroline Model
TL-312R Transilluminator
|
$
500
|
1
|
$
500
|
Thermo Electron
Micromax Centrifuge w/ Rotor
|
$
300
|
1
|
$
300
|
Thermo Fisher
SmartVue Temperature Monitoring System
|
$
2,500
|
1
|
$
2,500
|
Thermo Scientific
Model 7456 Cyromed controlled rate freezer
|
$
4,000
|
1
|
$
4,000
|
Thermo Scientific
Revco 45.8 cf Lab Refrigerator - Sliding Glass
|
$
1,500
|
1
|
$
1,500
|
Upright
Freezer
|
$
150
|
1
|
$
150
|
Upright
Freezer
|
$
150
|
1
|
$
150
|
Vacuum
Pump
|
$
400
|
1
|
$
400
|
Various - DI Water
filtration / distribution system, Vacuum system, Pipettors, Pipette
puller, Pipette aids; Gel Boxes and power supplies, Computer
network hubs, Firewall; iRicoh Network copy machine/printer,
scanner; HP Network Printers; filing cabinets, all office and
conference room tables/ desks/ chairs; shelving, equipment
cabinetry
|
$
0
|
|
$
0
|
VWR Orbital
Shaker
|
$
150
|
1
|
$
150
|
Zeiss Axio vert 25
microscope
|
$
2,500.00
|
1
|
$
2,500
|
Exhibit 10.7
LEASE
by and
between
PARADIGM RESOURCES, L.C.,
a Utah limited liability company,
as
Landlord
and
MAJESCO ENTERTAINMENT COMPANY,
a Delaware corporation,
d/b/a POLARITY TE,
as
Tenant
615 ARAPEEN DRIVE, SUITE 102
SALT LAKE CITY, UTAH 84108
615 ARAPEEN DRIVE – SALT LAKE CITY, UTAH
TABLE OF CONTENTS
|
|
|
ARTICLE I. BASIC
LEASE PROVISIONS; ENUMERATION OF EXHIBITS
|
|
1
|
SECTION 1.01.
BASIC LEASE PROVISIONS
|
|
1
|
SECTION 1.02.
SIGNIFICANCE OF A BASIC LEASE PROVISION.
|
|
3
|
SECTION 1.03.
ENUMERATION OF EXHIBITS.
|
|
3
|
ARTICLE II. GRANT
AND LEASED PREMISES
|
|
3
|
SECTION 2.01.
LEASED PREMISES.
|
|
3
|
ARTICLE III.
RENT
|
|
4
|
SECTION 3.01. BASE
MONTHLY RENT.
|
|
4
|
SECTION
3.02.
|
|
4
|
SECTION
3.03.
|
|
4
|
SECTION
3.04.
|
|
4
|
SECTION
3.05.
|
|
4
|
SECTION 3.06.
TAXES.
|
|
4
|
SECTION 3.07.
PAYMENTS.
|
|
4
|
SECTION 3.08.
ADDITIONAL RENT.
|
|
4
|
ARTICLE IV. RENTAL
TERM, COMMENCEMENT DATE & PRELIMINARY TERM
|
|
5
|
SECTION 4.01.
RENTAL TERM.
|
|
5
|
SECTION 4.02.
RENTAL TERM COMMENCEMENT DATE AND TERMINATION DATE.
|
|
5
|
SECTION 4.03.
PRELIMINARY TERM.
|
|
5
|
SECTION 4.04. END
OF RENTAL TERM.
|
|
5
|
ARTICLE V.
CONSTRUCTION OF LEASED PREMISES
|
|
5
|
SECTION 5.01.
CONSTRUCTION OF LEASED PREMISES BY LANDLORD.
|
|
5
|
SECTION 5.02.
DELIVERY OF POSSESSION FOR TENANT’S WORK.
|
|
5
|
SECTION 5.03.
CHANGES AND ADDITIONS BY LANDLORD.
|
|
5
|
SECTION 5.04.
TERMINATING LEASE FOR REMODELING.
|
|
6
|
ARTICLE VI.
TENANT’S WORK
|
|
6
|
SECTION 6.01.
REMODEL OF LEASED PREMISES BY TENANT.
|
|
6
|
SECTION 6.02.
SETTLEMENT OF DISPUTES.
|
|
7
|
SECTION 6.03.
PROJECT CLOSE-OUT.
|
|
7
|
ARTICLE VII.
PERMITTED USE
|
|
8
|
SECTION 7.01.
PERMITTED USE OF LEASED PREMISES.
|
|
8
|
SECTION 7.02.
HAZARDOUS SUBSTANCES.
|
|
8
|
ARTICLE VIII.
OPERATION AND MAINTENANCE OF COMMON AREAS
|
|
9
|
SECTION 8.01.
CONSTRUCTION AND CONTROL OF COMMON AREAS.
|
|
9
|
SECTION 8.02.
LICENSE.
|
|
9
|
ARTICLE IX.
ALTERATIONS, SIGNS, LOCKS & KEYS
|
|
10
|
SECTION 9.01.
ALTERATIONS.
|
|
10
|
SECTION 9.02.
REMOVAL BY TENANT.
|
|
10
|
SECTION 9.03.
SIGNS.
|
|
10
|
SECTION
9.04.
|
|
10
|
SECTION 9.05.
LOCKS AND KEYS.
|
|
10
|
ARTICLE X.
MAINTENANCE AND REPAIRS; ALTERATIONS; ACCESS
|
|
11
|
SECTION 10.01.
LANDLORD’S OBLIGATION FOR MAINTENANCE.
|
|
11
|
SECTION 10.02.
TENANT’S OBLIGATION FOR MAINTENANCE.
|
|
11
|
SECTION 10.03.
SURRENDER AND RIGHTS UPON TERMINATION.
|
|
11
|
ARTICLE XI.
INSURANCE AND INDEMNITY
|
|
12
|
SECTION 11.01.
LIABILITY INSURANCE AND INDEMNITY.
|
|
12
|
SECTION 11.02.
FIRE AND CASUALTY INSURANCE.
|
|
12
|
SECTION 11.03.
WAIVER OF SUBROGATION.
|
|
13
|
SECTION 11.04.
INDEMNIFICATION.
|
|
13
|
615 ARAPEEN DRIVE – SALT LAKE CITY, UTAH
TABLE OF CONTENTS
ARTICLE XII.
UTILITY CHARGES
|
|
13
|
SECTION 12.01.
OBLIGATION OF LANDLORD.
|
|
13
|
SECTION 12.02.
OBLIGATIONS OF TENANT.
|
|
14
|
SECTION
12.03.
|
|
14
|
SECTION 12.04.
LIMITATIONS ON LANDLORD’S LIABILITY.
|
|
14
|
ARTICLE XIII.
ESTOPPEL AND OFF-SET STATEMENT, ATTORNMENT AND
SUBORDINATION
|
|
15
|
SECTION 13.01.
ESTOPPEL AND OFF-SET STATEMENT.
|
|
15
|
SECTION 13.02.
ATTORNMENT.
|
|
15
|
SECTION 13.03.
SUBORDINATION.
|
|
15
|
SECTION 13.04.
MORTGAGEE SUBORDINATION.
|
|
15
|
SECTION 13.05.
REMEDIES.
|
|
15
|
ARTICLE XIV.
ASSIGNING, MORTGAGING, SUBLETTING,
|
|
16
|
CHANGE
IN OWNERSHIP BY TENANT
|
|
16
|
SECTION 14.01.
CONSENT REQUIRED.
|
|
16
|
SECTION 14.02.
OPTION TO TERMINATE.
|
|
16
|
SECTION 14.03.
CONDITIONS OF CONSENT.
|
|
16
|
SECTION 14.04.
STANDARDS OF REASONABLENESS IN WITHHOLDING CONSENT.
|
|
16
|
SECTION 14.05.
DOCUMENTATION OF ASSIGNMENT.
|
|
17
|
SECTION 14.06.
CONTINUING LIABILITY OF TENANT AND GUARANTOR.
|
|
17
|
ARTICLE XV. WASTE
OR NUISANCE
|
|
17
|
SECTION 15.01.
WASTE OR NUISANCE.
|
|
17
|
ARTICLE XVI.
NOTICES
|
|
17
|
SECTION 16.01.
NOTICES.
|
|
17
|
ARTICLE XVII.
DESTRUCTION OF THE LEASED PREMISES
|
|
18
|
SECTION 17.01.
DESTRUCTION.
|
|
18
|
ARTICLE XVIII.
CONDEMNATION
|
|
18
|
SECTION 18.01.
CONDEMNATION.
|
|
18
|
ARTICLE XIX.
DEFAULT OF TENANT
|
|
19
|
SECTION 19.01.
DEFAULT - RIGHT TO RE-ENTER.
|
|
19
|
SECTION 19.02.
DEFAULT - RIGHT TO RE-LET.
|
|
19
|
SECTION 19.03.
LEGAL EXPENSES.
|
|
19
|
ARTICLE XX.
BANKRUPTCY, INSOLVENCY OR RECEIVERSHIP
|
|
20
|
SECTION 20.01.
RIGHT OF TERMINATION.
|
|
20
|
SECTION 20.02.
BANKRUPTCY.
|
|
20
|
ARTICLE XXI.
LANDLORD ACCESS
|
|
21
|
SECTION 21.01.
LANDLORD ACCESS.
|
|
21
|
ARTICLE XXII.
TENANT’S PROPERTY AND LANDLORD’S LIEN
|
|
21
|
SECTION 22.01.
TAXES ON LEASEHOLD.
|
|
21
|
SECTION 22.02.
LOSS AND DAMAGE.
|
|
21
|
SECTION 22.03.
NOTICE BY TENANT.
|
|
21
|
SECTION 22.04.
LANDLORD’S LIEN.
|
|
21
|
SECTION 22.05.
LANDLORD’S SUBORDINATION.
|
|
21
|
ARTICLE XXIII.
HOLDING OVER
|
|
21
|
SECTION 23.01.
HOLDING OVER.
|
|
21
|
SECTION 23.02.
SUCCESSORS.
|
|
22
|
ARTICLE XXIV.
RULES AND REGULATIONS
|
|
22
|
SECTION 24.01.
RULES AND REGULATIONS.
|
|
22
|
ARTICLE XXV. QUIET
ENJOYMENT
|
|
22
|
SECTION 25.01.
QUIET ENJOYMENT.
|
|
22
|
ARTICLE XXVI.
SECURITY DEPOSIT
|
|
22
|
SECTION 26.01.
SECURITY DEPOSIT.
|
|
22
|
SECTION 26.02.
TRANSFER OF LANDLORD’S INTEREST IN THE SECURITY
DEPOSIT.
|
|
22
|
615 ARAPEEN DRIVE – SALT LAKE CITY, UTAH
TABLE OF CONTENTS
ARTICLE XXVII.
MISCELLANEOUS PROVISIONS
|
|
23
|
SECTION 27.01.
WAIVER.
|
|
23
|
SECTION 27.02.
ENTIRE LEASE AGREEMENT.
|
|
23
|
SECTION 27.03.
INTERPRETATION, USE OF PRONOUNS.
|
|
23
|
SECTION 27.04.
FORCE MAJEURE.
|
|
23
|
SECTION 27.05.
LOSS AND DAMAGE.
|
|
23
|
SECTION 27.06.
CAPTIONS AND SECTION NUMBERS.
|
|
23
|
SECTION 27.07.
BROKER’S COMMISSION.
|
|
24
|
SECTION 27.08.
RECORDING.
|
|
24
|
SECTION 27.09.
CONSENT NOT UNREASONABLY WITHHELD.
|
|
24
|
SECTION 27.10.
FURNISHING OF FINANCIAL STATEMENTS.
|
|
24
|
SECTION 27.11.
TIME OF ESSENCE.
|
|
24
|
SECTION 27.12.
ACCORD AND SATISFACTION.
|
|
24
|
SECTION 27.13. NO
OPTION.
|
|
24
|
SECTION 27.14.
ANTI-DISCRIMINATION.
|
|
24
|
SECTION 27.15.
SEVERABILITY.
|
|
24
|
SECTION 27.16.
SURVIVAL OF OBLIGATIONS.
|
|
25
|
SECTION 27.17.
REPRESENTATION REGARDING AUTHORITY.
|
|
25
|
SECTION 27.18.
TENANT’S LIABILITY.
|
|
25
|
SECTION 27.19.
LANDLORD’S LIABILITY.
|
|
25
|
SECTION 27.20.
COUNTERCLAIM AND JURY TRIAL.
|
|
25
|
SECTION 27.21.
TRANSFER OF LANDLORD’S INTEREST IN THE LEASED
PREMISES.
|
|
25
|
SECTION 27.22.
TENANT SELECTION BY LANDLORD.
|
|
25
|
SECTION 27.23.
DISCLOSURE OF PARTIES.
|
|
25
|
SECTION 27.24.
EXECUTIVE ORDER CERTIFICATION.
|
|
25
|
ADDITIONAL
PROVISIONS
|
|
26
|
SIGNATURES
|
|
27
|
ACKNOWLEDGMENT OF
TENANT
|
|
28
|
ACKNOWLEDGMENTS OF
LANDLORD
|
|
29
|
EXHIBIT
“A”
|
|
30
|
EXHIBIT
“B”
|
|
31
|
LEASE AGREEMENT
(hereinafter
“
Lease
”)
ARTICLE I. BASIC LEASE PROVISIONS; ENUMERATION OF
EXHIBITS
SECTION 1.01. BASIC LEASE
PROVISIONS
(A)
EFFECTIVE DATE:
_______________________________, 2016 (“
Effective Date
”)
(B)
LANDLORD:
PARADIGM RESOURCES, L.C.,
a Utah limited
liability company (“
Landlord
”)
(C)
ADDRESS OF LANDLORD FOR NOTICES
(Section
16.01):
Paradigm Resources,
L.C.
c/o
Woodbury Corporation
Attn:
Lease Administration
2733
East Parleys Way, Suite 300
Salt
Lake City, Utah 84109
With a copy
to:
Paradigm Resources,
L.C.
c/o
Woodbury Corporation
Attn:
Legal Department
2733
East Parleys Way, Suite 300
Salt
Lake City, Utah 84109
(D)
TENANT:
Majesco Entertainment Company, a
Delaware corporation, d/b/a PolarityTE (“
Tenant
”) (Tax ID:
06-1529524)
(E)
ADDRESS OF TENANT FOR NOTICES
(Section 16.01):
4041-T
Hadley Road, South Plainfield, New Jersey 07080
(F)
PERMITTED USE (Section 7.01):
Research
and development lab and office use (“
Permitted Use
”), and for no other
use without the prior written consent of Landlord.
