EXHIBIT 99.1
CHROMAVISION MEDICAL SYSTEMS, INC.
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of March
25, 2004, among ChromaVision Medical Systems, Inc., a Delaware corporation (the
"Company"), and the purchasers identified on the signature pages hereto (each a
"Purchaser" and collectively the "Purchasers"); and
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below), and Rule
506 promulgated thereunder, the Company desires to issue and sell to the
Purchasers, and the Purchasers, severally and not jointly, desire to purchase
from the Company in the aggregate, up to $ 21,000,000 of Common Stock, together
with Warrants to purchase additional shares of Common Stock equal to 15% of the
number of shares of Common Stock purchased hereunder (each unit of one share of
Common Stock and one Warrant to purchase 3/20ths (0.15) of a share of Common
Stock is referred to herein as a "Unit").
WHEREAS, the rules of Nasdaq (as defined below) require the approval of a
majority of the Company's stockholders in connection with the issuance at a
price below the current market price of more than 19.9% of the Company's voting
securities during any six month period.
WHEREAS, the number of Units to be sold pursuant to this agreement,
together with certain issuances of Common Stock and Common Stock Equivalents (as
defined below) in the six months prior to the date of this Agreement, exceeds
the 19.9% Nasdaq threshold.
WHEREAS, the Company and Purchasers have agreed to close the sale of units
in two tranches in order to comply with such Nasdaq rules
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"Action" shall have the meaning ascribed to such term in Section
3.1(j).
"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 144.
"Agent" means Xxxxxxxxx & Company, Inc.
"Authorization" shall have the meaning ascribed to such term in
Section 3.1(e).
"Business Day" means any day except Saturday, Sunday and any day
which shall be a federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or
other governmental action to close.
"Closing" means each closing of the purchase and sale of the Units
pursuant to Section 2.1.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, $0.01 par
value per share, and any securities into which such common stock may
hereafter be reclassified.
"Common Stock Equivalents" means any securities of the Company or
the Subsidiaries which would entitle the holder thereof to acquire at any
time Common Stock, including without limitation, any debt, preferred
stock, rights, options, warrants or other instrument that is at any time
convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
"Company Counsel" means Xxxxxx and Xxxxxxx LLP, counsel to the
Company.
"Disclosure Materials" shall have the meaning ascribed to such term
in Section 3.1(h).
"Disclosure Schedules" means the Disclosure Schedules attached
hereto.
"Effective Date" means the date that the Registration Statement is
first declared effective by the Commission.
"Effectiveness Period" shall have the meaning ascribed to such term
in the Registration Rights Agreement.
"Escrow Agent" means the Company's transfer agent or such other
party reasonably acceptable to the Agent and the Company.
"Escrow Agreement" means an escrow agreement reasonably acceptable
to the Company, the Agent and the Escrow Agent, in the form of Exhibit B
hereto or in such other form as the Company, the Agent and the Escrow
Agreement may agree.
"Evaluation Date" shall have the meaning ascribed to such term in
Section 3.1(u).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" shall have the meaning ascribed to such term in Section
3.1(h).
"Governmental Entity" shall have the meaning ascribed to such term
in Section 3.1(e).
"Information Statement" shall have the meaning ascribed to such term
in Section 4.13.
"Initial Closing" means the closing of the purchase and sale of
4,200,000 Units pursuant to Section 2.1(a).
"Initial Closing Date" means the date of the Initial Closing.
"Initial Subscription Amount" means, as to each Purchaser, the
amounts specified as the Initial Subscription Amount and set forth on
Schedule A hereto, in United States dollars and in immediately available
funds.
"Intellectual Property Rights" shall have the meaning ascribed to
such term in Section 3.1(p).
"Law" shall have the meaning ascribed to such term in Section
3.1(e).
"Legend Removal Date" shall have the meaning ascribed to such term
in Section 4.1(c).
"Liens" shall have the meaning ascribed to such term in Section
3.1(a).
"Material Adverse Effect" shall have the meaning ascribed to such
term in Section 3.1(b).
"Material Permits" shall have the meaning ascribed to such term in
Section 3.1(n).
"Order" shall have the meaning ascribed to such term in Section
3.1(d).
"Per Unit Purchase Price" equals $ 2.00, subject to adjustment for
reverse and forward stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock that occur after the date
of this Agreement.
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
"Private Placement Memorandum" means the confidential private
placement memorandum dated March 15, 2004, related to the Company,
including all exhibits, supplements and amendments thereto.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and
each Purchaser, in the form of Exhibit A hereto.
"Registration Statement" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering
the resale by the Purchasers of the Shares.
"Regulation D" shall have the meaning ascribed to such term in
Section 3.1(ff).
"Requisite Approval" shall have the meaning ascribed to such term in
Section 4.12.
"Review Period" shall have the meaning ascribed to such term in
Section 4.13.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 4350(i)" means Rule 4350(i) of The Nasdaq Stock Market.
"Safeguard" means Safeguard Delaware, Inc., a Delaware corporation,
and all Affiliates of Safeguard Delaware, Inc.
"SEC Reports" shall have the meaning ascribed to such term in
Section 3.1(h).
"Securities" means the Shares, the Warrants and the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock issued or issuable to each
Purchaser pursuant to this Agreement.
"Subsequent Closing" means the closing of the purchase and sale of
6,300,000 Units following compliance with Rule 4350(i) pursuant to Section
2.1(b).
"Subsequent Closing Date" means the date of the Subsequent Closing.
"Subsequent Subscription Amount" means, as to each Purchaser, the
amounts specified as the Subsequent Subscription Amount and set forth on
Schedule A hereto, in United States dollars and in immediately available
funds.
"Subsidiary" means any "significant subsidiary" as defined in Rule
1-02(w) of Regulation S-X promulgated by the Commission under the Exchange
Act.
"Subscription Amount" means, as to each Purchaser, the sum of the
Initial Subscription Amount and the Subsequent Subscription Amount set
forth below such Purchaser's signature block on the signature page hereto.
"Trading Day" means (i) a day on which the Common Stock is traded on
a Trading Market, or (ii) if the Common Stock is not listed on a Trading
Market, a day on which the Common Stock is traded on the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the Common
Stock is not quoted on the OTC Bulletin Board, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); provided, that in the event
that the Common Stock is not listed or quoted as set forth in (i), (ii)
and (iii) hereof, then Trading Day shall mean a Business Day.
"Trading Market" means the following markets or exchanges on which
the Common Stock is listed or quoted for trading on the date in question:
the American Stock Exchange, the New York Stock Exchange, the Nasdaq
National Market or the Nasdaq SmallCap Market (the Nasdaq National Market
and Nasdaq SmallCap Market, "Nasdaq").
"Transaction Documents" means this Agreement, the Registration
Rights Agreement, the Escrow Agreement, the Warrant, the Lock-Up
Agreements and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
"Warrants" means Common Stock Purchase Warrants, in the form of
Exhibit C, issuable to the Purchasers at Closing, which warrants shall be
exercisable immediately and have an exercise price equal to $2.75 per
share of Common Stock and a term of exercise of four (4) years.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing.
