COMMON STOCK AND WARRANT PURCHASE AGREEMENT
EXHIBIT
99.1
THIS
COMMON STOCK AND WARRANT PURCHASE AGREEMENT, dated as of March 7, 2006 (this
“Agreement”), is entered into by and between Sontra Medical Corporation, a
Minnesota corporation (the “Company”), and the investors listed on Schedule 1
hereto (each, an “Investor” and, collectively, the “Investors”).
RECITALS
WHEREAS,
the Investors desire to purchase from the Company, and the Company desires
to
issue and sell to the Investors, up to an aggregate of 4,456,354 shares (the
“Shares”) of common stock, par value $.01 per share (the “Common Stock”), of the
Company at a per share purchase price of $0.40, and warrants to purchase shares
of Common Stock in the form attached hereto as Exhibit
A
(the
“Warrants”), exercisable to purchase up to an aggregate of 4,456,354 shares of
Common Stock at an exercise price of $0.58 per share of Common Stock, on the
terms and subject to the conditions contained herein; and
WHEREAS,
each of the Investors has previously deposited funds equal to the aggregate
purchase price set forth opposite such Investor’s name in Schedule 1 (the
“Purchase Price”) in an escrow account established by the Company at U.S. Bank
National Association (the “Escrow Agent”).
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereto, intending to be legally bound, agree
as
follows:
ARTICLE
I
PURCHASE
AND SALE OF THE COMMON STOCK AND THE WARRANTS
1.1 Purchase
and Sale of the Common Stock and Warrants.
Subject
to the terms and conditions hereof, the Company hereby issues and sells to
the
Investors, and each Investor hereby purchases from the Company, severally and
not jointly, the number of Shares and Warrants set forth opposite such
Investor’s name in Schedule 1, for the Purchase Price. Upon
satisfaction of the conditions set forth in Section 1.2, the closing of the
purchase and sale of the Shares and the Warrants (the “Closing”) shall occur at
the offices of the Company, or such other location as the parties shall mutually
agree. Notwithstanding the foregoing, up to an aggregate of 65,359 Shares and
65,359 Warrants may be issued and sold by the Company to one or more additional
purchasers who shall execute and become a party to this Agreement at any time
on
or before March 17, 2006.
1.2 Closing.
(a) At
the
Closing, the Company shall deliver or cause to be delivered to each
Investor:
(i)this
Agreement duly executed by the Company;
(ii)a
certificate evidencing the Shares purchased by the Investor, registered in
the
name of such Investor;
(iii)the
Warrant purchased by the Investor, registered in the name of such Investor;
and
(iv)a
legal
opinion from Company counsel with respect to the matters set forth on
Exhibit
B
hereto.
(b) At
the
Closing, each Investor shall deliver or cause to be delivered to the Company
the
following:
(i)this
Agreement duly executed by such Investor;
(ii)a
properly completed and executed copy of the Investor’s Accredited Investor
Questionnaire, in the form attached hereto as Exhibit
C;
and
(iii)a
properly completed and executed Request for Taxpayer Identification Number
and
Certification on IRS Form W-9.
(c) At
the
Closing, the Company and Xxxxxx Xxxxx Securities, Inc., as placement agent,
shall jointly execute and deliver to the Escrow Agent joint release instructions
directing the Escrow Agent to transfer the Purchase Price deposited
by each Investor in the escrow account by
wire
transfer of immediately available funds to the account of the
Company.
ARTICLE
II
REPRESENTATIONS,
WARRANTIES AND AGREEMENTS OF THE COMPANY
The
Company represents and warrants to, and agrees with, the Investors
as
follows:
2.1
Organization,
etc.
The
Company has been duly formed, is validly existing as a corporation in good
standing under the laws of the State of Minnesota, and is qualified to do
business as a foreign corporation in each jurisdiction in which the failure
to
be so qualified would have a material adverse effect on the assets, liabilities,
financial condition, business or results of operations of the Company (a
“Material Adverse Effect”). The Company has the requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
as presently conducted and to enter into, execute, deliver and perform all
of
its duties and obligations under this Agreement and to consummate the
transactions contemplated hereby.
2.2
Authorization.
