EXHIBIT 10.25
FORM OF
I-FLOW CORPORATION
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is made as of
September 2, 2003, by and between I-Flow Corporation, a Delaware corporation
(the "COMPANY"), and each of the investors listed on Schedule 1 hereto (each, an
"INVESTOR").
A. The Company desires to sell to the Investors, and the Investors desire
to purchase from the Company, units (the "UNITS") of the Company's securities.
B. Each Unit consists of (i) twenty (20) shares of the Company's common
stock, par value $0.001 per share ("COMMON STOCK"), and (ii) a warrant, in
substantially the form attached hereto as Exhibit A (the "WARRANT"), to purchase
three (3) shares of Common Stock.
C. In connection with the purchase and sale of the Units, the Company and
the Investors will also enter into a registration rights agreement, in
substantially the form attached hereto as Exhibit B (the "REGISTRATION RIGHTS
AGREEMENT"), providing for the registration of the Units.
In consideration of the mutual promises herein contained, the parties
hereto hereby agree as follows:
1. PURCHASE AND SALE OF SECURITIES.
(a) Sale and Issuance of Securities. Subject to the terms and conditions
of this Agreement, the Company shall issue, sell and deliver to each Investor,
and each Investor shall purchase and acquire from the Company, such number of
Units as set forth on Schedule 1 hereto (the "PURCHASED UNITS") for an aggregate
purchase price (the "PURCHASE PRICE") equal to the product of: (i) the number of
Purchased Units, multiplied by (ii) one hundred fifty dollars ($150.00).
(b) Closing. The purchase and sale of the Units will take place at the
offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0 Xxxx Xxxxx, Xxxxxx, Xxxxxxxxxx, at
10:00 a.m., on September 4, 2003, or at such other time and place as the Company
and the Investors acquiring in the aggregate more than half the Units being sold
pursuant hereto may mutually agree, either orally or in writing (which time and
place are designated as the "CLOSING"). Notwithstanding the foregoing, this
Agreement will terminate and none of the parties will have any further
obligations hereunder if the Closing does not occur on or prior to September 5,
2003.
(c) Closing Deliverables. At the Closing, (i) the Company shall deliver to
each Investor a certificate for such number of shares of Common Stock and a
Warrant for the purchase of such number of shares of Common Stock as are
represented by the Purchased Units such Investor is purchasing; and (ii) each
Investor shall deliver to the Company payment of the applicable Purchase Price
therefor by cashier's check or wire transfer of immediately available funds.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth on the
disclosure schedule attached hereto as Schedule 2 (the "DISCLOSURE SCHEDULE") or
in the SEC Reports (as defined below), the Company hereby represents and
warrants to each Investor, as of the date of this Agreement, as follows:
(a) Organization; Good Standing; Qualification. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, has all requisite corporate power and authority
to (i) own and operate its properties and assets and to carry on its business as
now conducted and as currently proposed to be conducted; (ii) execute and
deliver this Agreement, the Warrant, the Registration Rights Agreement and the
other documents required to be executed and delivered by the Company in
connection with the transactions contemplated hereby (the "TRANSACTION
DOCUMENTS"); (iii) issue and sell the shares of Common Stock, the Warrants and
the shares of Common Stock issuable upon exercise of the Warrants, that are
represented by the Units (collectively, the "SECURITIES"); and (iv) perform its
obligations under the Transaction Documents. The Company is duly qualified and
is authorized to transact business and is in good standing as a foreign
corporation in each jurisdiction in which the failure to so qualify would have a
material adverse effect on its business, financial condition or results of
operations, taken as a whole (a "MATERIAL ADVERSE EFFECT").
(b) Authorization. All corporate action on the part of the Company
necessary for (i) the authorization, execution and delivery of Transaction
Documents; (ii) the authorization, issuance (or reservation for issuance), sale,
and delivery of the Securities being sold hereunder or issuable upon exercise of
the Warrants; and (iii) the performance of all obligations of the Company under
the Transaction Documents, has been taken or will be taken prior to the Closing.
No stockholder approval is required to be obtained by the Company in order to
consummate the transactions contemplated by this Agreement, the Warrants and the
Registration Rights Agreement. This Agreement, the Warrants and the Registration
Rights Agreement, when executed and delivered, will constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except (x) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (y) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies, and (z) to the extent that the indemnification provisions contained in
the Registration Rights Agreement may be limited by applicable laws (clauses
(x), (y) and (z), the "ENFORCEABILITY EXCEPTIONS"). The sale of the Units is
not, and the subsequent exercise of the Warrants for shares of Common Stock will
not be, subject to any preemptive rights or rights of first refusal that have
not been properly waived or complied with, or trigger any anti-dilution, reset
or similar provisions contained in any currently outstanding securities of the
Company.