(a) Initial Closing. Subject to the terms and conditions set forth
in this Agreement, at the Initial Closing, each Purchaser shall purchase,
severally and not jointly, and the Company shall issue and sell, to each
Purchaser such number of Units set forth opposite such Purchaser's name as the
Initial Subscription Amount on Schedule A hereto at the Per Unit Purchase Price.
As soon as practicable following satisfaction or waiver of the conditions set
forth in Sections 6.1 and 6.2, and in any event within five Business Days of the
date hereof , the Initial Closing shall occur at the offices of Ropes & Xxxx
LLP, Xxx Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000, or on such other
date and at such other location as the Company and Agent shall mutually agree.
(b) Subsequent Closing. Subject to the terms and conditions set
forth in this Agreement, at the Subsequent Closing, each Purchaser shall
purchase, severally and not jointly, and the Company shall issue and sell, to
each Purchaser such number of Units set forth opposite such Purchaser's name as
the Subsequent Subscription Amount on Schedule A hereto at the Per Unit Purchase
Price. As soon as practicable following satisfaction or waiver of the condition
set forth in Section 6.3, and in any event within two Business Days of the
satisfaction of such condition, the Subsequent Closing shall occur at the
offices of Ropes & Xxxx LLP, Xxx Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx,
00000, or on such other date and at such other location as the Company and Agent
shall mutually agree.
2.2 Closing Deliveries. (a) At the Initial Closing the Company shall
deliver or cause to be delivered to each Purchaser (and, with respect to item
(vi), to the Agent) the following:
(i) this Agreement duly executed by the Company;
(ii) a certificate evidencing a number of Shares equal to such
Purchaser's Initial Subscription Amount divided by the Per Unit
Purchase Price, registered in the name of such Purchaser;
(iii) a Warrant, registered in the name of such Purchaser,
pursuant to which such Purchaser shall have the right to acquire up
to the number of shares of Common Stock equal to 15% of the number
of Shares purchased at the Initial Closing and set forth opposite
such Purchaser's name on Schedule A hereto;
(iv) the Escrow Agreement duly executed by the Company and the
Escrow Agent;
(v) the Registration Rights Agreement duly executed by the
Company; and
(vi) the legal opinion(s) of Company Counsel, executed by such
counsel and delivered to the Purchasers and the Agent, in form and
substance reasonably satisfactory to the Agent.
(b) At the Subsequent Closing the Company shall deliver or cause to
be delivered to each Purchaser (and, with respect to item (iii), to the
Agent) the following:
(i) a certificate evidencing a number of Shares equal to such
Purchaser's Subsequent Subscription Amount divided by the Per Unit
Purchase Price, registered in the name of such Purchaser
(ii) a Warrant, registered in the name of such Purchaser,
pursuant to which such Purchaser shall have the right to acquire up
to the number of shares of Common Stock equal to 15% of the number
of Shares purchased at the Subsequent Closing and set forth opposite
such Purchaser's name on Schedule A hereto; and
(iii) the legal opinion(s) of Company Counsel, executed by
such counsel and delivered to the Purchasers and the Agent, in form
and substance reasonably satisfactory to the Agent.
(c) At the Initial Closing each Purchaser shall deliver or cause to
be delivered to the Company (except for the delivery pursuant to subclause
(iii), which shall be delivered to the Escrow Agent) the following:
(i) this Agreement duly executed by such Purchaser;
(ii) such Purchaser's Initial Subscription Amount by wire
transfer to the account designated in writing by the Company
(iii) such Purchaser's Subsequent Subscription Amount by wire
transfer to the account designated in writing by the Escrow Agent
(the "Escrowed Amount");
(iv) the Escrow Agreement duly executed by such Purchaser;
(v) the Registration Rights Agreement duly executed by such
Purchaser; and
(vi) completed Purchaser Instructions and all attachments, in
the form attached as Exhibit C hereto, completed by such Purchaser.
(d) At the Subsequent Closing, the Escrow Agent shall release the
Escrowed Amount to the Company.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth in
the SEC Reports or the Private Placement Memorandum or under the corresponding
section of the Disclosure Schedules delivered concurrently herewith, the Company
hereby makes the following representations and warranties as of the date hereof
and as of the Initial Closing Date to each Purchaser:
(a) Subsidiaries. The Company owns, directly or indirectly, all of
the capital stock of each Subsidiary free and clear of any lien, charge,
security interest, encumbrance, right of first refusal or other
restriction (collectively, "Liens"), and all the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are
fully paid, non-assessable and free of preemptive and similar rights.
(b) Organization and Qualification. Each of the Company and each
Subsidiary is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power
and authority to own and use its properties and assets and to carry on its
business as described in the Disclosure Materials. Each Subsidiary is a
direct or indirect wholly owned Subsidiary of the Company. Neither the
Company nor any Subsidiary is in violation of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified or licensed to conduct business and is in
good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure
to be so qualified or in good standing, as the case may be, would not have
or reasonably be expected to result in (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii)
a material adverse effect on the results of operations, assets, business
or financial condition of the Company and the Subsidiaries, taken as a
whole, or (iii) adversely impair the Company's ability to perform in any
material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a "Material Adverse Effect").
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to execute and deliver each of the
Transaction Documents and to enter into and to consummate the transactions
contemplated by each of the Transaction Documents to which it is party and
otherwise to carry out its obligations thereunder. The execution
and delivery of each of the Transaction Documents to which it is a party
by the Company and the consummation by it of the transactions contemplated
thereby have been duly authorized by all necessary action on the part of
the Company and no further action is required by the Company or its
stockholders in connection therewith. Each Transaction Document including
this Agreement has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies and
(iii) as limited by laws, or public policy underlying such laws, relating
to indemnification and contribution in Section 4.9 hereof.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents to which it is a party by the Company and the
consummation by the Company of the transactions contemplated thereby do
not and will not (i) conflict with or violate any provision of the
Company's or any Subsidiary's certificate or articles of incorporation,
bylaws or other organizational or charter documents; (ii) conflict with,
or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or
other instrument (evidencing a Company or Subsidiary debt or otherwise) or
other understanding to which the Company or any Subsidiary is a party or
by which any property or asset of the Company or any Subsidiary is bound
or affected; (iii) to the Company's knowledge, conflict with, or result in
or constitute any violation of, any award, decision, judgment, decree,
injunction, writ, order, subpoena, ruling, verdict or arbitration award
entered, issued, made or rendered by any federal, state, local or foreign
government or any other Governmental Entity (each an "Order"), or any Law,
applicable to the Company or any of its Subsidiaries, or to any of their
respective properties or assets, or to any Securities; (iv) result in the
creation or imposition of (or the obligation to create or impose) any Lien
on any of the properties or assets of the Company or any of its
subsidiaries, or on any of the Securities; or (v) conflict with, or result
in or constitute any violation of, or result in the termination,
suspension or revocation of, any Authorization applicable to the Company
or any of its subsidiaries, or to any of their respective properties or
assets, or to any of the Securities, or result in any other impairment of
the rights of the holder of any such Authorization; except in the case of
each of clauses (ii), (iii), (iv) and (v), such as would not, individually
or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect.