The
execution, delivery and performance of this Agreement and the issuance of the
Shares, the Warrants and the shares of Common Stock issuable upon exercise
of
the Warrants (the “Warrant Shares”) have been duly authorized by all necessary
corporate action on the part of the Company.
2.3
Validity;
Enforceability.
This
Agreement has been duly executed and delivered by the Company, and constitutes
the legal, valid and binding obligation of the Company, enforceable against
the
Company in accordance with its terms, except as such enforceability may be
limited by, or subject to, any bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally and subject to general principles of equity.
2.4
Capitalization.
As of
the date hereof, the authorized capital stock of the Company consists of
60,000,000 shares of Common Stock and 10,000,000 shares of preferred stock,
$0.01 par value per share, of which 7,000,000 shares have been designated Series
A Convertible Preferred Stock. Without giving effect to the transactions
contemplated by this Agreement, the issued and outstanding capital stock of
the
Company as of February 28, 2006 consists of 22,647,137 shares of Common Stock,
and 73,334 shares of Series A Convertible Preferred Stock. All such shares
of
the Company have been duly authorized and are fully paid and non-assessable.
Except as set forth on Schedule 2.4 hereto or as otherwise contemplated by
this
Agreement, there are no other outstanding options, warrants or other equity
securities that are convertible into, or exercisable for, shares of the
Company's capital stock.
2.5
Governmental
Consents.
The
execution and delivery by the Company of this Agreement and the performance
by
the Company of the transactions contemplated hereby, do not and will not require
the Company to effectuate or obtain any registration with, consent or approval
of, or notice to any federal, state or other governmental authority or
regulatory body, other than (i) periodic and other filings under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), (ii) filings that may be
required to be made with The
Nasdaq Stock Market, Inc. (“Nasdaq”),
(iii)
filings that may be required under federal securities laws, including Regulation
G under the Securities Act of 1933, as amended (the “Securities Act”), and state
securities or “blue sky” laws, and (iv) as otherwise required to comply with the
obligations of the Company under Section 4.1 hereof. The parties hereto agree
and acknowledge that, in making the representations and warranties in the
foregoing sentence of this Section 2.5, the Company is relying on the
representations and warranties made by the Investors in Section
3.4.
2.6
No
Violation.
Assuming
the representations and warranties of the Investors in Section 3 are true,
accurate and correct, the execution and delivery of this Agreement and the
performance by the Company of the transactions contemplated hereby will not
(i)
conflict with or result in a breach of any provision of the articles of
incorporation or by-laws of the Company, (ii) result in a default or breach
of,
or, except as set forth on Schedule 2.6 hereto, require any consent, approval,
authorization or permit of, or filing or notification to, any person, company
or
entity under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, loan, factoring arrangement, license, agreement, lease
or
other instrument or obligation to which the Company is a party or by which
the
Company or any of its assets may be bound, or (iii) violate any law, judgment,
order, writ, injunction, decree, statute, rule or regulation of any court,
administrative agency, bureau, board, commission, office, authority, department
or other governmental entity applicable to the Company, except, in the case
of
clause (ii) or (iii) above, any such event that could not reasonably be expected
to have a Material Adverse Effect or materially impair the transactions
contemplated hereby.
2.7
Issuances
of Securities.
Upon
payment therefor in accordance with the terms hereof, the Shares and the
Warrants will be validly issued, fully paid and non-assessable. Upon the
exercise of the Warrants in accordance with the terms thereof, the Warrant
Shares will be validly issued, fully paid and non-assessable. The offering,
issuance, sale and delivery of the Shares and the Warrants as contemplated
by
this Agreement are exempt from the registration and prospectus delivery
requirements of the Securities Act are being made in compliance with all
applicable federal and (except for any violation or non-compliance that could
not reasonably be expected to have a Material Adverse Effect) state laws and
regulations concerning the offer, issuance and sale of securities, and are
not
being issued in violation of any preemptive or other rights of any stockholder
of the Company. The parties hereto agree and acknowledge that, in making the
representations and warranties in the foregoing sentence of this Section 2.7,
the Company is relying on the representations and warranties made by the
Investors in Section 3.4.
2.8
Commission
Filings.