(G)
TENANT’S TRADE NAME:
PolarityTE
(H)
BUILDING (Section 2.01):
An office
building situated at 615 Arapeen Drive, in the City of Salt Lake,
County of Salt Lake, State of Utah (“
Building
”).
(I)
LEASED PREMISES (Section 2.01):
615
Arapeen Drive, Suite 102, Salt Lake City, Utah 84108, consisting of
approximately 5,331 square feet of gross rentable area
(“
Leased
Premises
”), as depicted on Exhibit
“A”.
(J)
DELIVERY OF POSSESSION (Section 5.02):
The Leased Premises shall be delivered to Tenant within ten (10)
days of the Effective Date of this Lease (“
Delivery of Possession
”), as
certified by a notice of Delivery of Possession. Preliminary Term
(as defined in Section 4.03) begins on Delivery of
Possession.
(K)
RENTAL TERM, COMMENCEMENT AND EXPIRATION
DATE
(Sections 4.01 and
4.02):
The term of this Lease shall commence on the earlier
to occur of (a) January 1, 2017 or (b) the date Tenant is open and
operating in the Leased Premises (“
Rental Term Commencement Date
”),
and shall be for a period of one (1) full Lease Year (as defined in
Section 4.01) ending December 31, 2017 (“
Rental Term
”), as certified by a
notice of Rental Term Commencement Date.
(L)
BASE MONTHLY RENT
(Section 3.01):
Twelve Thousand Four
Hundred Thirty-Nine and 00/100 Dollars ($12,439.00) per month
(“
Base Monthly
Rent
”).
(M)
Intentionally
Omitted.
(N)
OPERATING EXPENSES:
All operating
expenses for the Leased Premises and the Building shall be paid for
by Landlord.
(O)
Intentionally
Omitted.
(P)
UTILITIES AND SERVICES:
Subject to the
provisions of Sections 12.01 and 12.02, this Lease provides that
the utilities and services shall be paid or reimbursed by
Tenant.
(Q)
HOURS OF OPERATION (Section 12.03):
Tenant shall have access to the Leased Premises twenty-four (24)
hours a day, seven (7) days per week. Standard operating hours for
the Building shall be 6:00 a.m. to 9:00 p.m., Monday through
Friday, and 8:00 a.m. to 1:00 p.m. on Saturday, excluding holidays
(“
Standard Operating
Hours
”).
(R)
PREPAID RENT:
Twelve Thousand Four
Hundred Thirty-Nine and 00/100 Dollars ($12,439.00) paid by Tenant
upon Tenant’s execution of this Lease to be applied to the
first installment of Base Monthly Rent due hereunder.
(S)
SECURITY DEPOSIT (Section 26.01):
Twelve
Thousand Five Hundred and 00/100 Dollars ($12,500.00)
(“
Security
Deposit
”) to be paid by Tenant upon Tenant’s
execution of this Lease.
(T)
Intentionally
Omitted.
(U)
Intentionally
Omitted.
(V)
Intentionally
Omitted.
(W)
TENANT’S WORK (Section 6.01):
Tenant shall finish the Leased Premises in accordance with plans
and specifications approved by Landlord. Prior to commencement of
construction, Tenant shall submit an electronic copy of all plans
to Landlord for review and approval as set forth in Section
6.01.
(X)
LEASED PREMISES CONDITION:
Except as hereinafter
provided, Landlord covenants that actual possession of the Leased
Premises shall be delivered to Tenant in “as is”
condition. It is agreed that by taking possession of the Leased
Premises as a tenant, Tenant formally accepts the same and
acknowledges that the Leased Premises is in the condition called
for hereunder.
[Remainder of Page Intentionally Left Blank]
SECTION 1.02. SIGNIFICANCE OF A
BASIC LEASE PROVISION.
The
foregoing provisions of Section 1.01 summarize for convenience only
certain fundamental terms of this Lease delineated more fully in
the articles and sections referenced therein. In the event of a
conflict between the provisions of Section 1.01 and the balance of
this Lease, the latter shall control.
SECTION 1.03. ENUMERATION OF
EXHIBITS.
The
exhibits enumerated in this Section 1.03 and attached to this Lease
are incorporated in this Lease by this reference and are to be
construed as a part of this Lease. In the event of a conflict
between the body of this Lease and the exhibits, the body of this
Lease shall control.
EXHIBIT
“A” -
SITE PLAN
EXHIBIT
“B” -
LEGAL DESCRIPTION
ARTICLE
II. GRANT AND LEASED PREMISES
SECTION 2.01. LEASED
PREMISES.
Landlord
has heretofore obtained a long-term ground lease covering that
certain tract of real property situated in the University of Utah
Research Park in Salt Lake City, State of Utah, more particularly
described in Exhibit “B” attached hereto, together with
certain easement for access rights. (Such tract is hereinafter
referred to as the “
Property
”).
Landlord owns the
Building on the Property referred to in Section 1.01(H) suitable
for use as office, research and limited complementary retail space,
together with related parking facilities and other improvements
necessary to enable the Building to be so used (the Building and
related facilities and improvements are hereinafter collectively
referred to as the “
Improvements
”).
In
consideration for the rent to be paid and covenants to be performed
by Tenant, Landlord hereby leases to Tenant, and Tenant leases from
Landlord for the Rental Term and upon the terms and conditions
herein set forth, the Leased Premises described in Section 1.01(I),
located in the Building. Gross rentable area measurements herein
specified are from the exterior of the perimeter walls of the
Building to the center of the interior walls.
The
exterior walls and roof of the Leased Premises and the areas
beneath the Leased Premises are not demised hereunder, and the use
thereof together with the right to install, maintain, use, repair,
and replace pipes, ducts, conduits, and wires leading through the
Leased Premises in locations which do not materially and adversely
interfere with Tenant’s use thereof and serving other parts
of the Building or buildings are hereby reserved to Landlord.
Landlord reserves (a) such access rights through the Leased
Premises as may be reasonably necessary to enable access by
Landlord to the balance of the Building and reserved areas and
elements as set forth above; and (b) the right to install or
maintain meters on the Leased Premises to monitor use of utilities.
In exercising such rights, Landlord shall use reasonable efforts so
as to not commit waste upon the Leased Premises and as far as
practicable shall not materially and adversely interfere with
Tenant’s use of the Leased Premises and shall minimize
annoyance, interference or damage to Tenant and the Leased Premises
when making modifications, additions or repairs.
Subject
to the provisions of Article VIII and Section 27.11, Tenant and its
employees, contractors, customers, agents and invitees have the
right to the non-exclusive use, in common with existing tenants of
such unreserved automobile parking spaces, driveways, footways, and
other facilities designated for common use within the Building,
except that with respect to non-exclusive areas, Tenant shall cause
its employees to park their cars only in areas specifically
designated from time to time by Landlord for that purpose. Landlord
shall have the right to designate, in its sole business judgment,
certain spaces as “visitor” parking spaces and Tenant
shall use its best efforts to cause its employees not to park in
such visitor parking.
ARTICLE III. RENT
SECTION 3.01. BASE MONTHLY
RENT.
Tenant
agrees to pay to Landlord Base Monthly Rent in the amounts set
forth in Section 1.01(L) at such place as Landlord may designate,
without prior demand therefor, without offset or deduction and in
advance on or before the first day of each calendar month during
the Rental Term, including any Rental Term extension or renewal
thereof, commencing on the Rental Term Commencement Date. In the
event the Rental Term Commencement Date occurs on a day other than
the first day of a calendar month, then Base Monthly Rent to be
paid on the Rental Term Commencement Date shall include both Base
Monthly Rent for the first full calendar month occurring after the
Rental Term Commencement Date, plus Base Monthly Rent for the
initial fractional calendar month pro-rated on a per-diem basis
(based upon a thirty (30) day month).
SECTION 3.02.
Intentionally
Omitted.
SECTION 3.03.
Intentionally
Omitted.
SECTION 3.04.
Intentionally
Omitted.
SECTION 3.05.
Intentionally
Omitted.
(a) Landlord
shall pay all real property taxes and assessments which are levied
against or which apply to the Building with respect to the Leased
Premises.
(b) Tenant
shall pay, prior to delinquency, all taxes, assessments, charges,
and fees which during the Rental Term, or any Rental Term extension
or renewal thereof, may be imposed, assessed, or levied by any
governmental or public authority against or upon Tenant’s use
of the Leased Premises or any inventory, personal property,
fixtures or equipment kept or installed, or permitted to be located
therein by Tenant.
SECTION 3.07. PAYMENTS.
All
payments of Base Monthly Rent, Additional Rent (as defined in
Section 3.08) and other payments to be made to Landlord shall be
made on a timely basis and shall be payable to Landlord or as
Landlord may otherwise designate. All such payments shall be mailed
or delivered to Landlord’s principal office set forth in
Section 1.01(C), or at such other place as Landlord may designate
from time to time in writing. If mailed, all payments shall be
mailed in sufficient time and with adequate postage thereon to be
received in Landlord’s account by no later than the due date
for such payment. If Tenant fails to pay any Base Monthly Rent,
Additional Rent or any other amounts or charges within ten (10)
days of the date when due, Tenant shall pay interest from the due
date of such past due amounts to the date of payment, both before
and after judgment at a rate equal to the greater of fifteen
percent (15%) per annum or two percent (2%) over the prime rate or
base rate charged by Citibank of New York at the due date of such
payment; provided however, that in any case the maximum amount or
rate of interest to be charged shall not exceed the maximum
non-usurious rate in accordance with applicable law. In addition,
Tenant shall pay a late fee equal to four percent (4%) of such past
due amount to compensate Landlord for extra administrative,
collection, processing, accounting and other costs incurred through
Tenant’s nonpayment.
SECTION 3.08. ADDITIONAL
RENT.
Tenant
shall pay as “
Additional
Rent
” any and all sums of money or charges required to
be paid by Tenant under this Lease whether or not the same be
designated as Additional Rent. If such amounts or charges are not
paid at the time provided for in this Lease, they shall
nevertheless, if not paid when due, be collectible as Additional
Rent with the next installment of Base Monthly Rent thereafter
falling due hereunder, but nothing herein contained shall be deemed
to suspend or delay the payment of any amount of money or charge at
the time the same becomes due and payable hereunder, or limit any
interest, late fee or other remedy of Landlord.
ARTICLE IV. RENTAL TERM, COMMENCEMENT DATE & PRELIMINARY
TERM
SECTION 4.01. RENTAL
TERM.
The initial
term of this Lease shall be for the period defined as the Rental
Term in Section 1.01(K), plus the partial calendar month, if any,
occurring after the Rental Term Commencement Date if the Rental
Term Commencement Date occurs other than on the first day of a
calendar month. “
Lease
Year(s)
” shall include twelve (12) calendar months,
except that the first Lease Year shall also include any partial
calendar month beginning on the Rental Term Commencement
Date.
SECTION 4.02. RENTAL TERM
COMMENCEMENT DATE AND TERMINATION DATE.
The Rental
Term of this Lease and Tenant’s obligation to pay rent
hereunder shall commence on the Rental Term Commencement Date as
set forth in Section 1.01(K). Each of the parties hereto agrees,
upon demand of the other, to execute a Rental Term Commencement
Date notice, expressing the commencement and termination dates of
the Rental Term as soon as the commencement and termination dates
have been determined.
SECTION 4.03. PRELIMINARY
TERM.
The period
between the date Tenant enters upon the Leased Premises and the
Rental Term Commencement Date shall be designated as the
“
Preliminary
Term
” during which no Base Monthly Rent shall accrue;
however, other covenants and obligations of Tenant shall be in full
force and effect. Delivery of Possession of the Leased Premises to
Tenant, as provided in Section 5.02, shall be considered
“entry” by Tenant and commencement of the Preliminary
Term.
SECTION 4.04. END OF RENTAL
TERM.
This Lease,
and the tenancy hereby created, shall terminate at the end of the
Rental Term, or any Rental Term extension or renewal thereof,
without the necessity of any notice from either Landlord or Tenant
to terminate the same, and Tenant hereby waives notice to vacate
the Leased Premises and agrees that Landlord shall be entitled to
the benefit of all provisions of law respecting the summary
recovery of possession of the Leased Premises from Tenant holding
over to the same extent as if statutory notice has been
given.
ARTICLE
V. CONSTRUCTION OF LEASED PREMISES
SECTION 5.01. CONSTRUCTION OF
LEASED PREMISES BY LANDLORD.
Landlord has
constructed the Building in which the Leased Premises is located.
Tenant is leasing the Leased Premises in “as is”
condition.
SECTION 5.02. DELIVERY OF
POSSESSION FOR TENANT’S WORK.
Except
as expressly stated otherwise, Landlord covenants that actual
possession of the Leased Premises shall be delivered to Tenant in
“as is” condition. It is agreed that by taking
possession of the Leased Premises as a tenant, Tenant formally
accepts the same and acknowledges that the Leased Premises is in
the condition called for hereunder.
SECTION 5.03. CHANGES AND
ADDITIONS BY LANDLORD.