(e) Filings, Consents and Approvals. Assuming the accuracy of the
representation of each Purchaser set forth in Section 3.2 hereof, no
registration (including any registration under the Securities Act) or
filing with, or any notification to, or any approval, permission, consent,
ratification, waiver, authorization, order, finding of suitability,
permit, license, franchise, exemption, certification or similar instrument
or document (each, an "Authorization") of or from, any court, arbitral
tribunal, arbitrator, administrative or regulatory agency or commission or
other governmental or regulatory authority, agency or governing body,
domestic or foreign, including without limitation
any Trading Market (each, a "Governmental Entity"), or any other person,
or under any statute, law, ordinance, rule, regulation or agency
requirement of any Governmental Entity, (each, a "Law"), on the part of
the Company or any of its subsidiaries is required in connection with the
execution or delivery by the Company of the Transaction Documents or the
performance by the Company of its obligations under each of the
Transaction Documents except (i) as would not have a Material Adverse
Effect on the Company or its performance of its obligations under the
Transaction Documents and (ii) Form D and blue sky filings and (iii) the
filings contemplated by the Transaction Documents.
(f) Issuance of the Securities. The Securities have been duly
authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens, except for such restrictions
on transfer or ownership imposed by applicable federal or state securities
laws or set forth in this Agreement. The Company has reserved from its
duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to this Agreement.
(g) Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 58,000,000 shares, 50,000,000 shares of
which are common stock, $0.01 par value per share and 8,000,000 shares of
which are preferred stock, $0.01 par value per share. As of the Initial
Closing Date, the authorized capital stock of the Company will consist of
108,000,000 shares, 100,000,000 shares of which shall be common stock,
$0.01 par value per share and 8,000,000 shares of which shall be preferred
stock, $0.01 par value per share. As of the date hereof and immediately
prior to the transactions contemplated hereby, there are 40,884,834 shares
of Common Stock issued and outstanding and no shares of preferred stock
issued and outstanding. Other than as contemplated in this Agreement, the
Company has not issued any capital stock since February 11, 2004 other
than pursuant to the exercise of (i) stock options or restricted grants
held by employees, officers, directors, or consultants, whether or not
pursuant to the Company's equity incentive plans or stock option plans,
(ii) the issuance of shares of Common Stock to employees pursuant to the
Company's equity incentive plans, stock option plans, stock option
agreements, restricted stock agreements, stock ownership plans or dividend
reinvestment plans, and (iii) pursuant to the conversion or exercise of
outstanding Common Stock Equivalents. Except as set forth in the
Disclosure Materials, no Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as
disclosed in Section 3.1(g) of the Disclosure Schedule, there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights
or obligations convertible into or exchangeable for, or giving any Person
any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. The issue and sale of the
Securities will not obligate the Company to issue shares of Common Stock
or other securities to any Person (other than the shares of Common Stock
being issued to the Purchasers hereunder) and will not result in a right
of
any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities.
(h) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing
materials, including the exhibits thereto (together with any materials
filed by the Company under the Exchange Act, whether or not required),
being collectively referred to herein as the "SEC Reports" and, together
with the Disclosure Schedules to this Agreement and the Private Placement
Memorandum, the "Disclosure Materials") on a timely basis or has timely
filed a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. The Company has
informed each Purchaser prior to the date hereof of any filing by the
Company of any SEC Reports within the 10 days preceding the date hereof.
As of their respective dates, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange Act
and the rules and regulations of the Commission promulgated thereunder,
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 light of
the circumstances under which they were made, not misleading. 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 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. All material agreements to
which the Company and its Subsidiaries are a party or to which any of
their respective property or assets are subject that are required to be
filed as Exhibits to the SEC Reports under Item 601 of Regulation S-K are
included as a part of, or specifically identified in, the SEC Reports.
(i) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as disclosed in the
Disclosure Materials, (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in
a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent
with past practice and (B) liabilities that would not be required to be
reflected in the Company's financial statements pursuant to GAAP or that
would not be required to be disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting, (iv) the
Company has not declared or made any dividend or distribution of cash or
other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and (v)
the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to
existing Company equity incentive plans, stock option plans, stock option
agreements, restricted stock agreements, stock ownership plans or dividend
reinvestment plans. The Company does not have pending before the
Commission any request for confidential treatment of information.
(j) Litigation. Except as disclosed in the Disclosure Materials,
there are no actions, suits, inquiries, notices of violation, proceedings
or investigations pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county,
local or foreign) (collectively, an "Action") which (i) adversely affects
or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) would have or reasonably
be expected to result in a Material Adverse Effect. Neither the Company
nor any Subsidiary, nor any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary
duty. There has not been, and to the knowledge of the Company, there is
not pending or contemplated, any investigation by the Commission involving
the Company or any current or former director or officer of the Company.
The Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(k) Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees
of the Company or any Subsidiary which could reasonably be expected to
result in a Material Adverse Effect.
(l) Taxes. Each of the Company and its Subsidiaries has filed all
necessary material federal, state and foreign income and franchise tax
returns and has paid or accrued all material taxes shown as due thereon,
and neither the Company nor any of its Subsidiaries has knowledge of a tax
deficiency which has been or might be asserted or threatened against it
which could reasonably be expected to result in a Material Adverse Effect.
(m) Compliance. Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not
been waived that, with notice or lapse of time or both, could result in a
default by the Company or any Subsidiary under), nor has the Company or
any Subsidiary received notice of a claim that it is in default under or
that it is in violation of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected (whether or not such default or violation has been waived), (ii)
is in violation of any order of any court, arbitrator or governmental
body, or (iii) to the Company's knowledge, is or has been in violation of
any statute, rule or regulation of any governmental authority, including
without limitation all foreign, federal, state and local laws relating to
taxes, environmental protection, kickbacks and false claims in healthcare
programs, occupational health and safety, product quality and safety and
employment, labor matters, except in each case as would not, individually
or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect.
The Company is in compliance with the applicable requirements of the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations thereunder
promulgated by the Commission, except where such noncompliance would not
have or reasonably be expected to result in a Material Adverse Effect.
(n) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to
conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits would not have or
reasonably be expected to result in a Material Adverse Effect ("Material
Permits"), and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any
Material Permit.
(o) Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to their respective businesses and good and marketable title in
all personal property owned by them that is material to their respective
businesses, in each case free and clear of all Liens, except for (i) Liens
described on Schedule 3.1(o) of the Disclosure Schedules, (ii) Liens as do
not materially affect the value of such property, do not materially
interfere with the use made and proposed to be made of such property by
the Company and the Subsidiaries, (iii) Liens for taxes not yet due and
payable and (iv) Liens which would not, individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect. To
the Company's knowledge, any real property and facilities held under lease
by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the
Subsidiaries are in compliance except, in each case, as would not
reasonably be expected to result in a Material Adverse Effect.
(p) Patents and Trademarks. The Company and the Subsidiaries own
(and are the record owner of) or possess adequate licenses to use, all
patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses, confidential information,
technology and other similar rights (and all goodwill associated
therewith) that are necessary or that are used in connection with their
respective businesses as described in the SEC Reports and which the
failure to so own or have would, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect
(collectively, the "Intellectual Property Rights"). Except as set forth in
the Disclosure Materials, neither the Company nor any Subsidiary has
received a written notice that any of the Intellectual Property Rights
violates or infringes upon or conflicts with the rights of any Person.