The
Company has filed all required forms, reports and other documents with the
Securities and Exchange Commission (the “Commission”) for periods from and after
January 1, 2005 (collectively, the “Commission Filings”), each of which has
complied in all material respects with all applicable requirements of the
Securities Act and/or the Exchange Act (as applicable). The Company has
heretofore made available upon request to the Investors all of the Commission
Filings. As of their respective dates, the Commission Filings did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading. The audited financial statements
and
unaudited interim financial statements of the Company included or incorporated
by reference in such Commission Filings have been prepared in accordance with
GAAP (except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-QSB), complied as of their
respective dates in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, and fairly present, in all material respects, the financial
position of the Company as of the dates thereof and the results of operations
for the periods then ended (subject, in the case of any unaudited interim
financial statements, to the absence of footnotes required by GAAP and normal
year-end adjustments).
2.9 Intellectual
Property. To
the
knowledge of the Company, the Company owns, or has rights to use, all patents,
patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, licenses necessary to conduct its business and which the
failure to so own or have would result in a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). Since January 1, 2005,
the Company has not received any written notice that the Intellectual Property
Rights used by the Company violates or infringes the rights of any other party.
2.10 No
Actions or Proceedings. There
is
no pending or, to the knowledge of the Company, threatened action, suit,
proceeding inquiry, notice of violation, or investigation before any court,
governmental or administrative agency or regulatory body (federal, state,
county, local or foreign), or arbitrator having jurisdiction over the Company,
that, if adversely determined, would have a Material Adverse Effect on the
Company, or would challenge the legality, validity or enforceability of this
Agreement or the transactions contemplated hereby.
2.11 No
Defaults. The
Company is not: (i) in violation of its articles of incorporation or by-laws,
which violation would have a Material Adverse Effect, (ii) in default under
or
in violation of any other material agreement or instrument to which it is a
party or by which it or any of its properties are bound or affected, which
default or violation would have a Material Adverse Effect; or (iii) to its
knowledge in violation of any statute, rule or regulation of any governmental
authority which violation would have a Material Adverse Effect.
2.12 Nasdaq
Capital Market.
The
Common Stock is listed for trading on the Nasdaq Capital Market.
2.13 No
Undisclosed Liabilities.
The
Company has no liabilities or obligations which are material, individually
or in
the aggregate, which are not disclosed in the Commission Filings or on Schedule
2.13 hereto, other than those incurred in the ordinary course of the Company’s
business since September 30, 2005 and which, individually or in the aggregate,
would not have a Material Adverse Effect.
2.14 Title
to Assets.
Except
as disclosed in the Commission Filings, the Company owns and has good title
to
all assets of the Company that are material to the business of the Company,
free
and clear of all liens, charges, security interests, encumbrances, rights of
first refusal or other restrictions (collectively “Liens”), except for (i) Liens
of materialmen, carriers, landlords and like persons, (ii) Liens for taxes
not
yet delinquent, and (iii) Liens as do not materially affect the value of such
assets and do not materially interfere with the use made and proposed to be
made
of such assets by the Company.
2.15 Brokers.
Except
for Xxxxxx Xxxxx Securities, Inc., neither the Company, nor any of its officers,
directors or employees, has employed any broker or finder, or incurred any
liability for any brokerage fees, commissions, finder’s or other similar fees or
expenses in connection with the transactions contemplated hereby.
ARTICLE
III
REPRESENTATIONS,
WARRANTIES AND AGREEMENTS OF THE INVESTORS
Each
Investor represents and warrants to, and agrees with, the Company,
severally
but not jointly, as follows:
3.1
Organization,
etc.
Such
Investor has been duly formed and is validly existing and in good standing
under
the laws of its jurisdiction of organization. Such Investor has the requisite
organizational power and authority to enter into, execute, deliver and perform
all of its duties and obligations under this Agreement and to consummate the
transactions contemplated hereby.
3.2
Authorization.
The
execution, delivery and performance of this Agreement have been duly authorized
by all necessary organizational or other action on the part of such
Investor.
3.3
Validity;
Enforceability.
This
Agreement has been duly executed and delivered by such Investor, and constitutes
the legal, valid and binding obligation of such Investor, enforceable against
such Investor in accordance with its terms, except as such enforceability may
be
limited by, or subject to, any bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally and subject to general principles of equity.