Landlord
hereby reserves the right at any time, and from time to time, to
make alterations or additions to, and to build additional stories
on the Building in which the Leased Premises is contained and to
build adjoining the same and to modify the existing parking or
other Common Areas to accommodate additional buildings. Landlord
also reserves the right to construct other buildings or
improvements on the Property from time to time, on condition that
if the Property is expanded so as to include any additional
buildings, Landlord agrees to create or maintain a parking ratio
adequate to meet local laws and ordinances, including the right to
add land to the Common Areas or to erect parking structures
thereon.
SECTION
5.04. TERMINATING LEASE FOR REMODELING.
In
Landlord’s sole discretion, if it becomes necessary to
terminate this Lease in order to reasonably perform alterations or
additions to the Building, Landlord may terminate this Lease upon
one (1) year’s prior written notice. In such case, Tenant
shall have the right to remove its trade fixtures (but no building
improvements) on or before the termination date of this Lease and
Landlord shall pay to Tenant as liquidated damages for such
termination, a sum equal to the unamortized portion of
Tenant’s building improvements as certified to Landlord in
accordance with Section 6.01 hereof, assuming that such
amortization is on a straight line basis extending over the firm
Rental Term and at an interest rate equal to the lower of ten
percent (10%) per annum or the rate in fact applicable to
Tenant’s existing financing of such improvements. Landlord
may elect to offset any sums payable by Landlord to Tenant against
any sums payable by Tenant to Landlord. In addition, Tenant shall
have the right to lease such other available space of comparable
size within the Building as may be mutually agreeable to Landlord
and Tenant for the remainder of the Rental Term at the same Base
Monthly Rent rate per square foot as Tenant is required to pay
Landlord in Section 3.01.
ARTICLE
VI. TENANT’S WORK
SECTION 6.01. REMODEL OF LEASED
PREMISES BY TENANT.
Subject
to Section 9.01, Tenant agrees, prior to the Rental Term
Commencement Date, at Tenant’s sole cost and expense, to
provide all work of whatsoever nature in accordance with its plans
and specifications, subject to Landlord’s prior written
approval (“
Tenant’s
Work
”). Empty conduit extending to the Leased Premises
for telephone and data lines, from central locations in the
building, shall be provided by Landlord. All terminations,
crossovers, and distribution wiring from panels to the various
equipment and receptacles shall be provided by Tenant at
Tenant’s sole cost and expense. Tenant agrees to furnish
Landlord, within the time periods designated by Landlord, with a
complete and detailed set of plans and specifications drawn by a
registered architect (or by some other qualified person acceptable
to Landlord) setting forth and describing Tenant’s Work in
such detail as Landlord may require and in compliance with the
initial permit set drawings and the final construction set
documents approved by Landlord. If such plans and specifications
are not so furnished by Tenant within the required time periods
designated by Landlord, then Landlord may, at its option, in
addition to other remedies Landlord may enjoy, cancel this Lease at
any time thereafter while such plans and specifications have not
been so furnished. Tenant shall remit one (1) electronic copy of
any and all plans and specifications to Landlord at the following
email address:
drawings@woodburycorp.com
Additional physical
copies can be sent to:
Woodbury
Corporation
Attn:
Architecture
2733
Parleys Way, Suite 300
Salt
Lake City, Utah 84109-1662
With a
copy to:
Woodbury
Corporation
Attn:
Lease Administration
2733
Parleys Way, Suite 300
Salt
Lake City, Utah 84109-1662
No
material deviation from the final set of plans and specifications,
once submitted to and approved by Landlord, shall be made by Tenant
without Landlord’s prior written consent. Landlord shall have
the right to approve or disapprove Tenant’s architect and
contractor to be used in performing Tenant’s Work, and the
right to require and approve insurance or bonds to be provided by
Tenant or such contractors. In due course, after completion of
Tenant’s Work, Tenant shall certify to Landlord the itemized
cost of Tenant improvements and fixtures located upon the Leased
Premises. Any design costs incurred by Landlord, including space
planning, preliminary and final design and engineering costs, as
well as municipal and/or construction plan review fees, permit
fees, and/or impact fees shall be part of Tenant’s Work and
may be applied to any, Landlord’s construction cost cap
and/or any additional allowance. Additional costs shall include,
but not be limited to, any costs incurred due to Tenant requested
changes which are a result of change orders requiring extraordinary
design or engineering applications. To the extent that Landlord
elects to perform certain Tenant’s Work, Tenant shall pay
Landlord for such work within ten (10) days of invoice by
Landlord.
SECTION 6.02. SETTLEMENT OF
DISPUTES.
It is
understood and agreed that any disagreement or dispute which may
arise between Landlord and Tenant with reference to the work to be
performed by Landlord shall be resolved by Landlord’s
architect, whose good faith decision shall be final and binding on
both Landlord and Tenant.
SECTION 6.03. PROJECT
CLOSE-OUT.
Where
Tenant’s Work is performed in accordance with Section 6.01,
the following procedures shall apply:
(a)
Preconstruction
.
Prior to the commencement of construction, Tenant and
Tenant’s contractor shall participate in a preconstruction
meeting and provide all documentation requested by
Landlord.
(b)
Field
Inspection
. On completion of construction, Landlord and
Tenant shall conduct an inspection of the improvements to identify
whether there are any incomplete items or other deficiencies. A
punch list of such deficiencies shall be prepared. Tenant shall
make all corrections within no more than fifteen (15) days
thereafter.
(c)
Required
Project Closeout Information
. Tenant shall provide an
electronic copy of items (i) through (v) below to Landlord at the
following email address:
leaseadmin@woodburycorp.com
Additional,
physical copies can be sent to:
Woodbury
Corporation
Attn:
Architecture
2733
Parleys Way, Suite 300
Salt
Lake City, Utah 84109-1662
With a
copy to:
Woodbury
Corporation
Attn:
Lease Administration
2733
Parleys Way, Suite 300
Salt
Lake City, Utah 84109-1662
(i) As-built
drawings depicting changes to the construction documents that
occurred during construction, organized according to the original
construction documents.
(ii) A
list of all subcontractors and major material and equipment
supplies having contracts greater than Five Thousand Dollars
($5,000.00). The list shall include the actual final contract value
of the contractor’s and each subcontractors’ work.
Also, include a copy of contractor’s final application for
payment with a cost breakdown of the various categories of
work.
(iii) Copies
of final unconditional lien waivers from Tenant’s general
contractor, each subcontractor and material supplier who have
provided materials, labor and/or services during the construction
of Tenant’s Work, and any person who has filed a preliminary
lien notice with the State’s registry. Tenant shall include a
copy of the State registry of preliminary lien notices
demonstrating that all rights to claim have been removed. In the
event that final unconditional lien releases are not available,
contractor shall submit final lien waivers conditioned on final
payment. Such waivers shall indicate the amount of payment due.
Contractor shall include on its list of subcontractors, a column
indicating the amount due each subcontractor. In the event of
disputes, reasonable evidence shall be required showing that any
lien rights have been bonded over and that the Tenant is contesting
such matters in good faith and by appropriate proceedings, or upon
evidence of expiration of statute of limitation for filing
mechanics liens.
ARTICLE
VII. PERMITTED USE
SECTION 7.01. PERMITTED USE OF
LEASED PREMISES.
Tenant
shall use and occupy the Leased Premises during the continuance of
this Lease solely for the Permitted Use set forth in Section
1.01(F) and for purposes ordinarily incidental to such use and only
for such purposes and in such manner as are permitted both by the
Protective Covenants relating to the University of Utah Research
Park and by any existing legislation concerning the Research Park,
and for no other use without the prior written consent of Landlord.
Tenant shall promptly comply with all present or future laws,
ordinances, lawful orders and regulations affecting the Leased
Premises and the cleanliness, safety, occupancy and use of the
Leased Premises. Tenant shall not make any use of the Leased
Premises which shall cause cancellation or an increase in the cost
of any insurance policy covering the Leased Premises. Tenant shall
not keep or use on the Leased Premises any article, item, or thing
which is prohibited by the standard form of fire insurance policy.
Tenant shall not commit any waste upon the Leased Premises and
shall not conduct or allow any business, activity, or thing on the
Leased Premises which is an annoyance or causes damage to Landlord,
to other subtenants, occupants, or users of the improvements, or to
occupants of the vicinity. Tenant shall comply with and abide by
all laws, ordinances, and regulations of all municipal, county,
state, and federal authorities which are now in force or which may
hereafter become effective with respect to use and occupancy of the
Leased Premises. Landlord represents that to the best of its
knowledge and understanding, that upon Delivery of Possession, the
Building shall comply with all currently applicable laws,
ordinances and regulations of municipal, county, state and federal
authorities.
SECTION 7.02. HAZARDOUS
SUBSTANCES.
Tenant
shall not use, produce, store, release, dispose or handle in or
about the Leased Premises or transfer to or from the Leased
Premises (or permit any other party to do such acts) any Hazardous
Substance (as defined herein) except in compliance with all
applicable Environmental Laws (as defined herein). Tenant shall not
construct or use any improvements, fixtures or equipment or engage
in any act on or about the Leased Premises that would require the
procurement of any license or permit pursuant to any Environmental
Law. Tenant shall immediately notify Landlord of (i) the existence
of any Hazardous Substance on or about the Leased Premises that may
be in violation of any Environmental Law (regardless of whether
Tenant is responsible for the existence of such Hazardous
Substance), (ii) any proceeding or investigation by any
governmental authority regarding the presence of any Hazardous
Substance on the Leased Premises or the migration thereof to or
from any other property, (iii) all claims made or threatened by any
third party against Tenant relating to any loss or injury resulting
from any Hazardous Substance, or (iv) Tenant’s notification
of the National Response Center of any release of a reportable
quantity of a Hazardous Substance in or about the Leased Premises.
“
Environmental
Law(s)
” shall mean any federal, state or local
statute, ordinance, rule, regulation or guideline pertaining to
health, industrial hygiene, or the environment, including without
limitation, the federal Comprehensive Environmental Response,
Compensation, and Liability Act. “
Hazardous Substance(s)
” shall mean
all substances, materials and wastes that are or become regulated,
or classified as hazardous or toxic, under any Environmental Law.
If it is
determined
that any Hazardous Substance exists on the Leased Premises
resulting from any act of Tenant or its employees, agents,
contractors, licensees, subtenants or customers, then Tenant shall
immediately take necessary action to cause the removal of such
substance and shall remove such within ten (10) days after
discovery. Notwithstanding the above, if the Hazardous Substance is
of a nature that cannot be reasonably removed within ten (10) days
Tenant shall not be in default if Tenant has commenced to cause
such removal and proceeds diligently thereafter to complete
removal, except that in all cases, any Hazardous Substance must be
removed within sixty (60) days after discovery thereof.
Furthermore, notwithstanding the above, if in the good faith
judgment of Landlord, the existence of such Hazardous Substance
creates an emergency or is of a nature which may result in
immediate physical danger to persons at the Property, Landlord may
enter upon the Leased Premises and remove such Hazardous Substances
and charge the cost thereof to Tenant as Additional
Rent.
ARTICLE
VIII. OPERATION AND MAINTENANCE OF COMMON AREAS
SECTION 8.01. CONSTRUCTION AND
CONTROL OF COMMON AREAS.
All
automobile parking areas, driveways, entrances and exits thereto,
and other facilities furnished by Landlord in or near the Building,
including if any, employee parking areas, truck ways, loading
docks, mail rooms or mail pickup areas, pedestrian sidewalks and
hallways, landscaped areas, retaining walls, stairways, restrooms
and other areas and improvements provided by Landlord for the
general use in common with all tenants, their officers, agents,
employees and customers (“
Common Area(s)
”), shall at all
times be subject to the exclusive control and management of
Landlord, which Landlord shall have the right from time to time to
establish, modify and enforce reasonable rules and regulations with
respect to all facilities and areas mentioned in this Section 8.01.
Landlord shall have the right to construct, maintain and operate
lighting and drainage facilities on or in all such areas and
improvements; to police the same, from time to time to change the
area, level, location and arrangement of parking areas and other
facilities hereinabove referred to; to restrict parking by tenants,
their officers, agents and employees to employee parking areas; to
close temporarily all or any portion of such areas or facilities to
such extent as may, in the opinion of counsel, be legally
sufficient to prevent a dedication thereof or the accrual of any
rights to any person or the public therein; to assign
“reserved” parking spaces for exclusive use of certain
tenants or for customer parking, to discourage non-employee and
non-customer parking; and to do and perform such other acts in and
to such areas and improvements as, in the exercise of good business
judgment, Landlord shall determine to be advisable with a view
toward maintaining of appropriate convenience uses, amenities, and
for permitted uses by tenants, their officers, agents, employees
and customers. Landlord shall operate and maintain the Common Areas
and Common Facilities (as defined herein) referred to above in such
a manner as it, in its sole discretion, shall determine from time
to time to be reasonable. Without limiting the scope of such
discretion, Landlord shall have the full right and authority to
employ all personnel and to make all rules and regulations
pertaining to and necessary for the proper operation, security and
maintenance of the Common Areas and Common Facilities. The Building
and/or Property signs, traffic control signs and other signs
determined by Landlord to be in best interest of the Building
and/or Property shall be considered part of the Common Areas and
Common Facilities.
For
purposes of this Article VIII, “
Common Facilities
” shall mean all
areas, space, equipment and special services available for the
common or joint use and/or benefit of any of the occupants of the
Building or their employees, agents, servants, customers and other
invitees, including without limitation, parking areas, access
roads, driveways, retaining walls, landscaped areas, truck
serviceways or tunnels, loading docks, pedestrian lanes, courts,
stairs, ramps and sidewalks, comfort and first-aid stations,
washrooms, restrooms, janitorial rooms, transformer vaults,
electrical rooms, sprinkler riser rooms, common equipment storage
rooms, information booths, canopies, utility systems, energy
management systems, roof drains, sumps and gutters, walls and
fences, and elevators and air-walkways, if any.