Except as set forth in the Disclosure Materials, or as would not
reasonably be expected to result in a Material Adverse Effect, to the
knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any
of the Intellectual Property Rights.
(q) FDA Compliance. The Company, and the manufacture, marketing and
sales of its products, comply with any and all applicable requirements of
the Federal Food, Drug and Cosmetic Act, 21 U.S.C. Section 301, et seq.,
any rules and regulations of the Food and Drug Administration promulgated
thereunder, and any similar laws outside of the
United States to which the Company is subject, except where such
noncompliance would not, individually or in the aggregate, have a Material
Adverse Effect.
(r) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which the Company and the Subsidiaries are engaged. Neither the Company
nor any Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.
(s) Price of Common Stock. The Company has not taken, and will not
take, directly or indirectly, any action designed to cause or result in,
or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the shares
of the Common Stock to facilitate the sale or resale of the Securities.
(t) Transactions With Affiliates and Employees. Except as set forth
in the Disclosure Materials, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors)
which would be required to be disclosed by the Company pursuant to Item
402 under Regulation S-K under the Exchange Act, including any contract,
agreement or other arrangement providing for the furnishing of services to
or by, providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is
an officer, director, trustee or partner, in each case in excess of
$60,000 other than (a) for payment of salary or consulting fees for
services rendered, (b) reimbursement for expenses incurred on behalf of
the Company and (c) for other employee benefits, including stock option
agreements, whether or not issued, under any stock option plan of the
Company.
(u) Internal Accounting Controls. The Company and each of its
subsidiaries maintains 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 has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and designed such
disclosure controls and procedures to ensure that material information
relating to the Company, including its subsidiaries, is made known to the
certifying officers by others within those entities, particularly during
the period in which the Company's Form 10-K or 10-Q, as the case may be,
is being prepared. The Company's certifying officers have evaluated the
effectiveness of the Company's controls and procedures as of a date within
90 days prior to the filing date of the most recently filed periodic
report under the Exchange Act (such date, the "Evaluation Date"). The
Company presented in its most recently filed Form 10-K or Form 10-Q 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 significant
changes in the Company's internal controls (as such term is defined in
Item 307(b) of Regulation S-K under the Exchange Act) or, to the Company's
knowledge, in other factors that could significantly affect the Company's
internal controls.
(v) Solvency. Based on the financial condition of the Company as of
the Closing Date (and assuming that the Closing shall have occurred), (i)
the Company's fair saleable value of its assets exceeds the amount that
will be required to be paid on or in respect of the Company's existing
debts and other liabilities (including known contingent liabilities) as
they mature; (ii) the Company's assets do not constitute unreasonably
small capital to carry on its business for the current fiscal year as now
conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the
cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to
incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be payable on or in respect
of its debt).
(w) Certain Fees. Other than fees paid to the Agent, no brokerage or
finder's fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by this
Agreement.
(x) Certain Registration Matters. Assuming the accuracy of the
Purchasers' representations and warranties set forth in Section
3.2(b)-(e), no registration under the Securities Act is required for the
offer and sale of the Securities by the Company to the Purchasers under
the Transaction Documents. The Company is eligible to register the resale
of its Common Stock for resale by the Purchasers under Form S-3 under the
Securities Act.
(y) Registration Rights. Except as set forth in the Disclosure
Materials, no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company.
(z) Listing and Maintenance Requirements. Except as specified in the
Disclosure Materials, the Company has not, in the twenty-four months
preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that
the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has
no reason to believe that it will not in the foreseeable future continue
to be, in compliance with all such listing and maintenance requirements.
The Company is in compliance with the listing and maintenance requirements
for continued listing of the Common Stock on the Nasdaq SmallCap Market.
(aa) Investment Company. The Company is not, and after giving effect
to the sale of the Securities and the application of the net proceeds
therefrom, will not be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or an Affiliate of an
"investment company."
(bb) Off-Balance Sheet Arrangements. There is no transaction,
arrangement or other relationship between the Company and an
unconsolidated or other off-balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so
disclosed or that otherwise would be reasonably expected to result in a
Material Adverse Effect. There are no such transactions, arrangements or
other relationships with the Company that may create contingencies or
liabilities that are not otherwise disclosed by the Company in its
Exchange filings.
(cc) Application of Takeover Protections. The Company and its Board
of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company's Certificate of
Incorporation (or similar charter documents) or the laws of its state of
incorporation or any agreement to which the Company is a party that is or
could become applicable to the Purchasers as a result of the Purchasers
and the Company fulfilling their obligations or exercising their rights
under the Transaction Documents, including without limitation the
Company's issuance of the Securities and the Purchasers' ownership of the
Securities.
(dd) No Additional Agreements. The Company does not have any
agreement or understanding with any Purchaser with respect to the
transactions contemplated by the Transaction Documents other than as
specified in this Agreement.
(ee) Disclosure. The Company confirms that, neither the Company nor
any other Person acting on its behalf has provided any of the Purchasers
or their agents or counsel with any information that constitutes or might
constitute material, non-public information. The Company understands and
confirms that the Purchasers will rely on the foregoing representations
and covenants in effecting transactions in securities of the Company. All
disclosure provided to the Purchasers regarding the Company, its business
and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, furnished by or on behalf of the Company are
true and correct in all material respects and do not contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(ff) Regulation D. Except as set forth on Schedule 3.1(ff) of the
Disclosure Schedules, none of the Company or any affiliate (as defined in
Rule 501(b) of Regulation D ("Regulation D") under the Securities Act) of
the Company has directly, or through
any agent (provided that no representation is made as to the Agent or its
affiliates or any person acting on its behalf), (a) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of any
security (as defined in the Securities Act) which is or will be integrated
with the sale of the Securities in a manner that would require the
registration of the Securities under the Securities Act or cause this
offering to be integrated with other offerings of the Company for purposes
of the rules and regulations of the Nasdaq National Market or; (b) engaged
in or used any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with the sale of the
Securities, including articles, notices or other communications published
in any newspaper, magazine or similar medium or broadcast over television
or radio, or any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising.
(gg) Acknowledgment Regarding Purchasers' Purchase of Company
Securities. The Company acknowledges and agrees that each of the
Purchasers is acting solely in the capacity of an arm's length purchaser
with respect to this Agreement and the transactions contemplated hereby.
The Company further acknowledges that no Purchaser is acting as a
financial advisor or fiduciary of the Company or any other Purchaser (or
in any similar capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and any advice given by any
Purchaser or any of their respective representatives or agents in
connection with the Transaction Document and the transactions contemplated
hereby and thereby is merely incidental to such Purchaser's purchase of
the Securities. The Company further represents to each Purchaser that the
Company's decision to enter into the Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the applicable Transaction Documents and
otherwise to carry out its obligations thereunder. The execution, delivery
and performance by such Purchaser of the transactions contemplated by this
Agreement has been duly authorized by all necessary corporate or, if such
Purchaser is not a corporation, such partnership, limited liability
company or other applicable like action, on the part of such Purchaser.