3.4
Investment
Representations.
(a) Such
Investor acknowledges that the offer and sale of the Shares and the Warrants
to
such Investor have not been registered under the Securities Act, or the
securities laws of any state or regulatory body and are being offered and sold
in reliance upon exemptions from the registration requirements of the Securities
Act and such laws and may not be transferred or resold without registration
under such laws unless an exemption is available. The Shares, the Warrants
and
the Warrant Shares will be imprinted with a legend in substantially the
following form:
“THE
OFFER AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS
OF ANY STATE AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER
SUCH ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS UNLESS, IN THE OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND STATE SECURITIES LAWS IS
AVAILABLE.”
(b)
Such
Investor is acquiring the Shares, the
Warrants
and the Warrant Shares for investment and not with a view to the resale or
distribution thereof and is acquiring such securities for its own account.
Such
Investor is able (i) to bear the economic risk of the Investor’s investment in
the Shares, the
Warrants
and the Warrant Shares; (ii) to hold the Shares, the
Warrants
and the Warrant Shares for an indefinite period of time and understands that
such securities cannot be resold unless subsequently registered under the
Securities Act or unless an exemption from such registration is available,
as
established by an opinion of counsel satisfactory to the Company; and (iii)
currently, and based on existing conditions, hereafter will be able to afford
a
complete loss of such investment.
(c)
Such
Investor is an “accredited investor” (as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act), is sophisticated in
financial matters and is familiar with the business of the Company so that
it is
capable of evaluating the merits and risks of its investment in the Company
and
has the capacity to protect its own interests. Such Investor has had the
opportunity to investigate on its own the Company's business, management and
financial affairs and has had the opportunity to review the Company's operations
and facilities and to ask questions and obtain whatever other information
concerning the Company as such Investor has deemed relevant in making its
investment decision.
(d)
Such
Investor is in compliance with the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of
2001. Neither such Investor, nor any of its principal owners, partners, members,
directors or officers is included on: (i) the Office of Foreign Assets Control
list of foreign nations, organizations and individuals subject to economic
and
trade sanctions, based on U.S. foreign policy and national security goals;
(ii)
Executive Order 13224, which sets forth a list of individuals and groups with
whom U.S. persons are prohibited from doing business because such persons have
been identified as terrorists or persons who support
terrorism;
or (iii) any other watch list issued by any governmental authority, including
the Commission.
(e)
No
representations or warranties have been made to such Investor by the Company
or
any director, officer, employee, agent or affiliate of the Company, other than
the representations and warranties of the Company set forth herein, and the
decision of such Investor to purchase the Shares and the Warrant is based on
the
information contained herein, the Commission Filings and such Investor's own
independent investigation of the Company.
(f) Such
Investor has completed and executed an Accredited Investor Questionnaire, in
the
form attached hereto as Exhibit
C,
and all
information provided by such Investor therein is true, accurate and complete.
3.5
Governmental
Consents.
The
execution and delivery by such Investor of this Agreement and the performance
by
such Investor of the transactions contemplated hereby, do not and will not
require such Investor to effectuate or obtain any registration with, consent
or
approval of, or notice to any federal state or other governmental authority
or
regulatory body.
3.6
No
Violation.
The
execution and delivery of this Agreement and the performance by such Investor
of
the transactions contemplated hereby, will not (i) conflict with or result
in a
breach of any provision of the articles of incorporation, by-laws or similar
organizational documents of such Investor or (ii) violate any law, judgment,
order, writ, injunction, decree, statute, rule or regulation of any court,
administrative agency, bureau, board, commission, office, authority, department
or other governmental entity applicable to such Investor, except any such
violation that could not reasonably be expected to materially impair the
transactions contemplated hereby.
3.7
Brokers.
Except
for Xxxxxx Xxxxx Securities, Inc., neither such Investor, nor any of its
officers, directors or employees, has employed any broker or finder, or incurred
any liability for any brokerage fees, commissions, finder’s or other similar
fees or expenses in connection with the transactions contemplated
hereby.
ARTICLE
IV
REGISTRATION
RIGHTS AND OTHER AGREEMENTS
4.1
Registration
Rights.