SECTION 8.02. LICENSE.
All
Common Areas and Common Facilities not within the Leased Premises,
which Tenant may be permitted to use and occupy, are to be used and
occupied under a revocable license, and if the amount of such areas
be diminished, Landlord shall not be subject to any liabilities nor
shall Tenant be entitled to any compensation or diminution or
abatement of rent, nor shall such diminution of such areas be
deemed constructive or actual eviction, so long as such revocations
or diminutions are deemed by Landlord to serve the best interests
of the Building and/or Property. The term of such revocable license
shall be coterminous with this Lease and shall not be revoked or
terminated during the Rental Term of this Lease
ARTICLE IX. ALTERATIONS, SIGNS, LOCKS & KEYS
SECTION 9.01.
ALTERATIONS.
Tenant
shall not make or suffer to be made any alterations or additions to
the Leased Premises or any part thereof without the prior written
consent of Landlord, in Landlord’s sole and absolute
discretion. Any additions to, or alterations of the Leased
Premises, except movable furniture, equipment and trade fixtures,
shall become a part of the realty and belong to Landlord upon the
expiration of the Rental Term, or any Rental Term extension or
renewal thereof, or other termination or surrender of the Leased
Premises to Landlord. Tenant shall promptly pay all contractors and
materialmen so as to minimize the possibility of a lien attaching
to the Leased Premises, and should any such lien be made or filed,
Tenant shall bond against or discharge the same within ten (10)
days after written request by Landlord. Landlord reserves the right
to enter the Leased Premises to post, and keep posted, notices of
non-responsibility for any such liens.
SECTION 9.02. REMOVAL BY
TENANT.
In the
event of any Landlord-approved remodeling by Tenant, Landlord
reserves title to all removed materials, building components,
plumbing and HVAC equipment, except that Tenant shall remove from
the Leased Premises those items which Landlord chooses not to
salvage. All new alterations, decorations, additions and
improvements paid by Tenant, if any, shall be deemed to belong to
Tenant although attached to the Leased Premises. However, none of
such items may be removed from the Leased Premises and shall become
the property of Landlord upon the expiration of the Rental Term, or
any Rental Term renewal or extension thereof, or other termination
or surrender of the Leased Premises to Landlord. Tenant shall not
remove any of such alterations, decorations, additions and
improvements, although trade fixtures installed by Tenant may be
removed if all rents due herein are paid in full and Tenant is in
full compliance with all other terms and conditions in this
Lease.
SECTION 9.03. SIGNS.
Tenant
shall not place or suffer to be placed or maintained on any
exterior door, wall or window of the Leased Premises, or elsewhere
in the Building, any sign, awning, marquee, decoration, lettering,
attachment, canopy, advertising matter or other thing of any kind,
and shall not place or maintain any decoration, lettering or
advertising matter on the glass of any window or door of the Leased
Premises without first obtaining Landlord’s written approval.
Tenant shall maintain any such sign, awning, canopy, decoration,
lettering, advertising matter or other things as may be approved in
good condition and repair at all times. Landlord may, at
Tenant’s cost, and without liability to Tenant, enter the
Leased Premises and remove any item erected in violation of this
Section 9.03. Landlord has established rules and regulations
governing the size, type and design of all signs, decorations,
etc., which are specifically set forth in accordance with the final
construction set documents approved by Landlord.
SECTION 9.04.
Intentionally
Omitted.
SECTION 9.05. LOCKS AND
KEYS.
(a) The
Building shall be equipped with an electronic card access system at
entrance to the Building as well as primary doors of the Leased
Premises. Landlord shall issue, monitor, and program key cards for
Tenant and Tenant’s employees, as reasonably needed. When
employment relationships change, Tenant shall cooperate to attempt
to retrieve such key cards from employees leaving
Tenant.
(b) Where
key access exists, Tenant may change locks or install other locks
on doors, but if Tenant does, Tenant must provide Landlord with
duplicate keys or key cards, if any, within twenty-four (24) hours
after such change or installation.
(c) Tenant
shall, upon termination of this Lease, deliver to Landlord all the
keys and/or key cards to the Building and the Leased Premises
including any interior offices, toilet rooms, combinations to
built-in safes, etc. which shall have been furnished to or by
Tenant or are in the possession of Tenant.
ARTICLE X. MAINTENANCE AND REPAIRS; ALTERATIONS;
ACCESS
SECTION 10.01. LANDLORD’S
OBLIGATION FOR MAINTENANCE.
Landlord
shall maintain and repair: (1) the areas outside the Leased
Premises including hallways, public restrooms, if any, general
landscaping, Landlord owned parking areas, driveways and walkways;
(2) the Building structure including the roof, exterior walls and
foundation; and (3) all Building plumbing, electrical, heating, and
air conditioning systems. However, if the need for such repairs or
maintenance results from any careless, wrongful or negligent act or
omission of Tenant or any malfunctioning furnishings and/or
fixtures, Tenant shall pay the entire cost of any such repair or
maintenance including a reasonable charge to cover Landlord’s
supervisory overhead. Landlord shall not be obligated to repair any
damage or defect until receipt of written notice from Tenant of the
need of such repair and Landlord shall have a reasonable time after
receipt of such notice in which to make such repairs. Tenant shall
give immediate notice to Landlord in case of fire or accidents in
the Leased Premises or in the Building of which the Leased Premises
is a part or of defects therein or in any fixtures or equipment
provided by Landlord.
SECTION 10.02. TENANT’S
OBLIGATION FOR MAINTENANCE.
(a) Tenant
shall provide its own janitorial service and keep and maintain the
Leased Premises, including the interior wall surfaces and windows,
floors, floor coverings and ceilings, in a clean, sanitary and safe
condition in accordance with applicable laws of the State and in
accordance with all directions, rules and regulations of the health
officer, fire marshal, insurance underwriter or rating bureau
designated by Landlord, building inspector, or other proper
officials of the governmental agencies having jurisdiction, at the
sole cost and expense of Tenant, and Tenant shall comply with all
requirements of law, ordinance and otherwise, affecting the Leased
Premises.
(b) Tenant
shall pay, when due, all claims for labor or material furnished,
for work under Sections 9.01, 9.02 and 10.02 hereof, to or for
Tenant at or for use in the Leased Premises, and shall bond such
work to prevent assertion of claims against Landlord unless
Landlord waives such requirement in writing.
(c) Tenant
agrees to be responsible for all furnishings, fixtures and
equipment located upon the Leased Premises from time to time
(including any specialty HVAC equipment for labs or lab
equipment
)
and shall replace
carpeting within the Leased Premises if same shall be damaged by
tearing, burning, or stains resulting from spilling anything on
such carpet, reasonable wear and tear excepted. Tenant further
agrees to use chair mats or floor protectors wherever it uses
chairs with wheels or casters on carpeted areas.
SECTION 10.03. SURRENDER AND
RIGHTS UPON TERMINATION.
(a) This
Lease, and the tenancy hereby created, shall cease and terminate at
the end of the Rental Term hereof, or any Rental Term extension or
renewal thereof, without the necessity of any notice from either
Landlord or Tenant to terminate the same, and Tenant hereby waives
notice to vacate the Leased Premises and agrees that Landlord shall
be entitled to the benefit of all provisions of law respecting
summary recovery of possession of the Leased Premises from Tenant
holding over to the same extent as if statutory notice has been
given.
(b) Upon
termination of this Lease at any time and for any reason
whatsoever, Tenant shall surrender and deliver up the Leased
Premises, including the items constituting Tenant’s Work, to
Landlord in the same condition as when the Leased Premises was
delivered to Tenant or as altered as provided in Section 9.01,
ordinary wear and tear excepted. Upon request of Landlord, Tenant
shall promptly remove all personal property from the Leased
Premises and repair any damage caused by such removal. Obligations
under this Lease relating to events occurring or circumstances
existing prior to the date of termination shall survive the
expiration or other termination of the Rental Term of this Lease.
Liabilities accruing after the date of termination are defined in
Sections 11.01, 19.01 and 19.02.
ARTICLE XI. INSURANCE AND INDEMNITY
SECTION 11.01. LIABILITY
INSURANCE AND INDEMNITY.
Tenant
shall, during the Rental Term, Preliminary Term, and any Rental
Term extension or renewal thereof, keep in full force and effect a
policy of commercial general liability insurance with respect to
the Leased Premises, with a combined single limit of not less than
Two Million Dollars ($2,000,000.00) per occurrence. The policy
shall name Landlord, property manager (i.e., Woodbury Corporation)
and any other persons, firms or corporations designated by Landlord
and Tenant as named “
Additional Insured(s)
”, and shall
contain a clause that the insurer shall not cancel or change the
insurance without first giving Landlord ten (10) days prior written
notice. Such insurance shall include an endorsement permitting
Landlord and property manager to recover damage suffered due to act
or omission of Tenant, notwithstanding being named as an Additional
Insured party in such policies. Such insurance may be furnished by
Tenant under any blanket policy carried by it or under a separate
policy therefor. The insurance shall be with an insurance company
approved by Landlord and a copy of the paid-up policy evidencing
such insurance or a certificate of insurer certifying to the
issuance of such policy shall be delivered to Landlord. If Tenant
fails to provide such insurance, Landlord may do so and charge the
same to Tenant.
Tenant
shall indemnify, defend and hold Landlord harmless from and against
any and all claims, actions, damages, liability and expense in
connection with loss of life, personal injury and/or damage to
property arising from or out of any occurrence in, upon or at the
Leased Premises or from the occupancy or use by Tenant of the
Leased Premises or any part thereof, or occasioned wholly or in
part by any act or omission of Tenant, its agents, contractors,
employees, servants, sublessees, concessionaires or business
invitees unless caused by the negligence of Landlord and to the
extent not covered by its casualty or liability insurance. In case
Landlord shall, without fault of its part, be made a party to any
litigation commenced by or against Tenant, then Tenant shall
protect and hold Landlord harmless and shall pay all costs,
expenses and reasonable attorneys’ fees incurred or paid by
either in defending itself or enforcing the covenants and
agreements of this Lease.
SECTION 11.02. FIRE AND
CASUALTY INSURANCE.
(a) Subject
to the provisions of this Section 11.02, Landlord shall secure, pay
for, and at all times during the Rental Term, and any Rental Term
extension or renewal thereof, maintain fire and casualty extended
coverage insurance providing coverage upon the Improvements in an
amount equal to the full insurable replacement value thereof (as
determined by Landlord), together with such other casualty
insurance coverage as Landlord deems advisable with regard to the
Building, including at its option, but not limited to, average
clauses, boiler insurance, elevator insurance, automatic sprinkler
damage insurance, and rental income insurance sufficient to pay to
Landlord not less than twelve (12) months Base Monthly Rent and
Additional Rent. Landlord may require appropriate endorsements as
may be required by Landlord or Landlord’s lender.
Landlord’s fire and casualty insurance on the Building need
not cover items such as Tenant’s murals, works of art,
abnormal decorative treatments or items listed in this Section
11.02 included within such policy coverage. All insurance required
hereunder shall be written by reputable, responsible companies
licensed in the State of Utah. Tenant shall have the right, at its
request at any reasonable time, to be furnished with copies of the
insurance policies then in force pursuant to this Section 11.02,
together with evidence that the premiums therefor have been
paid.
(b) Tenant
agrees to maintain, at its own expense, such fire and casualty
insurance coverage as Tenant may desire or require in respect to
Tenant’s personal property, equipment, furniture, fixtures or
inventory and Landlord shall have no obligation in respect to such
insurance or losses. All property kept or stored on the Leased
Premises by Tenant or with Tenant’s permission shall be so
done at Tenant’s sole risk and Tenant shall indemnify
Landlord against and hold it harmless from any claims arising out
of loss or damage to same.
(c) Tenant
shall not permit the Leased Premises to be used for any purpose
which would render the insurance thereon void or cause cancellation
thereof or increase the insurance risk or increase the insurance
premiums in effect just prior to the Rental Term Commencement Date
of this Lease. Tenant agrees to pay as Additional Rent the total
amount of any increase in the insurance premium of Landlord over
that in effect prior to the Rental Term Commencement Date of this
Lease resulting from Tenant’s use of the Leased Premises. If
Tenant installs any electrical or other equipment which overloads
the lines in the Leased Premises, Tenant shall at its own expense
make whatever changes are necessary to comply with the requirements
of Landlord’s insurance.
(d) Tenant
shall be responsible for all glass breakage in and about the Leased
Premises, unless caused by Landlord, its employees or agents, and
agrees to immediately replace all glass broken or damaged during
the Rental Term, and any Rental Term extension or renewal thereof,
with glass of the same quality as that broken or damaged. Landlord
may replace, at Tenant’s expense, any broken or damaged glass
if not replaced by Tenant within five (5) days after such
damage.
SECTION 11.03. WAIVER OF
SUBROGATION.
Each
party hereto does hereby release and discharge the other party
hereto and any officer, agent, employee or representative of such
party, of and from any liability whatsoever hereafter arising from
loss, damage or injury caused by fire or other casualty for which
insurance (permitting waiver of liability and containing a waiver
of subrogation) is carried by the injured party at the time of such
loss, damage or injury to the extent of any recovery by the injured
party under such insurance.
SECTION 11.04.
INDEMNIFICATION.
(a) Subject
to the terms and conditions set forth in Section 11.03, Tenant
shall indemnify Landlord and save it harmless from and against any
and all claims, actions, damages, liability and expense in
connection with loss of life, personal injury and/or damage to
property arising from or out of any occurrence in, upon or at the
Leased Premises or from the occupancy or use by Tenant of the
Leased Premises or any part thereof, or occasioned wholly or in
part by any act or omission of Tenant, its agents, contractors,
employees, servants, sublessees, concessionaires or business
invitees to extent not covered by insurance required by Article XI.