Each of this Agreement and the Registration Rights Agreement has been duly
executed by such Purchaser, and when delivered by such Purchaser in
accordance with terms hereof, will constitute the valid and legally
binding obligation of such Purchaser, enforceable against it in accordance
with its terms.
(b) Investment Intent. Such Purchaser is acquiring the Securities as
principal for its own account for investment purposes only and not with a
view to or for distributing or reselling such Securities or any part
thereof, without prejudice, however, to such Purchaser's right, subject to
the provisions of this Agreement, at all times to sell or
otherwise dispose of all or any part of such Securities pursuant to an
effective registration statement under the Securities Act or under an
exemption from such registration and otherwise in compliance with
applicable federal and state securities laws. Subject to the immediately
preceding sentence, nothing contained herein shall be deemed a
representation or warranty by such Purchaser to hold the Securities for
any period of time. Such Purchaser is acquiring the Securities hereunder
in the ordinary course of its business. Such Purchaser does not have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.
(c) Purchaser Status. At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is an "accredited investor"
as defined in Rule 501(a) under the Securities Act. Such Purchaser is not
required to be registered as a broker-dealer under Section 15 of the
Exchange Act.
(d) Experience of such Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of
such investment. Such Purchaser has requested, received, reviewed and
considered all information it deems relevant in making an informed
decision to purchase the Securities.
(e) General Solicitation. Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general
advertisement. At no time was the Purchaser presented with or solicited by
any publicly issued or circulated newspaper, mail, radio, television, or
to the Purchaser's knowledge, any other form of general advertising or
solicitation in connection with the offer, sale and purchase of the
Securities.
(f) Registration Required. Such Purchaser hereby covenants with the
Company not to, directly or indirectly, offer, sell, pledge, transfer, or
otherwise dispose of (or solicit offers to buy, purchase or otherwise
acquire or take pledge of) any of the Securities without complying with
the provisions hereof, the Registration Rights Agreement and the
Securities Act and the applicable rules and regulations of the Commission
thereunder, including without limitation, the prospectus delivery
requirement under the Securities Act to be satisfied (unless such
Purchaser is selling such Securities in a transaction not subject to the
prospectus delivery requirement), and such Purchaser acknowledges that the
certificates evidencing the Shares will be imprinted with a legend that
prohibits their transfer except in accordance therewith.
(g) Purchaser Instructions. Such Purchaser will have, on or prior to
the Closing Date, furnished to the Company fully completed Purchaser
Instructions attached as Exhibit C hereto for use in, among other things,
preparation of the Registration Statement and all of the information
contained therein, including all information set forth in the
accompanying Confidential Purchaser Questionnaire, will be true and
correct as of the Closing Date.
(h) Updated Information. Such Purchaser will notify the Company
immediately of any change in any such information required to be disclosed
in Section 3.2(g) above until such time as the Purchaser has sold all of
its Shares or until the Company is no longer required to keep the
Registration Statement effective, except to the extent that such changed
information is not required under the Act to be disclosed in an amendment
or supplement to the Registration Statement.
(i) Access to Information. Such Purchaser acknowledges that it has
reviewed the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms
and conditions of the offering of the Securities and the merits and risks
of investing in the Securities; (ii) access to information about the
Company and the Subsidiaries and their respective financial condition,
results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted
by or on behalf of such Purchaser or its representatives or counsel shall
modify, amend or affect such Purchaser's right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Transaction Documents.
(j) Certain Fees. Except for the fees that will be payable by the
Company under Section 3.1(w), such Purchaser has not entered into any
agreement or arrangement that would entitle any broker or finder to
compensation by the Company in connection with the sale of the Company
Securities to such Purchaser
(k) No Tax, Legal or Investment Advice. Such Purchaser understands
that nothing in the Transaction Documents or any other materials presented
to such Purchaser in connection with the purchase and sale of the
Securities constitutes tax, legal, or investment advice. Such Purchaser
has consulted such tax, legal, and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its
purchase of Securities.
(l) Certain Sales. Such Purchaser represents and warrants that it is
aware of the following Telephone Interpretation in the SEC Manual of
Publicly Available Telephone Interpretations (July 1997):
A.65. Section 5
An issuer filed a Form S-3 registration statement for a secondary
offering of common stock which is not yet effective. One of the
selling shareholders wanted to do a short sale of common stock
"against the box" and cover the short sale with registered shares
after the effective date. The issuer was advised that the short sale
could not be made before the registration statement becomes
effective, because the shares underlying the short sale are deemed
to be sold at the time such sale is made. There would, therefore, be
a violation of Section 5 if the shares were effectively sold prior
to the effective date.
(m) Compliance with Securities Laws. Such Purchaser represents and
warrants that, in connection with its purchase of the Securities, it has
complied with all applicable provisions of the Act, including the rules
and regulations promulgated by the SEC thereunder, and applicable state
securities laws.
(n) Reliance. Such Purchaser understands and acknowledges that (i)
the Securities are being offered and sold to it without registration under
the Securities Act in a private placement that is exempt from the
registration requirements of the Securities Act and (ii) the availability
of such exemption, depends in part on, and the Company will rely upon the
accuracy and truthfulness of, the foregoing representations and warranties
and such Purchaser hereby consents to such reliance.
The Company acknowledges and agrees that each Purchaser does not make or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions. (a) The Securities may only be disposed of in
compliance with state and federal securities laws, including pursuant to
an exemption therefrom. In connection with any transfer of the Securities
other than pursuant to an effective registration statement, pursuant to
paragraph (k) of Rule 144, to the Company, to an Affiliate of a Purchaser
or in connection with a pledge as contemplated in Section 4.1(b), the
Company may require the transferor thereof to provide to the Company an
opinion of counsel selected by the transferor, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to the
effect that such transfer does not require registration of such
transferred Securities under the Securities Act. As a condition of
transfer, any such transferee shall agree in writing to be bound by the
terms of this Agreement and the Registration Rights Agreement and, if such
transfer is a transfer of at least 5,000 shares of Common Stock, shall
have the rights of a Purchaser under this Agreement and the Registration
Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is required
by this Section 4.1(b), of a legend on any of the Securities in the
following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE
TO THE COMPANY. SUBJECT TO COMPLIANCE WITH APPLICABLE SECURITIES
LAWS, THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501(a) UNDER THE SECURITIES ACT.
The Company acknowledges and agrees that, subject to compliance with
applicable securities laws, a Purchaser may from time to time pledge
and/or grant a security interest pursuant to a bona fide margin agreement
in a bona fide margin account and, if required under the terms of such
arrangement, agreement or account, such Purchaser may transfer pledged or
secured Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no legal
opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith. However, at the discretion of the
Company, such legal opinion may be required in connection with a
subsequent transfer following default by the Purchaser transferee of the
pledge. No notice shall be required of such pledge. At the appropriate
Purchaser's expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably
request in connection with a pledge or transfer of the Securities,
including, if the Securities are subject to registration pursuant to the
Registration Rights Agreement, the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act or
other applicable provision of the Securities Act to appropriately amend
the list of Selling Stockholders thereunder.