(c) No Conflict. The execution, delivery and performance by the Company of
the Transaction Documents to which the Company is a party and the consummation
of the transactions contemplated thereby do not and will not: (a) violate or
conflict with any provision of the certificate of incorporation or bylaws of the
Company; (b) violate any provision or requirement of any federal, state or local
law, statute, judgment, order, writ, injunction, decree, award, rule, or
regulation of any governmental entity applicable to the Company, except for
violations that would not have a Material Adverse Effect; (c) violate in any
material respect, result in a material breach of, constitute (with due notice or
lapse of time or both) a material
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default or cause any material obligation, penalty, premium or right of
termination to arise or accrue under, any contract, agreement or document to
which the Company is a party and required to be filed as an exhibit to the SEC
Reports in accordance with Item 601 of Regulation S-K (the "MATERIAL
CONTRACTS"); or (d) result in the creation or imposition of any lien, charge or
encumbrance of any kind whatsoever upon any of the properties or assets of the
Company, except where the creation of any such liens would not have a Material
Adverse Effect.
(d) Valid Issuance of Securities. The shares of Common Stock that are
being purchased by the Investors hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid and nonassessable, and will
be free of restrictions on transfer, other than restrictions on transfer under
this Agreement and the Warrants and under applicable federal and state
securities laws. The shares of Common Stock issuable upon exercise of the
Warrants being purchased under this Agreement have been duly and validly
reserved for issuance and, upon issuance in accordance with the terms of the
Warrants, will be duly and validly issued, fully paid and nonassessable, and
will be free of restrictions on transfer other than restrictions on transfer
under this Agreement and the Warrants and under applicable federal and state
securities laws.
(e) Governmental Consents. Except for such filings as have been, or will
be, made prior to the Closing, no consent, approval, qualification, order or
authorization of, or filing with, any federal, state or local governmental
authority is required on the part of the Company in connection with (i) the
Company's valid execution, delivery or performance of the Transaction Documents
to which it is a party; (ii) the offer, sale or issuance of the shares of Common
Stock by the Company under this Agreement; or (iii) the issuance of the shares
of Common Stock upon exercise of the Warrants.
(f) Capitalization and Voting Rights. The capitalization of the Company,
as of August 28, 2003, including the authorized capital stock, the number of
shares issued and outstanding, the number of shares issuable and reserved for
issuance pursuant to any equity incentive plan and the number of shares issuable
and reserved for issuance pursuant to securities exercisable or exchangeable
for, or convertible into, any shares of capital stock is as set forth in Section
(f) of the Disclosure Schedule. The outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable. As of
August 28, 2003 and except for (i) the exercise rights of the Warrants, (ii)
currently outstanding options to purchase 3,606,145 shares of Common Stock
granted to employees, consultants and directors pursuant to the Company's equity
incentive plans (the "OPTION PLANS"), and (iii) warrants to purchase 15,625
shares of Common Stock granted to Silicon Valley Bank, there are no outstanding
options, warrants, rights (including conversion or preemptive rights and rights
of first refusal), proxy or stockholder agreements or agreements of any kind for
the purchase or acquisition from the Company of any of its securities. In
addition to the aforementioned options, as of August 28, 2003, the Company has
reserved an additional (x) 1,836,463 shares of its Common Stock for purchase
upon exercise of options to be granted in the future under the Option Plans, and
(y) 160,000 shares of its Common Stock for grant under the Company's 2003
restricted stock plan. The Company is not a party or subject to any agreement or
understanding, and, to the Company's knowledge, there is no agreement or
understanding between any persons that affects or relates to the voting or
giving of written consents with respect to any security or the voting by a
director of the Company.
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(g) SEC Reports. The Company has made available to each Investor true and
complete copies of each form, report, schedule, definitive proxy statement and
registration statement filed by the Company with the U.S. Securities and
Exchange Commission (the "SEC") subsequent to January 1, 2002 and on or prior to
the business day immediately prior to the date hereof (collectively, the "SEC
REPORTS"), which are all the forms, reports, schedules, statements and other
documents (other than preliminary material) that the Company was required to
file with the SEC. Since January 1, 2002, the Company has timely made all
filings required to be made by it under the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the "SECURITIES
ACT"), or the Securities Exchange Act of 1934, as amended (together with the
rules and regulations promulgated thereunder, the "EXCHANGE ACT"), as
applicable. The SEC Reports (including, without limitation, any financial
statements or schedules included or incorporated by reference therein) (i) were
prepared in compliance with the requirements of the Securities Act or the
Exchange Act, as applicable, and (ii) did not at the time of filing (or if
amended, supplemented or superseded by a filing prior to the date hereof, on the
date of that filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(h) Financial Statements. The consolidated financial statements of the
Company included in the SEC Reports have been prepared in accordance with
generally accepted accounting principles consistently applied and consistent
with prior periods, subject, in the case of unaudited interim consolidated
financial statements, to normal recurring year-end adjustments and the absence
of certain footnote disclosures. The consolidated balance sheets of the Company
included in the SEC Reports fairly present the consolidated financial position
of the Company as of their respective dates, and the related consolidated
statements of operations, cash flows and stockholders' equity included in the
SEC Reports fairly present the consolidated results of operations of the Company
for the respective periods then ended, subject, in the case of unaudited interim
financial statements, to normal recurring year-end adjustments and the absence
of certain footnote disclosures. The Company has no liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of a nature required by
generally accepted accounting principles to be reflected in a consolidated
balance sheet (or reflected in the notes thereto), except for those (i) that are
accrued or reserved against in the Company's financial statements (or reflected
in the notes thereto) included in the SEC Reports, (ii) that were incurred
subsequent to June 30, 2003 in the ordinary course of business and consistent
with past practice, or (iii) that would not individually or in the aggregate
have a Material Adverse Effect on the Company. Since June 30, 2003, there has
not been any event, circumstance, condition, development or occurrence causing,
resulting in or having a Material Adverse Effect.
(i) Material Contracts. Each Material Contract is valid and in full force
and effect as to the Company and, to the knowledge of the Company, the other
parties thereto. The Company is not in violation of, or default under (and there
does not exist any event or condition which, after notice or lapse of time or
both, would constitute such default under), the Material Contracts, except to
the extent that such violations or defaults, individually or in the aggregate,
would not have a Material Adverse Effect. The Company has not received any
written notice of any cancellation of any Material Contract by any other party
thereto.
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(j) Related-Party Transactions. No director, officer or employee of the
Company is indebted to the Company, nor is the Company indebted (or committed to
make loans or extend or guarantee credit) to any of them, other than (i) for
payment of salary for services rendered, (ii) reimbursement for reasonable
expenses incurred on behalf of the Company, and (iii) for other standard
employee benefits made generally available to all employees (including, without
limitation, stock option agreements outstanding under any equity incentive plan
approved by the board of directors of the Company). To the Company's knowledge,
no director, officer or employee of the Company has any direct or indirect
material interest in any transaction with the Company (other than ordinary
course services solely in their capacity as directors, officers or employees),
in which the amount involved exceeds $60,000, individually or in the aggregate.
To the Company's knowledge, none of such persons has any direct or indirect
ownership interest in excess of ten percent (10%) in any firm or corporation
with which the Company has a material business relationship.
(k) Registration Rights. Except as provided in the Registration Rights
Agreement, the Company is presently not under any obligation and has not granted
any rights to register under the Securities Act any of its presently outstanding
securities or any of its securities that may subsequently be issued.
(l) Permits. The Company has all franchises, permits, licenses, and any
similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could, individually or in the aggregate, have
a Material Adverse Effect. The Company is not in default in any material respect
under any of such franchises, permits, licenses or other similar authority.
(m) Compliance with Applicable Law. The business of the Company is being
conducted in compliance with, in all material respects, all applicable laws,
ordinances, rules or regulations of any governmental entity, including, without
limitation, federal, state, local and foreign laws and regulations relating to
the protection of the health and safety of employees and equal employment
opportunity. There are no unresolved notices of deficiency or charges of
violation brought or, to the knowledge of the Company, threatened against the
Company, including under any federal, state, local or foreign regulation or
otherwise, and there are no facts or circumstances known to the Company that
would constitute a reasonable basis on which any such proceedings, notices or
actions may be instituted, issued or brought hereafter. No investigation or
review by any governmental entity with respect to the Company or any of its
subsidiaries is pending or, to the knowledge of the Company, threatened, nor, to
the knowledge of the Company, has any governmental entity indicated an intention
to conduct the same.