In case Landlord is, without fault on its part, made a party to any
litigation commenced by or against Tenant, then Tenant shall
protect and hold Landlord harmless and shall pay all costs,
expenses and reasonable attorneys’ fees incurred or paid by
Landlord in defending itself or enforcing the covenants and
agreements of this Lease.
(b) Subject
to the terms and conditions set forth in Section 11.03, to the
extent not covered by the insurance required to be maintained by
Tenant, or that would not have been covered by insurance had Tenant
maintained such insurance, Landlord agrees to indemnify and save
harmless Tenant in regard to third parties for damages occurring on
the Common Area proximately caused by the wrongful acts or
negligence of Landlord, its contractors, agents or employees in
scope of their employment, including costs of defense and
reasonable attorneys’ fees incurred in such defense. In case
Tenant is, without fault on its part, made a party to litigation
against Landlord as a result of such acts or negligence which
Tenant’s insurer is not required to defend, then Landlord
shall indemnify Tenant against costs of such defense including
reasonable attorneys’ fees.
ARTICLE
XII. UTILITY CHARGES
SECTION 12.01. OBLIGATION OF
LANDLORD.
Unless
otherwise agreed in writing by the parties, during the Rental Term
of this Lease Landlord shall cause to be furnished to the Leased
Premises during Standard Operating Hours as set forth in Section
1.01(Q), except Holidays, the following utilities and
services:
(a) Electricity,
water, gas and sewer service.
(b) Telephone
connection, but not including telephone stations and equipment (it
being expressly understood and agreed that Tenant shall be
responsible for the ordering and installation of telephone lines
and equipment which pertain to the Leased Premises).
(c) Heat
and air-conditioning to such extent and to such levels as, in
Landlord’s judgment, is reasonably required for the
comfortable use and occupancy of the Leased Premises subject
however to any limitations imposed by University Research Park or
any government agency. The parties agree and understand that the
above heat and air-conditioning shall be provided during Standard
Operating Hours.
(d) Snow
removal and parking lot sweeping services for the parking areas
owned by Landlord.
(e) Elevator
service.
SECTION 12.02. OBLIGATIONS OF
TENANT.
Tenant
shall arrange for and shall pay the entire cost and expense of all
telephone and data installation, equipment and monthly use charges,
electric light bulbs (but not fluorescent bulbs used in fixtures
originally installed in the Leased Premises) and all other
materials and services not expressly required to be provided and
paid for pursuant to the provisions of Section 12.01. Tenant
covenants to use good faith efforts to reasonably conserve
utilities by turning off lights and equipment when not in use and
taking such other reasonable actions in accordance with sound
standards for energy conservation. Landlord reserves the right to
separately meter or otherwise monitor any utility usage and to
separately charge Tenant for its own utilities, in which case an
equitable adjustment shall be made to Base Monthly Rent. Additional
limitations of Tenant are as follows:
(a) Tenant
shall not, without the written consent of Landlord, which consent
shall not be unreasonably withheld, use any apparatus or device on
the Leased Premises using current in excess of 208 volts) which
shall in any way or to any extent increase the amount of
electricity or water usually furnished or supplied for use on the
Leased Premises for the Permitted Use designated in Section
1.01(F), nor connect with electrical current, except through
existing electrical outlets in the Leased Premises, or water pipes,
any apparatus or device, for the purposes of using electric current
or water.
(b) If
Tenant shall require water or electric current in excess of that
usually furnished or supplied for use of the Leased Premises, or
for purposes other than those designated in Section 1.01(F), Tenant
shall first procure the written consent of Landlord for the use
thereof, which consent Landlord may refuse and/or Landlord may
cause a water meter or electric current meter to be installed in
the Leased Premises, so as to measure the amount of water and/or
electric current consumed for any such use. The cost of such meters
and of installation maintenance, and repair thereof shall be paid
for by Tenant and Tenant agrees to pay Landlord promptly upon
demand by Landlord for all such water and electric current consumed
as shown by such meters, at the rates charged for such service by
the city in which the Building is located or the local public
utility, as the case may be, furnishing the same, plus any
additional expense incurred in keeping account of the water and
electric current so consumed; and
(c) If
and where heat generating devices are used in the Leased Premises
which affect the temperature otherwise maintained by the air
conditioning system, Landlord reserves the right to install
additional or supplementary air conditioning units for the Leased
Premises, and the entire cost of installing, operating, maintaining
and repairing the same shall be paid by Tenant to Landlord promptly
after demand by Landlord.
SECTION 12.03.
Intentionally
Omitted.
SECTION 12.04. LIMITATIONS ON
LANDLORD’S LIABILITY.
Landlord
shall not be liable for and Tenant shall not be entitled to
terminate this Lease or to effectuate any abatement or reduction of
Base Monthly Rent by reason of Landlord’s failure to provide
or furnish any of the foregoing utilities or services if such
failure was reasonably beyond the control of Landlord. In no event
shall Landlord be liable for loss or injury to persons or property,
however, arising or occurring in connection with or attributable to
any failure to furnish such utilities or services even if within
the control of Landlord.
ARTICLE XIII. ESTOPPEL AND OFF-SET STATEMENT, ATTORNMENT AND
SUBORDINATION
SECTION 13.01. ESTOPPEL AND
OFF-SET STATEMENT.
Tenant
agrees, within ten (10) days after request therefor by Landlord, to
execute in recordable form and deliver to Landlord a statement in
writing, certifying:
(a) that
this Lease is unmodified and in full force and effect, or if there
have been modifications, stating the modifications,
(b) the
Rental Term Commencement Date of this Lease,
(c) that
rent is paid currently without any off-set or defense
thereto,
(d) the
amount of rent, if any, paid in advance, and
(e) that
there are no uncured defaults by Landlord or stating those claimed
by Tenant.
Tenant’s
failure to execute and deliver such statement within the ten (10)
day period shall be an event of default which is subject to the
remedies set forth in Section 13.05 herein and further deemed to
make conclusive and binding upon Tenant the statements contained
therein as true and correct without exception. Unless Tenant shall
have notified Landlord in writing within the ten (10) day period of
any qualifications Tenant may have to the aforesaid statements,
then anyone participating with Landlord in the sale or mortgage
shall have the right to rely on the accuracy of such
statement.
SECTION 13.02.
ATTORNMENT.
In the
event any proceedings are brought for the foreclosure of, or in the
event of exercise of the power of sale under any mortgage or deed
of trust made by Landlord covering the Leased Premises, or in the
event Landlord conveys in a sale all of its rights and duties in
and to this Lease and the Leased Premises, Tenant shall attorn to
the purchaser upon any such foreclosure or sale and recognize such
purchaser as Landlord under this Lease.
SECTION 13.03.
SUBORDINATION.
Tenant
agrees that this Lease shall, at the request of Landlord, be
subordinate to any first mortgages or deeds of trust that may
hereafter be placed upon the Leased Premises and to any and all
advances to be made thereunder, and to the interest thereon, and
any Rental Term renewals, replacements and extensions thereof,
provided the mortgagees or trustees named in such mortgages or
deeds of trust shall agree to recognize this Lease in the event of
foreclosure, if Tenant is not in default.
SECTION 13.04. MORTGAGEE
SUBORDINATION.
Tenant
hereby agrees that this Lease shall, if at any time requested by
Landlord or any lender in respect to Landlord’s financing of
the Building or the Property in which the Leased Premises is
located or any portion hereof, be made superior to any mortgage or
deed of trust that may have preceded this Lease.
SECTION 13.05. REMEDIES.
Failure
of Tenant to execute and deliver any of the above instruments
within fifteen (15) days after written request to do so by Landlord
shall constitute a breach of this Lease entitling Landlord, at its
option, to cancel this Lease and terminate Tenant’s interest
therein.
ARTICLE XIV. ASSIGNING, MORTGAGING, SUBLETTING,
CHANGE
IN OWNERSHIP BY TENANT
SECTION 14.01. CONSENT
REQUIRED.
Tenant
shall not assign this Lease, in whole or in part, nor sublet all or
any part of the Leased Premises, or any part thereof, nor mortgage
nor encumber this Lease or any part of the Leased Premises, nor
enter into licenses or concession agreements or in other manner
permit the occupation of or sharing of possession of any part of
the Leased Premises, or any assignment of this Lease or any estate
or interest therein (all of the foregoing being hereafter referred
to as an “
Assignment
”) without first
obtaining the prior written consent of Landlord, which consent
shall not be unreasonably withheld. The consent of Landlord shall
not relieve Tenant or any Guarantor of this Lease from continuing
liability for all obligations under this Lease. Any Assignment by
operation of law or if Tenant is a corporation, unincorporated
association or partnership, the transfer, assignment or
hypothecation of any stock or interest in such corporation,
association or partnership in the aggregate in excess of fifty
percent (50%) shall be deemed an Assignment within the meaning of
this Section 14.01. However, any Assignment to a parent
corporation, or to a successor corporation acquiring substantially
all the assets of Tenant, and intending to operate Tenant’s
business under the same trade name, shall be deemed reasonable. An
Assignment consummated in violation of the provisions of this
Article XIV shall be null and void and of no force or
effect.
SECTION 14.02. OPTION TO
TERMINATE.
In the
event Tenant desires to make any such Assignment, Tenant shall
serve written notice upon Landlord; and Landlord shall have sixty
(60) days after written notice to elect whether to approve such
Assignment, reject such Assignment or to terminate this Lease.
Should Landlord elect to terminate, Landlord shall so notify Tenant
in writing and Tenant shall have fifteen (15) days either to
rescind the request, or this Lease shall be deemed terminated
effective at the end of the calendar month when Landlord so elects
to terminate. Tenant’s notice shall be accompanied by a copy
of a bona fide offer from a potential “
Assignee
” specifying the terms of
any offer from such Assignee. If Landlord so elects to terminate,
Landlord shall pay to Tenant a sum not exceeding the lower of any
bona fide offer from a potential Assignee, or remaining book value
of Tenant’s improvements to the real estate.
SECTION 14.03. CONDITIONS OF
CONSENT.
(a) Should
consent be granted, such consent shall be subject to Tenant causing
the Assignee to execute an agreement directly with Landlord
undertaking to be bound by all the terms, covenants and conditions
contained in this Lease as though Assignee had originally executed
this Lease as Tenant.
(b) Tenant
shall pay to Landlord any and all consideration received by Tenant
for such Assignment to the extent such consideration exceeds the
remaining book value of Tenant’s leasehold improvements paid
for by Tenant, whether paid in lump sum or in rent exceeding Base
Monthly Rent required under this Lease.
(c) At
no time when Tenant is in default in the performance of any
covenant of this Lease or in payment of rent or any other matured
sums payable hereunder shall any Assignment be approved or
permitted, nor shall the notice provision of Section 14.02 limit
the right to declare default and pursue other remedies provided for
in this Lease or under the laws of the State of Utah.
SECTION 14.04. STANDARDS OF
REASONABLENESS IN WITHHOLDING CONSENT.
In
determining whether to grant consent, Landlord may consider any
statutory or common law tests including, but not limited to, the
following tests, each of which if applicable in Landlord’s
sole business judgment, shall be deemed a reasonable ground for
rejection:
(a)
Any Assignment
disapproved by Landlord’s lender;
(b)
Any Assignment
resulting in a change of Permitted Use from that specified in
Section 1.01(F);
(c) Any
Assignment to an Assignee who lacks good reputation, successful
business experience in Tenant’s type of business and
substantial means and financial capacity adequate to conduct such a
business;
(d) Any
Assignment which would breach any covenant of Landlord respecting
use or exclusivity in any other lease, financing agreement or other
agreement relating to the Building.
However, any
Assignment to a parent corporation, or to a successor corporation
acquiring substantially all the assets of Tenant, and intending to
operate Tenant’s business under the same trade name, shall be
deemed reasonable.
Consent
by Landlord to one (1) or more Assignments shall not constitute a
waiver or consent to any subsequent Assignment nor exhaust
Landlord’s rights under this Article XIV; nor shall
acceptance of Base Monthly Rent, Additional Rent or any other
payment from Assignee be deemed a waiver or consent by Landlord or
an acceptance of such Assignment. Any Assignment without such
Landlord’s consent shall be void and of no force and effect
and shall confer no estate or benefit on anyone, nor shall Landlord
be required to terminate this Lease in order to invalidate such
Assignment.
SECTION 14.05. DOCUMENTATION OF
ASSIGNMENT.
Whether
the documentation of any such Assignment shall be prepared by
Tenant or by Landlord or its attorneys, all costs and reasonable
attorneys’ fees related to considering such Assignment shall
be paid by Tenant, which fees payable to Landlord shall in no case
be greater than One Thousand Dollars ($1,000.00) per Assignment
considered, payable by Tenant upon demand as Additional
Rent.
SECTION 14.06. CONTINUING
LIABILITY OF TENANT AND GUARANTOR.
Neither
the consent of Landlord nor any otherwise permitted Assignment or
subletting shall relieve Tenant or any Guarantor from continuing
liability under this Lease, including liability for Base Monthly
Rent as provided in Section 1.01(L) and 1.01(M) and any Additional
Rent for which Tenant and any Guarantor shall each remain
obligated.
ARTICLE
XV. WASTE OR NUISANCE
SECTION 15.01. WASTE OR
NUISANCE.
Tenant
shall not commit or suffer to be committed any waste upon the
Leased Premises, or any nuisance or other act or thing which may
disturb the quiet enjoyment of any other tenant in the Building in
which the Leased Premises may be located, or elsewhere within the
Building.
SECTION 16.01. NOTICES.
Except
as provided in Section 19.01, any notice, demand, request or other
instrument which may be or is required to be given under this Lease
shall be personally delivered or mailed by United States certified
mail, return receipt requested, postage prepaid, or via a
nationally recognized overnight courier or expedited mail service,
and shall be addressed (a) if to Landlord at the address set forth
in Section 1.01(C) or at such other address as Landlord may
designate by written notice and (b) if to Tenant at the address set
forth in Section 1.01(E) or at such other address as Tenant shall
designate by written notice. Notice shall be effective on delivery
unless delivery is refused or cannot be made, in which event notice
shall be effective on mailing.
Notwithstanding the
foregoing, any notices Landlord is required or authorized to
deliver to Tenant in order to advise Tenant of alleged violations
of Tenant’s covenants relating to advertising, signs, parking
of automobiles, hours of operation, failure of Tenant to properly
maintain or repair the Leased Premises, all as provided in, but not
limited to, Articles VII, IX and X and Sections 8.01, 15.01 and
16.02, must be in writing but may be served upon Tenant by
delivering a copy of such notice to Tenant as above specified and
delivering a copy of such notice to one (1) of Tenant’s
managing employees at the Leased Premises
ARTICLE XVII. DESTRUCTION OF THE LEASED PREMISES
SECTION 17.01.
DESTRUCTION.
(a) If
the Leased Premises is partially or totally destroyed by fire or
other casualty insurable under standard fire insurance policies
with extended coverage endorsement so as to become partially or
totally untenantable, the same shall be repaired or rebuilt as
speedily as practical under the circumstances at the expense of
Landlord, unless Landlord elects not to repair or rebuild as
provided in subsection (b) of this Section 17.01. During the period
required for restoration, a just and proportionate part of Base
Monthly Rent, Additional Rent and other charges payable by Tenant
hereunder shall be abated until the Leased Premises is repaired or
rebuilt.
(b) If
the Leased Premises is (i) rendered totally untenantable by reason
of an occurrence described in subsection (a) of this Section 17.01,
or (ii) damaged or destroyed as a result of a risk which is not
insured under Landlord’s fire insurance policies, or (iii) at
least twenty percent (20%) damaged or destroyed during the last two
(2) years of the Rental Term, or (iv) if the Building is damaged in
whole or in part (whether or not the Leased Premises is damaged),
to such an extent that Tenant cannot practically use the Leased
Premises for its intended purpose, then and in any such events
Landlord may at its option terminate this Lease by notice in
writing to Tenant within sixty (60) days after the date of such
occurrence. Unless Landlord gives such notice, this Lease shall
remain in full force and effect and Landlord shall repair such
damage at its expense as expeditiously as possible under the
circumstances.
(c) If
Landlord should elect or be obligated, pursuant to subsection (a)
of this Section 17.01, to repair or rebuild because of any damage
or destruction, Landlord’s obligation shall be limited to the
original Building and any other work or improvements which may have
been originally performed or installed at Landlord’s expense.
If the cost of performing Landlord’s obligation exceeds the
actual proceeds of insurance paid or payable to Landlord on account
of such casualty, Landlord may terminate this Lease unless Tenant,
within fifteen (15) days after demand therefor, deposits with
Landlord a sum of money sufficient to pay the difference between
the cost of repair and the proceeds of the insurance available for
such purpose. Tenant shall replace all work and improvements not
originally installed or performed by Landlord at its
expense.
(d) Except
as stated in this Article XVII, Landlord shall not be liable for
any loss or damage sustained by Tenant by reason of casualties
mentioned hereinabove or any other accidental
casualty.
ARTICLE
XVIII. CONDEMNATION
SECTION 18.01.
CONDEMNATION.
As used
in this Section 18.01, the term “
Condemnation Proceeding(s)
” means
any action or proceeding in which any interest in the Leased
Premises or the Building is taken for any public or quasi-public
purpose by any lawful authority through exercise of the power of
eminent domain or right of condemnation or by purchase or otherwise
in lieu thereof. If the whole of the Leased Premises is taken
through Condemnation Proceedings, this Lease shall automatically
terminate as of the date possession is taken by the condemning
authority. If in excess of twenty-five percent (25%) of the Leased
Premises is taken, either party hereto shall have the option to
terminate this Lease by giving the other written notice of such
election at any time within thirty (30) days after the date of
taking. If less than twenty-five percent (25%) of the space is
taken and Landlord determines, in Landlord’s sole discretion,
that a reasonable amount of reconstruction thereof shall not result
in the Leased Premises or the Building becoming a practical
improvement reasonably suitable for use for the purpose for which
it is designed, then Landlord may elect to terminate this Lease by
giving thirty (30) days written notice as provided hereinabove. In
all other cases, or if neither party exercises its option to
terminate, this Lease shall remain in effect and the rent payable
hereunder from and after the date of taking shall be
proportionately reduced in proportion to the ratio of: (i) the area
contained in the Leased Premises which is capable of occupancy
after the taking; to (ii) the total area contained in the Leased
Premises which was capable of occupancy prior to the taking. In the
event of any termination or rental reduction provided for in this
Section 18.01, there shall be a proration of the rent payable under
this Lease and Landlord shall refund any excess theretofore paid by
Tenant. Whether or not this Lease is terminated as a consequence of
Condemnation Proceedings, all damages or compensation awarded for a
partial or total taking, including any sums compensating Tenant for
diminution in the value of or deprivation of its leasehold estate,
shall be the sole and exclusive property of Landlord, except that
Tenant shall be entitled to any awards intended to compensate
Tenant for expenses of locating and moving Tenant’s
operations to a new space.
ARTICLE XIX. DEFAULT OF TENANT
SECTION 19.01. DEFAULT - RIGHT
TO RE-ENTER.
In the
event of any failure of Tenant to pay any Base Monthly Rent and
Additional Rent due hereunder, within ten (10) days after written
notice that the same is past due, shall have been mailed to Tenant
by registered mail to Tenant’s address as listed in Section
1.01(E) or to such address as Tenant has specified in writing, or
any failure by Tenant to perform any other of the terms, conditions
or covenants required of Tenant by this Lease within thirty (30)
days after written notice of such default shall have been mailed to
Tenant by registered mail to Tenant’s address as listed in
Section 1.01(E) or to such address as Tenant has specified in
writing, or if Tenant shall abandon the Leased Premises, or permit
this Lease to be taken under any writ of execution, then Landlord,
besides other rights or remedies it may have, shall have the right
to declare this Lease terminated and the Rental Term ended and
shall have the immediate right of re-entry and may remove all
persons and property from the Leased Premises. Such property may be
removed and stored in a public warehouse or elsewhere at the cost
of and for the account of Tenant, without evidence of notice or
resort to legal process and without being deemed guilty of
trespass, or becoming liable for any loss or damage which may be
occasioned thereby. Tenant hereby waives all compensation for the
forfeiture of the Rental Term or its loss of possession of the
Leased Premises in the event of the forfeiture of this Lease as
provided for above. Any notice that Landlord may desire or is
required to give Tenant with reference to the foregoing provision
may, in lieu of mailing, at the option of Landlord, be
conspicuously posted for ten (10) consecutive days at the main
entrance to or in front of the Leased Premises, and such notice
shall constitute a good, sufficient, and lawful notice for the
purpose of declaring a forfeiture of this Lease and for terminating
all of the rights of Tenant hereunder.
SECTION 19.02. DEFAULT - RIGHT
TO RE-LET.
Should
Landlord elect to re-enter, as provided herein, or should it take
possession pursuant to legal proceedings or pursuant to any notice
provided for by law, it may either terminate this Lease or it may
from time to time, without terminating this Lease, make such
alterations and repairs as may be necessary in order to re-let the
Leased Premises, and may re-let the Leased Premises, or any part
thereof, for such term or terms (which may be for a term extending
beyond the Rental Term of this Lease) and at such rent or rental
income and upon such other terms and conditions as Landlord in its
sole discretion may deem advisable. Upon each re-letting, all
rental income received by Landlord from such re-letting shall be
applied, first, to the payment of any indebtedness other than rents
due hereunder from Tenant to Landlord; second, to the payment of
any costs and expenses of such re-letting, including brokerage fees
and attorneys’ fees and costs of such alterations and
repairs; third, to the payment of rents due and unpaid hereunder;
and fourth, the residue, if any, shall be held by Landlord and
applied in payment of future rent as the same may become due and
payable hereunder. If such rental income received from such
re-letting during any month is less than those payable during that
month by Tenant hereunder, Tenant shall pay any such deficiency
immediately to Landlord. Such deficiency shall be calculated and
paid monthly. No such re-entry or taking possession of the Leased
Premises by Landlord shall be construed as an election on its part
to terminate this Lease unless a written notice of such intention
is given to Tenant or unless the termination thereof is decreed by
a court of competent jurisdiction. Notwithstanding any such
re-letting without termination, Landlord may at any time thereafter
elect to terminate this Lease for such previous breach. Should
Landlord at any time terminate this Lease for any breach, in
addition to any other remedies it may have, it may recover from
Tenant all damages it may incur by reason of such breach, including
the cost of recovering the Leased Premises, reasonable
attorneys’ fees, and including the worth at the time of such
termination of the excess, if any, of the amount of rents and other
charges equivalent to rents reserved in this Lease for the
remainder of the stated Rental Term over the then reasonable rental
value of the Leased Premises for the remainder of the Rental Term,
all of which amounts shall be immediately due and payable from
Tenant to Landlord.
SECTION 19.03. LEGAL
EXPENSES.
In case
of default by either party in the performance and obligations under
this Lease, the non-prevailing party shall pay all costs incurred
in enforcing this Lease, or any right arising out of the breach
thereof, whether by suit or otherwise, including reasonable
attorneys’ fees.
ARTICLE XX. BANKRUPTCY, INSOLVENCY OR RECEIVERSHIP
SECTION 20.01. RIGHT OF
TERMINATION.
It is
intended that neither this Lease, nor any interest therein nor any
estate thereby created, shall pass to any trustee or receiver or
assignee for the benefit of creditors or otherwise by operation of
law. The parties acknowledge that the Permitted Use covenant
described in Section 1.01(F) and in Section 7.01 was a motivating
consideration in Landlord’s approval of this Lease.
Accordingly, should any of the following events occur, Landlord may
terminate this Lease and any interest of Tenant therein, effective
upon commencement of the event:
(a) If
proceedings are instituted whereby all, or substantially all, of
Tenant’s assets are placed in the hands of a receiver,
conservator, trustee or assignee for the benefit of Tenant’s
creditors, and such proceedings are not dismissed within thirty
(30) days;
(b) If
any creditor of Tenant institutes judicial or administrative
process to execute on, attach or otherwise seize any of
Tenant’s merchandise, fixtures or personal property located
on the Leased Premises and Tenant fails to discharge, set aside,
exonerate by posting a bond, or otherwise obtain a release of such
property within thirty (30) days;
(c) If
Tenant becomes a debtor in any case filed under the Bankruptcy Code
(as defined in Section 20.02) or similar law providing relief to
bankrupt or insolvent debtors;
(d) If
any of the foregoing events occurs with respect to any Guarantor of
this Lease.
In
addition, within ten (10) days after Landlord’s request
therefor, Tenant or Guarantor of this Lease shall provide Landlord
and Landlord’s mortgagee or proposed mortgagee, as Landlord
shall specify, such financial, legal and business information
concerning any of the events described in this Section 20.01 as
Landlord shall request.
SECTION 20.02.
BANKRUPTCY.
If
Landlord shall not be permitted to terminate this Lease as
hereinabove provided because of the provisions of the United States
Code relating to Bankruptcy (“
Bankruptcy Code
”), then Tenant as
a debtor-in-possession or any trustee for Tenant agrees promptly,
within no more than fifteen (15) days upon request by Landlord to
the “
Bankruptcy
Court
”, to assume or reject this Lease and Tenant on
behalf of itself, and any trustee agrees not to seek or request any
extension or adjournment of any application to assume or reject
this Lease by Landlord with such Bankruptcy Court. In such event,
Tenant or any trustee for Tenant may only assume this Lease if (a)
it cures or provides adequate assurance that the trustees shall
promptly cure any default hereunder, (b) compensates or provides
adequate assurance that Tenant shall promptly compensate Landlord
for any actual pecuniary loss to Landlord resulting from
Tenant’s defaults, and (c) provides adequate assurance of
performance during the fully stated Rental Term hereof of all the
terms, covenants, and provisions of this Lease to be performed by
Tenant. In no event after the assumption of this Lease shall any
then-existing default remain uncured for a period in excess of the
earlier of ten (10) days or the time period set forth herein.
Adequate assurance of performance of this Lease, as set forth
hereinabove, shall include, without limitation, adequate assurance
(1) of the source of rent reserved hereunder, (2) that the
assumption of this Lease shall not breach any provision hereunder,
and (3) that business operated shall comply with the Permitted Use
covenants set forth in Sections 1.01(F) and 7.01. In the event of a
filing of a petition under the Bankruptcy Code, Landlord shall have
no obligation to provide Tenant with any services or utilities as
herein required, unless Tenant shall have paid and be current in
all payments of utilities or other charges therefor. Tenant shall
pay all of Landlord’s costs incurred as a result of
Tenant’s insolvency and/or bankruptcy proceedings including,
but not limited to, reasonable attorneys’ fees incurred as a
result of Landlord’s participation in and/or monitoring of
Tenant’s insolvency proceeding.
ARTICLE XXI. LANDLORD ACCESS
SECTION 21.01. LANDLORD
ACCESS.
Landlord
or Landlord’s agent shall have the right to enter the Leased
Premises at all reasonable times to examine the same, or to show
the Leased Premises to prospective purchasers or lessees of the
Building, or to make all reasonable repairs, alterations,
improvements or additions as Landlord may deem necessary or
desirable, and Landlord shall be allowed to take all material into
and upon the Leased Premises that may be required therefor without
the same constituting an eviction of Tenant in whole or in part,
and the rents reserved shall in no wise abate while such repairs,
alterations, improvements, or additions are being made, by reason
of loss or interruption of business of Tenant, or otherwise. During
the ninety (90) days prior to the expiration of the Rental Term, or
any Rental Term extension or renewal thereof, Landlord may exhibit
the Leased Premises to prospective tenants and place upon the
Leased Premises the usual notices “To Let” or
“For Rent” which notices Tenant shall permit to remain
thereon without molestation.
ARTICLE
XXII. TENANT’S PROPERTY AND LANDLORD’S
LIEN
SECTION 22.01. TAXES ON
LEASEHOLD.
Tenant
shall be responsible for and shall pay before delinquency all
municipal, county and state taxes assessed during the Rental Term
of this Lease against any leasehold interest, improvements, trade
fixtures or personal property of any kind, owned by or placed in,
upon or about the Leased Premises by Tenant, and taxes, levies or
fees assessed on the basis of Tenant’s occupancy thereof,
including, but not limited to, taxes measured by rents due from
Tenant hereunder.
SECTION 22.02. LOSS AND
DAMAGE.
Landlord
shall not be responsible or liable to Tenant for any loss or damage
that may be occasioned by or through the acts or omissions of
persons occupying adjoining spaces or any part of the spaces
adjacent to or connected with the Leased Premises hereby or any
part of the Building of which the Leased Premises is a part, or for
any loss or damage resulting to Tenant or its property from
bursting, stoppage or leaking of water, gas, sewer or steam pipes
or for any damage or loss of property within the Leased Premises
from any cause whatsoever.
SECTION 22.03. NOTICE BY
TENANT.
Tenant
shall give immediate telephone or electronic mail notice to
Landlord in case of fire, casualty or accidents in the Leased
Premises or in the Building of which the Leased Premises is a part
or of defects therein or in any fixtures or equipment, and Tenant
shall promptly thereafter confirm such notice in
writing.
SECTION 22.04. LANDLORD’S
LIEN.
Tenant
hereby grants to Landlord a lien upon the improvements, trade
fixtures and furnishings of Tenant to secure full and faithful
performance of all of the terms of this Lease.
SECTION 22.05. LANDLORD’S
SUBORDINATION.
Provided
that Tenant is not in default hereunder, Landlord agrees to
subordinate its lien on Tenant’s personal property to that of
any bona fide third party lender providing financing which directly
benefits Tenant
=
s operations in the Leased
Premises. However, Landlord shall refuse and shall otherwise not be
required to subordinate its lien or priority as to Tenant's
equipment, trade fixtures or personal property, and Landlord shall
be entitled to refuse subordination if loans are not directly
related to the Leased Premises.
ARTICLE
XXIII. HOLDING OVER
SECTION 23.01. HOLDING
OVER.
Any
holding over after the expiration of the Rental Term, or any Rental
Term extension thereof, without Landlord’s approval, shall be
construed to be a tenancy-at-will and all provisions of this Lease
shall be and remain in effect except that Base Monthly Rent shall
be double the amount of Base Monthly Rent (including any
adjustments as provided herein) payable for the last full calendar
month of the Rental Term, including any Rental Term extension or
renewal thereof, or tenancy on a month-to-month basis.
SECTION
23.02. SUCCESSORS.
All
rights and liabilities herein given to, or imposed upon, the
respective parties hereto shall extend to and bind the several
respective heirs, executors, administrators, successors and assigns
of such parties; and if there shall be more than one (1) tenant,
they shall all be bound jointly and severally by the terms,
covenants and agreements herein. No rights, however, shall inure to
the benefit of any assignee of Tenant unless the assignment to such
assignee has been approved by Landlord in writing.
ARTICLE
XXIV. RULES AND REGULATIONS
SECTION 24.01. RULES AND
REGULATIONS.
Tenant
agrees to comply with and observe all rules and regulations as
established by Landlord and which are now, or which may be
hereafter, prescribed by Landlord from time to time, provided, in
Landlord’s sole discretion, and posted in or about the Leased
Premises or otherwise brought to the notice of Tenant, both with
regard to the Building as a whole and to the Leased Premises,
including Common Areas and Common Facilities. Tenant’s
failure to keep and observe such rules and regulations shall
constitute a breach of the terms of this Lease in the manner as if
such rules and regulations were contained herein as
covenants.
ARTICLE
XXV. QUIET ENJOYMENT
SECTION 25.01. QUIET
ENJOYMENT.
Upon
payment by Tenant of the rents herein provided, and upon the
observance and performance of all the covenants, terms and
conditions on Tenant’s part to be observed and performed,
Tenant shall peaceably and quietly hold and enjoy the Leased
Premises for the Rental Term, or any Rental Term extensions or
renewals thereof, without hindrance or interruption by Landlord or
any other person or persons lawfully or equitably claiming by,
through or under Landlord, subject, nevertheless, to the terms and
conditions of this Lease and actions resulting from future eminent
domain proceedings and casualty losses.
ARTICLE
XXVI. SECURITY DEPOSIT
SECTION 26.01. SECURITY
DEPOSIT.
Landlord
herewith acknowledges receipt of the Security Deposit in the amount
set forth in Section 1.01(S) which is to be retained as security
for the faithful performance of all the covenants, conditions and
agreements of this Lease, but in no event shall Landlord be obliged
to apply the same upon rents or other charges in arrears or upon
damages for Tenant’s failure to perform such covenants,
conditions and agreements; Landlord may so apply the Security
Deposit, at its option; and Landlord’s right to the
possession of the Leased Premises for non-payment of rents or for
other reasons shall not in any event be affected by reason of the
fact that Landlord holds the Security Deposit. Such sum, if not
applied toward the payment of rents in arrears or toward the
payment of damages suffered by Landlord by reason of Tenant’s
breach of the covenants, conditions and agreements of this Lease,
is to be returned to Tenant without interest when this Lease is
terminated or expired, according to these terms, and in no event is
the Security Deposit to be returned until Tenant has vacated the
Leased Premises and delivered possession to Landlord.
In the
event that Landlord repossesses the Leased Premises because of
Tenant’s default or because of Tenant’s failure to
carry out the covenants, conditions and agreements of this Lease,
Landlord may apply the Security Deposit toward damages as may be
suffered or shall accrue thereafter by reason of Tenant’s
default or breach. In the event of bankruptcy or other
debtor-creditor proceedings against Tenant as set forth in Article
XX, the Security Deposit shall be deemed to be applied first to the
payment of Base Monthly Rent, Additional Rent and other charges due
to Landlord for the earliest possible periods prior to the filing
of such proceedings. Landlord shall not be obliged to keep the
Security Deposit as a separate fund, but may mix the same with its
own funds.
SECTION 26.02. TRANSFER OF
LANDLORD’S INTEREST IN THE SECURITY DEPOSIT.
Landlord
may deliver the Security Deposit to the purchaser or assignee of
Landlord’s interest in the Leased Premises and thereupon
Landlord shall be discharged from any further liability with
respect to the Security Deposit. This Section 26.02 shall also
apply to any subsequent transfers of Landlord’s interest in
the Leased Premises.
ARTICLE XXVII. MISCELLANEOUS PROVISIONS
SECTION 27.01. WAIVER.
One (1)
or more waivers of any covenant or condition by Landlord shall not
be construed as a waiver of a subsequent breach of the same
covenant or condition and the consent or approval to or of any
subsequent or similar act by Tenant. The subsequent acceptance of
rents hereunder by Landlord shall not be deemed to be a waiver of
any preceding breach by Tenant of any term, covenant or condition
of this Lease, other than the failure of Tenant to pay the
particular rents so accepted, regardless of Landlord’s
knowledge of such preceding breach at the time of acceptance of
such rents. No breach of a covenant or condition of this Lease
shall be deemed to have been waived by Landlord, unless such waiver
is in writing signed by Landlord.
SECTION 27.02. ENTIRE LEASE
AGREEMENT.
This
Lease and the exhibits, if any, constitutes the entire Lease and
understanding between the parties hereto and supersedes all prior
discussions, understandings and agreements. This Lease may not be
altered or amended except by a subsequent written agreement
executed by all parties.
SECTION 27.03. INTERPRETATION,
USE OF PRONOUNS.
Nothing
contained herein shall be deemed or construed by the parties
hereto, nor by any third party, as creating the relationship of
principal and agent or of partnership or of joint venture between
the parties hereto, it being understood and agreed that neither the
method of computation of rent, nor any other provision contained
herein, nor any acts of the parties herein, shall be deemed to
create any relationship between the parties hereto other than the
relationship of Landlord and Tenant. Whenever herein the singular
number is used, the same shall include the plural, and the
masculine gender shall include the feminine and neuter
genders.
The
laws of the state where the Building is situated shall govern the
validity, performance and enforcement of this Lease. Although the
printed provisions of this Lease were drawn by Landlord, this Lease
shall not be construed either for or against Landlord or Tenant,
but this Lease shall be interpreted in accordance with the general
tenor of the language in an effort to reach an equitable
result.
The
parties agree that any deletion of language from this Lease prior
to mutual execution by Landlord and Tenant shall not be construed
to have any particular meaning or to raise any presumption or
implication, including without limitation, any implication that the
parties intended thereby to state the converse or opposite of the
deleted language. It is the intention of the parties hereto that,
if any provision of this Lease is capable of two (2) constructions,
one (1) of which would render the provision void and one (1) of
which would render the provision valid, then the provision shall
have the meaning which renders it valid.
SECTION 27.04. FORCE
MAJEURE.
In the
event that either party hereto shall be delayed or hindered in or
prevented from the performance of any act required hereunder by
reason of strikes, lockouts, labor troubles, inability to procure
materials, failure of power, restrictive governmental laws or
regulations, riots, insurrection, war or other reason of a like
nature not the fault of the party delayed in performing work or
doing acts required under the terms of this Lease, then performance
of such act shall be excused for the period of the delay and the
period for the performance of any such act shall be extended for a
period equivalent to the period of such delay. The provisions of
this Section 27.04 shall not operate to excuse Tenant from prompt
payment of Base Monthly Rent, Additional Rent or any other payments
required by the terms of this Lease.
SECTION 27.05. LOSS AND
DAMAGE.
Landlord
shall not be responsible or liable to Tenant for any loss or damage
that may be occasioned by or through the acts or omissions of
persons occupying all or any part of the Leased Premises adjacent
to or connected with the Leased Premises or any part of the
Building of which the Leased Premises is a part, or for any loss or
damage resulting to Tenant or its property from bursting, stoppage
or leaking of water, gas sewer or steam pipes or for any damage or
loss of property within the Leased Premises from any cause
whatsoever.
SECTION 27.06. CAPTIONS AND
SECTION NUMBERS.
The
captions, section numbers, article numbers and index appearing in
this Lease are inserted only as a matter of convenience and in no
way define, limit, construe, or describe the scope or intent of
such sections or articles of this Lease nor in any way affect this
Lease.
SECTION
27.07. BROKER’S COMMISSION.
Each of
the parties represents and warrants that there are no claims for
brokerage commissions or finder’s fees in connection with the
execution of this Lease, except as listed below, and each of the
parties agrees to indemnify the other against, and hold it harmless
from, all liabilities arising from any such claim (including,
without limitation, the cost of reasonable attorneys’ fees in
connection therewith) except as follows: Landlord has commission
obligation to Woodbury Corporation. This provision in no way
creates any third party beneficiary rights in any party, nor does
it create any liability on the part of Tenant to pay any or all of
the commission due Tenant’s broker or Landlord’s
broker. Further, Landlord shall hold Tenant harmless from and
against any claim by Tenant’s broker stemming from
Landlord’s broker’s failure to pay Tenant’s
broker its commission split.
SECTION 27.08.
RECORDING.
Tenant
shall not record this Lease without the written consent of
Landlord; however, upon the request of either party hereto, the
other party shall join in the execution of a memorandum or
so-called “short form” of this Lease for the purposes
of recordation. Such memorandum or short form of this Lease shall
describe the parties, the Leased Premises, the Rental Term and
Rental Term renewals of this Lease, any special provisions, and
shall incorporate this Lease by reference.
SECTION 27.09. CONSENT NOT
UNREASONABLY WITHHELD.
Landlord
agrees that whenever under this Lease a provision is made for
Tenant to secure the written consent of Landlord, such written
consent shall not be unreasonably withheld, except as provided in
Article XIV.
SECTION 27.10. FURNISHING OF
FINANCIAL STATEMENTS.
Upon
Landlord’s written request, Tenant shall promptly furnish
Landlord, from time to time, financial statements reflecting
Tenant’s current financial condition.
SECTION 27.11. TIME OF
ESSENCE.
Time is
of the essence in the performance of all covenants and conditions
in this Lease for which time is a factor.
SECTION 27.12. ACCORD AND
SATISFACTION.
No
payment by Tenant or receipt by Landlord of a lesser amount than
the amount owing hereunder shall be deemed to be other than on
account of the earliest stipulated amount receivable from Tenant,
nor shall any endorsement or statement on any check or any letter
accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord’s right to recover the balance of such
rent or receivable or pursue any other remedy available under this
Lease or the law of the state wherein the Leased Premises is
located.
SECTION 27.13. NO
OPTION.
The
submission of this Lease for examination does not constitute a
reservation of, or option for, the Leased Premises. This Lease
becomes effective as a lease only upon full execution and delivery
thereof by Landlord and Tenant.
SECTION 27.14.
ANTI-DISCRIMINATION.
Tenant
herein covenants by and for itself, its heirs, executors,
administrators and assigns and all persons claiming under or
through it, and this Lease is made and accepted upon and subject to
the following conditions: That there shall be no discrimination
against or segregation of any person or group of persons on account
of race, sex, marital status, color, creed, national origin or
ancestry, in the leasing, subleasing, assigning, use, occupancy,
tenure or enjoyment of the Leased Premises, nor shall Tenant
itself, or any person claiming under or through it, establish or
permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use
or occupancy of tenants, lessees, sublessees, or subtenants in the
Leased Premises.
SECTION 27.15.
SEVERABILITY.
If any
term, covenant or condition of this Lease or the application
thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant or condition to persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term,
covenant or condition of this Lease shall be valid and be enforced
to the fullest extent permitted by law.
SECTION
27.16. SURVIVAL OF OBLIGATIONS.
The
provisions of this Lease, with respect to any obligation of Tenant
to pay any sum owing in order to perform any act after the
expiration or early termination of this Lease, shall survive the
expiration or early termination of this Lease.
SECTION 27.17. REPRESENTATION
REGARDING AUTHORITY.
The
person(s) executing this Lease represent and warrant that they are
duly authorized to execute this Lease in their individual or
representative capacity as indicated.
SECTION 27.18. TENANT’S
LIABILITY.
In the
event there is more than one (1) Tenant hereunder, the liability of
each shall be joint and several.
SECTION 27.19. LANDLORD’S
LIABILITY.
Landlord’s
liability hereunder shall be limited solely to Landlord’s
interest in the Building.
SECTION 27.20. COUNTERCLAIM AND
JURY TRIAL.
In the
event that Landlord commences any summary proceedings or action for
non-payment of rents or other charges provided for in this Lease,
Tenant shall not interpose any non-compulsory counterclaim of any
nature or description in any such proceeding or action. Tenant and
Landlord both waive a trial by jury of any or all issues arising in
any action or proceeding between the parties hereto or their
successors, under or relating to this Lease, or any of its
provisions. Notwithstanding the foregoing, this provision shall not
prohibit Tenant from bringing any claim it may have against
Landlord in a separate and distinct proceeding.
SECTION 27.21. TRANSFER OF
LANDLORD’S INTEREST IN THE LEASED PREMISES.
In the
event of any transfer or transfers of Landlord’s interest in
the Leased Premises, the transferor shall be automatically relieved
of any and all obligations and liabilities on the part of Landlord
accruing from and after the date of such transfer, provided the
transferee assumes such obligations and liabilities.
SECTION 27.22. TENANT SELECTION
BY LANDLORD.
Landlord
reserves the absolute right to effect such other tenancies in the
Building as Landlord, in the exercise of its sole business
judgment, shall determine to best promote the interests of the
Building. Tenant does not rely on the fact, nor does Landlord
represent, that any specific tenant or number of tenants shall,
during the Rental Term of this Lease, occupy any space in the
Building.
SECTION 27.23. DISCLOSURE OF
PARTIES.
Landlord
is a limited liability company, one (1) or more Managers of which
is a licensed real estate broker or agent.
SECTION 27.24. EXECUTIVE ORDER
CERTIFICATION.
For
purposes of compliance with Executive Order 13224 and related
regulations, Landlord and Tenant each represent and warrant
that:
(i) it
is not acting, directly or indirectly, for or on behalf of any
person, group, entity, or nation named by any Executive Order, the
United States Department of Justice, or the United States Treasury
department as a terrorist, “Specially Designated National or
Blocked Person,” or other banned or blocked person, entity,
nation, or transaction (“
SDN
”) pursuant to any law, order,
rule or regulation that is enforced or administered by the Office
of Foreign Assets Control (“
OFAC
”);
(ii) it
is not engaged in this transaction, directly or indirectly on
behalf of, any such person, group, entity or nation;
and
(iii) it
is not in violation of Presidential Executive order 13224, the USA
Patriot Act, the Bank Secrecy Act, the Money Laundering Control Act
or an regulations promulgated pursuant thereto.
Landlord agrees to
defend, indemnify, and hold harmless Tenant from and against any
and all claims, damages, losses, risks, liabilities and expenses
(including attorney’s fees and costs) arising from or related
to any breach of the foregoing certification. Should Landlord,
during the Rental Term of this Lease, be designated an SDN, Tenant
may, at its sole option, terminate this Lease.
Tenant
agrees to defend, indemnify, and hold harmless Landlord from and
against any and all claims, damages, losses, risks, liabilities and
expenses (including attorney’s fees and costs) arising from
or related to any breach of the foregoing certification. Should
Tenant, during the Rental Term of this Lease, be designated an SDN,
Landlord may, at its sole option, terminate this
Lease.
ADDITIONAL PROVISIONS
:
None.
[Signature Page(s) to Follow]
IN WITNESS WHEREOF
, Landlord and Tenant
have signed and sealed this Lease as of the day and year first
above written.
SIGNATURES
:
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LANDLORD
PARADIGM
RESOURCES, L.C., a Utah limited liability company
By:
WOODBURY CORPORATION, a Utah corporation, Its Manager
By:
__________________________________________
O.
Randall Woodbury, President
By:
__________________________________________
W.
Richards Woodbury, Vice Chairman
BY:
TACHUS, INC., a Utah corporation, its Manager
By:
__________________________________________
Don R.
Brown, President
TENANT
MAJESCO
ENTERTAINMENT COMPANY, a Delaware corporation, d/b/a POLARITY
TE
By:
__________________________________________
Its:
_______________________________
By:
__________________________________________
Its:
_______________________________
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ACKNOWLEDGMENT OF TENANT
STATE OF
_________________________
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COUNTY OF
______________________
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On this
______ day ________________________________ 2016, before me
personally appeared _________________________________________ and
_______________________________________, to me personally known to
be the ____________________________ and
_______________________________ of MAJESCO ENTERTAINMENT COMPANY, a
Delaware corporation, d/b/a POLARITY TE, the corporation that
executed the within instrument, known to me to be the persons who
executed the within instrument on behalf of such corporation
therein named, and acknowledged to me that such corporation
executed the within instrument pursuant to its by-laws or a
resolution of its board of directors.
________________________________________________
Notary
Public
ACKNOWLEDGMENTS OF
LANDLORD
STATE OF
UTAH
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COUNTY OF SALT
LAKE
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On the
_________ day of _______________________________________ 2016,
personally appeared O. RANDALL WOODBURY and W. RICHARDS WOODBURY,
to me personally known, who being by me duly sworn did say that
they are the President and Vice Chairman of WOODBURY CORPORATION, a
Utah corporation, which is a Manager of PARADIGM RESOURCES, L.C.,
the company that executed the within instrument, known to me to be
the persons who executed the within instrument on behalf of such
company therein named, and acknowledged to me that such company
executed the within instrument pursuant to its Operating
Agreement.
__________________________________________________
Notary
Public
STATE OF
UTAH
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COUNTY OF SALT
LAKE
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On the
_______ day of ______________________________________ 2016,
personally appeared DON R. BROWN, to me personally known, who being
by me duly sworn did say that he is the President of TACHUS, INC.,
a Utah corporation, which is a Manager of PARADIGM RESOURCES, L.C.,
the company that executed the within instrument, known to me to be
the persons who executed the within instrument on behalf of such
company therein named, and acknowledged to me that such company
executed the within instrument pursuant to its Operating
Agreement.
_________________________________________________
Notary
Public
SITE PLAN
LEGAL DESCRIPTION
Beginning at a
point on the northwesterly right-of-way line of Chipeta Way said
point being South 44
E
00’00” West
along the monument line 546.107 feet and North 46
E
00’00” East
52.00 feet from a Salt Lake City monument located at the P.T. of
Chipeta Way and running thence South 44
E
00’00” West
along said northwesterly right-of-way line 43.261 feet to a point
of curvature; thence along the arc of a 660.000 foot radius curve
to the right and said northwesterly right-of-way line, through a
central angle of 24
E
00’07”, 276.484
feet to a point of compound curvature; thence along the arc of a
45.000 foot radius curve to the right, through a central angle of
81
E
21’51”, 63.903
feet to a point of reverse curvature, said point also being on the
northeasterly right-of-way line of Arapeen Drive; thence along the
arc of a 600.575 foot radius curve to the left, through a central
angle of 18
E
21’58”, 192.515
feet to a point of tangency; thence North 49
E
00’00” West
along said northeasterly right-of-way line 484.077 feet; thence
North 41
E
00’00” East
300.000 feet; thence South 49
E
00’00” East
800.892 feet to the point of beginning.
Exhibit
99.1
Majesco
Entertainment Inc. and PolarityTE, Inc. Enter Into Merger
Agreement
Appoints Denver Lough, MD, PhD as Chief Executive Officer and
Chairman of the Board; Appoints Edward Swanson, MD as Chief
Operating Officer and Director; Executive Vice President John
Stetson named Director
Majesco accepts subscription agreements for $2.25
million
SOUTH PLAINFIELD, New Jersey, December 8, 2016
– Majesco Entertainment, Inc. (Nasdaq: COOL)
(“Majesco”),
announced today it had signed a
definitive merger agreement with PolarityTE, Inc.
(“Polarity”). Polarity is
an entirely new and radically unique regenerative
medicine company committed to developing the first forms of
functionally-polarized autologous tissues for use in medical
procedures requiring reconstructive applications by surgeons and
wound care specialists.
Upon the closing of the transactions, Polarity will become a
wholly-owned subsidiary of Majesco. Majesco will issue preferred
stock in the transaction which, when converted, would represent
approximately 50% of the issued and outstanding common stock of
Majesco on a fully diluted basis. In connection with the
merger agreement, Majesco also entered into stock purchase
agreements for the purchase of 750,000 shares of common stock at a
purchase price of $3.00 per share to accredited investors for gross
proceeds of $2,225,000.
At signing of the merger agreement, Dr. Denver Lough, was named
Chief Executive Officer and Chairman of the Board of Majesco (to be
renamed PolarityTE, Inc.) and Dr. Edward Swanson was named Chief
Operating Officer and Director. Both Dr. Lough and Dr. Swanson had
worked as residents in plastic and reconstructive surgery at the
esteemed Johns Hopkins University School of Medicine. In leaving
Johns Hopkins careers as plastic surgeons, they hope to be able to
impact as many patients as possible by developing and translating
the technology of PolarityTE into a clinical reality. The company
will be headquartered in Salt Lake City, Utah where the Company is
establishing its biomedical R&D facilities and tissue
manufacturing center.
“We did not leave our resident careers at Johns Hopkins
Hospital to merely change biotech—we left to change the
future of medicine. This opportunity allows us to disrupt the field
with our entirely new proprietary technology platform across a wide
variety of tissues so that all patients will eventually be offered
a pragmatic method of regenerative wound healing and personalized
tissue engineering. Our goals are simple: A superior technology, a
superior team and a superior network of world leaders in
translational medicine to augment the delivery of autologous
products for the regeneration of self,” said Dr. Lough who
continued “We sincerely wish to thank Barry Honig, the
Majesco Board of Directors and Dr. Phillip Frost for their
confidence in PolarityTE and we promise to not
disappoint.”
Newly appointed COO, Dr. Edward Swanson, echoed Dr. Lough’s
statements and added, “PolarityTE will change the landscape
of regenerative medicine, beginning with our first target tissue:
skin. Prior to the groundbreaking discovery by Dr. Lough, the world
had never seen true regeneration of functional skin, including all
layers and hair. Skin regeneration of this magnitude is thought of
as the holy grail by burn surgeons.”
Barry Honig, former CEO of Majesco, said, “We are pleased to
announce that we have reached an agreement to merge with
PolarityTE. PolarityTE’s entirely new concept in tissue
engineering will revolutionize the future of regenerative medicine
and help address critical unmet medical needs. In addition to their
wildly novel technology, what further lead to our excitement in
this deal with PolarityTE was their unmatched clinical advisory
board, signaling to us the tremendous momentum behind this company
and its technology. I have no doubt that PolarityTE
will
be the name in autologous tissue engineering in the future after
meeting with their leadership, seeing their technology, and
speaking with members of their clinical advisory
board.”
The merger, which has been approved by the board of directors of
both companies, is subject to certain closing conditions, including
NASDAQ approval, approval by stockholders of Majesco, minimum cash
balance of Majesco at closing, and other customary closing
conditions.
Majesco's common stock trades on The NASDAQ Capital Market under
the symbol "COOL."
About Majesco Entertainment Company
Majesco
Entertainment Company is an innovative developer, marketer,
publisher and distributor of interactive entertainment for
consumers around the world. Building on more than 25 years of
operating history, Majesco develops and publishes a wide range of
video games on digital networks through its Midnight City label.
Majesco is headquartered in Plainfield, New Jersey, and its common
stock is traded on The NASDAQ Capital Market under the symbol:
COOL. More info can be found online at majescoent.com or on Twitter
at twitter.com/majesco.
About PolarityTE
PolarityTE, Inc. is the owner of a novel regenerative medicine and
tissue engineering platform developed and patented by Denver Lough
MD, PhD. This radical and proprietary technology employs a
patients’ own cells for the healing of full-thickness
functionally-polarized tissues. If clinically successful, the
PolarityTE platform will be able to provide medical professionals
with a truly new paradigm in wound healing and reconstructive
surgery by utilizing a patient’s own tissue substrates for
the regeneration of skin, bone, muscle, cartilage, fat, blood
vessels and nerves. It is because PolarityTE uses a natural and
biologically sound platform technology, which is readily adaptable
to a wide spectrum of organ and tissue systems, that the company
and its world-renowned clinical advisory board, are poised to
drastically change the field and future of translational
regenerative medicine.
Welcome to the
Shift
Forward-Looking Statements
Certain
statements contained in this release are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward looking statements contained in this
release relate to, among other things, the Company’s ongoing
compliance with the requirements of The NASDAQ Stock Market and the
Company’s ability to maintain the closing bid price
requirements of The NASDAQ Stock Market on a post reverse split
basis. They are generally identified by words such as
"believes," "may," "expects," "anticipates," "should'" and similar
expressions. Readers should not place undue reliance on such
forward-looking statements, which are based upon the Company's
beliefs and assumptions as of the date of this release. The
Company's actual results could differ materially due to risk
factors and other items described in more detail in the "Risk
Factors" section of the Company's Annual Reports filed with the SEC
(copies of which may be obtained at
www.sec.gov
). Subsequent events
and developments may cause these forward-looking statements to
change. The Company specifically disclaims any obligation or
intention to update or revise these forward-looking statements as a
result of changed events or circumstances that occur after the date
of this release, except as required by applicable law.