(a)
The
Company shall use its reasonable best efforts: (i) to prepare and file with
the
Commission a registration statement under the Securities Act (as the same may
be
amended or supplemented from time to time, the “Registration Statement”) with
respect to the offer and sale by the Investors of the Shares and the Warrant
Shares within 30 business days after the date hereof (the “Filing Date”); (ii)
to cause the Registration Statement to be declared effective by the Commission
as soon as practicable following receipt of notice from the Commission that
it
has no further comments on the Registration Statement; and (iii) to
register or qualify the Shares and Warrant Shares included in the Registration
Statement under such other securities or blue sky laws of such jurisdictions
as
the Investor reasonably requests in writing, and do any and all other acts
and
things which may be reasonably necessary or advisable to enable the Investor
to
consummate the disposition in such jurisdictions of the Shares and Warrant
Shares to be sold by the Investor (provided that the Company will not be
required to qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this subparagraph, subject itself
to taxation in any such jurisdiction, or consent to general service of process
in any such jurisdiction).
If
the
Registration Statement is not filed with the Commission on or prior to the
Filing Date, or if the Registration Statement is not declared effective by
the
Commission on or before the 150th
business
day after the date hereof, then the Company shall pay to each Investor, within
five days after the end of each calendar month during which the Company is
in
violation of the foregoing, an amount in cash as liquidated damages and not
as a
penalty, equal to 1.0% per month (pro rated for partial months) of the Purchase
Price paid by such Investor hereunder. Notwithstanding the foregoing, the
aggregate amount of such damages payments shall not exceed 12.0% of the Purchase
Price paid by such Investor hereunder. The
Company shall use its reasonable best efforts to maintain the effectiveness
of
such Registration Statement until the earliest to occur of the following: (i)
all of the Shares and the Warrant Shares have been disposed of by the Investors
pursuant to the Registration Statement or otherwise transferred (or in the
case
of the Warrant Shares, all of the Warrants pursuant to which such Warrant Shares
are issuable have expired); (ii) the second anniversary of the date hereof;
or
(iii) the Shares and the Warrant Shares can be resold pursuant to Rule 144,
promulgated under the Securities Act, or any similar provisions then in
effect.
(b) The
Investors will furnish to the Company in writing all information reasonably
requested by the Company for use in connection with the preparation of the
Registration Statement and obtaining the effectiveness thereof and
the
Company may exclude from such registration the Shares and the Warrant Shares
of
any Investor who unreasonably fails to furnish such information within a
reasonable time after receiving such request.
Each
Investor hereby represents and warrants, severally but not jointly, that all
such information furnished by it shall be true, accurate and
complete.
(c)
If
at any
time or from time to time after the date of effectiveness of the Registration
Statement, the Company notifies the Investors in writing of the existence of
a
Potential Material Event (as defined below), no Investor shall offer or sell
any
of the Shares or the Warrant Shares, or engage in any other transaction
involving or relating to the Shares or the Warrant Shares, from the time of
the
giving of notice with respect to a Potential Material Event until such Investor
receives written notice from the Company that such Potential Material Event
either has been disclosed to the public or no longer constitutes a Potential
Material Event. As used herein, “Potential Material Event” means any of the
following: (i) the possession by the Company of material information not ripe
for disclosure in a registration statement, which shall be evidenced by
determinations in good faith by the Board of Directors of the Company that
disclosure of such information in the registration statement would be
detrimental to the business and affairs of the Company; or (ii) any material
engagement or activity by the Company which would, in the good faith
determination of the Board of Directors of the Company, be adversely affected
by
disclosure in a registration statement at such time, which determination shall
be accompanied by a good faith determination by the Board of Directors of the
Company that the registration statement would be materially misleading absent
the inclusion of such information.
(d)
All
registration and filing fees, fees and expenses of compliance with securities
laws, printing expenses and all independent certified public accountants fees
and expenses of counsel to the Company and other persons retained by the Company
will be borne by the Company. The Company shall have no obligation to pay any
fees or expenses of brokers, underwriters, counsel or others retained by any
of
the Investors in connection with the sale, or potential sale, of the Shares
or
Warrant Shares.