(n) Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries or any of their respective properties or
assets which would have, individually or in the aggregate, a Material Adverse
Effect or would reasonably be expected to prevent or materially delay the
completion of the transactions contemplated by this Agreement. The Company is
not a party to, or to its knowledge, named in or subject to any order, writ,
injunction, judgment or decree of any court, government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company currently intends to initiate.
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(o) Title to Property and Assets; Leases. Except (i) as reflected in the
financial statements contained in the SEC Reports, (ii) for liens for current
taxes not yet delinquent, (iii) for liens imposed by law and incurred in the
ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, materialmen and the like, (iv) for liens in respect of
pledges or deposits under workers' compensation laws or similar legislation or
(v) for minor defects in title, none of which, individually or in the aggregate,
materially interferes with the use of such property (clauses (i) through (v),
the "PERMITTED LIENS"), the Company has good and marketable title to its
property and assets free and clear of all mortgages, liens, claims, and
encumbrances. With respect to the property and assets it leases, the Company is
in compliance with such leases and, to the knowledge of the Company, holds a
valid leasehold interest free of any liens, claims, or encumbrances, except for
Permitted Liens.
(p) Intellectual Property. The Company owns or possesses sufficient legal
rights to all patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information, and proprietary rights and processes necessary
for the conduct of its business as described in the SEC Reports, without, to the
knowledge of the Company, any conflict with, or infringement of the rights of,
others. Except for standard end-user license agreements, there are no
outstanding options, licenses, or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses, or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and proprietary
rights and processes of any other person or entity. The Company has not received
any communications alleging that the Company has violated or, by conducting its
business, would violate any of the patents, trademarks, service marks, trade
names, copyrights, trade secrets, or other proprietary rights or processes of
any other person or entity.
(q) Employees. There is no strike, labor dispute or union organization
activities pending or, to the knowledge of the Company, threatened between it
and its employees. None of the Company's employees belong to any union or
collective bargaining unit. The Company has complied in all material respects
with all applicable federal and state equal opportunity and other laws related
to employment. The Company is not aware that any executive officer (as defined
in Rule 501(f) of the Securities Act) intends to terminate his or her employment
with the Company or to substantially reduce his or her duties, nor does the
Company have a present intention to terminate the employment of any such
executive officer.
(r) Tax Matters. The Company has timely filed all tax returns and reports
(federal, state, and local) as required by law. These returns and reports are
true and correct in all material respects. The Company has paid all taxes and
other assessments due, except those contested by it in good faith. The provision
for taxes of the Company as shown in the financial statements included in the
SEC Reports is adequate for taxes due or accrued as of the date thereof.
(s) Insurance. The Company maintains in full force and effect insurance
policies of the type and in the amount reasonably adequate for its business
(subject to reasonable deductibles), including, without limitation, insurance
covering all real and personal property owned or leased by the Company against
such risks customarily insured against by similarly-situated companies.
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(t) Environmental and Safety Laws. To the knowledge of the Company, the
Company is not in violation of any applicable statute, law, or regulation
relating to the environment or occupational health and safety and, to the
knowledge of the Company, no material expenditures are or will be required in
order to comply with any such existing statute, law or regulation.
(u) No Integrated Offering. Subject in part to the truth and accuracy of
each Investor's representations set forth in this Agreement, the offer, sale and
issuance of the Units, as contemplated by this Agreement, are exempt from the
registration requirements of the Securities Act. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the
Securities Act of the Units to be issued to the Investors. The issuance of the
Units to the Investors will not be integrated with any past or future issuance
of the Company's securities for purposes of the Securities Act.
(v) Nasdaq Listing. The Common Stock is listed on the Nasdaq National
Market System ("NASDAQ NMS") and there are no pending proceedings to revoke or
suspend such listing. The Common Stock is registered pursuant to Section 12(g)
of the Exchange Act. The Company currently meets the continuing eligibility
requirements for listing on the Nasdaq NMS and has not received any notice from
the Nasdaq NMS that it may not currently satisfy such requirements or that such
continued listing is in any way threatened. The Company has taken no action
designed to, or which, to the knowledge of the Company, is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the Nasdaq NMS. The Company has received
no notice that either the SEC or the Nasdaq NMS is contemplating terminating
such registration or listing.
(w) S-3 Eligibility. The Company is eligible to register the resale of the
Common Stock on a registration statement on Form S-3 under the Securities Act.
To the knowledge of the Company, there currently exists no facts or
circumstances that would prohibit or delay the preparation and filing of a
registration statement on Form S-3 in accordance with the Registration Rights
Agreement.
(x) Independent Investors. The Company acknowledges that each of the
Investors is acting solely in the capacity of an arms' length purchaser with
respect to this Agreement and the transactions contemplated hereby and that each
Investor has separately negotiated the terms of this Agreement. The Company
confirms that neither it nor any other person acting on its behalf has provided
any of the Investors or their agents or counsel with any information that
constitutes, or might constitute, material, nonpublic information, other than
this Agreement and the transactions contemplated hereby. Upon the issuance of
the press release referenced in Section 7(a), no Investor will be in possession
of any material, non-public information provided by, or on behalf of, the
Company.
(y) Disclosure. All disclosure provided to the Investors regarding the
Company, including the Disclosure Schedule, furnished by, or on behalf of, the
Company are true and correct 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
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which they were made, not misleading. Other than this Agreement and the
transactions contemplated hereby, no event or circumstance has occurred or
information exists with respect to the Company which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly disclosed or announced.
(z) No Brokers. Except for First Albany Corporation and Xxxx Capital
Partners, LLC whose fees shall be payable by the Company, no broker, finder,
investment banker or other person is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement, based upon arrangements made by or on behalf of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each Investor, severally and
not jointly, hereby represents, warrants and covenants to the Company that:
(a) Authorization. Such Investor has full power and authority to enter
into the Transaction Documents to which it is a party. This Agreement, the
Warrant and the Registration Rights Agreement, when executed and delivered, will
constitute a valid and legally binding obligation of such Investor, enforceable
in accordance with their respective terms, except for the Enforceability
Exceptions.
(b) Purchase Entirely for Own Account. This Agreement is made with such
Investor in reliance upon such Investor's representation to the Company, which
by such Investor's execution of this Agreement such Investor hereby confirms,
that the Securities will be acquired for investment for such Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that such Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same; provided, however, that in making such representation, such Investor
does not agree to, or represent that it will, hold the Securities for any
minimum or specific term and reserves the right to sell, transfer or otherwise
dispose of the Securities at any time in accordance with the provisions of this
Agreement or the Warrants and with applicable federal and state securities laws.
Such Investor does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to any of the Securities.
(c) Reliance Upon Investor's Representations. Such Investor understands
that, except as provided under the Registration Rights Agreement, the Units are
not, and any shares of Common Stock issued upon exercise of the Warrants may not
be, registered under the Securities Act on the ground that the sale provided for
in this Agreement and the issuance of securities hereunder is exempt from
registration under the Securities Act pursuant to Section 4(2) thereof, and that
the Company's reliance on such exemption is predicated on the Investor's
representations set forth herein.
(d) Receipt of Information. Such Investor has received all the information
such Investor considers necessary or appropriate for deciding whether to
purchase the Units and understands that such Investor's investment in the
Securities involves a high degree of risk. Each Investor further represents that
such Investor has been furnished with all materials that it has requested
regarding the terms and conditions of the offering of the Units and the
business, financial condition, results of operations and prospects of the
Company and to obtain additional
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information necessary to verify the accuracy of any information furnished to
such Investor or to which such Investor had access. Each Investor has also had
the opportunity to make further inquiries of the Company for additional
information. All such inquiries have been answered to such Investor's full and
complete satisfaction. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 hereof or the right
of the Investors to rely thereon.
(e) Accredited Investor; Investment Experience. Such Investor's responses
to the Investor Suitability Questionnaire, attached hereto as Exhibit C, are
true and complete in every respect. Such Investor is an "ACCREDITED INVESTOR"
(as defined under SEC Rule 501 of Regulation D under the Securities Act) and is
experienced in evaluating and investing in private placement transactions of
securities. Such Investor is able to bear the economic risk of such Investor's
investment and has such knowledge and experience in financial and business
matters that such Investor is capable of evaluating the merits and risks of the
investment in the Units. Such Investor also represents that such Investor has
not been organized for the purpose of acquiring the Units or that, if it has
been so organized, each member, partner or stockholder of such Investor is an
"accredited investor."
(f) No Ownership; No Hedging. Such Investor does not beneficially own, and
will not beneficially own through the date of Closing (as determined in
accordance with Rule 13d-3 under the Exchange Act and after giving effect to the
transactions contemplated hereby), in excess of 14% of the outstanding shares of
Common Stock. Such Investor has not and will not engage in any "short sale" or
other hedging transaction in violation of applicable federal or state securities
laws.
(g) Restricted Securities. Such Investor understands that the Securities
are characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering. Such Investor understands that, because the
Securities are characterized as restricted securities, the Securities may not be
sold, transferred or otherwise disposed of without registration under the
Securities Act or an exemption therefrom. In the absence of an effective
registration statement covering the Securities or an available exemption from
registration under the Securities Act, the Securities must be held indefinitely.
Such Investor is familiar with Rule 144 under the Securities Act, as currently
in effect, and understands the resale limitations imposed thereby and by the
Securities Act. Such Investor is also familiar with the anti-manipulation rules
and regulations promulgated under the Exchange Act, including Regulation M.
(h) No General Solicitation. Such Investor has not been offered the
Securities through any form of advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio, or any seminar or meeting whose attendees have been
invited by such media.
(i) No Brokers. Except in connection with the arrangement among the
Company, First Albany Corporation and Xxxx Capital Partners, LLC, no broker,
finder, investment banker or other person is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement, based upon arrangements made by or on behalf of such Investor.
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4. CERTAIN SECURITIES MATTERS.
(a) Legends.
(i) Each Investor acknowledges and understands that, until the
Securities have been registered, each certificate or other document evidencing
any of the Securities will be endorsed with the following legend:
The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any
other jurisdiction. The securities represented hereby may not be
sold, transferred or assigned in the absence of an effective
registration statement covering the securities under applicable
securities laws, or unless the Company has received an opinion of
counsel or other evidence satisfactory to the Company and its
counsel, that such registration is not required.
Notwithstanding the foregoing, to the extent that (1) the resale, transfer or
assignment of any of the Securities is registered pursuant to an effective
registration statement; (2) any of the Securities have been sold pursuant to
Rule 144 under the Securities Act or any successor provision ("Rule 144), and
such Investor provides the Company with customary seller's and broker's
representation letters; or (3) the Securities are eligible for resale under Rule
144(k) or any successor provision, such Securities shall be issued without any
legend or other restrictive language and, with respect to the Securities upon
which such legend is stamped, the Company shall issue new certificates without
such legend to the holder thereof upon request.
(ii) The Company shall, within three (3) business days after the
Registration Statement (as defined in the Registration Rights Agreement) is
declared effective, deliver to its transfer agent an instruction letter
(together with any legal opinion of counsel that may be required), instructing
the transfer agent that at any time such registration statement is effective,
the transfer agent shall issue, in connection with the issuance of the
securities registered thereunder (the "REGISTERED SECURITIES"), certificates
representing the Registered Securities without the restrictive legend above;
provided that the Registered Securities are to be sold pursuant to the
prospectus contained in the Registration Statement. In the event the above
legend is removed from any Registered Security and, thereafter, the
effectiveness of the Registration Statement is suspended or the Company
determines that a supplement or amendment thereto is required by applicable
securities laws, then upon written notice to the Investor the Company may
require that the above legend be placed on any Registered Security that cannot
then be sold pursuant to an effective registration statement or under Rule 144
and the Investor shall cooperate in the replacement of such legend. Such legend
shall thereafter be removed when the Registered Security may again be sold
pursuant to an effective registration statement or under Rule 144.
(b) Limitations on Disposition. No Investor shall sell, transfer or assign
any portion of the Securities, unless
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(i) there is then in effect an effective registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with such registration statement; or
(ii) the Investor has notified the Company in writing of any such
sale, transfer or assignment and furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such disposition will not
require registration of such Securities under the Securities Act; provided,
however, that such opinion of counsel will be unnecessary (A) if the sale,
transfer or assignment is made pursuant to Rule 144 and such Investor provides
the Company with evidence reasonably satisfactory to the Company and its legal
counsel that the proposed transaction satisfies the requirements of Rule 144 or
(B) in connection with a bona fide pledge or hypothecation of any Securities
under a margin arrangement with a broker-dealer or other financial institution
that complies with all applicable federal and state securities laws.
5. CONDITIONS OF INVESTORS' OBLIGATIONS AT CLOSING. The obligations of each
Investor under Section 1 are subject to the fulfillment on or before the Closing
of each of the following conditions, the waiver of which will not be effective
unless the Investor consents in writing thereto:
(a) Representations and Warranties. The representations and warranties of
the Company contained in Section 2 are true, in all material respects, on and as
of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
(b) Performance. The Company has performed and complied, in all material
respects, with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
(c) Qualifications. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement have been duly obtained and effective as
of the Closing.
(d) Listing. The Common Stock shall be authorized for quotation and listed
on the Nasdaq National Market System ("NASDAQ NMS") and shall not have been
suspended or delisted by either the SEC or Nasdaq NMS. No proceedings shall have
been initiated by either the SEC or Nasdaq NMS to suspend or delist the Common
Stock.
(e) Compliance Certificate. An officer of the Company has delivered to the
Investors at the Closing a certificate certifying that the conditions specified
in Sections 5(a), (b), (c) and (d) have been fulfilled.
(f) Registration Rights Agreement. The Company and each Investor have
entered into the Registration Rights Agreement in the form attached hereto as
Exhibit B.
(g) Opinion of Company Counsel. The Investor has received from Xxxxxx,
Xxxx & Xxxxxxxx LLP, counsel to the Company, a legal opinion, dated the date of
the Closing and subject
11
to customary exceptions, qualifications and limitations, covering the matters
set forth on Exhibit D.
(h) Minimum Investment. The aggregate Purchase Price paid by all the
Investors hereunder to the Company must be no less than $8,000,000.
(i) No Proceedings. No proceeding has been instituted that seeks to enjoin
the transactions contemplated by this Agreement and the other Transaction
Documents.
6. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of the
Company to the Investors under this Agreement are subject to the fulfillment on
or before the Closing of each of the following conditions by each Investor:
(a) Representations and Warranties. The representations and warranties of
the Investors contained in Section 3 shall be true, in all material respects, on
and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
(b) Qualifications. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
(c) Payment of Purchase Price. Each Investor must have delivered to the
Company the Purchase Price at the Closing for the Purchased Units purchased by
it.
(d) Minimum Investment. The aggregate Purchase Price paid by all the
Investors hereunder to the Company must be no less than $8,000,000.
(e) No Proceedings. No proceeding has been instituted that seeks to enjoin
the transactions contemplated by this Agreement and the other Transaction
Documents.
7. CERTAIN COVENANTS OF THE COMPANY.
(a) Press Release and Form 8-K. The Company shall, on or prior to 9:30
a.m. (Eastern Time) on September 3, 2003, issue a press release (the "PRESS
RELEASE") disclosing all material terms of this Agreement and the transactions
contemplated by this Agreement. Within one (1) business day after the Closing,
the Company shall file a Current Report on Form 8-K (the "8-K FILING")with the
SEC disclosing all material terms of this Agreement and the transactions
contemplated hereby and including as exhibits to the 8-K Filing this Agreement,
the Registration Rights Agreement and the form of Warrants, in the form required
by the Exchange Act. Thereafter, the Company shall timely file any filings and
notices required by the SEC or applicable law with respect to the transactions
contemplated hereby. The Company shall not, and shall cause each of its
directors, officers, employees and agents not to, provide any Investor with any
material nonpublic information regarding the Company from and after the issuance
of the Press Release, unless otherwise requested by an Investor.
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(b) Use of Proceeds. The Company shall use the proceeds from the sale and
issuance of the Units for general corporate purposes and working capital.
8. MISCELLANEOUS.
(a) Entire Agreement. This Agreement and the other Transaction Documents
constitute the entire agreement among the parties and no party shall be liable
or bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein. Each Investor
acknowledges that, except as expressly provided in this Agreement, the SEC
Reports and the Disclosure Schedule, the Company has not made any representation
or warranty, expressed or implied, as to the accuracy or completeness of any
information regarding the Company or the Securities.
(b) Survival of Representations and Warranties. The representations and
warranties of the Company and the Investors contained in or made pursuant to
this Agreement shall survive the execution and delivery of this Agreement and
the Closing for a period of one (1) year after the Closing.
(c) Successors and Assigns. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including permitted
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(d) Governing Law. This Agreement will be governed by and construed under
the internal laws of the State of Delaware, without regard to any conflict of
laws principles.
(e) Submission to Jurisdiction. All actions or proceedings arising in
connection with this Warrant may be tried and litigated in the state or federal
courts located in the County of New Castle, State of Delaware. Each party hereby
waives any right it may have to assert the doctrine of forum non conveniens or
similar doctrine or to object to venue with respect to any proceeding brought in
accordance with this paragraph, and stipulates that the state and federal courts
located in the County of New Castle, State of Delaware shall have in personam
jurisdiction over each of them for the purpose of litigating any such dispute,
controversy, or proceeding. Each party hereby authorizes and accepts service of
process sufficient for personal jurisdiction in any action against it as
contemplated by this Section 8(e) by registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices as
set forth in Section 8(g). Nothing herein shall affect the right of any party to
serve process in any other manner permitted by law.
(f) Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
(g) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed given upon personal delivery
or one (1) business day after being sent via a nationally recognized overnight
courier service if overnight courier service is requested from such service or
upon receipt of electronic or other confirmation of transmission
13
if sent via facsimile, to the parties, their successors in interest or their
assignees. Notices to the Investors shall be delivered to the applicable
addresses set forth on Schedule 1 hereto; notices to the Company shall be
delivered to its principal place of business, Attention: Chief Executive
Officer. Any party may change its address for delivery of notice by written
notice in accordance with this Section 8(g).
(h) Finder's Fees. Each Investor, severally and not jointly, shall
indemnify and hold harmless the Company from any liability for any commission or
compensation in the nature of a finder's fee (and the cost and expenses of
defending against such liability or asserted liability) for which the Investor
or any of its officers, partners, employees, or representatives is responsible.
The Company shall indemnify and hold harmless each Investor from any liability
for any commission or compensation in the nature of a finder's fee (and the
costs and expenses of defending against such liability or asserted liability)
for which the Company or any of its officers, employees, or representatives is
responsible.
(i) Expenses. Irrespective of whether the Closing is completed, the
Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery, and performance of this Agreement. If the
Closing is completed, the Company shall, at the Closing and upon receipt of a
xxxx therefor, reimburse the reasonable legal fees and expenses of one (1)
special counsel for the Investors, not to exceed $20,000 in the aggregate.
(j) Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of any Transaction Document, the prevailing party
will be entitled to its actual attorneys' fees, costs and disbursements, in
addition to any other relief to which such party may be entitled.
(k) Waivers. Any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) only with
the written waiver of the Company or the Investor giving such waiver.
(l) Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
(m) California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
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(n) Rights of Investor. Each holder of Securities will have the absolute
right to exercise or refrain from exercising any right or rights that such
holder may have by reason of any Transaction Document, including, without
limitation, the right to consent to the waiver of any obligation of the Company
under any Transaction Document and to enter into an agreement with the Company
for the purpose of modifying this Agreement or any agreement effecting any such
modification. Such holder will not incur any liability to any other holder or
holders of Securities with respect to exercising or refraining from exercising
any such right or rights.
(o) Exculpation Among Investors. Each Investor acknowledges that such
Investor is not relying upon any person, firm, or corporation, other than the
Company and its officers and directors, in making its investment or decision to
invest in the Company. No Investor nor the respective controlling persons,
officers, directors, partners, agents, or employees of an Investor will be
liable for any action heretofore or hereafter taken or omitted to be taken by
any of them in connection with the Securities.
(p) Counterparts; Facsimiles. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. Facsimile transmission of
any signed original document and/or retransmission of any signed facsimile
transmission will be deemed the same as delivery of an original. At the request
of any party, the parties will confirm facsimile transmission by signing a
duplicate original document.
[The remainder of this page has been intentionally left blank; signature pages
follow.]
15
IN WITNESS WHEREOF, the Company has executed and delivered this Agreement
as of the date first written above.
THE COMPANY:
I-Flow Corporation,
a Delaware corporation
By:___________________________________
Name:_________________________________
Title:________________________________
[The remainder of this page has been intentionally left blank; Investor
signature pages follow.]
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IN WITNESS WHEREOF, the undersigned Investor has executed and delivered
this Agreement as of the date first written above with respect to the
corresponding number of Purchased Units set forth below and on Schedule 1
hereto.
Number of Purchased Units:
______________________________________
x $150.00 per Purchased Unit
Purchase Price: $_____________________________________
THE INVESTOR:
Printed Name: _____________________________________
Address: _____________________________________
_____________________________________
_____________________________________
By: _____________________________________
Printed Name: _____________________________________
Title: _____________________________________
