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. W__
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Warrant to Purchase
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Shares of Common Stock
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Dated: June __, 2021
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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 $9.50 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 __, 2026 (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, 2021 (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.
“Business Day” means any
day on which the Trading Markets are open for
business.
“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.
“Market Price” means, as
of the date of determination, the average of the closing prices of
a share of Common Stock on all Trading Markets on which the Common
Stock may at the time be listed, or, if there have been no sales on
any such Trading Market on any day, the average of the highest bid
and lowest asked prices on all such Trading Markets at the end of
such day.
“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. Within two (2) Business Days following
the exercise of this Warrant as provided above, the Company shall
cause its transfer agent to issue the Warrant Shares through the
facilities of its transfer agent for the account of the
Warrantholder.
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.2.1.
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 and restrictions under applicable state and federal
securities Laws. 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.3.1
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. 4.1
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. 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. 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.
5.3. 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.
5.4. 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
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
twenty (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 twelve (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 $19.00 (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 the Warrantholder that the
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 (30) 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 ten (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 either (i) 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 or (ii) has been provided by
the Company with the Company’s most recent audited financial
statements and non-financial statement information as set forth in
Rule 502(b)(2) 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. 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 contravention 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 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 Warrant Shares, 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 Warrant Shares, 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 or
the Company 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.
COMPENSATION FOR BUY-IN ON FAILURE TO
TIMELY DELIVER WARRANT SHARES UPON EXERCISE. In
addition to any other rights available to the Warrantholder, if the
Company fails to cause its transfer agent to transmit to the
Warrantholder the Warrant Shares in accordance with the provisions
of Section 1.3 above pursuant to an exercise of this Warrant on or
before the Expiration Date, and if after such date the
Warrantholder is required by its broker to purchase (in an open
market transaction or otherwise) or the Warrantholder’s
brokerage firm otherwise purchases, shares of Common Stock to
deliver in satisfaction of a sale by the Warrantholder of the
Warrant Shares which the Warrantholder anticipated receiving upon
such exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Warrantholder the amount, if
any, by which (x) the Warrantholder’s total purchase price
(including brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (y) the amount obtained by multiplying
(1) the number of Warrant Shares that the Company was required to
deliver to the Warrantholder in connection with the exercise at
issue times (2) the price at which the sell order giving rise to
such purchase obligation was executed, and (B) at the option of the
Warrantholder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not
honored (in which case such exercise shall be deemed rescinded) or
deliver to the Warrantholder the number of shares of Common Stock
that would have been issued had the Company timely complied with
its exercise and delivery obligations hereunder. For example,
if the Warrantholder purchases Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause
(A) of the immediately preceding sentence the Company shall be
required to pay the Warrantholder $1,000. The Warrantholder shall
provide the Company written notice indicating the amounts payable
to the Warrantholder in respect of the Buy-In and, upon request of
the Company, evidence of the amount of such loss. Nothing
herein shall limit a Warrantholder’s right to pursue any
other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s
failure to timely deliver shares of Common Stock upon exercise of
the Warrant as required pursuant to the terms hereof.
SECTION
10.
CASHLESS EXERCISE.
In the event that, at the time of the exercise of this Warrant by
the Warrantholder, there is not an effective Registration Statement
covering the sale by the Warrantholder of the Warrant Shares to be
issued upon such exercise, the Warrantholder, in lieu of exercising
this Warrant by the cash payment of the Exercise Price pursuant to
Section 1.2, may elect, at any time on or before the Expiration
Date, to surrender this Warrant and receive that number of shares
of Common Stock computed using the following formula:
Where: X = the
number of shares of Common Stock to be issued to the
Warrantholder.
Y
=
the number of
shares of Common Stock that Warrantholder would otherwise have been
entitled to purchase hereunder pursuant to Section 1.2 (or such
lesser number of shares as the Warrantholder may designate in the
case of a partial exercise of this Warrant).
A
=
the Market Price at
the time such exercise
B
=
the Exercise Price
then in effect.
Election
to exercise under this Section 10 may be made by delivering a
signed form of subscription to the Company via facsimile, to be
followed by delivery of this Warrant.
SECTION
11.
MISCELLANEOUS.
11.1. 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.
11.2. 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.
11.3. 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.
11.4. 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.
11.5. 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.
11.6. 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.
11.7. 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.
11.8 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.
11.9. 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.
(Signature Page Follows)
IN WITNESS WHEREOF, the Company has
caused this Warrant to be signed by its duly authorized officer as
of the first date written above.
|
SCIENTIFIC
INDUSTRIES, INC.
By:
_______________________________
Name:
Title:
|
|
|
IN WITNESS WHEREOF, the undersigned has
caused this Warrant to be signed by its duly authorized officer as
of the first date written above.
|
WARRANTHOLDER:
If an individual:
_______________________________
Name:
|
|
If an entity:
Name of
entity:
By:
_______________________________
Name:
Title:
|
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 this Warrant, to
[check applicable subsection]:
_________ (a)
Purchase __________ shares of Common Stock of Scientific
Industries, Inc., pursuant to the terms of the attached Warrant and
herewith pays the Exercise Price in accordance with the terms of
the Warrant by tendering cash payment for such Warrant
Shares;
OR
_________ (b)
Exercise the attached Warrant for [all of the shares] [________of
the shares] [cross out inapplicable phrase] purchasable under the
Warrant pursuant to the cashless exercise provisions of Section 10
of such Warrant.
The
undersigned hereby represents and warrants that (i) the undersigned
is acquiring such shares for its own account for investment
purposes only, and not for resale or with a view to distribution of
such shares or any part thereof and (ii) the undersigned is an “accredited
investor” as defined in Regulation D under the Securities Act
of 1933, as amended, and a “sophisticated investor” in
accordance with the exemption from registration under such Act in
accordance with Section 4(a)(2) thereof.
WARRANTHOLDER
Name:
Name in
which shares should be registered:
[_______________________]
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THE SECURITIES PURCHASED HEREUNDER MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT
AND OTHER APPLICABLE LAWS PURSUANT TO REGISTRATION OR EXEMPTION
FROM REGISTRATION REQUIREMENTS THEREUNDER.
SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (the “Agreement”) is entered
into as of June __, 2021 by and among Scientific Industries, Inc.,
a Delaware corporation (the “Company”), and each of
the purchasers, severally and not jointly, listed on Annex A hereto (collectively,
the “Purchasers” and each, a
“Purchaser”).
BACKGROUND
The
Company desires to sell, and each Purchaser desires to purchase,
shares of the Company’s common stock, par value $0.05 per
share (the “Common
Stock”) and warrants to purchase shares of Common
Stock, on the terms and subject to the conditions contained
herein.
The
issuance of the shares of Common Stock and warrants to purchase
shares of Common Stock hereunder is being made in a private
placement, without registration under the Securities Act of 1933,
as amended (the “Securities Act”) or any
other applicable securities Laws (as defined below), in reliance on
one or more exemptions from registration and other requirements
thereunder.
Therefore, in
consideration of the foregoing, and the representations,
warranties, covenants and conditions set forth below, the parties
hereto, intending to be legally bound, hereby agree as
follows:
1. Purchase and Sale of Common
Stock.
1.1 Sale and Issuance of Common
Stock. Subject to the terms and conditions of this
Agreement, each Purchaser agrees, severally and not jointly, to
purchase at the Closing (as defined below), and the Company agrees
to sell and issue to the several Purchasers at the Closing, that
number of shares of Common Stock, and warrants to purchase that
number of shares of Common Stock (“Warrants”), in each case
set forth opposite such Purchaser’s name on Annex A hereto, at a purchase
price of $4.75 per share. The shares of Common Stock to be issued
and sold by the Company to the Purchasers pursuant to this
Agreement are collectively referred to herein as the
“Shares”, the shares of
Common Stock issuable upon exercise of the Warrants are
collectively referred to herein as the “Warrant Shares” and the
Shares, Warrants and Warrant Shares are collectively referred to
herein as the “Securities”. Prior to the
Closing (as defined below), each Purchaser hereby agrees to pay the
entire purchase price of the Shares for which such Purchaser has
subscribed, as is set forth on the Purchaser’s signature
page, by wire transfer of immediately available funds in an amount
equal to such purchase price to ServisFirst Bank or such other bank
as may be selected by the Company (the “Escrow Agent”) in
accordance with the wiring instructions provided by the Company or
on the Company’s behalf by the Company’s placement
agent Brookline Capital Markets, a division of Arcadia Securities,
LLC (the “Placement
Agent”). The Escrow Agent shall hold the escrow funds
for the benefit of the Company until the applicable Closing
pursuant to the terms of an escrow deposit agreement between the
Company, the Escrow Agent and the Placement Agent, whereupon the
Escrow Agent shall release the funds as designated in writing by
the Company and the Placement Agent. In the event a prospective
Purchaser’s subscription is rejected by the Company, which
each prospective Purchaser hereby acknowledges the Company may do
at any time, for any reason or no reason, in the Company’s
sole discretion, then such prospective Purchaser’s funds in
escrow, if any, shall be promptly returned to such prospective
Purchaser without interest or deduction. In the event the Initial
Closing (as defined below) has not occurred by June 30, 2021, any
funds of a prospective Purchaser that are in escrow will be
promptly returned to such prospective Purchaser, without interest
or deduction, upon such prospective Purchaser’s written
request to the Company for the same. Any unaccepted subscription
amount(s) shall be returned to the same account from which such
amount(s) were received (or, if the Company and the Placement Agent
so determine, to such other account or in such other manner as the
Company and the Placement Agreement may mutually agree upon with
the Person to whom an amount is being returned).
1.2 Closing. The initial purchase
and sale of the Securities and other transactions contemplated
hereby (the “Initial
Closing”) shall take place remotely via the exchange
of documents and signatures by electronic mail and/or facsimile on
the date hereof or at such other time and place as the Company and
the Purchasers shall mutually agree (the date that the Closing
occurs, the “Initial
Closing Date”). In the event there is more than one
closing, the term “Closing” shall apply to
each such closing unless otherwise specified. At each Closing, (i)
each Purchaser shall execute and deliver to the Escrow Agent the
investor acknowledgment letter, in the form attached to the Escrow
Agreement as Exhibit
B and (ii) the Company shall (i) issue to each Purchaser
(and deliver a book-entry confirmation by the Company’s
transfer agent) that number of Shares set forth opposite such
Purchaser’s name on Annex A hereto in book-entry
form and (ii) deliver to each Purchaser a Warrant, the form of
which is attached hereto as Exhibit A, to purchase that
number of shares of Common Stock set forth opposite such
Purchaser’s name on Annex A hereto. At each
Closing, each Purchaser and the Company shall execute and deliver
the Joinder Agreement, the form of which is attached hereto as
Exhibit B (the
“Joinder
Agreement”), pursuant to which such Purchaser shall be
become a party to the Registration Rights Agreement dated as of
April 29, 2021, as amended by Amendment No. 1 dated as of June __,
2021 (the “Registration Rights
Agreement”).
2. Representations and Warranties of the
Company. The Company represents and warrants to each
Purchaser as of the date hereof and as of the Closing Date
that:
2.1 Organization, Good Standing and
Qualification. Each of the Company and its Subsidiaries is
duly incorporated or organized (as applicable), validly existing,
and in good standing under the Laws of the state of its
incorporation or organization (as applicable); has all corporate,
partnership or limited liability company (as applicable) power and
authority to own its properties and conduct its business as
presently conducted; and is duly qualified to do business and in
good standing in each state in the United States of America where
its business requires such qualification, except where failure to
qualify would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
2.2 Authorization; Enforceability.
The Company has all necessary power and authority to execute,
deliver, and perform under this Agreement, the Warrants and the
Registration Rights Agreement. All corporate action by and on
behalf of the Company necessary for the authorization, execution,
and delivery of this Agreement, the Warrants and the Registration
Rights Agreement, the performance of all obligations of the Company
hereunder and thereunder, and the authorization, issuance, sale,
and delivery of the Securities to each Purchaser hereunder has been
taken. This Agreement, the Warrants and the Registration Rights
Agreement, when executed and delivered by the Company, assuming due
authorization, execution, and delivery by each Purchaser,
constitutes and will constitute valid and legally binding
obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to: (i) Laws
limiting the availability of specific performance, injunctive
relief, and other equitable remedies; (ii) bankruptcy, insolvency,
reorganization, moratorium, or other similar Laws now or hereafter
in effect generally relating to or affecting creditors’
rights generally; and (iii) limitations on the enforceability of
indemnification provisions contained in the Registration Rights
Agreement (collectively, the “Enforceability
Exceptions”).
2.3 SEC Reports; Financial
Statements. Except as set forth on Schedule 2.3 hereto, 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 Securities Exchange Act of 1934, as amended
(the “Exchange
Act”), including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (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, and 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 United States
generally accepted accounting principles 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.
2.4 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,
consultants, 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.
2.5 Sarbanes-Oxley; Internal Accounting
Controls. The Company and the Subsidiaries are in compliance
in all material respects 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 Securities and Exchange Commission (the
“SEC”)
thereunder that are effective as of the date hereof. 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 Rules 13a-15(e) and 15d-15(e) promulgated under the
Exchange Act) 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 SEC’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.
2.6 Indebtedness. Neither the
Company nor any of its Subsidiaries is in default in the payment of
any Indebtedness or in default under any agreement relating to its
Indebtedness or under any mortgage, deed of trust, security
agreement, or lease to which it is a party, other than defaults
that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
2.7 Litigation. There is no action,
suit, proceeding, or investigation pending or, to the Knowledge of
the Company, overtly threatened against, nor any outstanding
judgment, order, or decree against, the Company or any of its
Subsidiaries before or by any Governmental Authority or arbitral
body which in the aggregate have, or if adversely determined, would
reasonably be expected to have, a Company Material Adverse
Effect.
2.8 Title. Each of the Company and
its Subsidiaries has good and marketable title to its properties
that are real property and good and valid title to all of its other
properties (other than negligible assets that are immaterial to the
operations of the Company or any of its Subsidiaries), free and
clear of all Liens, except (i) for Permitted Liens and (ii) as
would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect.
2.9 Taxes. Each of the Company and
its Subsidiaries has filed all material tax returns required to
have been filed and paid all material taxes shown thereon to be
due, except for those for which extensions have been obtained and
which are being contested in good faith by appropriate proceedings
and in respect of which adequate reserves are maintained by the
Company and its Subsidiaries in accordance with GAAP.
2.10 Governmental
Consents. No consent, approval, order, or authorization of,
or registration, qualification, declaration, or filing with, any
Governmental Authority on the part of the Company is required in
connection with the offer, sale, or issuance of the Securities to
each Purchaser hereunder or the consummation of the transactions
contemplated hereby, except for the following: (i) the compliance
with other applicable state securities Laws, which compliance will
have occurred within the appropriate time periods therefor and (ii)
the filing with the SEC of such reports under the Exchange Act
and/or the Securities Act as may be required in connection with
this Agreement and the transactions contemplated by this
Agreement.
2.11 Permits
and Licenses. The Company and each of its Subsidiaries
possess all permits, certificates, licenses and other
authorizations of Governmental Authorities that are required to
conduct its business, except for such permits, certificates,
licenses or other authorizations the absence of which would not,
individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
2.12 Valid
Issuance of Common Stock. The Shares being purchased by each
Purchaser hereunder, when issued, sold, and delivered in accordance
with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and
nonassessable, and will be free of restrictions on transfer other
than restrictions under applicable state and federal securities
Laws. The Warrant Shares, when issued
in accordance with the terms of the Warrants for the
consideration expressed therein, will be duly and validly issued,
fully paid, and nonassessable, and will be free of restrictions on
transfer other than restrictions under applicable state and federal
securities Laws. 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.
2.13 Capitalization.
The authorized capital stock of the Company consists of 15,000,000
shares of Common Stock, of which 4,458,143 were issued and
outstanding as of June 16, 2021 (excluding the Shares to be issued
pursuant to this Agreement). As of the close of business on
June 16, 2021, the Company has reserved an aggregate of 1,250,000
shares of Common Stock for issuance pursuant to the Company’s
2002 Stock Option Plan and 2012 Stock Option Plan, under which (i)
1,180,757 options are issued and outstanding and (ii) 5,243 shares
remain available for future grant. All issued and outstanding
shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable. There are also
outstanding warrants to purchase 2,147,790 shares of Common
Stock. Other than as provided in this Agreement, there are no
other outstanding rights, options, warrants, preemptive rights,
rights of first offer, or similar rights for the purchase or
acquisition from the Company of any securities of the Company, nor
are there any commitments from the Company to issue or execute any
such rights, options, warrants, preemptive rights, or rights of
first offer. There are no outstanding rights or obligations
of the Company to repurchase or redeem any of its
securities.
2.14 Private
Placement. Assuming that the representations of each
Purchaser set forth in Section 3 hereof are true and
correct, the offer, sale, and issuance of the Securities in
conformity with the terms of this Agreement are (i) exempt from the
registration requirements of Section 5 of the Securities Act, and
all applicable state securities Laws, (ii) exempt from the
requirement to publish a securities prospectus in compliance with
the Prospectus Regulation of the European Union (Regulation (EU)
2017/1129 – the “Prospectus Regulation”). Neither
the Company nor any person acting on behalf of the Company has
offered or sold any of the Securities by any form of general
solicitation or general advertising. The Company has offered the
Securities for sale only to the Purchasers and certain other
“accredited investors” within the meaning of Rule 501
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
of the Securities, 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.
In
relation to each member state of the European Economic Area, each
of which is referred to as a “Member State”, no offer
of Shares which are the subject of the offering of the Securities
has been, or will be, made to the public in that Member State,
prior to the publication of a securities prospectus in relation to
the Shares which has been approved by the competent authority in
that Member State, or, where appropriate, approved in another
Member State and notified to the competent authority in that Member
State, all in accordance with the Prospectus Regulation, except
that offers of Shares may be made in that Member State at any time
under an exemption from the securities prospectus requirement
available under the Prospectus Regulation.
2.15 Investment
Company Act. Neither the Company nor any of its Subsidiaries
is an investment company within the meaning of the Investment
Company Act of 1940, as amended, or, directly or indirectly,
controlled by or acting on behalf of any Person which is an
investment company, within the meaning of such act.
2.16 No
Default of Violation. The Company is not in violation or
default of any provision of its Certificate of Incorporation, as
amended (the “Charter”), or its
By-Laws, as amended and restated (the “Bylaws”). The execution,
delivery, and performance of this Agreement, the Warrants and the
Registration Rights Agreement by the Company and the issuance and
sale of the Securities will not (i) result in any default or
violation of the Charter or Bylaws; (ii) result in any default or
violation of any agreement relating to the Indebtedness of the
Company or its Subsidiaries or under any mortgage, deed of trust,
security agreement, or lease to which the Company or its
Subsidiaries is a party or in any default or violation of any
judgment, order, or decree of any Governmental Authority; or (iii)
be in conflict with or constitute, with or without the passage of
time or giving of notice, a default under any such provision,
require any consent or waiver under any such provision, or result
in the creation of any Lien upon any of the properties or assets of
the Company or its Subsidiaries pursuant to any such provision;
except in the case of (ii) and (iii) above, as would not,
individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
2.17 Compliance
with Laws. Neither the Company nor any of its Subsidiaries
is in violation of any applicable federal, state, local, foreign,
or other law, statute, regulation, rule, ordinance, code,
convention, directive, order, judgment, or other legal requirement
(collectively, “Laws”) of any
Governmental Authority, except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect. To the Knowledge of the Company, neither the
Company nor any of its Subsidiaries is being investigated with
respect to, or been overtly threatened to be charged with or given
notice of any violation of, any applicable Law, except as would
not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
2.18 No
Company Material Adverse Effect. Since June 30, 2020, no
event or circumstance has occurred that, individually or in the
aggregate, has had or would reasonably be expected to have a
Company Material Adverse Effect.
2.19 No
Restricted Payments. No Subsidiary of the Company is
currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on
such Subsidiary’s capital stock, from repaying to the Company
any loans or advances to such Subsidiary from the Company or from
transferring any of such Subsidiary’s property or assets to
the Company or any other Subsidiary of the Company.
2.20 No
Price Stabilization or Manipulation. The Company has not
taken, directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or result
in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
2.21 FCPA.
Neither the Company nor any of its Subsidiaries nor any director,
officer or controlled Affiliate of the Company or any of its
Subsidiaries nor, to the Knowledge of the Company, any agent or
employee of the Company or any of its Subsidiaries nor, to the
Knowledge of the Company, any Affiliate of the Company or any of
its Subsidiaries that is not controlled by or under common control
with the Company or any of its Subsidiaries, is aware of, has taken
or will take any action, directly or indirectly, that would result
in a violation by such Persons of the Foreign Corrupt Practices Act
of 1977, as amended, and the rules and regulations thereunder (the
“FCPA”), including,
without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of
an offer, payment, promise to pay or authorization of the payment
of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any
candidate for foreign political office, in contravention of the
FCPA; and the Company, its Subsidiaries and its controlled
Affiliates have conducted their businesses in compliance with the
FCPA and have instituted and maintain policies and procedures
designed to ensure, and which are reasonably expected to continue
to ensure, continued compliance therewith and with the
representation and warranty contained herein.
2.22 Compliance
with Money Laundering Laws. The operations of the Company
and its Subsidiaries are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting
requirements and the money laundering statutes and the rules and
regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”)
and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving
the Company or any of its Subsidiaries with respect to the Money
Laundering Laws is pending or, to the Knowledge of the Company,
threatened.
2.23 OFAC.
Neither the Company nor any of its Subsidiaries nor any director,
officer, agent, employee or Affiliate of the Company or any of its
Subsidiaries (i) is currently subject to any sanctions administered
imposed by the United States (including any administered or
enforced by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”) or (ii) will,
directly or indirectly, use the proceeds from the issuance of the
Securities, or lend, contribute or otherwise make available such
proceeds to any Subsidiary, joint venture partner or other Person
in any manner that will result in a violation of any economic
sanctions imposed by the United States (including any administered
or enforced by OFAC, the U.S. Department of State, or the Bureau of
Industry and Security of the U.S. Department of Commerce), the
United Nations Security Council, the European Union, or the United
Kingdom (including sanctions administered or controlled by Her
Majesty’s Treasury) by, or could result in the imposition of
Sanctions against, any Person (including any Person participating
in the transactions contemplated by this Agreement, whether as
placement agent, advisor, investor or otherwise).
2.24 No
Brokers’ Fees; Relationship with Certain Representatives of
Placement Agent. No broker, investment banker, financial
advisor or other Person, other than the Placement Agent, the fees
of which will be paid by the Company, is entitled to any
broker’s, finder’s, financial advisor’s, or other
similar fee or commission in connection with the transactions
contemplated by this Agreement. A registered representative of the
Placement Agent is the son of the Chairman of Board of Directors of
the Company.
3. Representations and Warranties of Each
Purchaser. Each Purchaser represents and warrants, severally
and not jointly, to the Company as of the date hereof and as of the
Closing Date that:
3.1 Private Placement.
(a) The Securities to
be acquired by such Purchaser hereunder will be acquired for such
Purchaser’s own account and not with a view to the resale or
distribution of any part thereof. Such Purchaser is aware that (i)
the offer and sale of the Securities to it have not been, and,
except as contemplated by the Registration Rights Agreement, will
not be, registered under the Securities Act or any state securities
Laws and are being offered and sold in reliance upon exemptions
from the registration requirements of the Securities Act and (ii)
the Securities purchased hereunder may not be transferred or resold
except as permitted under the Securities Act and applicable state
securities Laws pursuant to registration or exemption from
registration requirements thereunder; provided, however, that by making such
representations herein, such Purchaser does not agree to hold any
of the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an
exemption under the Securities Act. Further, such Purchaser is
aware and agrees that the offer and sale of the Shares to it do not
require the publication of a securities prospectus under the
Prospectus Regulation and that such securities prospectus has not
been, and will not be, filed for approval with the competent
authority nor published in any Member State and are being offered
and sold in reliance upon exemptions from the securities prospectus
requirements under the Prospectus Regulation.
(b) Each of the
Purchasers listed on Schedule 1 attached hereto is
an “accredited investor” within the meaning of Rule 501
of Regulation D promulgated under the Securities Act.
(c) Each of the
Purchasers listed on Schedule 2 attached hereto has
received and reviewed the SEC Reports listed on Schedule 3 attached
hereto.
(d) Such Purchaser
understands that, unless sold pursuant to a registration statement
that has been declared effective under the Securities Act or in
compliance with Rule 144 thereunder, the certificates evidencing
the Securities will bear a legend or other restriction
substantially to the following effect (it being agreed that if the
Shares or Warrant Shares are not certificated, other appropriate
restrictions shall be implemented or notated to give effect to the
following):
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES
ACT”), OR THE SECURITIES LAWS OF ANY STATE AND WERE
OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE SECURITIES MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT
AND OTHER APPLICABLE LAWS PURSUANT TO REGISTRATION OR EXEMPTION
FROM REGISTRATION REQUIREMENTS THEREUNDER.”
(e) Such Purchaser (i)
has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of its
prospective investment in the Securities; and (ii) has the ability
to bear the economic risks of its prospective investment and can
afford the complete loss of such investment.
(f) Such Purchaser (i)
has conducted its own investigation of the Company and the
Securities; (ii) has had access to the Company’s public
filings with the SEC and to such financial and other information as
it deems necessary in connection with its decision to purchase the
Securities; and (iii) has been offered the opportunity to conduct
such review and analysis of the business, assets, condition,
operations, and prospects of the Company and its Subsidiaries and
to ask questions of the Company and received answers thereto, each
as it deems necessary in connection with its decision to purchase
the Shares. Each Purchaser further acknowledges that it has had the
opportunity to consult with its own counsel, financial, tax, and
other professional advisers as it believes is sufficient for
purposes of its purchase of the Securities. The foregoing, however,
does not limit or modify the representations and warranties of the
Company in Section
2 hereof or the right of each Purchaser to rely
thereon.
(g) Such Purchaser
understands that the Company will rely upon the truth and accuracy
of the foregoing representations, acknowledgements, and
agreements.
(h) Except for the
representations and warranties contained in Section 2 hereof, each
Purchaser acknowledges that neither the Company nor any Person on
behalf of the Company makes, and such Purchaser has not relied
upon, any other express or implied representation or warranty with
respect to the Company or any of its Subsidiaries or with respect
to any other information provided to such Purchaser in connection
with the transactions contemplated by this Agreement.
3.2 Organization and Good Standing.
Such Purchaser is duly incorporated or organized (as applicable),
validly existing, and in good standing under the Laws of the state
of its incorporation or organization (as applicable).
3.3 Authorization; Enforceability.
Such Purchaser has all necessary power and authority to execute,
deliver, and perform under this Agreement, the Warrants and the
Registration Rights Agreement. All action by and on behalf of such
Purchaser necessary for the authorization, execution, and delivery
of this Agreement, the Warrants and the Registration Rights
Agreement and the performance of all obligations of such Purchaser
hereunder and thereunder has been taken. This Agreement, the
Warrants and the Registration Rights Agreement, when executed and
delivered by such Purchaser, assuming due authorization, execution
and delivery by the Company, constitutes and will constitute a
valid and legally binding obligation of such Purchaser, enforceable
against such Purchaser in accordance with their respective terms,
subject to the Enforceability Exceptions.
3.4 “Bad Actor” Status.
The Purchaser hereby represents that neither it nor, to its
knowledge, any of its Rule 506(d) Related Parties is a “bad
actor” within the meaning of 506(d) promulgated under the
Securities Act. For purposes of this Agreement, “Rule 506(d)
Related Party” shall mean a Person covered by the “Bad
Actor disqualification” provision of Rule 506(d) of the
Securities Act.
3.5 Oral Statements. IN MAKING AN
INVESTMENT DECISION WITH RESPECT TO THE SHARES, SUCH PURCHASER IS
NOT RELYING ON ORAL STATEMENTS MADE BY REPRESENTATIVES OF ANY OF
THE COMPANY OR THE PLACEMENT AGENT, ANY OF THEIR RESPECTIVE
AFFILIATES, OR ANY OTHER PERSON. PURCHASER'S INVESTMENT DECISION IS
BASED SOLELY ON WRITTEN INFORMATION PROVIDED BY THE
COMPANY.
3.6 USA Patriot Act and Related
Matters. Such Purchaser is in compliance with all applicable
provisions of the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001 (as amended from time to time and together with the
regulations promulgated thereunder, the "USA Patriot Act"), the United
States Bank Secrecy Act (as amended from time to time and together
with the regulations promulgated thereunder, the "BSA") and all other anti-money
laundering laws and applicable regulations adopted to implement the
provisions of such laws, including policies and procedures that can
be reasonably expected to detect and cause the reporting of
transactions under Section 5318 of the BSA. The Purchaser is not,
and shall not be, a person: (i) acting, directly or indirectly, on
behalf of terrorists or terrorist organizations, including those
persons or entities that are included on any of the United States
Office of Foreign Assets Control ("OFAC") lists; (ii) listed on,
residing in, or having a place of business in a country or
territory named on any of such lists, or which is designated as a
Non-Cooperative Jurisdiction by the Financial Action Task Force on
Money Laundering ("FATF"), or whose funds are from
or through such a jurisdiction; (iii) that is a "Foreign Shell
Bank" within the meaning of the USA Patriot Act; or (iv) residing
in, or organized under the laws of, a jurisdiction designated by
the United States Secretary of the Treasury under Sections 311 or
312 of the USA Patriot Act as warranting special measures due to
money-laundering concerns.
3.7 Non-U.S. Investor
Matters.
(a) Notwithstanding
anything to the contrary contained in this Agreement, each Non-U.S.
Investor (as defined below) and the Company agree that, as of and
following the date of this Agreement, no such Non-U.S. Investor
shall be afforded any of the following within the meaning of the
Defense Production Act of 1950, as amended, including any
implementing regulations thereof (the "DPA"): (i) "control" of the
Company; (ii) access to any "material nonpublic technical
information" in the possession of the Company; (iii) membership or
observer rights on, or the right to nominate an individual to a
position on, the board of directors or equivalent governing body of
the Company; or (iv) any "involvement," other than through the
voting of shares, in "substantive decisionmaking" by the Company
regarding: (A) the use, development, acquisition, safekeeping, or
release of "sensitive personal data" of U.S. citizens maintained or
collected by the Company; (B) the use, development, acquisition, or
release of any "critical technology"; or (C) the management,
operation, manufacture, or supply of "covered investment critical
infrastructure." To the extent that any term in this Agreement
would afford any of the foregoing to such Non-U.S. Investor
contrary to the intent of each Non-U.S. Investor and the Company as
expressed herein, such term shall have no effect as to the Non-U.S.
Investor. Additionally, for the avoidance of doubt, in the event
that any Non-U.S. Investor is afforded any information and/or
inspection rights pursuant to written agreements with the Company,
such rights shall not include access to material nonpublic
technical information in the Company's possession nor any
involvement in substantive decisionmaking with respect to the
matters listed in clause 3.7(a)(iv) hereinabove. For purposes of
this Agreement, a "Non-U.S. Investor" means a Purchaser that is a
"foreign person" within the meaning of the DPA.
(b)
The Company shall
have and shall exercise the right to (i) exclude any Non-U.S.
Investor from access to any information, facilities, or properties
of the Company or any its subsidiaries, and (ii) prohibit any
Non-U.S. Investor from engaging in discussions and communications
with any Company personnel and any personnel of any Company
subsidiary if the Company determines in its sole discretion that
such exclusion is necessary or appropriate to enforce the
limitations in Section 3.7(a).
3.8 Minimum Initial Closing Shares.
The Purchaser understands that the sale of any minimum number of
Shares at the Initial Closing, while desirable for purposes of the
business operations of the Company, is not designed as a protection
to the Purchaser or to indicate that the Purchaser's investment
decision is shared by other unaffiliated investors. The Purchaser
acknowledges that, because there may be substantial purchases by
officers, directors, employees and affiliates of the Company or by
other persons who will receive fees or other compensation or gain
dependent upon the success of the offering of the Shares,
including, without limitation, the Placement Agent and its
employees and Affiliates, any of which may be made at any time and
will be counted in determining whether any required minimum number
of Shares sold at the Initial Closing requirement has been met, the
Purchaser should not place any reliance on the sale of any such
minimum number of Shares as an indication of the merits of the
offering of the Shares. The Purchaser therefore does not expect
that the sale of sufficient Shares to reach any such minimum number
of Shares to be sold at the Initial Closing, or in excess of any
such minimum number of Shares, indicates that such sale has been
made to investors or other Purchasers who have no financial or
other interest in this offering, or who otherwise are exercising
independent investment discretion. Each Purchaser must make such
Purchaser's own investment decision as to the merits of this
offering.
3.9 Financial Capability. Such
Purchaser currently has, or at Closing will have, available funds
necessary to purchase the Securities at Closing on the terms and
conditions contemplated by this Agreement.
4. Conditions to Each Purchaser’s
Obligations at Closing. The several obligations of each
Purchaser to purchase the Securities from the Company and
to consummate the transactions contemplated by this Agreement are
subject to the fulfillment on or before the Closing of each of the
following conditions; provided, that each Purchaser shall
only be entitled to waive conditions with respect to such
Purchaser’s obligations:
4.1 Representations and Warranties.
The representations and warranties of the Company contained in
Section 2 hereof
shall be true and correct on and as of the Closing Date as if such
representations and warranties were made as of such date, except
for such representations and warranties made as of a specific date,
which shall be true and correct only as of such date, and in each
case, except where the failure of such representations and
warranties to be so true and correct (without giving effect to any
qualification and limitation as to “materiality” or
“material adverse effect” set forth therein) would not,
individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
4.2 Performance. The Company shall
have performed and complied in all material respects with all
agreements, obligations, and conditions contained in this Agreement
that are required to be performed or complied with by it on or
before the Closing.
4.3 Compliance Certificate. The
Chief Executive Officer or Chief Financial Officer of the Company
shall deliver to such Purchaser at the Closing a certificate
stating that the conditions specified in Section 4.1 and Section 4.2 hereof have been
fulfilled.
4.4 Joinder Agreement. The Company
and such Purchaser shall have entered into a Joinder
Agreement.
4.5 No Legal Restraint. No Law,
judgment, injunction, order, ruling, or decree shall have been
enacted, promulgated, entered, or enforced by Governmental
Authority which would prohibit the consummation of the transactions
contemplated by this Agreement, and there shall be no legal
proceeding or action pending or threatened by any Governmental
Authority that seeks to enact, issue, promulgate, enforce, or enter
into any such Law, judgment, injunction, order, ruling, or decree
or that seeks to enjoin or prohibit the consummation of the
transactions contemplated hereby.
4.6 Opinion
of Company’s Counsel. Each Purchaser shall have
received an opinion from Reitler Kailas & Rosenblatt, counsel
for the Company, dated the Closing Date, in form and substance
reasonably acceptable to such Purchaser and customary for
transactions of this nature.
5. Conditions of the Company’s
Obligations at Closing. The obligations of the Company to
sell the Securities to the several Purchasers and to consummate the
transactions contemplated by this Agreement are subject to the
fulfillment on or before the Closing of each of the following
conditions:
5.1 Representations and Warranties.
The representations and warranties of such Purchaser contained in
Section 3 hereof
shall be true and correct on and as of the Closing Date as if such
representations and warranties were made as of such date, except
for such representations and warranties made as of a specific date,
which shall be true and correct only as of such date, and in each
case, except where the failure of such representations and
warranties to be so true and correct (without giving effect to any
qualification and limitation as to “materiality” or
“material adverse effect” set forth therein) would not,
individually or in the aggregate, reasonably be expected to prevent
or materially impair or materially delay the ability of such
Purchaser to consummate the transactions contemplated by this
Agreement.
5.2 Performance. Such Purchaser
shall have performed and complied in all material respects with all
agreements, obligations, and conditions contained in this Agreement
that are required to be performed or complied with by them on or
before the Closing.
5.3 Compliance Certificate. An
authorized officer of such Purchaser shall deliver to the Company
at the Closing a certificate stating that the conditions specified
in Section 5.1 and
Section 5.2 hereof
have been fulfilled.
5.4 Joinder Agreement. The Company
and each Purchaser shall have entered into a Joinder
Agreement.
5.5 No Legal Restraint. No Law,
judgment, injunction, order, ruling, or decree shall have been
enacted, promulgated, entered, or enforced by any Governmental
Authority which would prohibit the consummation of the transactions
contemplated by this Agreement, and there shall be no legal
proceeding or action pending or threatened by any Governmental
Authority that seeks to enact, issue, promulgate, enforce, or enter
into any such Law, judgment, injunction, order, ruling, or decree
or that seeks to enjoin or prohibit the consummation of the
transactions contemplated hereby.
6. Indemnification.
(a) Indemnification by the Company.
The Company agrees to indemnify the Purchasers and their
Representatives (collectively, “Purchaser Related
Parties”) from, and hold each of them harmless
against, any and all actions, suits, proceedings (including any
investigations, litigation or inquiries), demands, and causes of
action, and, in connection therewith, and promptly upon demand, pay
or reimburse each of them for all costs, losses, liabilities,
damages, or expenses of any kind or nature whatsoever, including,
without limitation, the reasonable fees and disbursements of
counsel and all other reasonable expenses (collectively,
“Losses”) incurred in
connection with investigating, defending or preparing to defend any
such matter that may be incurred by them or asserted against or
involve any of them as a result of, arising out of, or in any way
related to the breach of any of the representations, warranties or
covenants of the Company contained herein, provided that such claim
for indemnification relating to a breach of the representations or
warranties is made prior to the expiration of such representations
or warranties.
(b) Indemnification by the
Purchasers. Each Purchaser severally agrees to indemnify the
Company and its Representatives (collectively, “Company Related Parties”)
from, and hold each of them harmless against, any and all actions,
suits, proceedings (including any investigations, litigation or
inquiries), demands, and causes of action, and, in connection
therewith, and promptly upon demand, pay or reimburse each of them
for all Losses incurred in connection with investigating, defending
or preparing to defend any such matter that may be incurred by them
or asserted against or involve any of them as a result of, arising
out of, or in any way related to the breach of any of the
representations, warranties or covenants of such Purchaser
contained herein, provided that such claim for indemnification
relating to a breach of the representations and warranties is made
prior to the expiration of such representations and warranties.
Notwithstanding anything herein to the contrary, (i) no Purchaser
shall be liable for the acts, omission or breaches of any other
Purchaser under or with respect to this Agreement or the
transactions contemplated hereby, and (ii) each Purchaser’s
aggregate liability for Losses under this Section 6(b) shall not exceed
the aggregate purchase price payable by such Purchaser to the
Company for it Securities under this Agreement, except in the case
of fraud or willful misconduct by such Purchaser.
(c) Indemnification Procedure.
Promptly after any Company Related Party or Purchaser Related Party
(hereinafter, the “Indemnified Party”) has
received notice of any indemnifiable claim hereunder, or the
commencement of any action, suit or proceeding by a third Person,
which the Indemnified Party believes in good faith is an
indemnifiable claim under this Agreement, the Indemnified Party
shall give the indemnitor hereunder (the “Indemnifying Party”)
written notice of such claim or the commencement of such action,
suit or proceeding, but failure to so notify the Indemnifying Party
will not relieve the Indemnifying Party from any liability it may
have to such Indemnified Party hereunder except to the extent that
the Indemnifying Party is materially prejudiced by such failure.
Such notice shall state the nature and the basis of such claim to
the extent then known. The Indemnifying Party shall have the right
to defend and settle, at its own expense and by its own counsel who
shall be reasonably acceptable to the Indemnified Party, any such
matter as long as the Indemnifying Party pursues the same
diligently and in good faith. If the Indemnifying Party undertakes
to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in all
commercially reasonable respects in the defense thereof and the
settlement thereof. Such cooperation shall include, but shall not
be limited to, furnishing the Indemnifying Party with any books,
records and other information reasonably requested by the
Indemnifying Party and in the Indemnified Party’s possession
or control. Such cooperation of the Indemnified Party shall be at
the cost of the Indemnifying Party. After the Indemnifying Party
has notified the Indemnified Party of its intention to undertake to
defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal
expenses incurred by the Indemnified Party in connection with any
defense or settlement of such asserted liability; provided,
however, that the Indemnified Party shall be entitled (a) at its
expense, to participate in the defense of such asserted liability
and the negotiations of the settlement thereof and (b) if (i) the
Indemnifying Party has failed to assume the defense or employ
counsel reasonably acceptable to the Indemnified Party or (ii) if
the defendants in any such action include both the Indemnified
Party and the Indemnifying Party and counsel to the Indemnified
Party shall have concluded that there may be reasonable defenses
available to the Indemnified Party that are different from or in
addition to those available to the Indemnifying Party or if the
interests of the Indemnified Party reasonably may be deemed to
conflict with the interests of the Indemnifying Party, then the
Indemnified Party shall have the right to select a separate counsel
and to assume such legal defense and otherwise to participate in
the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation
to be reimbursed by the Indemnifying Party as incurred.
Notwithstanding any other provision of this Agreement, the
Indemnifying Party shall not settle any indemnified claim without
the consent of the Indemnified Party, unless the settlement thereof
imposes no liability or obligation on, and includes a complete
release from liability of, and does not include any admission of
wrongdoing or malfeasance by, the Indemnified Party.
7. Miscellaneous.
7.1 Survival. The representations,
warranties, covenants, and agreements contained in this Agreement
shall survive the Closing for a period of one year after the date
hereof and thereafter shall have no further force and
effect.
7.2 Finder’s Fees. The
Company represents that it will be obligated for compensation and
other rights to the Placement Agent in connection with this
offering as may be set forth in that certain placement agency
agreement by and between the Company and the Placement Agent dated
effective as of June 2, 2021, as the same may be amended and
restated from time to time, including, without limitation,
receiving a placement fee, warrants to purchase shares of the
Company’s Common Stock and reimbursement for certain
expenses. Each Purchaser agrees to indemnify and to hold harmless
the Company from any liability for any commission or compensation
in the nature of a finder’s or broker’s fee arising out
of this offering (and the costs and expenses of defending
against such liability or asserted liability) for which each
Purchaser or any of its officers, employees, or representatives is
responsible. The Company agrees to indemnify and hold harmless each
Purchaser from any liability for any commission or compensation
in the nature of a finder’s or broker’s fee
arising out of this offering (and the costs and expenses of
defending against such liability or asserted liability) for which
the Company or any of its officers, employees or representatives
is responsible.
7.3 Successors and Assigns. The
provisions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the
parties hereto. The Company will not assign this Agreement or any
rights or obligations hereunder without the prior written consent
of the Purchasers. None of the Purchasers will assign this
Agreement or any rights or obligations hereunder without the prior
written consent of the Company, except to a Permitted Transferee as
provided in the next sentence. Notwithstanding anything to the
contrary contained herein, each of the Purchasers may assign its
commitment to purchase the Securities hereunder in whole or in part
to any direct or indirect subsidiary of such Purchaser or any of
its Affiliates and its Affiliates’ limited partners and/or
funds, entities and accounts managed or advised by its Affiliates
(any such transferee, a “Permitted Transferee”)
subject to such Permitted Transferee making the representations and
warranties set forth in Section 3, and each such
Permitted Transferee shall be entitled to the full benefit and be
subject to the obligations of this Agreement as if such Person were
a “Purchaser” hereunder.
7.4 Notices. Any notice or request
required or permitted to be delivered under this Agreement shall be
given in writing and shall be deemed effectively given (a) if given
by personal delivery, upon actual delivery; (b) if given by
facsimile or electronic mail, upon receipt of confirmation of a
completed transmittal or receipt, as applicable; (c) if given by
mail, upon the earlier of (i) actual receipt of such notice by the
intended recipient; or (ii) three business days after such notice
is deposited in first class mail, postage prepaid; and (d) if by an
internationally recognized overnight courier, one business day
after delivery to such courier for overnight delivery. All notices
to the Company shall be addressed to the address below and all
notices to any Purchaser shall be addressed to the address listed
on such Purchaser’s signature page hereto, or at such other
address as the parties hereto may designate by ten days’
advance written notice to the other parties:
If the Company:
Scientific
Industries, Inc.
80
Orville Drive, Suite 102
Bohemia,
NY 11716
Attention:
Helena Santos
Email:
hsantos@scientificindustries.com
With a copy to (which shall not
constitute notice to the Company):
Reitler
Kailas & Rosenblatt LLC
885
3rd Ave,
20th
Floor
New
York, NY 10022
Attention:
John F.F. Watkins, Esq.
Email:
jwatkins@reitlerlaw.com
Facsimile:
(212) 371-5500
If to a Purchaser:
[See signature pages
hereto]
7.5 Governing Law. This Agreement
shall be governed in all respects by the Laws of the State of New
York without regard to choice of Law or principles that could
require the application of the Laws of any other
jurisdiction.
7.6 Submission to Jurisdiction; Venue;
Waiver of Trial by Jury. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York over any suit,
action, or proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby. Each of the parties
irrevocably waives, to the fullest extent permitted by Law, any
objection which it may now or hereafter have to the laying of venue
of any such suit, action, or proceeding brought in such a court
pursuant to the foregoing sentence and any claim that any such
suit, action, or proceeding brought in such a court has been
brought in an inconvenient forum. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS
LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE,
EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT, OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER;
(III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (IV) EACH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET FORTH IN THIS
SECTION
7.6.
7.7 Equitable Relief. The parties
hereto agree that irreparable damage would occur in the event that
any provision of this Agreement was not performed in accordance
with its specific terms or was otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction, this being in addition to any
other remedy to which they are entitled at Law or in equity.
Additionally, each party hereto irrevocably waives any defense
based on adequacy of any other remedy, whether at Law or in equity,
that might be asserted as a bar to the remedy of specific
performance of any of the terms or provisions hereof or injunctive
relief in any action brought therefor.
7.8 Severability. If any provision
of this Agreement or the application of any such provision to any
Person or circumstance shall be declared by any court of competent
jurisdiction to be invalid, illegal, void, or unenforceable in any
respect, all other provisions of this Agreement, or the application
of such provision to Persons or circumstances other than those as
to which it has been held invalid, illegal, void, or unenforceable,
shall nevertheless remain in full force and effect and will in no
way be affected, impaired, or invalidated thereby. Upon such
determination that any provision, or the application of any such
provision, is invalid, illegal, void, or unenforceable, the parties
hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties hereto as closely as
possible to the fullest extent permitted by Law in an acceptable
manner to the end that the transactions contemplated hereby are
fulfilled to the greatest extent possible.
7.9 Entire Agreement. This
Agreement, including the Annexes, Exhibits and Schedules hereto,
constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior
written, and prior and contemporaneous oral, agreements and
understandings between the parties with respect to the subject
matter hereof.
7.10 No
Third Party Beneficiaries. Nothing in this Agreement
(implied or otherwise) is intended to confer upon any Person other
than the parties hereto, or their respective successors and
permitted assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
7.11 Headings;
Interpretation. All headings and subheadings used in this
Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. The words
“include,” “includes,” and
“including” will be deemed to be followed by the phrase
“without limitation.” The meanings given to terms
defined herein will be equally applicable to both the singular and
plural forms of such terms. Unless expressly provided to the
contrary, the word “or” is not exclusive and
“hereunder,” “hereof,” “herein”
and words of similar import are references to this Agreement as a
whole and not any particular section or other provision of this
Agreement. Whenever the context may require, any pronoun includes
the corresponding masculine, feminine, and neuter forms. All
references to “dollars” or “$” will be
deemed references to the lawful money of the United States of
America. Further, the parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties
hereto, and no presumption or burden of proof shall arise favoring
or disfavoring any party hereto by virtue of the authorship of any
provisions of this Agreement. All annexes attached hereto are
hereby incorporated herein by reference and made a part
hereof.
7.12 Expenses.
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
the Securities to the
Purchasers.
7.13 Amendments
and Waivers. No term of this Agreement may be amended or
modified without the prior written consent of each party hereto and
this Agreement may not be amended in a manner that provides more
favorable terms to any Purchaser unless the other Purchasers are
first offered the opportunity to accept such favorable terms. No
provision of this Agreement may be waived except in a writing
executed and delivered by the party against whom such waiver is
sought to be enforced.
7.14 Certain
Definitions. The following terms shall have the respective
meanings for all purposes of the Agreement:
(a) “Affiliate” of any Person
shall mean any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such
Person. For purposes of this definition, “control” when
used with respect to any Person has the meaning specified in Rule
12b-2 promulgated under the Exchange Act; and the terms
“controlling” and “controlled” have
meanings correlative to the foregoing.
(b) “Company Material Adverse
Effect” shall mean any change, development,
occurrence, or event that would reasonably be expected to be
materially adverse to (i) the business, prospects, properties,
assets, liabilities, consolidated results of operations, or
financial condition of the Company and its Subsidiaries, taken as a
whole; or (ii) the ability of the Company to consummate the
transactions contemplated hereby; provided that any such change,
development, occurrence, or event resulting or arising from or
relating to any of the following matters shall not be considered
when determining whether a Company Material Adverse Effect has
occurred or would reasonably be expected to occur: (1) any change,
development, occurrence, or event affecting the businesses or
industries in which the Company and its Subsidiaries operate; (2)
any conditions affecting the United States of America’s
general economy or the general economy in any geographic area in
which the Company or its Subsidiaries operate or developments or
changes therein or the financial and securities markets and credit
markets in the United States of America or elsewhere in the world;
(3) political conditions, including acts of war (whether or not
declared), armed hostilities, and terrorism, or developments or
changes therein; (4) any conditions resulting from natural
disasters; (5) changes in any Laws or GAAP; (6) any action taken or
omitted to be taken by or at the written request or with the
written consent of any Purchaser; (7) any announcement or pendency
of this Agreement or the transactions contemplated hereby; (8)
changes in the market price or trading volume of Common Stock or
any other equity, equity-related, or debt securities of the Company
or its Affiliates (it being understood that the underlying
circumstances, events, or reasons giving rise to any such change
can be taken into account in determining whether a Company Material
Adverse Effect has occurred or would reasonably be expected to
occur); (9) any failure by the Company or its Subsidiaries to meet
any internal or public projections, forecasts, estimates, or
guidance for any period (it being understood that the underlying
circumstances, events, or reasons giving rise to any such failure
can be taken into account in determining whether a Company Material
Adverse Effect has occurred or would reasonably be expected to
occur); or (10) any legal claims or other proceedings made by any
of the Company’s stockholders (on their own behalf or on
behalf of the Company) arising out of or related to this Agreement;
provided, however, that the changes,
developments, occurrences, or events set forth in clauses (1), (2),
(3), (4), and (5) above may be taken into account in determining
whether there has been or is a Company Material Adverse Effect if
and only to the extent such changes, developments, occurrences, or
events have a disproportionate impact on the Company and its
Subsidiaries, taken as a whole, relative to other laboratory
equipment and bioprocessing companies in the United States of
America.
(c) “Governmental
Authority” shall mean any foreign governmental
authority, the United States of America, any state of the United
States of America, and any political subdivision of any of the
foregoing, and any agency, instrumentality, department, commission,
board, bureau, central bank, authority, court, or other tribunal,
having jurisdiction over any Purchaser, the Company, any of the
Company’s Subsidiaries, or their respective
properties.
(d) “Indebtedness” shall mean,
as to any Person, without duplication: (i) all indebtedness
(including principal, interest, fees, and charges) of such Person
for borrowed money or for the deferred purchase price of property
or services; (ii) any other indebtedness which is evidenced by a
promissory note, bond, debenture, or similar instrument; and (iii)
any obligation under or in respect of outstanding letters of
credit, acceptances, and similar obligations created for the
account of such Person.
(e) “Knowledge” of the Company
shall mean the actual knowledge of any of the following
individuals: John Moore, Chairman of the Board, Helena Santos,
President & CEO, or Robert Nichols, President.
(f) “Lien” shall mean any
mortgage, pledge, charge, encumbrance, security interest,
collateral assignment, or other lien or restriction.
(g) “Permitted Liens” shall
mean (i) Liens for taxes, assessments, or levies not yet due
(subject to applicable grace periods) or which are being contested
in good faith by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of the Company in
accordance with GAAP; (ii) carriers’, warehousemen’s,
mechanics,’ landlords,’ vendors,’
materialmen’s, repairmen’s, sureties,’ or other
like Liens arising in the ordinary course of business and securing
amounts not yet due or which are being contested in good faith by
appropriate proceedings if, in the case of such contested Liens,
adequate reserves with respect thereto are maintained on the books
of the Company in accordance with GAAP; (iii) easements,
rights-of-way, covenants, reservations, exceptions, encroachments,
zoning, and similar restrictions and encumbrances or title defects
incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which would not,
individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect; (iv) contractual Liens which arise
in the ordinary course of business under operating agreements,
joint venture agreements, and other agreements which are usual and
customary in the Company’s industries and are for claims
which are not delinquent by more than 90 days or which are being
contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP; (v)
bankers’ Liens, rights of set-off or similar rights and
remedies arising by operation of Law; and (vi) rights of lessees
and sublessees in assets leased by the Company or any Subsidiary
not prohibited elsewhere herein.
(h) “Person” shall mean any
individual, corporation, trust, unincorporated organization,
Governmental Authority, or any other form of entity.
(i) “Representative” of any
Person means the Affiliates, officers, directors, managers,
employees, agents, counsel, accountants, investment bankers and
other representatives of such Person.
(j) “Subsidiary” of any Person
shall mean any corporation, partnership, joint venture, limited
liability company, trust, or estate of which (or in which) more
than fifty percent of (i) the issued and outstanding capital stock
having ordinary voting power to elect a majority of the board of
directors of such corporation (regardless of whether at the time
capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any
contingency); (ii) the interest in the capital or profits of such
partnership, joint venture, or limited liability company; or (iii)
the beneficial interest in such trust or estate is at the time
directly or indirectly owned or controlled by such Person, by such
Person and one or more of its other Subsidiaries, or by one or more
of such Person’s other Subsidiaries.
7.15 Independent
Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under this Agreement and the
Registration Rights Agreement (together, the “Transaction Documents”)
are several and not joint with the obligations of any other
Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under any
Transaction Document. The decision of each Purchaser to purchase
Securities pursuant to the Transaction Documents has been made by
such Purchaser independently of any other Purchaser and
independently of any information, materials, statements or opinions
as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or any Subsidiary which may
have been made or given by any other Purchaser or by any agent or
employee of any other Purchaser, and no Purchaser and any of its
agents or employees shall have any liability to any other Purchaser
(or any other Person) relating to or arising from any such
information, materials, statement or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any
Purchaser pursuant 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 acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its
investment hereunder and that no Purchaser will be acting as agent
of such Purchaser in connection with monitoring its investment in
the Securities or enforcing its rights under the Transaction
Documents. Each Purchaser shall be entitled to independently
protect and enforce its rights, including without limitation the
rights arising out of the 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 acknowledges
that each of the Purchasers has been provided with the same
Transaction Documents for the purpose of closing a transaction with
multiple Purchasers and not because it was required or requested to
do so by any Purchaser. The Company’s obligations to each
Purchaser under this Agreement are identical to its obligations to
each other Purchaser other than such differences resulting solely
from the number of Shares purchased by such Purchaser, but
regardless of whether such obligations are memorialized herein or
in another agreement between the Company and a
Purchaser.
7.16 Counterparts.
This Agreement may be executed in any number of counterparts and
signatures may be delivered by facsimile or in electronic format
(e.g., “PDF”), each of which may be executed by less
than all parties hereto, each of which shall be enforceable against
the parties hereto actually executing such counterparts, and all of
which together shall constitute one instrument.
[Signature
Pages Follow]
IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound
by the terms hereof, have caused this Agreement to be executed as
of the date first written above by their officers or other
representatives thereunto duly authorized.
|
COMPANY:
|
SCIENTIFIC INDUSTRIES, INC.
By:
___________________________
Name:
Title:
|
[Signature
Pages to Securities Purchase Agreement]
IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound
by the terms hereof, have caused this Agreement to be executed as
of the date first written above by their officers or other
representatives thereunto duly authorized.
PURCHASERS:
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
Pages to Securities Purchase Agreement]
Schedule
2.3
SEC
Reports; Financial Statements
The
Company’s Form 10-Q for the quarter ended December 31, 2020
was accepted for filing by the SEC on February 22, 2021 but is
reflected on the SEC’s website as having been filed on
February 23, 2021:
https://www.sec.gov/Archives/edgar/data/87802/000165495421001966/0001654954-21-001966-index.htm
ANNEX A
Purchasers
and Number of Shares
|
Purchaser
Name
|
Number
of SharesPurchased at Closing
|
Number
of Shares of Common Stock Underlying Warrants Purchased at
Closing
|
|
21
April Fund, Ltd.
|
400,000
|
200,000
|
|
21
April Fund, L.P.
|
157,895
|
78,947
|
|
A.G.
Family, L.P.
|
157,895
|
78,947
|
|
Bruce
C. Conway
|
50,000
|
25,000
|
|
Curtis
Dupill
|
3,157
|
1,578
|
|
Eldgarn
Family Trust
|
73,684
|
36,842
|
|
Guillaume
Rambourg
|
42,105
|
21,052
|
|
Harris
Lydon
|
21,052
|
10,526
|
|
Henry
Hazard Moore
|
3,158
|
1,579
|
|
James
A. Clancy
|
5,263
|
2,631
|
|
Josiah
T. Austin
|
42,105
|
21,052
|
|
Lytton-Kambara
Foundation
|
191,058
|
95,529
|
|
Nicholas
Finegold
|
42,105
|
21,052
|
|
Pessin
Children’s Trust
|
52,631
|
26,315
|
|
Sandra
F. Pessin
|
421,053
|
210,526
|
|
Starlight
Investments Holdings Limited
|
63,157
|
31,578
|
|
Stephen
Dreier
|
31,579
|
15,789
|
|
The
Saxony 1999 Dynastic Trust
|
63,157
|
31,578
|
|
Thomas
M. Fitzgerald
|
21,052
|
10,526
|
|
Thomas
Satterfield
|
78,947
|
39,473
|
|
TomSat
Investment & Trading Co., Inc.
|
78,947
|
39,473
|
|
|
|
|
|
TOTAL:
|
2,000,000
|
1,000,000
|
[Annex
A to Securities Purchase Agreement]
Schedule 1
Accredited Investors
Schedule 2
Non-accredited Investors
Schedule 3
Disclosure Documents
(i)
Annual Report on
Form 10-K for the fiscal year ended June 30, 2020;
(ii)
Quarterly Reports
on Form 10-Q for the fiscal quarters ended December 31, 2020 and
March 31, 2021;
(iii)
Definitive Schedule
14A – Information Statement as of January 6,
2021;
(iv)
Reports on Form 8-K
dated March 1, 2021, March 8, 2021, April 13, 2021, and April 30,
2021, respectively;
(v)
Report on Form S-8
dated March 15, 2021; and
(vi)
Investor
Presentation
EXHIBIT A
Form of
Warrant
[See attached]
EXHIBIT B
Form of
Joinder Agreement
[See
attached]