(e)
The
Company agrees to indemnify, to the fullest extent permitted by law, the
Investors and their respective officers, directors, partners, employees,
advisors and agents against any and all Loss (as hereinafter defined) arising
out of or based upon any untrue, or alleged untrue, statement of a material
fact
contained in the Registration Statement or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except (i) insofar as the same are caused by or contained in any information
furnished by an Investor pursuant to clause (b) or (ii) insofar as the same
are
caused by a failure by an Investor to deliver an updated prospectus that has
been filed with the Commission and made available to such Investor or its
representatives for delivery to a purchaser. Each Investor agrees to indemnify,
to the fullest extent permitted by law, the Company, the other Investors and
their respective officers, directors, partners, employees, advisors and agents
against any and all Loss arising out of or based upon any untrue, or alleged
untrue statement of a material fact contained in the Registration Statement
or
arising out of or based upon any omission or alleged omission to state therein
a
material fact required to be stated therein or necessary to make the
statements
therein
not misleading (i) insofar as the same are caused by or contained in any
information furnished by indemnifying Investor pursuant to clause (b) or (ii)
insofar as the same are caused by a failure by the indemnifying Investor to
deliver an updated prospectus that has been filed with the Commission and made
available to such Investor or its representatives for delivery to a purchaser.
Any indemnity obligation arising under this Section 4.1 shall be governed by
the
provisions of Section 5.3.
(f) The
Company will advise the Investors promptly after it receives any notice of
issuance by the Commission, any state securities commission or any other
regulatory authority of any stop order or of any order preventing or suspending
any offering of the Shares or Warrant Shares by the Investors, or of the
suspension of the qualification of the Common Stock of the Company for offering
or sale in any jurisdiction, or the initiation of any proceeding for any such
purpose.
4.2 Legend
Removal.
Certificates evidencing the Shares and the Warrant Shares shall not be required
to contain any restrictive legend (including the legend set forth in Section
3.4(a) of this Agreement): (i) while a registration statement (including the
Registration Statement) covering the resale of such securities is effective
under the Securities Act, provided that the holder thereof covenants that in
connection with each
sale
of such securities, a copy of the final prospectus that forms a part of such
registration statement will be delivered in accordance with the provisions
of
Section 5(b)(2) of the Securities Act, and the rules and regulations promulgated
thereunder; (ii) following any sale of such securities pursuant to Rule 144
under the Securities Act in the opinion of counsel to the Company; (iii) if
such
securities are eligible for sale under Rule 144(k) under the Securities Act
in
the opinion of counsel to the Company; or (iv) if such legend is not required
under applicable law, or, in the opinion of the Company’s counsel, in accordance
with Rule 502(d) under the Securities Act, or other interpretations and
pronouncements of the Commission. Upon request of the holder, the Company shall
cause its counsel to issue a legal opinion to the Company’s transfer agent
promptly to effect the removal of such legend pursuant to the foregoing
sentence. If all or a portion of the Warrant is exercised at a time when there
is an effective registration
statement (including the Registration Statement) covering the resale of the
Warrant Shares under the Securities Act, the certificate evidencing such Warrant
Shares shall be issued free of all restrictive legends, provided that the holder
thereof covenants that in connection with each
sale
of such securities, a copy of the final prospectus that forms a part of such
registration statement will be delivered in accordance with the provisions
of
Section 5(b)(2) of the Securities Act, and the rules and regulations promulgated
thereunder. The Company agrees that at such time as such restrictive legend
is
not required as provided in this Section 4.2, it will, as soon as practicable
following the delivery by the holder to the Company’s transfer agent of a
certificate representing the Shares or Warrant Shares, as the case may be,
deliver or cause to be delivered to such holder a certificate representing
such
securities that is free from all restrictive legends. Unless otherwise required
by law or judicial order, the Company shall not make any notation on its records
or give any instructions to its transfer agent that enlarge the restrictions
on
transfer set forth in this Agreement.
ARTICLE
V
SURVIVAL;
INDEMNIFICATION
5.1
Survival.
The
representations and warranties contained in Articles II and III hereof shall
survive until the first anniversary of the date hereof.
5.2
Indemnification.