(c) Certificates evidencing the Shares shall not contain any legend
(including the legend set forth in Section 4.1(b)), (i) while a
registration statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, or (ii)
following any sale of such Shares pursuant to Rule 144, or (iii) if such
Shares are eligible for sale or are sold under Rule 144(k), or (iv) if
such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements
issued by the Staff of the Commission). Promptly following effectiveness
of a registration statement contemplated under clause (i) of this Section
4.1(c), the Company shall, or shall cause its counsel to, deliver to the
Company's transfer agent, with a copy delivered to the Agent, written
notice that such a registration statement is effective, and that such
Shares may be sold pursuant thereto by Purchasers without any legend. In
addition, in the case of clause (ii) of this Section 4.1(c), the Company
shall, if requested by its transfer agent, direct the Company's counsel to
issue a legal opinion to such transfer agent to effect the removal of the
legend hereunder and, if required by the Company's transfer agent, such
legal opinion need not be issued until the Company's transfer agent has
first received a copy of the Purchaser's broker representation letter
relating to the Purchaser's Shares. The Company agrees that following the
Effective Date or at such time as such legend is no longer required under
this Section 4.1(c), it will, no later than four Trading Days following
the delivery by a Purchaser to the Company or the Company's transfer agent
of a certificate representing Shares with a restrictive legend (such date,
the "Legend Removal Date"), direct the transfer agent to deliver to such
Purchaser a certificate representing such Securities that is free from all
restrictive and other legends. The Company may not make any notation on
its records or give instructions to any transfer agent of the Company that
enlarge the restrictions on transfer set forth in this Section.
(d) Each Purchaser, severally and not jointly with the other
Purchasers, agrees that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section 4.1 is
predicated upon (i) the Company's reliance that the Purchaser will sell
any Shares pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom, and/or (ii) that in the context of a sale under
Rule 144, if requested by the Company's transfer agent, the Purchaser
shall have delivered to the transfer agent a broker representation letter
relating to the Purchaser's Shares.
4.2 Furnishing of Information. As long as any Purchaser owns the
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any such holder of Securities, the Company
shall deliver to such holder a written certification of a duly authorized
officer as to whether it has complied with the preceding sentence unless such
statement has been included in the Company's most recent report filed pursuant
to Section 13 or Section 15(d) of the Exchange Act. During the Effectiveness
Period, as long as any Purchaser owns Securities, if the Company is not required
to file reports pursuant to such laws, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule 144(c) such
information as is required for the Purchasers to sell the Securities under Rule
144. The Company further covenants that it will take such further action during
the Effectiveness Period as any holder of Securities may reasonably request to
the extent required from time to time to enable such Person to sell such
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144.
4.3 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require stockholder
approval prior to the closing of such other transaction unless stockholder
approval is obtained before the closing of such subsequent transaction.
4.4 Further Issuances; Preemptive Rights.
(a) Except as otherwise contemplated herein, the Company will not,
during the period commencing on the date hereof and concluding on the first
anniversary of the Initial Closing Date, directly or indirectly, offer, sell,
grant any option to purchase, or otherwise dispose of (or announce any offer,
sale, grant or any option to purchase or other disposition of) (a
"Qualifying Offering") any of its equity or equity equivalent securities,
including without limitation any debt, preferred stock or other instrument or
security that is, at any time during its life and under any circumstances,
convertible into or exchangeable or exercisable for Common Stock or Common Stock
Equivalents ("New Securities"), without first offering to the Purchasers a
preemptive right to purchase not less than 49.9% of such New Securities,
allocated among the Purchasers as set out below; provided, however, that a
Qualifying Offering shall not include the following, and the Company may,
without complying with this Section 4.4, (i) issue Common Stock pursuant to any
equity incentive plan, stock option plan, stock option agreement, restricted
stock agreement, stock ownership plan or dividend reinvestment plan of the
Company that is currently in effect and is disclosed in the SEC Reports or in
Schedule 4.4 of the Disclosure Schedules or that is subsequently approved by the
Board of Directors; (ii) issue restricted stock or options to purchase Common
Stock pursuant to any equity incentive plan or stock option plan that is
currently in effect and is disclosed in the SEC Reports or in Schedule 4.4 of
the Disclosure Schedules or that is subsequently approved by the Board of
Directors; (iii) issue stock options or restricted stock grants to employees,
officers, directors or consultants, whether or not pursuant to an equity
incentive plan; (iv) issue Common Stock issuable upon the conversion or the
exercise of securities, options or warrants outstanding at the Closing or in
connection with the offer and sale of Securities pursuant to this Agreement,
including the Warrant Shares, provided that the terms of such securities,
options or warrants are not amended, modified or changed on or after the Initial
Closing Date; (v) issue Common Stock or any other security convertible into or
exercisable or exchangeable for the Common Stock in connection with an
acquisition transaction (including by way of a merger or consolidation), the
primary purpose of which is not to raise equity capital; (vi) issue securities
to customers, vendors, licensors or joint venture partners or in connection with
other strategic alliances approved by the Company's board of directors, the
primary purpose of which is not to raise equity capital; (vii) issue securities
in connection with an equipment lease financing transaction or a credit
financing transaction with a bank or institutional lender approved by the Board
of Directors, the primary purpose of which is not to raise equity capital; or
(viii) issue Common Stock issuable upon the conversion or exercise of any
convertible securities, options or warrants issued and outstanding pursuant to
subclauses (i) - (vii) of this Section 4.4(a).
(b) The Company shall deliver to each Purchaser a written notice
(the "Offer Notice") of any proposed or intended issuance or sale or exchange
(the "Offer") of New Securities in a Qualifying Offering, which Offer Notice
shall (w) identify and describe the New Securities, (x) describe the price and
other terms upon which they are to be issued, sold or exchanged, and the number
or amount of the New Securities to be issued, sold or exchanged, (y) identify
the persons or entities (if known) to which or with which the New Securities are
to be offered, issued, sold or exchanged and (z) offer to issue and sell to or
exchange with the Purchasers not less than 49.9% of the New Securities (with the
other 50.1% (or such lesser amount as agreed by Safeguard and the Company) of
the New Securities being offered to Safeguard pursuant to a separate preemptive
right held by Safeguard), allocated among the Purchasers (a) based on such
Purchaser's pro rata portion of the number of Units purchased hereunder (the
"Basic Amount"), and (b) with respect to each Purchaser that elects to purchase
its Basic Amount, any additional portion of the New Securities attributable to
the Basic Amounts of other Purchasers as such Purchaser shall indicate it will
purchase or acquire should the other Purchasers subscribe for less than their
Basic Amounts (the "Undersubscription Amount").
(c) To accept an Offer, in whole or in part, a Purchaser must
deliver a written notice to the Company prior to the end of the fifth (5th)
Business Day after such Purchaser's receipt of the Offer Notice (the "Offer
Period"), setting forth the portion of the Purchaser's Basic Amount that such
Purchaser elects to purchase and, if such Purchaser shall elect to purchase all
of its Basic Amount, the Undersubscription Amount, if any, that such Purchaser
elects to purchase (in either case, the "Notice of Acceptance"). If the Basic
Amounts subscribed for by all Purchasers are less than the total of all of the
Basic Amounts, then each Purchaser who has set forth an Undersubscription Amount
in its Notice of Acceptance shall be entitled to purchase, in addition to the
Basic Amounts subscribed for, the Undersubscription Amount it has subscribed
for; provided, however, that if the Undersubscription Amounts subscribed for
exceed the difference between the total of all the Basic Amounts and the Basic
Amounts subscribed for (the "Available Undersubscription Amount"), each
Purchaser who has subscribed for any Undersubscription Amount shall be entitled
to purchase only that portion of the Available Undersubscription Amount as the
Basic Amount of such Purchaser bears to the total Basic Amounts of all
Purchasers that have subscribed for Undersubscription Amounts, subject to
rounding by the Company to the extent its deems reasonably necessary.
(d) The Company shall have sixty (60) days from the expiration of
the Offer Period above to offer, issue, sell or exchange all or any part of such
New Securities as to which a Notice of Acceptance has not been given by the
Purchasers (the "Refused Securities"), but only to the offerees described in the
Offer Notice (if so described therein) and only upon terms and conditions
(including, without limitation, unit prices and interest rates) that are not
more favorable to the acquiring person or persons or less favorable to the
Company than those set forth in the Offer Notice.
(e) In the event the Company shall propose to sell less than all the
Refused Securities (any such sale to be in the manner and on the terms specified
in this Section 4.4), then each Purchaser, at its sole option and in its sole
discretion, may reduce the number or amount of New Securities specified in its
Notice of Acceptance to an amount that shall be not less than the number or
amount of the New Securities that the Purchaser elected to purchase pursuant to
Section 4.4(c) above multiplied by a fraction, (i) the numerator of which shall
be the number or amount of New Securities the Company actually proposes to
issue, sell or exchange (including New Securities to be issued or sold to
Purchasers pursuant to Section 4.4(c) above prior to such reduction) and (ii)
the denominator of which shall be the original amount of the New Securities. In
the event that any Purchaser so elects to reduce the number or amount of New
Securities specified in its Notice of Acceptance, the Company may not issue,
sell or exchange more than the reduced number or amount of the New Securities
unless and until such securities have again been offered to the Purchasers in
accordance with this Section 4.4.
(f) Upon the closing of the issuance, sale or exchange of all or
less than all of the Refused Securities, the Purchasers shall acquire from the
Company, and the Company shall issue to the Purchasers, the number or amount of
New Securities specified in the Notices of Acceptance, as reduced pursuant to
Section 4.4(e) above if the Purchasers have so elected, upon the terms and
conditions specified in the Offer. The purchase by the Purchasers of any New
Securities is subject in all cases to the preparation, execution and delivery by
the Company and the Purchasers of a purchase agreement relating to such New
Securities reasonably satisfactory in form and substance to the Purchasers and
their respective counsel.
(g) Any New Securities not acquired by the Purchasers or other
Persons in accordance with this Section 4.4 may not be issued, sold or exchanged
until they are again offered to the Purchasers under the procedures specified in
this Agreement.
(h) Notwithstanding anything to the contrary in this Section 4.4,
the Company shall not be required to offer New Securities to a Purchaser if such
Purchaser is not an accredited investor at the time of the Qualifying Offering.
Each Purchaser agrees to represent and warrant to the Company as to its
accredited investor status as a condition to participating in the Offer.
(i) Notwithstanding the foregoing, this Section 4.4 shall not become
effective until 21 days from the date the Information Statement is first mailed
to all stockholders of the Company (the "Preemptive Rights Effective Date"). The
Company shall not issue securities in a Qualifying Offering prior to the
Preemptive Rights Effective Date.
4.5 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
Eastern time on the Business Day following the date of this Agreement, issue a
press release and file a Current Report on Form 8-K, in each case reasonably
acceptable to the Agent, disclosing the transactions contemplated hereby and
make such other filings and notices in the manner and time required by the
Commission. The Company shall, within five Business Days of the date hereof,
file a Current Report on Form 8-K including each of the Transaction Documents as
exhibits. The Company shall consult with the Agent in issuing any press releases
with respect to the transactions contemplated hereby, and the Company shall not
issue any such press release or otherwise make any such public statement without
the prior consent of the Agent, which consent shall not unreasonably be
withheld, except if such disclosure is required by law, in which case the
Company shall promptly provide the Agent with prior notice of such public
statement or communication.
4.6 Stockholders Rights Plan. No claim will be made or enforced by the
Company or any other Person that any Purchaser is an "Acquiring Person" under
any stockholders rights plan or similar plan or arrangement in effect or
hereafter adopted by the Company, or that any Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities under the Transaction Documents or under any other agreement between
the Company and the Purchasers.
4.7 Non-Public Information. The Company covenants and agrees that neither
it nor any other Person acting on its behalf will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.
4.8 Use of Proceeds. The Company shall use the net proceeds from the sale
of the Securities hereunder for general corporate purposes and working capital
including the funding of new business initiatives.
4.9 Reimbursement. If any Purchaser becomes involved in any capacity in
any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by
such Purchaser to or with any current stockholder), solely as a result of such
Purchaser's acquisition of the Securities under this
Agreement, the Company will reimburse such Purchaser for its reasonable legal
and other expenses (including the cost of any investigation preparation and
travel in connection therewith) incurred in connection therewith, as such
expenses are incurred; provided, that the Company shall only be required to
reimburse any Purchaser pursuant to this Section 4.9 with respect to a
Proceeding in which (i) the Proceeding primarily results from the Company's
breach of the terms of this Agreement and (ii) the Proceeding does not primarily
result from any action in violation of the terms of this Agreement or other
wrongful acts by the Purchaser requesting reimbursement. The reimbursement
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any Affiliates of the Purchasers who are actually named in
such action, proceeding or investigation, and partners, directors, agents,
employees and controlling persons (if any), as the case may be, of the
Purchasers and any such Affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, the Purchasers and any such Affiliate and any such Person. The Company
also agrees that neither the Purchasers nor any such Affiliates, partners,
directors, agents, employees or controlling persons shall have any liability to
the Company or any Person asserting claims on behalf of or in right of the
Company solely as a result of acquiring the Securities under this Agreement.
4.10 Reservation of Common Stock. As of the Initial Closing Date, the
Company shall have reserved and the Company shall continue to reserve and keep
available at all times, free of preemptive rights, a sufficient number of shares
of Common Stock for the purpose of enabling the Company to issue Shares pursuant
to this Agreement and to issue Warrant Shares pursuant to the Warrants.
4.11 Listing of Common Stock. The Company hereby agrees to use
commercially reasonable efforts to maintain the listing of the Common Stock on
the Trading Market, and as soon as reasonably practicable following the Initial
Closing (but not later than the earlier of the Effective Date and the first
anniversary of the Initial Closing Date) to list all of the Shares and the
Warrant Shares on the Trading Market. The Company further agrees, if the Company
applies to have the Common Stock traded on any other Trading Market, it will
include in such application all of the Shares, and will take such other action
as is necessary or desirable in the opinion of the Purchasers to cause the
Shares and the Warrant Shares to be listed on such other Trading Market as
promptly as possible. The Company will use commercially reasonable efforts to
comply in all material respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Trading Market.
4.12 Stockholder Vote. The Company shall obtain, not later than
concurrently with the execution of this Agreement, the written consent of a
majority of the outstanding voting securities of the Company, including the
consent of Safeguard Delaware, Inc. and Safeguard Scientifics (Delaware), Inc.
