THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE
STATE SECURITIES LAWS.
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No. W01
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Warrant to Purchase
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Shares
of Common Stock
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Dated: June 18, 2020
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SCIENTIFIC INDUSTRIES, INC.
WARRANT
TO PURCHASE SHARES OF COMMON STOCK
This
certifies that, for good and valuable consideration, SCIENTIFIC
INDUSTRIES, INC., a Delaware corporation (the “Company”), grants to
[___] (the “Warrantholder”), the
right to subscribe for and purchase from the Company [___] Shares
(the “Warrant
Shares”) at a per Share price equal to $9.00 per
Share, subject to adjustment as provided herein (the
“Exercise
Price”). This Warrant shall be exercisable as set
forth below and shall expire, without notice, at 5:00 p.m., New
York City time, on June 18, 2025 (the “Expiration Date”). The
Exercise Price and the number of Warrant Shares are subject to
adjustment from time to time as provided in Section 5. This Warrant is
issued in connection with that certain Securities Purchase
Agreement, dated as of June 18, 2020 (the “Purchase Agreement”), by
and among the Company and the purchasers named
therein.
For
purposes of this Warrant, the following defined terms shall have
the following meanings:
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under
Rule 405 under the Securities Act of 1933, as amended.
“Exercise Date” means the
date on which the Exercise Notice and Warrant is delivered to the
Company.
“Fundamental Transaction”
means any of the following (i) any tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to
which all or substantially all of the holders of Common Stock are
permitted to tender or exchange their shares for other securities,
cash or property. (ii) the Company effects any reclassification of
the Common Stock or any compulsory share exchange pursuant to which
the Common Stock is effectively converted into or exchanged for
other securities, cash or property (other than as a result of a
subdivision or combination of shares of Common Stock covered by
Section 5.1 hereof,
or a Distribution covered by Section 5.2 hereof). (iii) any
sale, lease, license, transfer, conveyance or other disposition of
all or substantially all of the assets of the Company, in one or a
series of related transactions. (iv) any reorganization,
consolidation, merger, demerger or sale of shares of the Company
where the holders of the Company’s outstanding shares as of
immediately before the transaction (or series of related
transactions) beneficially own less than a majority by voting power
of the outstanding shares of the surviving or successor entity as
of immediately after the transaction. or (v) any
“person” (together with his, her or its Affiliates) or
“group” (within the meaning of Section 13(d) or 14(d)
of the Exchange Act) acquires, directly or indirectly, the
beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) of outstanding shares of
capital stock and/or other equity securities of the Company, in a
single transaction or series of related transactions (including,
without limitation, one or more tender offers or exchange offers),
representing at least 50% of the voting power of or economic
interests in the then outstanding shares of capital stock of the
Company.
“OTC Markets” means either
OTC QX or OTC QB of the OTC Markets Group, Inc.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Shares” means shares of
the Company’s Common Stock, $0.05 par value per share (the
“Common
Stock”).
“Trading Market” shall
mean any of the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the
NYSE MKT, the NASDAQ Capital Market, the NASDAQ Global Market, the
NASDAQ Global Select Market, the New York Stock Exchange or the OTC
Markets (or any successors to any of the foregoing).
“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average sales price
of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or
quoted as reported by such Trading Market, (b) if the Common
Stock is not then listed or quoted for trading on a Trading Market
and if prices for the Common Stock are then reported on The Pink
Open Market (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share
of the Common Stock so reported, or (c) in all other cases, the fair market value of a
share of Common Stock as determined by an independent appraiser
selected in good faith by the purchasers of a majority in interest
of the Shares then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be borne equally by
the Company and the purchasers. For the avoidance of doubt,
with respect to clause (a) above, the VWAP for any date on which
the Common Stock is not traded shall be the VWAP of the nearest
preceding date.
SECTION
1.
VESTING; EXERCISE
OF WARRANT; LIMITATION ON EXERCISE; TAXES; TRANSFER;
DIVISIBILITY.
1.1. VESTING.
The Warrant Shares shall vest immediately upon
issuance.
1.2. EXERCISE
OF WARRANT. This Warrant may be exercised for vested Warrant
Shares, in whole or in part, at any time after payment prior to the
Expiration Date. This Warrant may be exercised by delivery by the
Warrantholder to the Company of the following:
(a) this
Warrant, accompanied by the Exercise Form annexed hereto (the
“Exercise
Form”) duly executed by the Warrantholder, at the
Company’s offices at 80 Orville Drive, Suite 102, Bohemia,
New York 11716 (or such other office or agency of the Company as it
may designate by notice to the Warrantholder) during normal
business hours on any Business Day;
(b) payment
of an amount equal to (x)
the number of Warrant Shares then issuable multiplied by
(y) the Exercise Price by
wire transfer or immediately available funds or by certified or
official bank check; and
(c) such
documentation as to the identity and authority of the Warrantholder
as the Company may reasonably request.
1.3. ISSUANCE
OF WARRANT SHARES. The Warrant Shares shall be deemed by the
Company to be issued to the Warrantholder as the record holder of
the Warrant Shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for the
Warrant Shares as aforesaid.
1.4. LIMITATION
ON EXERCISE. If this Warrant is not exercised prior to the
Expiration Date or is terminated pursuant to Section 6, this Warrant shall
cease to be exercisable and shall become void, and all rights of
the Warrantholder hereunder shall cease.
1.5. PAYMENT
OF TAXES. The issuance of certificates for any Warrant Shares that
are certificated shall be made without charge to the Warrantholder
for any Share transfer or other issuance tax in respect
thereto.
SECTION
2.
RESERVATION OF
SHARES.
All
Warrant Shares issued upon the exercise of the rights represented
by this Warrant shall, upon issuance and payment of the Exercise
Price in cash, be validly issued, fully paid and non-assessable and
free from all taxes, liens, security interests, charges and other
encumbrances with respect to the issuance thereof other than taxes
in respect of any transfer occurring contemporaneously with such
issuance. During the period within which this Warrant may be
exercised, the Company shall at all times have authorized and
reserved, and keep available and free from preemptive or similar
rights, a sufficient number of Shares to provide for the exercise
of this Warrant.
SECTION
3.
EXCHANGE, LOSS OR
DESTRUCTION OF WARRANT.
Upon
receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant and, if
requested by the Company, an agreement to indemnify the Company for
any loss resulting from the replacement of this Warrant, the
Company will execute and deliver a new Warrant of like
tenor.
SECTION
4.
OWNERSHIP OF
WARRANT.
The
Company may deem and treat the person or entity in whose name this
Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made
by anyone other than the Company) for all purposes and shall not be
affected by any notice to the contrary.
SECTION
5.
ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF SHARES
The Exercise Price and the
number of Shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the
occurrence of certain events described in this Section 5.
5.1.
SUBDIVISION OR COMBINATION OF SHARES; ANTI-DILUTION. In case the
Company shall at any time subdivide its outstanding Shares into a
greater number of Shares, the Exercise Price in effect immediately
prior to such subdivision shall be proportionately reduced, and
conversely, in case the outstanding Shares of the Company shall be
combined into a smaller number of Shares, the Exercise Price in
effect immediately prior to such combination shall be
proportionately increased.
5.2.
PRO RATA DISTRIBUTIONS. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of its Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash,
stock, evidences of its indebtedness, or other securities, property
or options by way of a dividend, spin off, reclassification,
corporate rearrangement, scheme of arrangement or other similar
transaction) (a “Distribution”), then,
upon any exercise of this Warrant that occurs after the record date
fixed for determination of stockholders entitled to receive such
Distribution, the Warrantholder shall be entitled to receive, in
addition to the Warrant Shares otherwise issuable upon such
exercise, the Distribution, to the same extent that the
Warrantholder would have participated therein if the Warrantholder
had held the number of shares of Common Stock acquirable upon
complete exercise of this Warrant immediately before the date of
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of Common
Stock are to be determined for the participation in such
Distribution, without regard to any limitation on exercise
contained therein. To the extent that this Warrant has not been
partially or completely exercised at the time of such Distribution,
such portion of the Distribution shall be held in abeyance for the
benefit of the Warrantholder until the Warrantholder has exercised
this Warrant.