Each
Investor (including its officers, directors, employees, affiliates, agents,
successors and assigns (each, an “Indemnified Party”)) shall be indemnified and
held harmless by the Company for any and all liabilities, losses, damages,
claims, costs and expenses, interest, awards, judgments and penalties
(including, without limitation, reasonable attorneys’ fees and expenses)
actually suffered or incurred by them (hereinafter a “Loss”), arising out of or
resulting from the breach of any representation, warranty, agreement or covenant
made by the Company contained in this Agreement. Notwithstanding the foregoing,
the aggregate liability of the Company under this Article V shall in no event
exceed the purchase price paid by the Investors for the Shares and the
Warrants.
5.3
Indemnification
Procedure.
The
obligations and liabilities of the Company under this Article V with respect
to
Losses arising from claims of any third party which are subject to the
indemnification provided for in this Article V (“Third Party Claims”) shall be
governed by and contingent upon the following additional terms and conditions:
if an Indemnified Party shall receive notice of any Third Party Claim, the
Indemnified Party shall give the Company notice of such Third Party Claim
promptly after the receipt by the Indemnified Party of such notice (which notice
shall include the amount of the Loss, if known, and method of computation
thereof, and containing a reference to the provisions of this Agreement in
respect of which such right of indemnification is claimed or arises); provided,
however, that the failure to provide such notice shall not release the Company
from any of its obligations under this Article V except to the extent the
Company is materially prejudiced by such failure and shall not relieve the
Company from any other obligation or liability that it may have to any
Indemnified Party otherwise than under this Article V. Upon written notice
to
the Indemnified Party within five (5) days of the receipt of such notice, the
Company shall be entitled to assume and control the defense of such Third Party
Claim at its expense and through counsel of its choice; provided, however,
that,
if there exists or is reasonably likely to exist a conflict of interest that
would make it inappropriate in the reasonable judgment of such counsel for
the
same counsel to represent both the Indemnified Party and the Company, then
the
Indemnified Party shall be entitled to retain its or his own counsel in each
jurisdiction for which the Indemnified Party reasonably determines counsel
is
required, at the expense of the Company. In the event the Company exercises
the
right to undertake any such defense against any such Third Party Claim as
provided above, the Indemnified Party shall cooperate with the Company in such
defense and make available to the Company, at the Company’s expense, all
witnesses, pertinent records, materials and information in the Indemnified
Party's possession or under the Indemnified Party's control relating thereto
as
is reasonably required by the Company. Similarly, in the event the Indemnified
Party is, directly or indirectly, conducting the defense against any such Third
Party Claim, the Company shall cooperate with the Indemnified Party in such
defense and make available to the Indemnified Party, at the Company’s expense,
all such witnesses (including himself), records, materials and information
in
the Company’s possession or under the Company’s control relating thereto as is
reasonably required by the Indemnified Party. No such Third Party Claim may
be
settled by the Company on behalf of the Indemnified Party without the prior
written consent of the Indemnified Party (which consent shall not be
unreasonably withheld); provided, however, in the event that the Indemnified
Party does not consent to any such settlement that would provide it with a
full
release from indemnified Losses and would not require it to take, or refrain
from taking, any action, the Company’s liability for indemnification shall not
exceed the amount of such proposed settlement. The Indemnified Party will
refrain from any act or omission that is inconsistent with the position taken
by
the Company in the defense of a Third Party Claim unless the Indemnified Party
determines that such act or omission is reasonably necessary to protect its
own
interest.
ARTICLE
VI
MISCELLANEOUS
6.1
Expenses.
All
costs and expenses, including, without limitation, fees and disbursements of
counsel, incurred in connection with the negotiation, execution and delivery
of
this Agreement and its related documents shall be paid by the party incurring
such costs and expenses.
6.2
Publicity.