(the "Requisite Approval") in favor of the issuance of the Securities and the
preemptive rights as required by the rules and regulations of Nasdaq, including
Rule 4350(i).
4.13 Schedule 14C. The Company hereby agrees (1) to file with the
Commission within two (2) Business Days of the date hereof an Information
Statement pursuant to Section 14C of the Exchange Act, and Rule 14c and Schedule
14C thereunder (the "Information Statement"), disclosing the receipt of the
Requisite Approval, such Information Statement in
form and substance reasonably acceptable to the Agent, and (2) to mail the
Information Statement promptly (a) on the tenth day after the initial filing of
the Information Statement with the Commission (such ten-day period, the "Review
Period") if no comments are received from the Commission or (b) following
resolution of any comments received from the Commission if such comments were
received during the Review Period.
ARTICLE V.
MISCELLANEOUS
5.1 Fees and Expenses. Except as otherwise set forth in this Agreement,
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; provided, that the Company will pay the fees and expenses of
counsel to the Agent in an amount not to exceed $110,000. The Company shall pay
all stamp and other taxes and duties levied in connection with the sale of the
Securities.
5.2 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 6:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading
Day, (c) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.
5.4 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and Purchasers or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought, or with respect to waiver by
Purchasers, by Purchasers holding a majority of the Shares purchased hereby (or,
prior to the Closing, by Purchasers that have subscribed for a majority of the
aggregate Subscription Amounts subscribed for by all Purchasers hereunder). No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right.
5.5 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied
against any party. This Agreement shall be construed as if drafted jointly by
the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement or any of the Transaction Documents.
5.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser. Any Purchaser may assign
any or all of its rights under this Agreement in connection with a transfer of
not less than 5,000 shares of Common Stock pursuant to Section 4.1(a) to any
Person to whom such Purchaser assigns or transfers any Securities, provided such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions hereof that apply to the "Purchasers".
5.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.9 and as
otherwise necessary for the Agent to enforce its rights hereunder.
5.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, stockholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
New York for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is improper. Each party hereto
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto (including its affiliates, agents, officers, directors and
employees) hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such action
or proceeding shall be reimbursed by the other party for its attorneys fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
5.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive each Closing and the delivery of the Securities.
5.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.11 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.12 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
5.13 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.14 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
5.15 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. 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 Document. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser was introduced to the Company by the
Agent, which has acted solely as placement agent for the Company and not for any
Purchaser. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, certain Purchasers and their respective counsel
have chosen to communicate with the Company through the Agent and its counsel.
Counsel to the Agent does not represent the Purchasers or the Company but only
the Agent. The Company has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by the Purchasers.
ARTICLE VI.
CONDITIONS
6.1 Conditions to the Initial Closing of the Purchasers. Each Purchaser's
obligation to purchase the portion of the Securities being issued at the Initial
Closing is subject to the satisfaction, or waiver by such Purchaser, of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct in all material respects (except for those qualified as to
materiality or a Material Adverse Effect, which shall be true and correct)
as of the date of this Agreement and as of the Initial Closing Date
(except to the extent that such representation or warranty speaks of an
earlier date, in which case such representation or warranty shall be true
and correct in all material respects (or if qualified as to materiality or
a Material Adverse Effect, true and correct) as of such date) as though
made on and as of the Initial Closing Date.
(b) Performance of Obligations of Company. The Company shall have
performed in all material respects all agreements and covenants required
to be performed by it under this Agreement on or prior to the Initial
Closing Date.
(c) Minimum Investment Amount. The Company shall have received
executed and delivered signature pages from Purchasers committing to
purchase not less than $10 million of Units and the Company and the Escrow
Agent shall have received, in the aggregate, at least such amount prior to
the completion of the Initial Closing.
(d) NASD Filing. The Company shall have filed with the National
Association of Securities Dealers, a Notification Form: Listing of
Additional Shares with respect to the Shares and the Warrant Shares.
(e) No Suspension of Trading. From the date hereof to the Initial
Closing Date, trading in the Common Stock shall not have been suspended by
the Commission (except for any suspension of trading of limited duration
agreed to by the Company, which
suspension shall be terminated prior to each Closing), and, at any time
prior to the Closing Date, trading in securities generally as reported by
Bloomberg Financial Markets shall not have been suspended or limited, or
minimum prices shall not have been established on securities whose trades
are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New
York State authorities.
(f) Lock-up Agreements. The "lock-up" agreements, each substantially
in the form of Exhibit D hereto, between the Purchasers and each of the
executive officers, directors and Affiliates of the Company relating to
sales and certain other dispositions of shares of Common Stock or certain
other securities, and restricting such sales or other dispositions thereof
by such persons for at least 90 days following the Initial Closing Date,
shall have been executed and copies shall have been delivered to the
Purchasers and such agreements shall be in full force and effect on the
Initial Closing Date.
6.2 Conditions to the Initial Closing of the Company. The Company's
obligation to issue and sell the portion of the Securities being issued at the
Initial Closing is subject to the satisfaction, or waiver by the Company, of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of each Purchaser set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as
of the Initial Closing Date (except to the extent that such representation
or warranty speaks of an earlier date, in which case such representation
or warranty shall be true and correct in all material respects as of such
date) as though made on and as of the Initial Closing Date.
(b) Performance of Obligations of the Purchasers. Each of the
Purchasers shall have performed in all material respects all agreements
and covenants required to be performed by it under this Agreement on or
prior to the Initial Closing Date.
(c) Regulatory Approvals. The Company and each Purchaser shall have
received all requisite approvals (including all required findings of
suitability).
6.3 Conditions to the Subsequent Closing of the Company and the
Purchasers. Each of (i) each Purchaser's obligation to purchase the Securities
and (ii) the Company's obligation to issue and sell the Securities at the
Subsequent Closing is subject to the satisfaction prior the Subsequent Closing,
or waiver by all of the Purchasers and the Company, of the following condition:
either (x) twenty-one (21) days shall have elapsed from the date the Information
Statement was first mailed to all stockholders of the Company, (y) Nasdaq shall
have waived compliance with Rule 4350(i) with respect to the issuance of all
Shares contemplated hereby or (z) the Company shall have received a written
opinion of counsel reasonably satisfactory to all of the Purchasers and the
Agent that compliance with Rule 4350(i) is not required.
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
CHROMAVISION MEDICAL SYSTEMS, INC. Address for Notice:
------------------
ChromaVision Medical Systems, Inc.
33171 Paseo Cerveza
By: Xxx Xxxx Xxxxxxxxxx, XX 00000
------------------------------------
Name: Attn: Xxxxxxx Xxxxx, CFO
Title: E-mail: Xxxxxx@xxxxxxxxxxxx.xxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With copy to (which shall not constitute
notice):
Xxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: X. Xxxxxxxxx Voxman, Esq.
E-mail: Xxxx.Xxxxxx@XX.xxx
Tel: (000) 000-0000
Fax: (000) 000-0000
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
-----------------------------
[Print Name of Purchaser]
By:
--------------------------
Name:
Title:
[SIGNATURE PAGE CONTINUED]