5.4. NO
VOTING RIGHTS. Nothing contained in this Warrant shall be construed
as conferring upon the holder hereof the right to vote or to
consent to receive notice as a shareholder of the Company on any
other matters or any rights whatsoever as a shareholder of the
Company.
5.5. NOTICE
OF ADJUSTMENT. When the Exercise Price is adjusted pursuant to any
provision of this Section 5, the Company shall promptly (i) deliver
a notice to the Warrantholder, and (ii) file with the transfer
agent for the Warrants a certificate of an officer of the Company,
in each case, setting forth the Exercise Price after such
adjustment and any resulting adjustment to the number of Warrant
Shares, and setting forth a brief statement of the facts requiring
such adjustment and a computation thereof. To the extent that any
notice provided in this Warrant constitutes, or contains, material,
non-public information regarding the Company, the Company shall
simultaneously file such notice with the Commission pursuant to a
Report on Form 8-K. The Warrantholder shall remain entitled to
exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such
notice except as may otherwise be expressly set forth
herein.
5.6. CERTAIN
EVENTS. If any change in the outstanding Shares of the Company or
any other event occurs as to which the other provisions of this
Section 5 are not
strictly applicable or if strictly applicable would not fairly
effect the adjustments to this Warrant in accordance with the
essential intent and principles of such provisions, then the chief
executive officer of the Company shall make in good faith an
adjustment in the number and class of Shares issuable under this
Warrant, the Exercise Price and/or the application of such
provisions, in accordance with such essential intent and
principles, so as to protect such purchase rights as aforesaid. The
adjustment shall be such as will give the Warrantholder, upon
exercise for the same aggregate Exercise Price, the total number,
class and kind of Shares as the Warrantholder would have owned had
this Warrant been exercised prior to the event and had the
Warrantholder continued to hold such Shares until after the event
requiring adjustment.
SECTION
6.
NOTICE OF CORPORATE EVENTS.
If the Company (i)
declares a dividend or any other distribution of cash, securities
or other property in respect of its Common Stock, including without
limitation, any granting of rights or warrants to subscribe for or
purchase any capital stock of the Company or of any rights, (ii)
enters into any agreement contemplating or solicits stockholder
approval for any Fundamental Transaction, or (iii) authorizes the
dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be
delivered to the Warrantholder at least 20 calendar days prior to
the applicable record or effective date on which a Person would be
required to hold Common Stock in order to participate in or vote
with respect to such event or transaction a written notice stating
the date on which a record is to be taken for the purpose of such
event or transaction, or if a record is not to be taken, the date
as of which the holders of the Common Stock to be entitled to
participate or vote in event or transaction are to be determined.
To the extent that any notice provided in this Warrant constitutes,
or contains, material, non-public information regarding the Company
or any of the Subsidiaries, the Company shall simultaneously file
such notice with the Commission pursuant to a Report on Form 8-K.
The Holder shall remain entitled to exercise this Warrant during
the period commencing on the date of such notice to 5:00 P.M.
Eastern Time on the Business Day immediately preceding the
effective date of the event triggering such notice (the
“Corporate Event
Exercise Date”) in order to participate in or vote
with respect to such event or transaction except as may otherwise
be expressly set forth herein; provided, however, that upon the
consummation or occurrence of an event described in either clause
(ii) or (iii) above, this Warrant will terminate as of the
Corporate Event Exercise Date.
SECTION
7.
CALL PROVISION.
If at any time
commencing 12 months from the date of this Warrant, but before the
Expiration Date, the Volume Weighted Average Pricing
(“VWAP”)
of the Company’s Common Stock exceeds $18.00 (subject to
adjustment for forward and reverse stock splits, recapitalizations,
stock dividends and the like as set forth in Section 5) for each of
thirty consecutive trading days (the “Measurement
Period”), then the
Company may, at any time in its sole discretion, call for the
exercise of this Warrant, in its entirety
(“Call
Right”). To exercise
the Call Right, the Company must deliver to the Warrantholder an
irrevocable written notice (a “Call
Notice) indicating that the
provisions of this Section of the Warrant have been satisfied, and
that the Warrantholder accordingly must exercise all, or a portion,
of this Warrant prior to the Call Date, as defined below. Such Call
Notice shall include language notifying Warrantholder that failure
to comply with the Call Notice shall result in the forfeiture and
cancellation of any unexercised Warrant Shares granted to
Warrantholder hereunder. If the conditions set forth above for such
Call Notice are met and the Warrantholder has not exercised all of
the Shares exercisable under this Warrant by delivering an Exercise
Notice and payment therefor to the Company within thirty trading
days after the date the Call Notice is received by the
Warrantholder (such date and time, the “Call
Date”), then the
Warrants for which a Exercise Notice shall not have been received
by the Call Date will be cancelled at 5:00 p.m. (Eastern Time) on
the Call Date. In furtherance thereof, the Company covenants and
agrees that it will honor all Exercise Notices with respect to the
Warrant Shares subject to a Call Notice that are tendered through
5:00 p.m. (Eastern Time) on the Call Date. Notwithstanding anything
to the contrary set forth in this Warrant, provided that
the Warrantholder shall have furnished
to the Company, within 10 calendar days after the
Warrantholder’s receipt of written notice from the Company,
such information regarding the Warrantholder, the Warrant Shares
held by it, and the intended method of disposition of such
securities as is reasonably required to effect the registration of
such Warrantholder’s Warrant Shares and is set forth in
reasonable detail in such written notice, the Company may not
deliver a Call Notice or require the cancellation of this Warrant
(and any such Call Notice shall be void), unless the Company shall
have filed a registration
statement (“Registration
Statement”) under the
Securities Act of 1933, as amended, covering the Warrant Shares and
such Registration Statement has been declared effective by the
United States Securities and Exchange
Commission.
SECTION
8. COMPLIANCE WITH
SECURITIES ACT; TRANSFERABILITY OF WARRANT; DISPOSITION OF WARRANT
SHARES AND COMMON STOCK.
8.1. COMPLIANCE
WITH SECURITIES ACT. The Warrantholder, by acceptance hereof,
agrees that this Warrant, the Warrant Shares and the shares of
Common Stock issuable upon conversion of the Warrant Shares are
being acquired for investment and that it shall not offer, sell or
otherwise dispose of this Warrant, any Warrant Shares or any shares
of Common Stock issuable upon conversion of the Warrant Shares
except under circumstances which will not result in a violation of
the Act or any applicable state securities laws. This Warrant, the
Warrant Shares and the shares of Common Stock issuable upon
conversion of the Warrant Shares (unless registered under the Act)
shall be stamped or imprinted with a legend in substantially the
following form:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR THE
SECURITIES OR BLUE SKY LAWS OF ANY STATE. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED, OR UNLESS SOLD PURSUANT TO
RULE 144 OF THE ACT.
8.2 ACCREDITED
INVESTOR; ACCESS TO INFORMATION; PRE-EXISTING RELATIONSHIP.
Warrantholder presently qualifies and will as of any exercise of
this Warrant qualify as an “accredited investor” within
the meaning of Regulation D of the rules and regulations
promulgated under the Act. Warrantholder has had the opportunity to
ask questions of, and to receive answers from, appropriate
executive officers of the Company with respect to the terms and
conditions of the transactions contemplated hereby and with respect
to the business, affairs, financial condition and results of
operations of the Company. Warrantholder has had access to such
financial and other information as is necessary in order for
Warrantholder to make a fully informed decision as to investment in
the Company, and has had the opportunity to obtain any additional
information necessary to verify any of such information to which
Warrantholder has had access. Warrantholder further represents and
warrants that the Warrantholder has either (a) a pre-existing
relationship with the Company or one or more of its officers or
directors consisting of personal or business contacts of a nature
and duration which enable the Warrantholder to be aware of the
character, business acumen and general business and financial
circumstances of the Company or the officer or director with whom
such relationship exists or (b) such business or financial
expertise as to be able to protect the Warrantholder’s own
interests in connection with the purchase of the Warrant
Shares.
8.3 WARRANT
NOT TRANSFERABLE. This Warrant and the
rights and obligations hereunder shall not be assignable or
transferable without the prior written consent of the
Company. The Warrant Shares, if and when issued, may be
transferred or sold only in compliance with applicable United
States federal and state securities laws or of any requirements of the Trading Market
upon which the Common Stock may be quoted or listed.
Any instrument purporting to make an
assignment in violation of this Section 8.3
shall be void.
8.4 DISPOSITION
OF WARRANT SHARES. With respect to any offer, sale, or other
disposition of any Warrant Shares prior to registration of such
shares, the Warrantholder hereof and each subsequent Warrantholder
agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written
opinion of such Warrantholder’s counsel, if reasonably
requested by the Company, to the effect that such offer, sale or
other disposition may be effected without registration or
qualification (under the Act as then in effect or any federal or
state law then in effect) of such Warrant Shares and indicating
whether or not under the Act certificates for such Warrant Shares
to be sold or otherwise disposed of require any restrictive legend
as to applicable restrictions on transferability. Promptly upon
receiving such written notice and opinion, the Company, as promptly
as practicable, shall notify such Warrantholder that such
Warrantholder may sell or otherwise dispose of such Warrant Shares
all in accordance with the terms of the notice delivered to the
Company. If a determination has been made pursuant to this Section
8.4 that the opinion of the counsel for the Warrantholder is not
reasonably satisfactory to the Company, the Company shall so notify
the Warrantholder promptly after such determination has been made.
Notwithstanding the foregoing, such Warrant Shares may be offered,
sold or otherwise disposed of in accordance with Rule 144 under the
Act, provided that the Company shall have been furnished with such
information as the Company may request to provide reasonable
assurance that the provisions of Rule 144 have been satisfied. Each
certificate representing the Warrant Shares thus transferred
(except a transfer pursuant to Rule 144) shall bear a legend as to
the applicable restrictions on transferability in order to insure
compliance with the Act, unless in the aforesaid opinion of counsel
for the Warrantholder, such legend is not required in order to
insure compliance with the Act. The Company may issue stop transfer
instructions to its transfer agent in connection with such
restrictions.
8.5 MARKET
STANDOFF. The Warrantholder hereby agrees that it will not, without
the prior written consent of the managing underwriter, during the
period commencing on the date of the final prospectus relating to a
registered public offering of the Company and ending on the date
specified by the Company and the managing underwriter (such period
not to exceed one hundred eighty (180) days) (i) lend, offer,
pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of the
Company’s capital stock acquired through the exercise of this
Warrant, or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic
consequences of ownership of the Company’s capital stock
acquired through the exercise of this Warrant, whether any such
transaction described in clause (i) or (ii) above is to be settled
by delivery of securities, in cash or otherwise. The underwriters
in connection with a registered public offering of the Company are
intended third party beneficiaries of this Section and shall have
the right, power and authority to enforce the provisions hereof as
though they were a party hereto. Warrantholder further agrees to
execute such agreements as may be reasonably requested by the
underwriters in a registered public offering of the Company that
are consistent with this Section 8.5 or that are necessary to give
further effect thereto.
In
order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to shares of the
Company’s capital stock acquired through the exercise of this
Warrant until the end of such period. The Warrantholder agrees that
a legend reading substantially as follows shall be placed on all
certificates representing all shares of the Warrantholder (and the
shares or securities of every other person subject to the
restriction contained in this Section 8.5):
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP
PERIOD AFTER THE EFFECTIVE DATE OF THE ISSUER’S REGISTRATION
STATEMENT FILED UNDER THE ACT, AS AMENDED, AS SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL HOLDER OF THESE
SECURITIES, A COPY OF WHICH MAY BE OBTAINED AT THE ISSUER’S
PRINCIPAL OFFICE. SUCH LOCK-UP PERIOD IS BINDING ON TRANSFEREES OF
THESE SHARES.”
SECTION
9.
MISCELLANEOUS.
9.1. ENTIRE
AGREEMENT. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and supersede any
prior agreements or understandings regarding the subject matter
hereof.
9.2. SUCCESSORS
AND ASSIGNS. The terms and conditions of this Warrant shall inure
to the benefit of and be binding upon the parties’ respective
successors and assigns. Nothing in this Warrant, express or
implied, is intended to confer upon any party, other than the
parties hereto or their respective successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of
this Warrant, except as expressly provided in this
Warrant.
9.3. AMENDMENTS
AND WAIVERS. No failure on the part of either party to exercise and
no delay in exercising any power or right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of
any power or right preclude any other or further exercise thereof
or the exercise of any other power or right. The remedies herein
and in any other instrument, document or agreement delivered or to
be delivered by either party hereunder or in connection herewith
are cumulative and not exclusive of any remedies provided by law.
No notice to or demand on a party not required hereunder shall in
any event entitle such party to any other or further notice or
demand in similar or other circumstances or constitute a waiver of
the right of the other party to any other or further action in any
circumstances without notice or demand. No amendment, modification
or waiver of any provision of this Warrant or consent to any
departure by either party therefrom shall be effective unless the
same shall be in writing and signed by the Company and the
Warrantholder.
9.4. SECTION
AND OTHER HEADINGS. The titles and subtitles used in this Warrant
are used for convenience only and are not to be considered in
construing or interpreting this Warrant.
9.5. NOTICES.
All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (i) upon personal delivery to
the party to be notified; (ii) when sent by confirmed electronic
mail or facsimile if sent during normal business hours of the
recipient, if not, then on the next Business Day; (iii) five (5)
days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (iv) one (1) day after
deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All
communications shall be sent to the address as set forth in the
Warrantholder’s signature page to the Purchase Agreement or
at such other address as such party may designate by ten (10)
days’ advance written notice to the other parties
hereto.
9.6. SEVERABILITY.
If one or more provisions of this Warrant are held to be
unenforceable under applicable law, such provision shall be
excluded from this Warrant and the balance of this Warrant shall be
interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.
9.7. FRACTIONAL
SHARES. No fractional Shares or scrip representing fractional
Shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a Share called for upon any exercise
hereof, the Company shall round up to the nearest whole
Share.
9.8 DELIVERY
OF NEW WARRANT. Unless the purchase rights represented by this
Warrant shall have expired or shall have been fully exercised, the
Company shall, at the time of delivery of the certificate or
certificates representing the Warrant Shares being issued in
accordance herewith, deliver to the Warrantholder a new warrant
evidencing the rights of the Warrantholder to purchase the
unexpired and unexercised Warrant Shares called for by this
Warrant. Such new warrant shall in all other respects be identical
to this Warrant.
9.9. GOVERNING
LAW. This Warrant shall be governed by and construed under the
substantive laws of New York without regard to the conflicts of law
provisions thereof. The federal courts in New York, New York shall
have exclusive jurisdiction of any and all actions or suits
commenced by either party arising under or with respect to this
Warrant.
9.10. SURVIVAL.
The obligations of each party contained in or made pursuant to this
Agreement shall survive the termination of the Loan Agreement
and/or repayment in full of the Loan, whether by prepayment or
otherwise.
(Signature Page Follows)
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SCIENTIFIC INDUSTRIES, INC.
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Date: June 18,
2020
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By:
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/s/ Helena R. Santos
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Helena R. Santos,
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President and Chief Executive Officer
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Signature Page to Warrant
IN WITNESS WHEREOF, the undersigned has
caused this Warrant to be signed by its duly authorized officer as
of the first date written above.
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WARRANTHOLDER:
If an individual:
_______________________________
Name:
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If an entity:
Name of
entity:
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SCIENTIFIC INDUSTRIES, INC.
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Date: June 18,
2020
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By:
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/s/ Helena R. Santos
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Helena R. Santos,
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President and Chief Executive Officer
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SCIENTIFIC
INDUSTRIES, INC.
WARRANT
EXERCISE FORM
(To be
executed upon exercise of Warrant)
The
undersigned, the record holder of the Warrant, hereby irrevocably
elects to exercise the right, represented by the Warrant, to
purchase the Warrant Shares and herewith pays the Exercise Price in
accordance with the terms of the Warrant by tendering payment for
such Warrant Shares to the order of SCIENTIFIC INDUSTRIES, INC. in
the amount of $______________.
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SCIENTIFIC INDUSTRIES, INC.
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Date: June 18,
2020
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By:
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/s/ Helena R. Santos
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Helena R. Santos,
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President and Chief Executive Officer
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this
“Agreement”)
is dated as of June 18, 2020 (the “Closing
Date”), between
Scientific Industries, Inc., a Delaware corporation (the
“Company”),
and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser”
and collectively the “Purchasers”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and
pursuant to an exemption from the registration requirements of
Section 5 of the Securities Act contained in Section 4(a)(2)
thereof and/or Regulation D thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and
not jointly, desires to purchase from the Company, securities of
the Company as more fully described in this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Company
and each Purchaser agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. In
addition to the terms defined elsewhere in this Agreement, for all
purposes of this Agreement, the following terms have the meanings
set forth in this Section 1.1:
“Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under
Rule 405 of the Securities Act.
“Board of
Directors” means the
board of directors of the Company.
“Business
Day” means any day except
any Saturday, any Sunday, any day which is a federal legal holiday
in the United States or any day on which banking institutions in
the State of New York are authorized or required by law or other
governmental action to close.
“Closing”
means the closing of the purchase and sale of the Securities
pursuant to Section 2.1.
“Commission”
means the United States Securities and Exchange
Commission.
“Common
Stock” means the common
stock of the Company, par value $0.05 per share, and any other
class of securities into which such securities may hereafter be
reclassified or changed.
“Common Stock
Equivalents” means any
securities of the Company or the Subsidiaries which would entitle
the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, right, option,
warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
“Company
Counsel”
means Reitler Kailas & Rosenblatt LLC, with offices
located at 885 Third Avenue, New York, New York
10022.
“Disclosure
Schedules” means the
Disclosure Schedules of the Company delivered concurrently
herewith.
“Eligible
Market” means any of
the New York Stock Exchange, the American Stock Exchange, the
Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq
Capital Market and the OTC Bulletin Board.
“Exchange
Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“FINRA”
means the Financial Industry Regulatory
Authority.
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right
of first refusal, preemptive right or other
restriction.
“Per Share Purchase
Price” equals $4.50,
subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the
Common Stock that occur after the date of this
Agreement.
“Person”
means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any
kind.
“Proceeding”
means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or
partial proceeding, such as a deposition), whether commenced or
threatened.
“Registrable
Securities” means (i) any
Shares or Warrant Shares acquired or held by a Purchaser or (ii)
any securities of the Company or its Affiliates issued as a
dividend or other distribution with respect to, or in exchange for
or in conversion, exercise or replacement of or offered wholly or
partly in any tender or exchange offer in consideration of any
Registrable Securities described in (i). Registrable Securities
shall cease to be Registrable Securities when and to the extent
that (x) such securities have been transferred by a Purchaser
pursuant to an effective Registration Statement or pursuant to Rule
144; (y) such securities have ceased to be outstanding; or (z) all
of such securities may be transferred without restriction or
limitation pursuant to Rule 144.
“Registration
Statement” means any
registration statement of the Company that covers Registrable
Securities and is filed with, or to be filed with, the Commission
under the rules and regulations promulgated under the Securities
Act and pursuant to the provisions of this
Agreement.
“Rule
144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“Securities”
means the Shares, the Warrants and the Warrant
Shares.
“Securities
Act” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
“Shares”
means the shares of Common Stock issued or issuable to each
Purchaser pursuant to this Agreement.
“Short
Sale” means all
“short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include locating
and/or borrowing shares of Common
Stock).
“Subscription
Amount” means, as to each
Purchaser, the aggregate amount to be paid for Shares and Warrants
purchased hereunder as specified below such Purchaser’s name
on the signature page of this Agreement and next to the heading
“Subscription Amount,” in United States dollars and in
immediately available funds.
“Subsidiary”
means any subsidiary of the Company as set forth
on Schedule
3.1(a), and shall, where
applicable, also include any direct or indirect subsidiary of the
Company formed or acquired after the date
hereof.
“Trading
Market” means OTC
Bulletin Board or any other Eligible Market or any national
securities exchange, market or trading or quotation facility on
which the Common Stock is then listed or
quoted.
“Transaction
Documents” means this
Agreement, the Warrants, and any other documents or agreements
executed in connection with the transactions contemplated
hereunder.
“Transfer
Agent”
means Continental Stock Transfer & Trust, the current
transfer agent of the Company, with a mailing address of 1 State
Street, 30th
Floor, New York, New York 10004, and
any successor transfer agent of the Company.
“Warrants”
means, collectively, the Common Stock purchase warrants delivered
to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof, which Warrants shall be exercisable on the date of issuance
and have a term of exercise equal to five (5) years from such date,
in the form of Exhibit
A attached
hereto.
“Warrant
Shares” means the shares
of Common Stock issuable upon exercise of the
Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1. Closing.
On the Closing Date, upon the terms and subject to the conditions
set forth herein, the Company shall sell, and the Purchasers,
severally and not jointly, shall purchase, (in the amounts set
forth for each Purchaser on the signature pages hereto) up to an
aggregate of 1,349,850 Shares and Warrants to purchase up to
1,349,850 shares of Common Stock. On the Closing Date, each
Purchaser agrees to purchase and the Company agrees to sell and
issue to each Purchaser that number of Shares and Warrants set
forth opposite each Purchaser’s name on Exhibit
A.
Upon
satisfaction of the covenants and conditions set forth in Section
2.2, the Closing shall occur at the offices of Company Counsel or
such other location as the parties shall mutually
agree.
2.2. Deliveries.
(a) On
or prior to the Closing Date (except as set forth below), the
Company shall deliver or cause to be delivered to each Purchaser
the following:
(i) this
Agreement duly executed by the Company;
(ii) the
wire instructions of the Company;
(iii) a
copy of the irrevocable instructions to the Transfer Agent
instructing the Transfer Agent to deliver on an expedited basis
Shares equal to such Purchaser’s Subscription Amount divided
by the Per Share Purchase Price, registered in the name of such
Purchaser (certificates for such Shares may be delivered within
three Business Days of the Closing Date); and
(iv) a
Warrant registered in the name of such Purchaser to purchase up to
a number of shares of Common Stock equal to 100% of such
Purchaser’s Shares (as set forth on the applicable signature
page hereto), with an exercise price equal to $9.00 per share,
subject to adjustment therein (such Warrant certificate may be
delivered within three Business Days of the Closing
Date).
(b) On
or prior to the Closing Date,
each Purchaser shall deliver or
cause to be delivered to the Company, the following:
(i) this
Agreement duly executed by such Purchaser; and
(ii) such
Purchaser’s Subscription Amount, in United States dollars and
in immediately available funds, by wire to the account provided by
the Company to the
Purchasers.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. Representations
and Warranties of the Company. Except as set forth in the Disclosure
Schedules, which Disclosure Schedules shall be deemed a part hereof
and shall qualify any representation or otherwise made herein to
the extent of the disclosure contained in the corresponding section
of the Disclosure Schedules, the Company hereby makes the following
representations and warranties to each
Purchaser:
(a) Subsidiaries.
All of the direct and indirect Subsidiaries of the Company are set
forth on Schedule 3.1(a). Except as set forth in the SEC
Reports, the Company owns, directly or indirectly, all of the
capital stock or other equity interests of each Subsidiary free and
clear of any Liens, and all of the issued and outstanding shares of
capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b) Organization
and Qualification. The Company and each of its
material Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization, with the
requisite power and authority to own and use its properties and
assets and to carry on its business as currently conducted, except
where the failure to be in good standing would not, individually or
in the aggregate, have a Material Adverse Effect (as defined
below). Neither the Company nor any Subsidiary is in violation nor
default of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the material
Subsidiaries is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the
case may be, would not, individually or in the aggregate, have a
material adverse effect on the business, properties, financial
condition, and results of operations of the Company and the
Subsidiaries taken as a whole (the occurrence of any such effect
being herein referred to as a “Material Adverse Effect”)
and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.
(c) Authorization;
Enforcement. The
Company has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by this
Agreement and each of the other Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each of the other
Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and
no further action is required by the Company, the Board of
Directors or the Company’s stockholders in connection
herewith or therewith other than in connection with the Required
Approvals. This Agreement and each other Transaction Document to
which it is a party has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(d) No
Conflicts. The
execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents to which it is a
party, the issuance and sale of the Securities and the consummation
by it of the transactions contemplated hereby and thereby do not
and will not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles
of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the
properties or assets of the Company or any Subsidiary, or give to
others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or
by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except such
that would not, individually or in the aggregate, have a Material
Adverse Effect.
(e) Filings,
Consents and Approvals. The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to,
or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance
by the Company of the Transaction Documents, other than: (i) the
filings required pursuant to Section 4.4 of this Agreement, (ii)
application(s) to each applicable Trading Market for the listing of
the Shares and Warrant Shares for trading thereon in the time and
manner required thereby, (iii) the filing of Form D with the
Commission and such filings as are required to be made under
applicable state securities laws (collectively with clauses (i),
and (ii) above, the “Required
Approvals”), and (v)
where the failure to obtain, give or make, as applicable, such
consent, waiver, authorization, order, notice, filing or
registration would not, individually or in the aggregate, have a
Material Adverse Effect.
(f) Issuance
of the Securities. The Securities are duly authorized
and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the
Company. The Warrant Shares, when issued in accordance with the
terms of the Warrants, will be validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company.
The Company has reserved from its duly authorized capital stock the
maximum number of shares of Common Stock issuable pursuant to this
Agreement and the Warrants.
(g) Capitalization. The
capitalization of the Company is as set forth in its SEC Reports.
Except as disclosed in Schedule
3.1(g)(i), the Company has not
issued any capital stock since its most recently filed
periodic report under the Exchange Act, other than pursuant to
the (i) exercise of employee stock options under the
Company’s stock option plans, the issuance of shares of
Common Stock or any equity awards (including the issuance of Common
Stock upon exercise or settlement of such equity awards) to
employees pursuant to the Company’s employee stock purchase
plans, equity incentive plans, or other employee compensation plans
as such plans are in existence on the date hereof, and (ii)
conversion and/or exercise of Common Stock Equivalents outstanding
as of the date of the most recently filed periodic report under the
Exchange Act. Except as disclosed in Schedule
3.1(g)(ii), no Person has any
right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of
the purchase and sale of the Securities, there are no outstanding
options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock or the capital stock of any
Subsidiary, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common
Stock Equivalents or capital stock of any Subsidiary. The issuance
and sale of the Securities will not obligate the Company or any
Subsidiary to issue shares of Common Stock or other securities to
any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities.
There are no outstanding securities or instruments of the Company
or any Subsidiary that contain any redemption or similar
provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may
become bound to redeem a security of the Company or such
Subsidiary. The Company does not have any stock appreciation rights
or “phantom stock” plans or agreements or any similar
plan or agreement. All of the outstanding shares of capital stock
of the Company are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. Further approval or
authorization of any stockholder, the Board of Directors or others
is not required for the issuance and sale of the Securities. There
are no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to
which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s
stockholders.
(h) SEC
Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be
filed by the Company under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two
years preceding the date hereof (or such shorter period as the
Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively
referred to herein as the “SEC
Reports”) on a timely
basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable. None of the SEC Reports,
when filed, contained any untrue statement of a material fact or
omitted 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. The
Company has never been an issuer subject to Rule 144(i) under the
Securities Act. The financial statements of the Company included in
the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with
accounting principles generally accepted in the United States
applied on a consistent basis during the periods involved
(“GAAP”),
except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of and for the dates
thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements,
to normal, immaterial, year-end audit
adjustments.
(i) Material
Changes; Undisclosed Events, Liabilities or
Developments. Since
the date of the latest audited financial statements included within
the SEC Reports, except as specifically disclosed in a subsequent
SEC Report filed at least one Business Day prior to the date
hereof, (i) there has been no event, occurrence or development that
has had a Material Adverse Effect, (ii) the Company has not
incurred any material liabilities (contingent or otherwise) other
than trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice, (iv) the Company
has not declared or made any dividend or distribution of cash or
other property to its stockholders or purchased, redeemed or made
any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing
Company stock option plans. The Company does not have pending
before the Commission any request for confidential treatment of
information. Except for the issuance of the Securities contemplated
by this Agreement or as set forth on Schedule
3.1(i), no event, liability,
fact, circumstance, occurrence or development has occurred or
exists with respect to the Company or its Subsidiaries or their
respective businesses, prospects, properties, operations, assets or
financial condition that would be required to be disclosed by the
Company under applicable securities laws at the time this
representation is made or deemed made that has not been publicly
disclosed at least one Business Day prior to the date that this
representation is made.
(j) Transactions
With Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company or any
Subsidiary and, to the knowledge of the Company, none of the
employees of the Company or any Subsidiary is presently a party to
any transaction with the Company or any Subsidiary (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, providing for the borrowing of money
from or lending of money to 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, stockholder, member or partner, in each case in excess of
$120,000 other than for (i) payment of salary or consulting fees
for services rendered, (ii) reimbursement for expenses incurred on
behalf of the Company and (iii) other employee benefits, including
stock option agreements under any stock option plan of the
Company.
(k) Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are
in compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002 that are effective as of the date
hereof, and any and all applicable rules and regulations
promulgated by the Commission thereunder that are effective as of
the date hereof and as of the Closing Date. The Company and
the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions
are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (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. The Company and the Subsidiaries
have established “disclosure controls and
procedures” (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and the Subsidiaries and designed
such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it
files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the
Commission’s rules and forms. The Company’s certifying
officers have evaluated the effectiveness of the disclosure
controls and procedures of the Company and the Subsidiaries as of
the end of the period covered by the most recently filed periodic
report under the Exchange Act (such date, the
“Evaluation
Date”). The Company
presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no changes in the internal control over
financial reporting (as such term is defined in the Exchange Act)
of the Company and its Subsidiaries that have materially
affected the internal control over financial reporting of the
Company and its Subsidiaries.
(l) Certain
Fees. Except as set
forth in on Schedule 3.1(l), no brokerage or finder’s fees or
commissions are or will be payable by the Company or any Subsidiary
to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. The
Purchasers shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by the Transaction
Documents.
(m) Listing
and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration except as set forth in the SEC Reports. Except as set
forth on Schedule 3.1(m), the Company has not, in the 12
months preceding the date hereof, received notice from any Trading
Market on which the Common Stock is or has been listed or quoted to
the effect that the Company is not in compliance with the listing
or maintenance requirements of such Trading
Market.
(n) No
Integrated Offering. Assuming
the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, neither the Company, nor any
of its Affiliates, nor any Person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of
(i) the Securities Act which would require the registration of the
Warrants or Warrant Shares under the Securities Act, or (ii) any
applicable shareholder approval provisions of any Trading Market on
which any of the securities of the Company are listed or
designated.
(o) Acknowledgment
Regarding Purchasers’ Purchase of
Securities. The
Company acknowledges and agrees that each of the Purchasers is
acting solely in the capacity of an arm’s length purchaser
with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and
any advice given by any Purchaser or any of their respective
representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely
incidental to the Purchasers’ purchase of the
Securities.
(p) Private
Placement. Assuming the
accuracy of the Purchasers’ representations and warranties
set forth in Section 3.2, no registration under the Securities Act
is required for the offer and sale of the Warrants or the Warrant
Shares by the Company to the Purchasers as contemplated
hereby.
(q) No
General Solicitation. Neither the Company nor any Person
acting on behalf of the Company has offered or sold any of the
Warrant or Warrant Shares by any form of general solicitation or
general advertising. The Company has offered the Warrants and
Warrant Shares for sale only to the Purchasers and certain other
“accredited investors” within the meaning of Rule 501
under the Securities Act.
(r) No
Disqualification Events. With respect to the Warrant and
Warrant Shares to be offered and sold hereunder in reliance on Rule
506 under the Securities Act, none of the Company, any of its
predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering
hereunder, any beneficial owner of 20% or more of the
Company’s outstanding voting equity securities, calculated on
the basis of voting power, nor any promoter (as that term is
defined in Rule 405 under the Securities Act) connected with the
Company in any capacity at the time of sale (each, an
“Issuer Covered
Person”) is subject to
any of the “Bad Actor” disqualifications described in
Rule 506(d)(1)(i) to (viii) under the Securities Act (a
“Disqualification
Event”), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The
Company has exercised reasonable care to determine whether any
Issuer Covered Person is subject to a Disqualification Event. The
Company has complied, to the extent applicable, with its disclosure
obligations under Rule 506(e), and has furnished to the Purchasers
a copy of any disclosures provided thereunder.
(s) Other
Covered Persons. The
Company is not aware of any Person (other than any Issuer Covered
Person) that has been or will be paid (directly or indirectly)
remuneration for solicitation of purchasers in connection with the
sale of any Securities.
(t) Notice
of Disqualification Events. The Company will notify the
Purchasers in writing, prior to the Closing Date of any
Disqualification Event relating to any Issuer Covered
Person.
(u) Disclosure.
No representation or warranty of the Company contained in
this Section
3.1, when read in conjunction
with any disclosure furnished by the Company pursuant to this
Agreement and the SEC Reports, contains any untrue statement of a
material fact or omitted 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. All disclosure furnished in writing by or on
behalf of the Company to the Purchasers regarding the Company, its
business and the transactions contemplated hereby, is true and
correct and does not contains any untrue statement of a material
fact or omitted 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.
3.2. Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no
other Purchaser, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows (unless
as of a specific date therein, in which case they shall be accurate
as of such date):
(a) Organization;
Authority. Such
Purchaser is either an individual or an entity duly incorporated or
formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power
and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry
out its obligations hereunder and thereunder. The execution and
delivery of the Transaction Documents and performance by
such Purchaser of the transactions contemplated by the
Transaction Documents have been duly authorized by all
necessary corporate, partnership, limited liability company or
similar action, as applicable, on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly
executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against
it in accordance with its terms, except: (i) as limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(b) Understandings
or Arrangements. Such Purchaser is acquiring the
Securities as principal for its own account and has no direct or
indirect arrangement or understandings with any other Persons to
distribute or regarding the distribution of such Securities (this
representation and warranty not limiting such Purchaser’s
right to sell the Securities in compliance with applicable federal
and state securities laws). Such Purchaser understands that the
Shares, the Warrants and the Warrant Shares are “restricted
securities” and have not been registered under the Securities
Act or any applicable state securities law and is acquiring such
Securities as principal for his, her or its own account and not
with a view to or for distributing or reselling such Securities or
any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of
distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or
indirect arrangement or understandings with any other Persons to
distribute or regarding the distribution of such Securities in
violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such
Purchaser’s right to sell such Securities pursuant to a
registration statement or otherwise in compliance with applicable
federal and state securities laws).
(c) Purchaser
Status. At the time
such Purchaser was offered the Securities, it was, and as of the
date hereof it is, and on each date on which it exercises any
Warrants, it will be an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act.
(d) Experience
of Such Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so
as to be capable of evaluating the merits and risks of the
prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear
the economic risk of an investment in the Securities and, at the
present time, is able to afford a complete loss of such
investment.
(e) Access
to Information. Such Purchaser
acknowledges that it has had the opportunity to review the
Transaction Documents (including all exhibits and schedules
thereto) and the SEC Reports and has been afforded, (i) the
opportunity to ask such questions as it has deemed necessary of,
and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities;
(ii) access to information about the Company and its financial
condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the
investment.
(f) Certain
Transactions and Confidentiality. Other than consummating the
transactions contemplated hereunder, such Purchaser has not, nor
has any Person acting on behalf of or pursuant to any understanding
with such Purchaser, directly or indirectly executed any purchases
or sales, including Short Sales, of the securities of the
Company during the period commencing as of the time that such
Purchaser first received a term sheet (written or oral) from the
Company or any other Person representing the Company setting forth
the material terms of the transactions contemplated hereunder
and ending immediately prior to the execution hereof.
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the representation set
forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this Agreement. Other than to
other Persons party to this Agreement or to such Purchaser’s
representatives, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents
and Affiliates, such Purchaser has maintained the confidentiality
of all disclosures made to it in connection with this transaction
(including the existence and terms of this transaction).
Notwithstanding the foregoing, for the avoidance of doubt, nothing
contained herein shall constitute a representation or warranty, or
preclude any actions, with respect to locating or borrowing shares
in order to effect Short Sales or similar transactions in the
future.
(g) General
Solicitation. Such
Purchaser is not purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the
Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or
any other general solicitation or general
advertisement.
The Company acknowledges and agrees that the representations
contained in this Section 3.2 shall not modify, amend or affect
such Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of
the transactions contemplated hereby. Notwithstanding the
foregoing, for the avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any
actions, with respect to locating or borrowing shares in order to
effect Short Sales or similar transactions in the
future.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1. Removal
of Legends.
(a) The
Shares, Warrants and Warrant Shares may only be disposed of in
compliance with state and federal securities laws. In connection
with any transfer of Shares, Warrants or Warrant Shares other than
pursuant to an effective registration statement or Rule 144, to the
Company or to an Affiliate of a Purchaser or in connection with a
pledge, the Company may require the transferor thereof to provide
to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such
transferred Warrant under the Securities Act.
(b) The
Purchasers agree to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Shares, Warrants or Warrant
Shares substantially in the following form:
NEITHER THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY
IS EXERCISABLE] HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS
SECURITY [AND THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE] HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID ACT.
The Company acknowledges and agrees that a Purchaser may from time
to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or
all of the Shares, Warrants or Warrant Shares to a financial
institution that is an “accredited investor” as defined
in Rule 501(a) under the Securities Act and, if required under the
terms of such arrangement, such Purchaser may transfer pledged or
secured Shares, Warrants or Warrant Shares to the pledgees or
secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of
the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser’s expense, the Company
shall execute and deliver such reasonable documentation as a
pledgee or secured party of Shares, Warrants and Warrant Shares may
reasonably request in connection with a pledge or transfer of the
Shares, Warrants or Warrant Shares.
(d) The
Company shall cause certificates evidencing the Shares
and Warrant Shares to not contain any legend
(including the legend set forth in Section 4.1(b) hereof): (i)
while a registration statement covering the resale of such security
is effective under the Securities Act, or (ii) following
any sale of such Shares or Warrant Shares pursuant to
Rule 144, (iii) if such Shares or Warrant Shares are
eligible for sale under Rule 144 without regard to the current
information requirements under Rule 144(c), or (iv) if such
legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission). The Company
shall cause its counsel to issue a legal opinion to the Transfer
Agent promptly if required by the Transfer Agent to effect the
removal of the legend hereunder. If all or any portion of a Warrant
is exercised at a time when there is an effective registration
statement to cover the resale of the Warrant Shares, or if such
Warrant Shares may be sold under Rule 144 or if such legend is not
otherwise required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued
by the staff of the Commission) then the Company shall
cause such Warrant Shares to be issued free of all
legends. The Company agrees that following such time as such legend
is no longer required under this Section 4.1(d), the Company
will upon written request of a Purchaser, no later
than the earlier of (i) three Business Days and (ii)
the number of Business Days comprising the Standard
Settlement Period (as defined below) following the
delivery by a Purchaser to the Company or the Transfer Agent of
a written request for legend removal and a certificate
representing Shares or Warrant Shares, as applicable,
issued with a restrictive legend (such third Business Day, the
“Legend Removal
Date”), deliver or cause
to be delivered to such Purchaser a certificate representing such
shares that is free from all restrictive and other legends. The
Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on
transfer set forth in this Section 4. The Company shall cause
certificates for Shares and Warrant Shares subject to
legend removal hereunder to be transmitted by the
Transfer Agent to the Purchaser by crediting the account of
the Purchaser’s prime broker with the Depository Trust
Company System as directed by such Purchaser. As used herein,
“Standard Settlement
Period” means the
standard settlement period, expressed in a number of Business Days,
on the Company’s primary Trading Market with respect to the
Common Stock as in effect on the date of delivery of a certificate
representing Warrant Shares issued with a restrictive
legend.
4.2. Furnishing
of Information.
(a) Until
the earliest of the time that (i) no Purchaser owns Shares or
Warrants or (ii) the Warrants have expired, the Company covenants
to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange
Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.
4.3. Integration. The
Company shall not sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Shares,
Warrants or Warrant Shares or that would be integrated with the
offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of
such subsequent transaction.
4.4. Securities
Laws Disclosure; Publicity. The Company shall (a) by 9:00 a.m.
(New York City time) on the Business Day immediately following the
date hereof, issue a press release disclosing the material terms of
the transactions contemplated hereby, and (b) file a Current Report
on Form 8-K, including the Transaction Documents as exhibits
thereto, with the Commission within the time required by the
Exchange Act. From and after the issuance of such press release,
the Company represents to the Purchasers that it shall have
publicly disclosed all material, non-public information delivered
to any of the Purchasers by the Company or any of its Subsidiaries,
or any of their respective officers, directors, employees or agents
in connection with the transactions contemplated by the Transaction
Documents. No Purchaser shall issue any press releases or otherwise
make any public statement regarding this Agreement, the Transaction
Documents, or the related transaction. The Company shall not
publicly disclose the name of any Purchaser, or include the name of
any Purchaser in any filing with the Commission or any regulatory
agency or Trading Market, without the prior written consent of such
Purchaser, except (a) as required by federal securities law in
connection with the filing of final Transaction Documents with the
Commission and (b) to the extent such disclosure is required by law
or Trading Market regulations.
4.6. Use
of Proceeds. The
Company shall use the net proceeds from the sale of the Securities
hereunder for the development of the business of Scientific
Bioprocessing, Inc.
4.7. Reservation
of Common Stock. As of the date
hereof, the Company has reserved and the Company shall continue to
reserve and keep available at all times, free of preemptive rights,
a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue Shares pursuant to this Agreement and
Warrant Shares pursuant to any exercise of the
Warrants.
4.8. Listing
of Common Stock. The Company
hereby agrees to use commercially reasonable efforts to maintain
the listing or quotation of the Common Stock on the Trading Market
on which it is currently listed, and concurrently with the Closing,
the Company shall apply to list or quote all of the Shares and
Warrant Shares on such Trading Market and promptly secure the
listing of all of the Shares and Warrant Shares on such Trading
Market. The Company further agrees, if the Company applies to have
the Common Stock traded on any other Trading Market, it will then
include in such application all of the Shares and Warrant Shares,
and will take such other action as is necessary to cause all of the
Shares and Warrant Shares to be listed or quoted on such other
Trading Market as promptly as possible. The Company will then take
all action reasonably necessary to continue the listing and trading
of its Common Stock on a Trading Market and will comply in all
respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market. The
Company agrees to maintain the eligibility of the Common Stock for
electronic transfer through the Depository Trust Company or another
established clearing corporation, including, without limitation, by
timely payment of fees to the Depository Trust Company or such
other established clearing corporation in connection with such
electronic transfer.
4.9. Equal
Treatment of Purchasers. No consideration (including any
modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of
any provision of the Transaction Documents unless the
same consideration is also offered to all of the parties
to the Transaction Documents. For clarification purposes,
this provision constitutes a separate right granted to each
Purchaser by the Company and negotiated separately by each
Purchaser, and is intended for the Company to treat the Purchasers
as a class and shall not in any way be construed as the Purchasers
acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or
otherwise.
4.10. Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with
the other Purchasers, covenants that neither it nor any Affiliate
acting on its behalf or pursuant to any understanding with it will
execute any purchases or sales, including Short Sales of any of the
Company’s securities during the period commencing with the
execution of this Agreement and ending at such time that the
transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in
Section 4.4. Each Purchaser, severally and not jointly with
the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed
by the Company pursuant to the initial press release as described
in Section 4.4, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information
included in the Disclosure Schedules. Notwithstanding the
foregoing and notwithstanding anything contained in this Agreement
to the contrary, the Company expressly acknowledges and agrees that
no Purchaser makes any representation, warranty or covenant hereby
that it will not engage in effecting transactions in any securities
of the Company after the time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial
press release as described in Section 4.4. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed
investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the covenant set forth above shall
only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the
Securities covered by this Agreement.
4.11. Exercise
Procedures. The form
of Notice of Exercise included in the Warrants set forth the
totality of the procedures required of the Purchasers in order to
exercise the Warrants. No additional legal opinion,
other information or instructions shall be required of the
Purchasers to exercise their Warrants. Without limiting the
preceding sentences, no ink-original Notice of Exercise shall be
required, nor shall any medallion guarantee (or other type of
guarantee or notarization) of any Notice of Exercise form be
required in order to exercise the Warrants. The Company shall honor
exercises of the Warrants and shall deliver Warrant Shares in
accordance with the terms, conditions and time periods set forth in
the Transaction Documents.
4.12.
Form D;
Blue Sky Filings. The Company shall timely file a Form
D with respect to the Securities as required under Regulation D and
shall provide a copy thereof, promptly upon request of any
Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption
for, or to qualify the Securities for, sale to the Purchasers at
the Closing under applicable securities or “Blue Sky”
laws of the states of the United States, and shall provide evidence
of such actions promptly upon request of any
Purchaser.
4.13 Registration.
(a) No
later than the date that is ten months after the Closing Date, the
Company shall prepare and file with the Commission a Registration
Statement on Form S-1 or, if available, on Form S-3 (including
pursuant to Rule 415 under the Securities Act) (the
“Shelf
Registration”). The
Company shall use its best efforts to (i) cause the Shelf
Registration filed pursuant to this Section 4.13(a) to be declared
effective by the Commission or otherwise become effective under the
Securities Act by the date that is one year after the Closing Date
and (ii) keep such Shelf Registration continuously effective and in
compliance with the Securities Act and useable for the resale of
Registrable Securities for a period of one year. Prior to the
filing of the Shelf Registration, the Company shall provide written
notice to all holders of Registrable Securities of the anticipated
filing thereof and the right of the holders of Registrable
Securities to include Registrable Securities in the Registration
Statement. The Company shall include in such Shelf Registration all
Registrable Securities with respect to which the Company has
received written requests for inclusion therein within twenty days
after the receipt of the Company’s
notice.
(b) The
holders of a majority of the Registrable Securities shall have the
right, exercisable at any time prior to the fifth
(5th)
anniversary of the date hereof, to request that the Company (such
request, a “Demand”)
file a Registration Statement with the Commission for all or part
of the Registrable Securities beneficially owned by the holders of
Registrable Securities (a “Demand
Registration”). A Demand
shall specify the aggregate number of shares of Registrable
Securities requested to be so registered on behalf of such holders
of Registrable Securities. After receipt of a Demand, the Company
shall, as soon as practicable thereafter, but in no event later
than 60 days following such Demand, prepare and file with the
Commission a Registration Statement for the Registrable Securities
so requested to be registered. The Company shall use its best
efforts to (i) cause the Demand Registration filed pursuant to this
Section 4.13(b) to be declared effective by the Commission or
otherwise become effective under the Securities Act as promptly as
practicable after the filing thereof and (ii) keep such Demand
Registration continuously effective and in compliance with the
Securities Act and useable for the resale of Registrable Securities
for a period of six months. Prior to the filing of the Demand
Registration, the Company shall provide written notice to all
holders of Registrable Securities of the anticipated filing thereof
and the right of the holders of Registrable Securities to include
Registrable Securities in the Registration Statement. The Company
shall include in such Demand Registration all Registrable
Securities with respect to which the Company has received written
requests for inclusion therein within twenty days after the receipt
of the Company’s notice. The Company shall not be required to
file a Registration Statement for Registrable Securities pursuant
to a Demand if the Shelf Registration filed pursuant to Section
4.13(a) hereof remains effective.
(c) In
connection with all registrations of Registrable Securities made
pursuant to the Shelf Registration or the Demand Registration, the
Company shall pay any and all reasonable out-of-pocket expenses,
including, without limitation, (i) all Commission, FINRA and
national stock exchange registration and filing fees, (ii) all fees
and expenses of complying with state securities or “blue
sky” laws, (iii) all fees and expenses incurred in connection
with the listing of the Registrable Securities on any national
stock exchange and (iv) all fees and disbursements of counsel for
the Company and of its independent public accountants, but
excluding (A) any underwriting discounts and commissions and
transfer taxes relating to the sale or disposition of Registrable
Securities pursuant to a Registration Statement, and (B) any fees,
expenses or disbursements of counsel and other advisers to the
Purchasers, other than the reasonable fees and disbursements of one
counsel to all Purchasers.
(d) As
long as any Purchaser shall own Registrable Securities, the
Company, at all times while it shall be a reporting company under
the Exchange Act, covenants to file timely (or obtain extensions in
respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof
pursuant to Sections 13(a) or 15(d) of the Exchange Act and to
promptly furnish the Purchasers with true and complete copies of
all such filings. The Company further covenants that it shall take
such further action as any Purchaser may reasonably request, all to
the extent required from time to time to enable such Purchaser to
sell Shares held by such Purchaser without registration under the
Securities Act within the limitation of the exemptions provided by
Rule 144 promulgated under the Securities Act (or any successor
rule promulgated thereafter by the Commission), including providing
any legal opinions.
ARTICLE V.
MISCELLANEOUS
5.1. Fees
and Expenses. Except
as expressly set forth in the Transaction Documents to the
contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees (including, without
limitation, any fees required for same-day processing of any
instruction letter delivered by the Company and any exercise notice
delivered by a Purchaser), stamp taxes and other taxes and duties
levied in connection with the delivery of any Securities to the
Purchasers.
5.2. Entire
Agreement. The
Transaction Documents, together with the exhibits and schedules
thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.
5.3. Notices. Any
and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of: (a) the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number or email at the email address as
set forth on the signature pages attached hereto at or prior to
5:30 p.m. (New York City time) on a Business Day, (b) the next
Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or
email at the email address as set forth on the signature pages
attached hereto on a day that is not a Business Day or later than
5:30 p.m. (New York City time) on any Business Day, (c) the second
(2nd)
Business Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set
forth on the signature pages attached hereto. To the extent that
any notice provided by the Company pursuant to any Transaction
Document constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K.
5.4. Amendments;
Waivers. No
provision of this Agreement may be waived, modified, supplemented
or amended except in a written instrument signed, in the case of an
amendment, by the Company and Purchasers of a majority in interest
of the Shares then outstanding or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is
sought, provided that if any amendment, modification or waiver
disproportionately and adversely impacts a Purchaser (or group of
Purchasers), the consent of such disproportionately impacted
Purchaser (or group of Purchasers) shall also be required. 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. Any
proposed amendment or waiver that disproportionately, materially
and adversely affects the rights and obligations of any Purchaser
relative to the comparable rights and obligations of the other
Purchasers shall require the prior written consent of such
adversely affected Purchaser. Any amendment effected in accordance
with accordance with this Section 5.4 shall be binding upon each
Purchaser and holder of Securities and
the Company.
5.5. Headings. The
headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of
the provisions hereof.
5.6. Successors
and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may
not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by
merger). Any Purchaser may assign any or all of its rights under
this Agreement to any Person to whom such Purchaser assigns or
transfers any Securities, provided that such transferee agrees in
writing to be bound, with respect to the transferred Securities, by
the provisions of the Transaction Documents that apply to the
Purchasers.
5.7. No
Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and
permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other
Person.
5.8. Governing
Law; Submission to Jurisdiction. All questions concerning the
construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and
enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal Proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any
of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any Action or Proceeding, any claim that it
is not personally subject to the jurisdiction of any such court,
that such Action or Proceeding is improper or is an inconvenient
venue for such Proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such Action or Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law. If any party shall commence an Action or Proceeding to enforce
any provisions of the Transaction Documents, then the prevailing
party in such Action or Proceeding shall be reimbursed by the
non-prevailing party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation,
preparation and prosecution of such Action or
Proceeding.
5.9. Survival. The
representations and warranties contained herein shall survive the
Closing and the delivery of the Securities.
5.10. Execution. This
Agreement may be executed in two or more counterparts, all of which
when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by
each party and delivered to each other party, it being understood
that the parties need not sign the same counterpart. In the event
that any signature is delivered by facsimile transmission or by
e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
5.11. Severability. If
any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.
5.12. Rescission
and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions
of) any of the other Transaction Documents, whenever any Purchaser
exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related
obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time
to time upon written notice to the Company, any relevant notice,
demand or election in whole or in part without prejudice to its
future actions and rights; provided, however,
that in the case of a rescission of an exercise of a Warrant, the
applicable Purchaser shall be required to return any shares of
Common Stock subject to any such rescinded exercise notice
concurrently with the return to such Purchaser of the aggregate
exercise price paid to the Company for such shares and the
restoration of such Purchaser’s right to acquire such shares
pursuant to such Purchaser’s Warrant (including, issuance of
a replacement warrant certificate evidencing such restored
right).
5.13. Replacement
of Securities. If
any certificate or instrument evidencing any Securities is
mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and
substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction. The applicant for a new
certificate or instrument under such circumstances shall also pay
any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement
Securities.
5.14. Remedies. In
addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance
under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations contained in the Transaction
Documents and hereby agree to waive and not to assert in any Action
for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.15. Payment
Set Aside. To the
extent that the Company makes a payment or payments to any
Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
5.16. Independent
Nature of Purchasers’ Obligations and
Rights. The
obligations of each Purchaser under any Transaction Document are
several and not joint with the obligations of any other Purchaser,
and no Purchaser shall be responsible in any way for the
performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein
or in any other Transaction Document, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to constitute
the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to
independently protect and enforce its rights including, without
limitation, the rights arising out of this Agreement or out of the
other Transaction Documents, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any
Proceeding for such purpose. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or
requested to do so by any of the Purchasers. It is expressly
understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the
Company and a Purchaser, solely, and not between the Company and
the Purchasers collectively and not between and among the
Purchasers.
5.17. Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock that occur after the
date of this Agreement.
5.18. WAIVER
OF JURY TRIAL. IN
ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND
INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.
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SCIENTIFIC INDUSTRIES, INC.
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Date: June 18,
2020
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By:
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/s/ Helena R. Santos
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Helena R. Santos,
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President and Chief Executive Officer
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Address
for Notices:
80
Orville Drive, Suite 102
Bohemia,
New York 11716
With
a copy to:
Reitler
Kailas & Rosenblatt LLC
885
Third Avenue
New
York, NY 10022
Attn:
John Watkins, Esq.
[Signature
Page to Securities Purchase Agreement]
IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.
Name of Purchaser:
____________________________________________________________
Signature of Authorized Signatory of Purchaser:
_____________________________________
Name of Authorized Signatory:
___________________________________________________
Title of Authorized Signatory:
____________________________________________________
Email Address of Authorized Signatory:
____________________________________________
Facsimile Number of Authorized Signatory:
_________________________________________
Address for Notice to Purchaser:
__________________________________________________
Address for Delivery of Securities to Purchaser (if not same as
address for notice):
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
Subscription Amount: $_________________
Shares: _________________
Warrant Shares: __________________
EIN Number: _______________________
[Signature
Page to Securities Purchase Agreement]
EXHIBIT A
Schedule of Purchasers
EXHIBIT B
Form of Warrant