Except
as may be required by applicable law or the rules of any securities exchange
or
market on which securities of the Company are traded, no party hereto shall
issue a press release or public announcement or otherwise make any disclosure
concerning this Agreement and the transactions contemplated hereby, without
prior approval of the others; provided, however, that nothing in this Agreement
shall restrict the Company or any Investor from disclosing such information
(a)
that is already publicly available, (b) that may be required or appropriate
in
response to any summons or subpoena (provided that the disclosing party will
use
commercially reasonable efforts to notify the other parties in advance of such
disclosure under this clause (b) so as to permit the non-disclosing parties
to
seek a protective order or otherwise contest such disclosure, and the disclosing
party will use commercially reasonable efforts to cooperate, at the expense
of
the non-disclosing parties, in pursuing any such protective order) or (c) in
connection with any litigation involving disputes as to the parties' respective
rights and obligations hereunder. Notwithstanding the foregoing, (i) within
one
business day following the Closing, the Company shall issue a press release
regarding this Agreement and the transactions contemplated hereby, (ii) promptly
following the Closing, the Company shall file a Current Report on Form 8-K
with
the Commission regarding this Agreement and the transactions contemplated
hereby, and (iii) promptly following the Closing shall make all other necessary
filings with the Commission, Nasdaq and any other governmental authority or
regulatory body.
6.3 Entire
Agreement.
This
Agreement and any other agreement or instrument to be delivered expressly
pursuant to the terms hereof constitute the entire Agreement between the parties
hereto with respect to the subject matter hereof and supersede all previous
negotiations, commitments and writings with respect to such subject
matter.
6.4
Assignments;
Parties in Interest.
Neither
this Agreement nor any of the rights, interests or obligations hereunder may
be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. This Agreement shall
be
binding upon and inure solely to the benefit of each party hereto, and nothing
herein, express or implied, is intended to or shall confer upon any person
not a
party hereto any right, benefit or remedy of any nature whatsoever under or
by
reason hereof, except as otherwise provided herein.
6.5
Amendments.
This
Agreement may not be amended or modified except by an instrument in writing
signed by, or on behalf of, the parties against whom such amendment or
modification is sought to be enforced.
6.6
Descriptive
Headings.
The
descriptive headings of this Agreement are inserted for convenience of reference
only and do not constitute a part of and shall not be utilized in interpreting
this Agreement.
6.7
Notices
and Addresses.
Any
notice, demand, request, waiver, or other communication under this Agreement
shall be in writing and shall be deemed to have been duly given on the date
of
service, if personally served or sent by facsimile; on the business day after
notice is delivered to a courier or mailed by express mail, if sent by courier
delivery service or express mail for next day delivery; and on the fifth
business day after mailing, if mailed to the party to whom notice is to be
given, by first class mail, registered, return receipt requested, postage
prepaid and addressed as follows:
To
Company: Sontra
Medical Corporation
00
Xxxxx
Xxxxxxx
Xxxxxxxx,
XX 00000
Fax:
(000) 000-0000
Attn:
Xxxx X. Xxxxx
To
the
Investors: To
the
address set forth on Schedule 1.
6.8
Severability.
In the
event that any provision of this Agreement becomes or is declared by a court
of
competent jurisdiction to be illegal, void or unenforceable, the remainder
of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable
provision.
6.9
Governing
Law; Waiver of Jury Trial.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the Commonwealth of Massachusetts, without regard to conflicts of law
principles. Each
of
the parties hereto agrees that any action or proceeding brought to enforce
the
rights or obligations of any party hereto under this Agreement will be commenced
and maintained in any court of competent jurisdiction located in the
Commonwealth of Massachusetts. The
parties agree
that they shall, and hereby do, waive trial by jury in any action arising out
of
this Agreement or the transactions contemplated hereby.
6.10
Counterparts;
Facsimile Signatures.
This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to
the
other party, it being understood that all parties need not sign the same
counterpart. This Agreement may be executed by facsimile, and a facsimile
signature shall have the same force and effect as an original signature on
this
Agreement.
6.11 Escrow
Agent. U.S.
Bank National Association is acting only as an escrow agent in connection with
the transactions described herein, and has not endorsed, recommended or
guaranteed the purchase, value or repayment of such
securities.
[Signature
page follows]
IN
WITNESS WHEREOF, this Agreement has been duly executed on the date
first
set
forth above.
SONTRA
MEDICAL CORPORATION
By:
/s/
Xxxx Xxxxx
Name:
Xxxx
Xxxxx
Title:
Chief
Financial Officer
COUNTERPART
INVESTOR SIGNATURE PAGE
IN
WITNESS WHEREOF, this Agreement has been duly executed on the date
first
set
forth above.
Name
of
Investor: _______________
Taxpayer
ID Number: ____________
By:
___________________________
Name:
Title:
