EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of
March 17, 2004, by and among MIV Therapeutics, Inc. (the "COMPANY"), and the
purchasers listed on SCHEDULE 1 hereto (each a "PURCHASER" and collectively, the
"PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act (as defined below),
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
the Purchasers, and the Purchasers, severally and not jointly, desire to
purchase from the Company the (i) number of shares of Common Stock, and (ii)
Warrants set forth opposite each Purchaser's name on SCHEDULE 1 hereto
(collectively, the "Offering").
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this SECTION 1.1:
"ACTION" shall have the meaning ascribed to such term in SECTION
3.1(j).
"AGENT SHARES" shall have the meaning ascribed to such term in SECTION
2.6 of this Agreement.
"AGENT WARRANT AGREEMENT" shall mean the Placement Agent's Warrant
Agreement dated as of the Closing Date.
"AGENT WARRANTS" shall have the meaning ascribed to such term in
SECTION 2.6 of this Agreement.
"AFFILIATE" means any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a Person as such terms are used in and construed under Rule 144. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser.
"BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.
"CLOSING" means the closing of the purchase and sale of the Common
Stock and the Warrants pursuant to Section 2.1 on March 17, 2004, or such other
date as agreed to by the parties.
"CLOSING DATE" means the date of the Closing.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Company's common stock, par value $.001 per
share, and any securities into which such Common Stock may hereafter be
reclassified.
"COMMON STOCK EQUIVALENTS" means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
"COMPANY COUNSEL" means Xxxxx & Company.
"DISCLOSURE SCHEDULES" means the Disclosure Schedules attached hereto.
"EFFECTIVE DATE" means the date that the Registration Statement is
first declared effective by the Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"INVESTOR SECURITIES" means the Shares, the Warrants and the Warrant
Shares.
"LIENS" means a lien, charge, security interest, encumbrance, right of
first refusal or other restriction.
"MATERIAL ADVERSE EFFECT" shall have the meaning ascribed to such term
in SECTION 3.1(b).
"MATERIAL PERMITS" shall have the meaning ascribed to such term in
SECTION 3.1(m).
"PER SHARE PURCHASE PRICE" means $0.45, subject to adjustment for
reverse of forward stock splits, stock dividends, stock combinations and other
similar transactions of the Common Stock that occur after the date of this
Agreement and before the Closing.
"PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"PLACEMENT AGENT" means Rockwood, Inc.
"REGISTRATION STATEMENT" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale by the Purchasers of the Shares and the Warrant Shares and by the
Placement Agent of the Agent Shares.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and each
Purchaser, in the form of EXHIBIT A hereto.
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"RULE 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"SEC REPORTS" shall have the meaning ascribed to such term in SECTION
3.1(h).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES A WARRANTS" means the common stock purchase warrants in the
form of EXHIBIT B-1 hereto issuable to each Purchaser at Closing; such Series A
Warrants are exercisable to purchase up to the number of shares of Common Stock
equal to 50% of the aggregate number of Shares to be issued to such Purchaser at
the Closing, which shall be exercisable immediately and have an exercise price
equal to $0.66 per share and be exercisable for a period of five years from the
Closing Date.
"SERIES B WARRANTS" means the common stock purchase warrants in the
form of EXHIBIT B-2 hereto issuable to each Purchaser at Closing; such Series B
Warrants are exercisable to purchase (i) up to the number of shares of Common
Stock equal to 50% of the aggregate number of Shares to be issued to such
Purchaser at the Closing, which shall have an exercise price equal to $0.66 per
share and be exercisable for a period of six months commencing on the Effective
Date, but in no event shall such Series B Warrants be exercisable after the
fifth anniversary of the Closing Date and (ii) up to the number of shares of
Common Stock equal to 25% of the aggregate number of Shares to be issued to such
Purchaser at the Closing, which shall have an exercise price equal to $0.75 per
share and be exercisable for a period of six months commencing on the Effective
Date, but in no event but in no event shall such Series B Warrants be
exercisable after the fifth anniversary of the Closing Date.
"SHARES" means the shares of Common Stock purchased by the Purchasers
pursuant to this Agreement.
"SUBSCRIPTION AMOUNT" means as to each Purchaser, the amounts set forth
below such Purchaser's signature block on the Signature Page of this Agreement
in United States Dollars and in immediately available funds.
"SUBSIDIARY" shall have the meaning ascribed to such term in SECTION
3.1(a).
"TRADING DAY" means (i) a day on which the Common Stock is traded on a
Trading Market, or (ii) if the Common Stock is not quoted on a Trading Market, a
day on which the Common Stock is quoted in the over-the-counter market as
reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting price);
provided, that in the event that the Common Stock is not listed or quoted as set
forth in (i), and (ii) hereof, then Trading Day shall mean a Business Day.
"TRADING MARKET" means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the OTC
Bulletin Board, the American Stock Exchange, the New York Stock Exchange, the
Nasdaq National Market or the Nasdaq SmallCap Market.
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"TRANSACTION DOCUMENTS" means this Agreement, the Registration Rights
Agreement, the Series A Warrants, the Series B Warrants, the Placement Agent
Warrant Agreement, the Agent Warrant(s) and any and all other documents or
agreements executed in connection with the transactions contemplated hereunder.
"TRANSACTION SECURITIES" means the Shares, the Warrants, the Warrant
Shares, the Agent Warrants and the Agent Shares.
"WARRANTS" means collectively the Series A Warrants and Series B
Warrants issuable to each Purchaser at Closing.
"WARRANT SHARES" means the shares of Common Stock issuable upon
exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 CLOSING. On the terms and subject to the conditions set forth in
this Agreement, at the Closing, the Company shall sell and issue to each
Purchaser and each Purchaser shall purchase from the Company such number of
Shares as shall equal such Purchaser's Subscription Amount divided by the Per
Share Purchase Price. The Warrants shall be issued without additional
consideration. The aggregate number of Shares and Warrants each Purchaser shall
receive is set forth opposite each Purchaser's name on SCHEDULE 1 hereto. Upon
satisfaction of the conditions set forth in SECTION 2.2, the Closing shall occur
at the offices of Xxxxxx Capital at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or such other location as the parties shall mutually agree.
2.2 CLOSING CONDITIONS.
(a) At the Closing, the Company shall deliver or cause to be
delivered to:
(i) each Purchaser, a restricted stock certificate for
such number of Shares set forth next to such
Purchaser's name on SCHEDULE 1 hereto purchased by
each Purchaser;
(ii) each Purchaser, a Series A Warrant, registered in the
name of such Purchaser, as duly executed by the
Company, entitling such Purchaser to purchase such
amount of Warrant Shares as set forth next to such
Purchaser's name on SCHEDULE 1 hereto;
(iii) each Purchaser, a Series B Warrant, registered in the
name of such Purchaser, as duly executed by the
Company, entitling such Purchaser to purchase such
amount of Warrant Shares as set forth next to such
Purchaser's name on SCHEDULE 1 hereto;
(iv) each Purchaser, the Registration Rights Agreement
duly executed by the Company;
(v) each Purchaser, this Agreement duly executed by the
Company;
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(vi) each Purchaser and the Placement Agent, a legal
opinion from Company Counsel in form and substance
reasonably satisfactory to the Placement Agent;
(vii) the Placement Agent a certificate of the Chief
Executive Officer and Chief Financial Officer of the
Company stating, among other things, that (i) all the
conditions set forth in SECTION 2.2 of this Agreement
have been satisfied, (ii) except as set forth in any
Schedule to this Agreement, since November 30, 2003,
there has been no event, condition or circumstance
that has had or could reasonably be expected to have
a Material Adverse Effect, and (iii) the Company has
complied with all its covenants and agreements set
forth in the Transaction Documents;
(viii) the Placement Agent, a certificate of the Secretary
of the Company containing, among other items: (i)
true and complete copies, as of the Closing Date, of
the Articles of Incorporation and any amendments
thereto and the By-Laws, and any amendments thereto,
of the Company, and (ii) true and complete copies of
the resolutions of the Board of Directors of the
Company approving Transaction Documents, Placement
Agent compensation, the Offering and all documents
and matters relating thereto; and
(ix) to the Placement Agent, a Good Standing Certificate
dated the Closing Date.
(b) At the Closing, each Purchaser shall deliver or cause to be
delivered to the Company the following:
(i) this Agreement duly executed by such Purchaser;
(ii) such Purchaser's payment for the Shares and Warrants
being purchased from the escrow account by wire
transfer;
(iii) the Registration Rights Agreement duly executed by
such Purchaser; and
(iv) the completed and executed Selling Shareholder
Questionnaire in the form annexed hereto as EXHIBIT
C.
(c) All representations and warranties of each of the parties
herein shall remain true and correct as of the Closing Date.
(d) As of the Closing Date, there shall have been no Material
Adverse Effect with respect to the Company since the date
hereof.
(e) From the date hereof to the Closing Date, (i) trading in the
Common Stock shall not have been suspended; (ii) trading in
securities generally shall not have been suspended or limited,
or minimum prices shall not have been established on
securities whose trades are reported by such service, or on
any Trading Market; and (iii) no banking moratorium shall have
been declared either by the United States or New York State
authorities.
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2.3 ESCROW PROVISIONS. Pending the sale of the Shares and the Warrants,
all funds paid hereunder shall be deposited in a trust account maintained at
Manufacturers Bank, 0000 Xxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 (the
"BANK"), which is maintained by Xxxxx Law Group (the "ESCROW AGENT") (the "BANK
ACCOUNT"), pursuant to an escrow agreement by and among the Escrow Agent, the
Company, and the Placement Agent (the "ESCROW AGREEMENT"). If a Closing has not
occurred on or prior to March 23, 2004, or such later date mutually agreed by
the Company and the Placement Agent (the "TERMINATION DATE"), then this
Agreement shall be void and all funds paid hereunder by each Purchaser shall be
promptly returned to the Placement Agent without interest and/or deduction,
except for those fees, if any, charged by the Bank regarding the transfer by
wire of funds pursuant to this Agreement and the Escrow Agreement, subject to
Section 2.5 hereof. If a Closing occurs on or prior to the Termination Date,
then all net purchase proceeds shall be paid to the Company within three (3)
business days thereafter.
Each Purchaser, by his, her or its signature to this Agreement, hereby
acknowledges and agrees, for the benefit of the Escrow Agent, that the Escrow
Agent is not a co-issuer, employee, affiliate, agent, or other representative of
the Company or the Placement Agent regarding the offer and sale of the
Transaction Securities sold by the Company, pursuant to this Agreement, or
otherwise, but the Escrow Agent is acting as escrow agent to accommodate the
closing of the purchase of those securities for the Company and the Placement
Agent.
Each Purchaser, by his, her or its signature to this Agreement, hereby
represents, warrants, and covenants, for the benefit of the Escrow Agent, that
such Purchaser has not received from the Escrow Agent, directly or indirectly,
any representation, warranty, covenant, or other information, in any form
whatsoever, regarding the purchase of the Investor Securities. Accordingly, each
Purchaser, by his, her or its signature to this Agreement, hereby represents,
warrants, and covenants that such Purchaser has not relied upon any
representation, warranty, covenant, or other information from the Escrow Agent
regarding such Purchaser's decision to purchase the Investor Securities.
Each Purchaser, by his, her or its signature to this Agreement, hereby
represents, warrants, and covenants, for the benefit of the Escrow Agent, that
such Purchaser, is aware that the Escrow Agent has served as counsel for the
Company and currently serves as counsel for affiliates of the Company; PROVIDED,
HOWEVER, the Escrow Agent does not serve as counsel for the Company on the date
of this Agreement.
Each Purchaser, by his, her or its signature to this Agreement, and
assuming the proper execution by the Escrow Agent of its duties pursuant to the
Escrow Agreement, hereby unconditionally, irrevocably, and forever indemnifies
and releases the Escrow Agent, to the maximum extent permitted by applicable
law, for any and all claims of Purchaser of any nature whatsoever which may
exist at any time, either on the date of such Purchaser's purchase of such
Investor Securities or come into existence at any time in the future, in any way
resulting from or relating to such Purchaser's purchase of the Investor
Securities from the Company pursuant to the provisions of this Agreement, or
otherwise.
Each Purchaser, by his, her or its signature to this Agreement, for the
benefit of the Escrow Agent, represents, warrants, and covenants that such
Purchaser understands the meaning and legal consequences of the representations,
warranties, and covenants specified in this Section 2.3 and that the Escrow
Agent has relied on and will continue to rely on those representations,
warranties, and covenants as a condition to and as consideration for the
performance of the escrow services by the Escrow Agent pursuant to the
provisions of the Escrow Agreement.
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2.4 CERTIFICATES. Each Purchaser hereby authorizes and directs the
Company, upon each Closing, to deliver certificates representing the Shares and
Warrants to be issued to such Purchaser pursuant to this Agreement to each
Purchaser's address indicated in this Agreement.
2.5 RETURN OF FUNDS. Each Purchaser hereby authorizes and directs the
Company to return any funds for unaccepted purchases to the same account from
which the funds were drawn.
2.6 EXPENSES; FEES. Simultaneously with payment for and delivery of the
Shares and Warrants, at each Closing, the Company shall: (i) pay to the
Placement Agent a cash fee equal to ten (10%) percent of the aggregate purchase
price of the Shares and Warrants sold (the "CASH FEE"); (ii) reimburse the
Placement Agent for its actual out-of-pocket expenses incurred in connection
with the Offering, including, without limitation, the reasonable fees and
expenses of its legal counsel, not to exceed legal fees of $20,000; (iii) pay
all expenses in connection with the qualification of the Securities under the
blue sky laws of the states which the Placement Agent shall designate, including
filing fees and disbursements in connection with such blue sky matters; (iv) pay
certain fees to the Escrow Agent for acting as escrow agent; and (v) issue to
the Placement Agent five (5) year warrants (the "AGENT WARRANTS") to purchase
such number of shares of Common Stock (the "AGENT SHARES") as shall equal ten
(10%) percent of the aggregate number of (a) Shares sold in the Offering , and
(b) Warrant Shares issuable upon exercise of the Warrants as of the Closing, at
a per share exercise price equal to the Per Share Purchase Price.
2.7 PLACEMENT AGENT. The Investor Securities are being offered on a
"best-effort" basis by the Placement Agent. The Placement Agreement reserves the
right, but is under no obligation, to sell to its affiliates Shares and Warrants
on the terms provided herein.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth
under the corresponding section of the Disclosure Schedules delivered
concurrently herewith, the Company hereby makes the following representations
and warranties as of the date hereof and as of the Closing Date to each
Purchaser:
(a) SUBSIDIARIES. Other than as disclosed on SCHEDULE 3.1(A)
hereto, the Company has no direct or indirect operating subsidiaries (a
"SUBSIDIARY" and collectively, the "SUBSIDIARIES"). Except as set forth on
SCHEDULE 3.1(A), the Company owns, directly or indirectly, all of the capital
stock of each Subsidiary free and clear of any Liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights.
(b) ORGANIZATION AND QUALIFICATION. Each of the Company and
the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite corporate
power and authority to own and use its properties and assets and to carry on its
business as currently conducted. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
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Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not result in (i) a material adverse effect
on the legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business or
financial condition of the Company and the Subsidiaries, taken as a whole, or
(iii) a material adverse effect on the Company's ability to perform in any
material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a "MATERIAL ADVERSE EFFECT").
(c) AUTHORIZATION; ENFORCEMENT; VALIDITY. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further corporate action is required by
the Company in connection therewith. Each Transaction Document has been (or upon
delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally.
(d) NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby, do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, certificates of designation (or similar document
related to preferred stock), bylaws and/or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or otherwise), or
other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected.
(e) FILINGS, CONSENTS AND APPROVALS. The Company is not
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than the filing with the Commission of the Registration
Statement, the application(s) and approvals to each Trading Market for the
listing of the Shares, Warrant Shares and the Agent Shares for trading thereon
in the time and manner required thereby, and applicable Blue Sky filings.
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(f) ISSUANCE OF THE SECURITIES. All of the Transaction
Securities have been duly authorized and, when issued and paid for in accordance
with the Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens. The Company has reserved from its
duly authorized capital stock such number of shares of Common Stock so as to
permit the issuance of the Shares, the Warrant Shares and the Agent Shares.
(g) CAPITALIZATION. Immediately prior to the Closing, the
issued and outstanding shares of the Company's capital stock (Common Stock and
preferred stock), all warrants, options and other securities convertible and/or
exchangeable into capital stock shall be as disclosed on SCHEDULE 3.1(g) hereto.
All of the Company's outstanding securities have been and are, or upon issuance
will be duly authorized, validly issued, fully paid and non-assessable. Except
as disclosed in SCHEDULE 3.1(g), (i) no shares of the Company's capital stock
are subject to any preemptive rights, right of participation, right of first
refusal or any other similar rights; (ii) there are no outstanding securities of
the Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem or register a security of the Company or any of its
Subsidiaries; (iii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Transaction Securities as described in the Transaction Documents; and (iv)
the Company does not have any stock appreciation rights or "phantom stock" plans
or agreements or any similar plan or agreement. All prior sales of securities of
the Company were either registered under the Securities Act and applicable state
securities laws or exempt from such registration, and no security holder has any
rescission and/or similar rights with respect thereto.
(h) SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed
all reports required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to SECTION 13(A) or SECTION 15(D) of the Exchange Act,
for the two (2) years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing materials,
including the exhibits thereto, being collectively referred to herein as the
"SEC REPORTS" and, together with the Disclosure Schedules to this Agreement, the
"DISCLOSURE MATERIALS"). As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
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(i) MATERIAL CHANGES. Since the date of the latest audited
financial statements included within the SEC Reports, (i) there has been no
event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any material liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company's financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (iii) the Company has not altered
its method of accounting, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its holders of Common Stock or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the Commission any
request for confidential treatment of information.
(j) LITIGATION. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency and/or regulatory authority (federal, state, county, local
or foreign), including, but not limited to, the Federal Trade Commission, the
Food and Drug Agency, the Consumer Product Safety Commission, the United States
Department of Agriculture and any State Attorney General (collectively, an
"ACTION") which does and/or could (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents and/or
the Transaction Securities or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor, to the knowledge of the Company, any
current director or officer thereof, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. To the knowledge of the Company,
there is not pending or contemplated, any investigation by the Commission and/or
other entity involving the Company or any current directors or officers of the
Company. The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(k) LABOR RELATIONS. No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of the employees
of the Company which could reasonably be expected to result in a Material
Adverse Effect.
(l) COMPLIANCE. Neither the Company nor any Subsidiary (i) is
in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws applicable to its business, except in the case of clauses (i),
(ii) and (iii) as would not result in a Material Adverse Effect.
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(m) REGULATORY PERMITS. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses, except where the failure to possess such permits
would not have or reasonably be expected to result in a Material Adverse Effect
("MATERIAL PERMITS"), and neither the Company nor any Subsidiary has received
any notice of proceedings relating to the revocation or modification of any
Material Permit.
(n) TITLE TO ASSETS. The Company and the Subsidiaries have
good and marketable title in fee simple to all real property owned by them that
is material to the business of the Company and the Subsidiaries, taken as a
whole. Any real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases
with which the Company and the Subsidiaries are in material compliance.
(o) INTELLECTUAL PROPERTY RIGHTS. The Company and its
Subsidiaries own, or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. None of the Company's trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, government authorizations,
trade secrets or other intellectual property rights have expired or terminated,
or are expected to expire or terminate within two years from the date of this
Agreement, except where such expiration or termination would not have either
individually or in the aggregate a Material Adverse Effect. The Company and its
Subsidiaries do not have any knowledge of any infringement by the Company or its
Subsidiaries of trademarks, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service xxxx
registrations, trade secrets or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by
others and no claim, action or proceeding has been made or brought against, or
to the Company's knowledge, has been threatened against, the Company or its
Subsidiaries regarding trademarks, trade name rights, patents, patent rights,
inventions, copyrights, licenses, service names, service marks, service xxxx
registrations, trade secrets or other infringement, except where such
infringement, claim, action or proceeding would not reasonably be expected to
have either individually or in the aggregate a Material Adverse Effect. The
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties.
(p) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. None of the
officers, directors and/or employees of the Company and the Subsidiaries are a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $60,000 other than (a) for payment of salary
or consulting fees for services rendered, (b) reimbursement for expenses
incurred on behalf of the Company and (c) for other employee benefits, including
stock option agreements under any stock option plan of the Company.
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(q) INTERNAL ACCOUNTING CONTROLS. The Company and each of its
subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(r) CERTAIN FEES. Except for payments payable to the Placement
Agent or Xxxxxx Capital LLC by the Company, the Company has not entered into
agreement to pay any brokerage or finder's fees or commissions to any person
including, but not limited to, any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by this Agreement. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement,
except to the extent a Purchaser made an agreement to make any such payment.
(s) PRIVATE PLACEMENT. Assuming the accuracy of the Purchasers
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Investor Securities
by the Company to the Purchasers as contemplated hereby. The issuance and sale
of the Transaction Securities hereunder does not contravene the rules and
regulations of the Trading Market.
(t) INVESTMENT COMPANY. The Company is not, and is not an
Affiliate of, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(u) LISTING AND MAINTENANCE REQUIREMENTS. The Company is, and
has no reason to believe that it will not in the foreseeable future continue to
be, in compliance with all listing and maintenance requirements of the Trading
Market on which the Common Stock is listed.
(v) APPLICATION OF TAKEOVER PROTECTIONS. The Company and its
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Articles of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation the Company's issuance of
the Securities and the Purchasers' ownership of the Investor Securities.
(w) NO GENERAL SOLICITATION. Neither the Company, its
Subsidiaries, any of their affiliates nor any person acting on their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with the offer
or sale of the Transaction Securities.
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(x) NO INTEGRATED OFFERING. Neither the Company, its
Subsidiaries, any of their affiliates nor any person acting on their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of any of the Transaction Securities under the Securities Act or
cause the Offering to be integrated with prior offerings by the Company for
purposes of the Securities Act or any applicable stockholder approval
provisions, including without limitation, under the rules and regulations of any
exchange or automated quotation system on which any of the securities of the
Company are listed or designated. None of the Company, its Subsidiaries, their
affiliates and any person acting on their behalf will take any action or steps
referred to in the preceding sentence that would require registration of any of
the Transaction Securities under the Securities Act or cause the Offering to be
integrated with other offerings.
(y) TAX STATUS. The Company and each of its Subsidiaries has
made or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, except
when the failure to do so would not have a Material Adverse Effect, and has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations
or to the Company's knowledge otherwise due and payable, except those being
contested in good faith and has set aside on its books reserves in accordance
with GAAP reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
(z) REGISTRATION RIGHTS. Except with respect to Purchasers and
the Placement Agent and except as provided on SCHEDULE 3.1(Z) hereto, no person
has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company.
(aa) RIGHT OF FIRST REFUSAL. Except with regards to the
Placement Agreement and Xxxxxx Capital, LLC, no person, firm or other business
entity is a party to any agreement, contract or understanding, written or oral
entitling such party to a right of first refusal with respect to offerings of
securities by the Company.
(bb) DISCLOSURE. The Company confirms that, neither the
Company nor any other Person acting on its behalf has provided any of the
Purchasers or their agents or counsel with any information that constitutes or
might constitute material, non-public information. The Company understands and
confirms that the Purchasers will rely on the foregoing representations and
covenants in effecting transactions in securities of the Company. All disclosure
provided to the Purchasers regarding the Company, its business and the
transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, furnished by or on behalf of the Company are true and correct and do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
13
(cc) INSURANCE. Each of the Company and its Subsidiaries
maintain insurance of the types and in the amounts deemed adequate for its
business, including, but not limited to, product liability insurance, insurance
covering real and personal property owned or leased by the Company and its
subsidiaries against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect.
(dd) ENVIRONMENTAL. The Company and each of its Subsidiaries
is, to the best of its knowledge, in compliance with all applicable published
rules and regulations (and applicable standards and requirements) of the United
States Environmental Protection Agency (the "EPA") and of any similar State
agency. There is no suit, claim, action or proceeding now pending before any
court, governmental agency or board, or other forum, nor is any of the same
threatened by any person or entity; and, there is no fact or circumstance
actually known to the Company which could reasonably be anticipated to be the
basis for any such suit, claim, action or proceeding, for (i) noncompliance by
the Company with any environmental law, rule, regulation or requirement, or (ii)
relating to the release or threatened release into the environment by the
Company of any pollutant, toxic or hazardous material, oil, or waste generated
by the Company. The Company has not released any Hazardous Materials (as
hereinafter defined) at any site owned or leased by the Company or shipped any
Hazardous Materials for treatment, storage or disposal at any other site of
facility. For purposes of this SECTION 3.1(DD), "HAZARDOUS MATERIALS" shall mean
and include any solid, hazardous or toxic waste, substance or material as
defined in the United States Resource Conservation and Recovery Act; the Clean
Air Act; the Clean Water Act; the Toxic Substances Control Act; the
Comprehensive Environmental Response, Compensation and Liability Act; applicable
state laws for the protection of the environment, and the regulations
promulgated under any of the foregoing.
(ee) CONDUCT OF BUSINESS. Since November 30, 2003, the Company
has not (a) incurred any debts, obligations or liabilities, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities incurred in the usual and ordinary course of business, having a
Material Adverse Effect, (b) made or suffered any changes in its contingent
obligations by way of guaranty, endorsement (other than the endorsement of
checks for deposit in the usual and ordinary course of business), indemnity,
warranty or otherwise, (c) discharged or satisfied any liens other than those
securing, or paid any obligation or liability other than, current liabilities
shown on the balance sheet dated as at November 30, 2003 and forming part of the
SEC Documents, and current liabilities incurred since November 30, 2003, in each
case in the usual and ordinary course of business, (d) mortgaged, pledged or
subjected to lien any of its assets, tangible or intangible, (e) sold,
transferred or leased any of its assets except in the usual and ordinary course
of business, (f) cancelled or compromised any debt or claim, or waived or
released any right, of material value, (g) suffered any physical damage,
destruction or loss (whether or not covered by insurance) adversely affecting
the properties or business of the Company, (h) entered into any transaction
other than in the usual and ordinary course of business except for this
Agreement and the related agreements referred to herein, (i) encountered any
labor difficulties or labor union organizing activities, (j) made or granted any
wage or salary increase or entered into any employment agreement, (k) issued or
sold any shares of capital stock or other securities or granted any options with
respect thereto, or modified any equity security of the Company, (l) declared or
paid any dividends on or made any other distributions with respect to, or
purchased or redeemed, any of its outstanding equity securities, (m) suffered or
experienced any change in, or condition affecting, its condition (financial or
otherwise), properties, assets, liabilities, business operations or results of
operations other than changes, events or conditions in the usual and ordinary
course of its business, having (either by itself or in conjunction with all such
other changes, events and conditions) a Material Adverse Effect, (n) made any
change in the accounting principles, methods or practices followed by it or
depreciation or amortization policies or rates theretofore adopted, or (o)
entered into any agreement or otherwise obligated itself, to do any of the
foregoing.
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(ff) FOREIGN CORRUPT PRACTICES. Neither the Company, nor any
of its Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any of its Subsidiaries has, in the course of
its actions for, or on behalf of, the Company, (a) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds,
(b) violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or (c) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company, acknowledging that the
Company is relying upon the accuracy and completeness of the representations and
warranties set forth herein to, among other things, ensure that registration
under Section 5 of the Securities Act is not required in connection with the
sale of the Securities hereby, as follows:
(a) ORGANIZATION; AUTHORITY. Such Purchaser, if not a natural
person, is an entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization with full right, corporate or
partnership power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by such
Purchaser of the transactions contemplated by this Agreement has been duly
authorized by all necessary corporate or similar action on the part of such
Purchaser. Each Transaction Document to which it is a party has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of such Purchaser, enforceable against it in accordance with its terms.
(b) INVESTMENT INTENT. Such Purchaser understands that the
Investor Securities are "restricted securities" and have not been registered
under the Securities Act or any applicable state securities law and is acquiring
the Investor Securities as principal for its own account for investment purposes
only and not with a view to or for distributing or reselling such Investor
Securities or any part thereof, has no present intention of distributing any of
such Investor Securities and has no arrangement or understanding with any other
persons regarding the distribution of such Investor Securities (this
representation and warranty not limiting such Purchaser's right to sell the
Investor Securities pursuant to the Registration Statement or otherwise in
compliance with applicable federal and state securities laws). Such Purchaser is
acquiring the Investor Securities hereunder in the ordinary course of its
business. Such Purchaser does not have any agreement or understanding, directly
or indirectly, with any Person to distribute any of the Investor Securities.
(c) PURCHASER STATUS. At the time such Purchaser was offered
the Shares and Warrants, it was, and at the date hereof it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Such Purchaser is
not, and is not required to be, registered as a broker-dealer under Section 15
of the Exchange Act. In making an investment decision as to whether to purchase
the Shares and Warrants offered hereby, each Purchaser has relied solely upon
the SEC Reports and the representation and warranties of the Company contained
herein. Each Purchaser has had the opportunity to ask questions of, and receive
answers from, representatives of the Company concerning the Company and the
officers and all such questions have been asked and answered by the Company to
the satisfaction of the Purchaser.
15
(d) EXPERIENCE OF SUCH PURCHASER. Each Purchaser, either alone
or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Investor Securities,
and has so evaluated the merits and risks of such investment. Such Purchaser is
able to bear the economic risk of an investment in the Investor Securities and,
at the present time, is able to afford a complete loss of such investment.
(e) GENERAL SOLICITATION. Such Purchaser is not purchasing the
Shares and Warrants as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
(f) COMPLIANCE WITH THE SECURITIES LAWS. Such Purchaser hereby
confirms its understanding that it may not cover short sales made prior to the
Effective Date with shares of Common Stock registered for resale on the
Registration Statement.
(g) NO CONFLICTS. Neither the execution and delivery of this
Agreement and/or any Transaction Document, nor the consummation of the
Transactions contemplated hereby, will violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Purchaser
is subject or any provision of its organizational documents or other similar
governing instruments.
(h) NO ADVICE. Purchaser understands that nothing in this
Agreement or any other materials presented to Purchaser in connection with the
purchase and sale of the Investor Securities constitutes legal, tax or
investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Investor Securities.
(i) NO LITIGATION, ETC. There is no action, suit, proceeding,
judgment, claim or investigation pending or, to the knowledge of the Purchaser,
threatened against the Purchaser which could reasonably be expected in any
manner to challenge or seek to prevent, enjoin, alter or materially delay any of
the transactions contemplated by the Transaction Documents.
(j) APPROVALS. The execution, delivery and performance by the
Purchaser of this Agreement and the Transaction Documents to which it is a
party, and the consummation of the transactions set forth herein require no
material action by or in respect of, or material filing with, any governmental
body, agency, official or authority, by the Purchaser other than (i) any
filings, authorizations, consents and approvals as may be required under the
Xxxx-Xxxxx-Xxxxxx Improvements Act of 1976, as amended; (ii) the filing by the
Purchaser with the SEC of such reports under the Exchange Act as may be required
in connection with this Agreement, the Transaction Documents and the
transactions contemplated hereby, and (iii) any filings required by the
securities or blue sky laws of the various states.
16
(k) PLACEMENT AGENT. Each Purchaser agrees that neither the
Placement Agent nor any of its respective directors, officers, affiliates,
employees or agents shall be liable to the Purchaser for any action taken or
omitted to be taken by it in connection therewith, except for willful misconduct
or gross negligence.
The Company acknowledges and agrees that each Purchaser does not make
or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in this
SECTION 3.2 and SECTION 4.1.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 TRANSFER RESTRICTIONS.
(a) The Investor Securities may only be disposed of in
compliance with state and federal securities laws. In connection with any
transfer of Investor Securities other than pursuant to an effective registration
statement, or in connection with a pledge as contemplated in SECTION 4.1(B)
hereof, the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Investor
Securities under the Securities Act. As a condition of transfer, any such
transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights of a Purchaser under this Agreement and the Registration
Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is
required by this SECTION 4.1(b), of a legend on any of the Investor Securities
in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE SECURITIES
ACT.
17
The Company acknowledges and agrees that a Purchaser may from
time to time pledge pursuant to a BONA FIDE margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Investor
Securities to a financial institution that is an "accredited investor" as
defined in Rule 501(a) under the Securities Act and, if required under the terms
of such arrangement, such Purchaser may transfer pledged or secured Investor
Securities to the pledgees or secured parties. Such a pledge or transfer would
not be subject to approval of the Company and no legal opinion of legal counsel
of the pledgee, secured party or pledgor shall be required in connection with
the grant of the pledge. Further, no notice shall be required of grant of the
pledge. At the appropriate Purchaser's expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of
Transaction Securities may reasonably request in connection with a pledge or
transfer of the Investor Securities, including the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) under the Securities Act or
other applicable provision of the Securities Act to appropriately amend the list
of selling stockholders thereunder. Notwithstanding anything to the contrary,
any such pledgee shall not be entitled to any rights under any of the
Transaction Documents unless and until such pledgee executes a written agreement
to be bound by Purchasers' obligations under the Transaction Documents.
(c) Subject to compliance with all laws, rules and regulations
including, but not limited to, the Securities Act and the Exchange Act,
certificates evidencing the Shares and Warrant Shares shall not contain any
legend (including the legend set forth in SECTION 4.1(B)), (i) following any
sale of the Shares or Warrant Shares pursuant to a registration statement
(including the Registration Statement) covering the resale of such security, or
(ii) following any sale of the Shares or Warrant Shares pursuant to Rule 144, or
(iii) if such Shares or Warrant Shares are eligible for sale under Rule 144(k)
and appropriate documentation is provided satisfactory to legal counsel to the
Company, or (iv) if such legend is not required under applicable regulation of
the Securities Act (including judicial interpretations and pronouncements issued
by the Staff of the Commission). The Company agrees that at such time as such
legend is no longer required under and pursuant to this SECTION 4.1(C), it will,
no later than two (2) Trading Days following the delivery by a Purchaser to the
Company or the Company's transfer agent of a certificate representing Shares
and/or Warrant Shares, as the case may be, issued with a restrictive legend,
deliver or cause to be delivered to such Purchaser a certificate representing
such securities that is free from all restrictive and other legends. The Company
may not make any notation on its records or give instructions to any transfer
agent of the Company that enlarge the restrictions on transfer set forth in this
Section.
(d) Each Purchaser severally and not jointly agrees that the
removal of the restrictive legend from certificates representing the Shares and
the Warrant Shares as set forth in this SECTION 4.1 is predicated upon the
Company's reliance that the Purchaser will sell any Investor Securities pursuant
to either the registration requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an exemption therefrom.
4.2 FURNISHING OF INFORMATION. Until the date no Purchaser owns any
Investor Securities, the Company covenants and agrees to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act. Until the date no Purchaser owns any Investor Securities, if
the Company is not required to file reports pursuant to the Exchange Act, it
will prepare and furnish to the Purchasers and make publicly available in
18
accordance with Rule 144(c) such information as is required for the Purchasers
to sell any Shares and Warrant Shares under Rule 144. The Company further
covenants and agrees that it will take such further action as any holder of
Investor Securities may reasonably request, all to the extent required from time
to time to enable such person to sell any Shares and Warrant Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.
4.3 INTEGRATION. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of any of the Transaction Securities in a manner that would require the
registration under the Securities Act of the sale of the Investor Securities to
the Purchasers or that would be integrated with the offer or sale of the
Investor Securities for purposes of the rules and regulations of any Trading
Market.
4.4 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall by the end
of the business on the Business Day following the Closing issue a press release
or file a Current Report on Form 8-K, disclosing the transactions contemplated
hereby and make such other filings and notices in the manner and time required
by the Commission. The Company and the Placement Agent shall consult with each
other in issuing any press releases with respect to the transactions
contemplated hereby, and neither the Company nor the Placement Agent shall issue
any such press release or otherwise make any such public statement without the
prior consent of the Company, with respect to any press release of the Placement
Agent, or without the prior consent of the Placement Agent, with respect to any
press release of the Company, which consent shall not unreasonably be withheld
or delayed, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except
(i) as required by federal securities law in connection with the registration
statement contemplated by the Registration Rights Agreement and (ii) to the
extent such disclosure is required by law or Trading Market regulations, in
which case the Company shall provide the Purchasers with prior notice of such
disclosure permitted under subclause (i) or (ii).
4.5 SHAREHOLDERS RIGHTS PLAN. No claim will be made or enforced by the
Company or any other Person that any Purchaser is an "Acquiring Person" under
any shareholders rights plan or similar plan or arrangement in effect or
hereafter adopted by the Company, or that any Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
Investor Securities under the Transaction Documents or under any other agreement
between the Company and the Purchasers.
4.6 USE OF PROCEEDS. The Company covenants and agrees that all of the
net proceeds that it receives from the sale of the Shares and Warrants pursuant
to this Agreement, although distributed, allocated and expended by the Company
in its sole discretion, shall be used for general working capital and corporate
purposes.
4.7 FORM D AND BLUE SKY. The Company shall file a Form D with respect
to the Transaction Securities as required under Regulation D under the
Securities Act and, upon written request, provide a copy thereof to each
Purchaser and the Placement Agent promptly after such filing. The Company shall,
on or before the Closing, take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify any
Transaction Securities for sale to the Purchasers and/or the Placement Agent
pursuant to this Agreement under applicable securities or "Blue Sky" laws of the
states of the United States, and shall provide evidence of any such action so
taken to the Purchasers on or prior to the Closing. The Company shall make all
filings and reports relating to the offer and sale of the Transaction Securities
required under applicable securities or "Blue Sky" laws of the states of the
United States following the Closing.
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4.8 RESERVATION OF COMMON STOCK. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue the Shares, the Warrant Shares
and the Agent Shares.
4.9 LISTING OF COMMON STOCK. The Company hereby agrees to maintain the
listing of the Common Stock on its current Trading Market, and immediately file
with the Trading Market to list the applicable Shares, Warrant Shares and Agent
Shares on the Trading Market. The Company further agrees, if the Company applies
to have the Common Stock traded on any other Trading Market, it will include in
such application the Shares, Warrant Shares and Agent Shares and will take such
other action as is necessary or desirable in the opinion of the Purchasers to
cause the Shares, Warrant Shares and Agent Shares to be listed on such other
Trading Market as promptly as possible. The Company will take all action
necessary to continue the listing and trading of its Common Stock on its current
Trading Market and will comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the Trading
Market.
4.10 INDEMNIFICATION BY THE PURCHASERS. Each of the Purchasers
severally and not jointly agrees to indemnify and hold harmless the Company and
its officers, directors, agents, representatives, shareholders and employees and
each of their respective affiliates, from and against any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation that any such party may suffer or
incur which are caused by or arise out of (i) any material misrepresentation or
material breach or default in the performance by it of any covenant or agreement
made by it in this Agreement or in any of the Transaction Documents; or (ii) any
material misrepresentation or material breach of warranty or representation made
by it in this Agreement or in any of the Transaction Documents. Notwithstanding
anything to the contrary provided herein or elsewhere, the liability of each
Purchaser under this SECTION 4.10 shall be limited to the amount paid by the
Purchaser pursuant hereto to purchase the Investor Securities, and the
procedures and timing for indemnification by the Purchasers under this SECTION
4.10 shall follow the procedures and provisions of SECTIONS 5.16(B) AND (C),
MUTATIS MUTANDIS, with respect to indemnification by the Company of the
Purchasers.
4.11 REPORTING OBLIGATIONS. So long as any Purchaser beneficially owns
any Investor Securities, the Company shall continue to file or furnish pursuant
to the Exchange Act or the Securities Act, and the Company shall use
commercially reasonable best efforts to maintain it status as an issuer required
to file such reports under the Exchange Act. In addition, the Company shall take
all actions necessary to continue to meet the "registrant eligibility"
requirements set forth in the general instructions to Form SB-2 or any successor
form thereto, to continue to be eligible to register the resale of the Shares,
the Warrant Shares and the Agent Shares under the Securities Act on such Form.
20
ARTICLE V.
MISCELLANEOUS
5.1 FEES AND EXPENSES. Except as otherwise set forth in this Agreement,
each party shall pay the fees and expenses of its advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of
this Agreement.
5.2 ENTIRE AGREEMENT. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.3 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on (a) the next Business Day, if sent by U.S.
nationally recognized overnight courier service, or (b) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications to the Company shall be as set forth below and for
each Purchaser shall be as set forth on the signature pages attached hereto.
If to the Company:
MIV Therapeutics, Inc.
0-0000 Xxx Xxxxxx
Xxxxxxxxx, X.X.
Xxxxxx, X0X 0X0
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxx & Company
#000- 000 Xxxxx Xxxxxx
Xxxxxxxxx, X.X.
Xxxxxx, X0X 0X0
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
5.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each Purchaser or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
21
5.5 CONSTRUCTION. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser. Any Purchaser, however, may
assign any or all of its Investor Securities and/or rights under this Agreement
to any Person, provided such transferee agrees in writing to be bound, with
respect to the transferred Investor Securities and otherwise, by the provisions
hereof that apply to the "Purchasers."
5.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
5.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to the
conflicts of laws principles thereof. The parties hereto hereby irrevocably
agree that any suit or proceeding arising directly and/or indirectly pursuant to
or under this Agreement, shall be brought solely in a federal or state court
located in the City, County and State of New York. By its execution hereof, the
parties hereby covenant and irrevocably submit to the IN PERSONAM jurisdiction
of the federal and state courts located in the City, County and State of New
York and agree that any process in any such action may be served upon any of
them personally, or by certified mail or registered mail upon them or their
agent, return receipt requested, with the same full force and effect as if
personally served upon them in New York City. The parties hereto waive any claim
that any such jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of IN PERSONAM jurisdiction with respect
thereto. In the event of any such action or proceeding, the party prevailing
therein shall be entitled to payment from the other party hereto of its
reasonable counsel fees and disbursements.
5.9 SURVIVAL. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and delivery of the Shares and
Warrants and until no Purchaser owns any Shares, Warrants and/or Warrant Shares.
5.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
22
5.11 SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.12 REPLACEMENT OF INVESTOR SECURITIES. If any certificate or
instrument evidencing any Investor Securities is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Investor
Securities.
5.13 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.14 PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall, to the
extent permissible under applicable law, be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
5.15 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser represents that it has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents. The Company has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by the Purchasers.
23
5.16 INDEMNIFICATION BY THE COMPANY.
(a) The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Purchaser, the officers, directors,
agents and employees of each of them, each Person who controls any such
Purchaser (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and the officers, directors, agents and employees of each
such controlling Person, to the fullest extent permitted by applicable law, from
and against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys' fees) and expenses (including the cost
(including without limitation, reasonable attorneys' fees) and expenses relating
to an Indemnified Party's (as defined below) actions to enforce the provisions
of this SECTION 5.16) (collectively, "LOSSES"), as incurred, to the extent
arising out of or relating to (i) any material misrepresentation or material
breach of any representation or warranty made by the Company in the Transaction
Documents, or, (ii) any material breach of any covenant, agreement or obligation
of the Company contained in the Transaction Documents, or (iii) any cause of
action, suit or claim brought or made against such Indemnified Party and arising
out of or resulting from the execution, delivery, performance or enforcement of
the Transaction Documents executed pursuant hereto by any of the Indemnified
Parties. If the indemnification provided for in this SECTION 5.16 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any Losses, then the Indemnifying Party (as defined below), in lieu
of indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of Losses in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the actions or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The Company shall notify the Purchasers
promptly of the institution, threat or assertion of any proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.
(b) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the
Company (the "INDEMNIFYING PARTY") in writing, and the Indemnifying Party shall
have the right to assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; PROVIDED,
HOWEVER, that the failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that such failure shall have
materially and adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such proceeding; or (3) the named
parties to any such proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
24
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of one
separate counsel for all Indemnified Parties in any matters related on a factual
basis shall be at the expense of the Indemnifying Party). The Indemnifying Party
shall not be liable for any settlement of any such proceeding affected without
its written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such proceeding.
(c) TIMING OF PAYMENTS. All reasonable fees and expenses of
the Indemnified Party (including reasonable fees and expenses to the extent
incurred in connection with investigating or preparing to defend such proceeding
in a manner not inconsistent with this SECTION 5.16 shall be paid to the
Indemnified Party, as incurred, within five (5) Trading Days of written notice
thereof to the Indemnifying Party; PROVIDED, HOWEVER, that the Indemnified Party
shall promptly reimburse the Indemnifying Party for that portion of such fees
and expenses applicable to such actions for which such Indemnified Party is not
entitled to indemnification hereunder, determined based upon the relative faults
of the parties.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
MIV THERAPEUTICS, INC.
By:
-------------------------------
Name:
Title:
PURCHASERS SIGNATURE PAGE
----------------------------------
By:
------------------------------
Name:
Title:
----------------------------------
Address
----------------------------------
Facsimile Number
----------------------------------
Tax Id #:
SUBSCRIPTION AMOUNT:$_____________
----------------------------------
By:
------------------------------
Name:
Title:
----------------------------------
Address
----------------------------------
Facsimile Number
----------------------------------
Tax Id #:
SUBSCRIPTION AMOUNT:$_____________
----------------------------------
By:
------------------------------
Name:
Title:
----------------------------------
Address
----------------------------------
Facsimile Number
----------------------------------
Tax Id #:
SUBSCRIPTION AMOUNT:$_____________
26
INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
--------
EXHIBIT A - Form of Registration Rights Agreement
EXHIBIT B-1 - Form of Series A Warrant
EXHIBIT B-2 - Form of Series B Warrant
EXHIBIT C - Form of Selling Shareholder Questionnaire
SCHEDULES
---------
SCHEDULE 1 - List of Purchasers and Securities Received
SCHEDULE 3.1(a) - Subsidiaries
SCHEDULE 3.1(g) - Capitalization, Etc.
SCHEDULE 3.1(z) - Registration Rights
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
-------------------------------------
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of March 17, 2004, by and among MIV Therapeutics, Inc. (the
"COMPANY"), and the investors signatory hereto (each a "PURCHASER" and
collectively, the "PURCHASERS").
This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof by and among the Company and the Purchasers (the
"PURCHASE AGREEMENT").
The Company and the Purchasers hereby agree as follows:
ARTICLE I. DEFINITIONS. CAPITALIZED TERMS USED AND NOT OTHERWISE
DEFINED HEREIN THAT ARE DEFINED IN THE PURCHASE AGREEMENT SHALL HAVE THE
MEANINGS GIVEN SUCH TERMS IN THE PURCHASE AGREEMENT. AS USED IN THIS AGREEMENT,
THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
"EFFECTIVENESS DATE" means, with respect to the Registration Statement
required to be filed pursuant to SECTION 2(A) of this Agreement, the earlier of
(a) the 120th calendar day from the Closing Date, and (b) the date on which the
Commission declares the effectiveness of the Registration Statement.
"EFFECTIVENESS PERIOD" shall have the meaning set forth in SECTION
2(a).
"FILING DATE" means, with respect to the Registration Statement
required to be filed hereunder, the date fifteen (15) calendar days from the
Closing Date.
"HOLDER" or "HOLDERS" means the holder or holders, as the case may be,
from time to time of Registrable Securities (including any permitted assignee).
"INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 5(C).
"INDEMNIFYING PARTY" shall have the meaning set forth in SECTION 5(C).
"LOSSES" shall have the meaning set forth in SECTION 5(A).
"PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"REGISTRABLE SECURITIES" means the Shares, the Warrant Shares and any
shares of Common Stock issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect to the
foregoing or in connection with any provisions in the Warrants.
"REGISTRATION STATEMENT" means the registration statements required to
be filed hereunder, including (in each case) the Prospectus, amendments and
supplements to the registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in the registration
statement.
"RULE 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"RULE 424" means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"WARRANTS" shall mean the Common Stock purchase warrants issued to the
Purchasers pursuant to the Purchase Agreement.
ARTICLE II. REGISTRATION.
2.1 Mandatory Registration. No later than the Filing Date, the Company
shall prepare and file with the Commission the Registration Statement covering
the resale of all of the Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. The Registration Statement required
hereunder shall be on Form SB-2 (except if the Company is not then eligible to
register for resale the Registrable Securities on Form SB-2, in which case the
Registration shall be on another appropriate form in accordance herewith). The
Registration Statement required hereunder shall contain (except if otherwise
directed by the Holders) the "PLAN OF DISTRIBUTION" attached hereto as ANNEX A
(which may be modified to respond to comments, if any, received by the
Commission). The Company shall cause the Registration Statement to become
effective and remain effective as provided herein. The Company shall use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof and shall use its commercially reasonable efforts to keep the
Registration Statement continuously effective under the Securities Act until the
date when all Registrable Securities covered by the Registration Statement (a)
have been sold pursuant to the Registration Statement or an exemption from the
registration requirements of the Securities Act or (b) may be sold without any
volume or other restrictions pursuant to Rule 144(k) (the "EFFECTIVENESS
PERIOD").
-2-
2.2 Filing Default Liquidation Damages. If a Registration Statement is
not filed on or prior to the Filing Date, then, in addition to any other rights
the Holders may have hereunder or under applicable law, the Company shall pay to
each Holder an amount in cash until the date a Registration Statement is filed
and/or the Registrable Securities may be sold pursuant to Rule 144(k), as
liquidated damages and not as a penalty, equal to (i) one (1%) percent of the
aggregate purchase price paid by such Holder pursuant to the Purchase Agreement
for the first thirty (30) days or any part thereof following the Company's
failure to file, and (ii) an additional one (1%) percent of the aggregate
purchase paid by such Holder thereunder for each thirty (30) day period
subsequent thereto (or any part thereof), such payment(s) to be made in
immediately available funds no later than five (5) days after the first date of
each 30 day period (or any part thereof), as the case may be, during the
Company's failure to file.
2.3 Effectiveness Default Liquidation of Damages. In addition to any
liquidated damages paid, accrued and/or to be paid pursuant to Section 2(b)
above if (1) a Registration Statement is not declared effective on or prior to
June 15, 2004 (July 15, 2004, if reviewed by the SEC), or (2) if a Registration
Statement has been declared effective and subsequent hereto is not effective for
any period of time until the date no Holder owns any Registrable Securities or
Warrants (an "EFFECTIVENESS DEFAULT"), then in addition to any other rights the
Holders may have hereunder or under applicable law, the Company shall pay to
each Holder an amount in cash until the date a Registration Statement is
declared effective (or if previously declared effective until the date the
Registration Statement becomes effective again), as liquidated damages and not
as a penalty, equal to (i) one (1%) percent of the aggregate purchase price paid
by such Holder pursuant to the Purchase Agreement for the first thirty (30) days
or any part thereof, and (ii) an additional one (1%) percent of the aggregate
purchase price paid by such Holder thereunder for each thirty (30) day period
subsequent thereto (or part thereof) until the earlier of (a) such date the
Registration Statement is declared effective (or if previously declared
effective, until the date the Registration Statement becomes effective again),
and (b) no Holder owns any Registrable Securities or Warrants. Any such
payment(s) shall be made in immediately available funds no later than five (5)
days after the first day of each 30 day period of each such Effectiveness
Default.
2.4 Piggyback Registrations Rights. If, at any time during the
Effectiveness Period, there is not an effective Registration Statement covering
all of the Registrable Securities (other than the Registrable Securities of a
Holder that failed to comply with its obligations under Section 3(j) hereof),
and the Company shall determine to prepare and file with the Commission a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company shall send to each Holder a written notice of such
determination and, if within ten (10) days after receipt by a Holder, the
Company shall receive a request in writing from any such Holder, the Company
shall include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided, however, that (i)
if, at any time after giving written notice of is intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company determines for any reason not
to proceed with such registration, the Company will be relieved of its
obligation to register any Registrable Securities in connection with such
registration, and (ii) in case of a determination by the Company to delay
registration of its securities, the Company will be permitted to delay the
registration of Registrable Securities for the same period as the delay in
registering such other securities. Notwithstanding the foregoing, nothing in
this paragraph (d) shall permit the Company to file a registration statement in
contravention of the restrictions in Section 6(b).
-3-
2.5 Sufficient Number of Shares Registered. In the event the number of
shares of Common Stock covered under a Registration Statement filed pursuant to
Section 2(a) is insufficient to cover all of the Registrable Securities which
such Registration Statement is required to cover, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover at least 100% of the
Registrable Securities, in each case, as soon as practicable, but in any event
not later than three (3) business days after the necessity therefor arises. The
Company shall cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof. For purposes of
the foregoing provision, the number of shares of Common Stock covered under a
Registration Statement shall be deemed "INSUFFICIENT TO COVER ALL OF THE
REGISTRABLE SECURITIES" if the number of Registrable Securities issued or
issuable upon exercise of the Warrants covered by such Registration Statement is
greater than the number of shares of Common Stock available for resale under the
Registration Statement to cover shares issued or issuable upon exercise of the
Warrants.
ARTICLE III. Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall:
3.1 Not less than five (5) Trading Days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or supplement
thereto, (i) furnish to the Holders copies of all such documents proposed to be
filed (including documents incorporated or deemed incorporated by reference to
the extent requested by such Person) which documents will be subject to the
review of such Holders, and (ii) subject, if appropriate, to the execution of
confidentiality agreements in form acceptable to the Company, cause its officers
and directors, counsel and independent certified public accountants to respond
to such inquiries as shall be necessary, in the reasonable opinion of respective
counsel to conduct a reasonable investigation within the meaning of the
Securities Act.
3.2 (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; and (iii) respond as promptly as
reasonably possible to any comments received from the Commission with respect to
the Registration Statement or any amendment thereto and, as promptly as
reasonably possible, upon request, provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement (subject, if appropriate, to the execution of confidentiality
agreements in form acceptable to the Company).
-4-
3.3 Notify the Holders of Registrable Securities to be sold as promptly
as reasonably possible (and, in the case of (i)(A) below, not less than five (5)
Trading Days prior to such filing) and (if requested by any such Person) confirm
such notice in writing promptly following the day (i)(A) when a Prospectus or
any Prospectus supplement or post-effective amendment to the Registration
Statement is proposed to be filed; (B) when the Commission notifies the Company
whether there will be a "review" of the Registration Statement and whenever the
Commission comments in writing on the Registration Statement (the Company shall
upon request provide true and complete copies thereof and all written responses
thereto to each of the Holders, subject, if appropriate, to the execution of
confidentiality agreements in form acceptable to the Company); and (C) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event or passage of time that makes the financial statements included in the
Registration Statement ineligible for inclusion therein or any statement made in
the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
3.4 Use its commercially reasonable efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.
3.5 Promptly deliver to each Holder no later than two (2) business days
after the Effectiveness Date, without charge, two (2) copies of the Prospectus
or Prospectuses (including each form of prospectus) and each amendment or
supplement thereto (and, upon the request of the Holder such additional copies
as such Persons may reasonably request in connection with resales by the Holder
of Registrable Securities). The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except after
the giving of any notice pursuant to Section 3(c).
3.6 Prior to any resale of Registrable Securities by a Holder, use its
commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from the registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep such registration or qualification (or exemption therefrom)
-5-
effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement; provided,
however, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified, subject the
Company to any material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.
3.7 If requested by the Holders, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statement, which certificates shall be free, to the extent
permitted by the Purchase Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such
names as any such Holders may request.
3.8 Upon the occurrence of any event contemplated by Section 3(c)(v),
as promptly as reasonably possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
3.9 Use its best efforts to comply with all applicable rules and
regulations of the Commission relating to the registration of the Registrable
Securities pursuant to the Registration Statement or otherwise.
3.10 The Company agrees that the Selling Shareholder Questionnaire
attached to the Purchase Agreement as EXHIBIT C, satisfies all of the
information required to be provided by each Holder in connection with the
Registration Statement. The Company shall not be required to include any Holder
that does not complete a Selling Shareholder Questionnaire.
3.11 The Company shall either (a) cause all the Registrable Securities
covered by a Registration Statement to be listed on each securities exchange on
which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (b) secure designation and quotation of all
the Registrable Securities covered by the Registration Statement on the Nasdaq
National Market or the Nasdaq SmallCap Market, or, (c) if the Company is
unsuccessful in satisfying the preceding clauses (a) or (b), the Company shall
secure the inclusion for quotation on The American Stock Exchange, Inc. or if it
is unable to, the NASD Bulletin Board for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at least two
(2) market makers to register with the National Association of Securities
Dealers, Inc. ("NASD") as such with respect to such Registrable Securities. The
Company shall pay all fees and expenses in connection with satisfying its
obligation under this Section 3(k).
-6-
3.12 The Company shall make all documents, files, books, records,
officers, directors and employees of the Company reasonably available to any
Holder, legal counsel to the Holders and one firm of accountants or other agents
retained by the Holders (collectively, the "INSPECTORS"), and make such other
accommodations as are reasonably necessary for the Inspectors, if any, to
perform a due diligence review of the Company; provided, however, that all such
information ("CONFIDENTIAL INFORMATION") will be kept confidential and not
utilized by the Inspectors except as contemplated herein and except as required
by law or court order. The term Confidential Information also includes any
information included in a draft Registration Statement or any related Prospectus
or any amendment or supplement hereto provided to a Holder pursuant to Section
3(a). The term Confidential Information does not include information that (a) is
already in possession of such other party (other than that which is subject to
another confidentiality agreement unless obtained from a third party where the
receiving party knows that the third party was subject to a confidentiality
agreement), (b) becomes generally available to the public, or (c) becomes
available on a non-confidential basis from a source other than the Company
unless obtained from a third party where the receiving party knows that the
third party was subject to a confidentiality agreement. Each Holder agrees that
it shall, upon learning that disclosure of such Confidential Information is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the Company, at
its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, the information deemed confidential.
3.13 The Company shall hold in confidence and not make any disclosure
of information concerning any Holder provided to the Company unless (a)
disclosure of such information is necessary to comply with federal or state
securities laws, (b) the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (c) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, (d) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement, or (e) such Holder consents to the form and content of any such
disclosure (the Holders shall be deemed to consent to the inclusion of any
information provided in the Selling Shareholder Questionnaire in the
Registration Statement, any prospectus related thereto, and any amendments or
supplements thereto). The Company agrees that it shall, upon learning that
disclosure of such information concerning any Holder is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Holder and allow such Holder, at the Holder's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
3.14 The Company covenants that it shall file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder so long as the Holder owns any
Registrable Securities, but in no event longer than two (2) years; provided,
however, the Company may delay any such filing but only pursuant to Rule 12b-25
under the Exchange Act, and the Company shall take such further action as any
Holder of Registrable Securities may reasonably request (including without
limitation, promptly obtaining any required legal opinions from Company counsel
necessary to effect the sale of Registrable Securities under Rule 144 and paying
the related fees and expenses of such counsel), all to the extent required from
time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any Holder of Registrable Securities, the
Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
-7-
ARTICLE IV. REGISTRATION EXPENSES. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement, other than fees and expenses of counsel of any other
advisor retained by the Holders and discounts and commissions with respect to
the sale of any Registrable Securities by the Holders. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with the Trading Market on which
the Common Stock is then listed for trading, and (B) in compliance with
applicable state securities or Blue Sky laws), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is reasonably requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company, (v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.
ARTICLE V. INDEMNIFICATION
5.1 Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable attorneys' fees)
and expenses (including the cost (including without limitation, reasonable
attorneys' fees) and expenses relating to an Indemnified Party's actions to
enforce the provisions of this Section 5) (collectively, "LOSSES"), as incurred,
to the extent arising out of or relating to any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (1) such untrue statements or omissions are based solely upon information
regarding such Holder furnished (or in the case of an omission, not furnished)
in writing to the Company by or on behalf of such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose), (2) in the case of an occurrence of
an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder
of an outdated or defective Prospectus after the Company has notified such
Holder in writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of the Advice contemplated in Section 6(d), or (3) the
failure of the Holder to deliver a prospectus prior to the confirmation of a
sale. The Company shall notify the Holders promptly of the institution, threat
or assertion of any Proceeding of which the Company is aware in connection with
the transactions contemplated by this Agreement.
-8-
5.2 Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based upon: (x) such Holder's failure
to comply with the prospectus delivery requirements of the Securities Act or (y)
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not misleading
(i) to the extent, but only to the extent, that such untrue statement or
omission is contained in any information so furnished (or in the case of an
omission, not furnished) in writing by or on behalf of such Holder to the
Company specifically for inclusion in the Registration Statement or such
Prospectus or (ii) to the extent that (1) such untrue statements or omissions
are based solely upon information regarding such Holder furnished (or in the
case of an omission, not furnished) in writing to the Company by or on behalf of
such Holder expressly for use therein, or to the extent that such information
relates to such Holder or such Holder's proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in the Registration Statement (it being understood
that the Holder has approved Annex A hereto for this purpose), such Prospectus
or such form of Prospectus or in any amendment or supplement thereto, or (2) in
the case of an occurrence of an event of the type specified in Section
3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d), or (3) the failure of the Holder to deliver a
Prospectus prior to the confirmation of a sale. In no event shall the liability
of any selling Holder hereunder be greater in amount than the dollar amount of
the Subscription Amount paid by the Holder in the Purchase Agreement.
5.3 Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and the
Indemnifying Party shall have the right to assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that such failure
shall have materially prejudiced the Indemnifying Party.
-9-
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of one
separate counsel for all Indemnified Parties in any matters related on a factual
basis shall be at the expense of the Indemnifying Party). The Indemnifying Party
shall not be liable for any settlement of any such Proceeding affected without
its written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.
All reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Trading Days of written notice thereof to the
Indemnifying Party; PROVIDED, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is not entitled to
indemnification hereunder, determined based upon the relative faults of the
parties.
5.4 Contribution. If a claim for indemnification under Section 5(a) or
Section 5(b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.
-10-
5.5 The parties hereto agree that it would not be just and equitable if
contribution pursuant to Section 5(d) were determined by pro rata allocation or
by any other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of Section 5(d), no Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud by
such Holder. The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
ARTICLE VI. MISCELLANEOUS.
6.1 Remedies. In the event of a breach by the Company or by a Holder,
of any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
6.2 No Piggyback on Registrations. Other than those securities
(including securities issuable upon exercise of warrants) that may be issued to
Holders and/or the Placement Agent and/or its designee(s), the securities set
forth on Schedule 3.1(z) of the Purchase Agreement and such other securities as
may be consented to in writing by the Placement Agent, neither the Company nor
any of its security holders may include securities of the Company in a
Registration Statement filed pursuant to Section 2(a) hereof. Other than
pursuant to rights granted to the Placement Agent and/or to Holders in this
Agreement, no Person has any right to cause the Company to effect a registration
under the Securities Act of any securities of the Company. The Company shall not
and will not file any other registration statement until sixty (60) days after
the Effective Date without the written consent of the Placement Agent.
6.3 Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it in connection with sales of Registrable Securities pursuant to the
Registration Statement.
-11-
6.4 Discontinued Disposition. Each Holder agrees by its acquisition of
such Registrable Securities that, upon receipt of a notice from the Company of
the occurrence of any event of the kind described in Section 3(c), such Holder
will forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the "ADVICE") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.
6.5 Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of at least 75% of the then outstanding Registrable Securities (assuming
the exercise of all Warrant Shares, whether exercised or not).
6.6 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the Trading Day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(ii) upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be delivered and
addressed as set forth in the Purchase Agreement
6.7 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. Each Holder may assign
their respective rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.
6.8 Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
6.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to the
conflicts of laws principles thereof. The parties hereto hereby irrevocably
agree that any suit or proceeding arising directly and/or indirectly pursuant to
or under this Agreement, shall be brought solely in a federal or state court
located in the City, County and State of New York. By its execution hereof, the
parties hereby covenant and irrevocably submit to the IN PERSONAM jurisdiction
of the federal and state courts located in the City, County and State of New
York and agree that any process in any such action may be served upon any of
them personally, or by certified mail or registered mail upon them or their
agent, return receipt requested, with the same full force and effect as if
personally served upon them in New York City. The parties hereto waive any claim
that any such jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of IN PERSONAM jurisdiction with respect
thereto. In the event of any such action or proceeding, the party prevailing
therein shall be entitled to payment from the other party hereto of its
reasonable counsel fees and disbursements.
-12-
6.10 Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
6.11 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
6.12 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
6.13 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
6.14 Assignment of Registration Rights. The rights under this Agreement
shall be automatically assignable by any Holder to any transferee of all or any
portion of Registrable Securities if: (a) such Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment; (b) the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (i) the name and address of such transferee or
assignee, and (ii) the securities with respect to which such registration rights
are being transferred or assigned; and (c) at or before the time the Company
receives the written notice contemplated by clause (b) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
MIV THERAPEUTICS, INC.
By:
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Name:
Title:
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(PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)
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By:
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Name:
Title:
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By:
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Name:
Title:
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By:
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ANNEX A
PLAN OF DISTRIBUTION
--------------------
The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker/dealer solicits purchasers;
o block trades in which the broker/dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker/dealer as principal and resale by the
broker/dealer for its account;
o an exchange distribution in accordance with the Rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales;
o broker/dealers may agree with the Selling Stockholders to sell
a specified number of such shares at a stipulated price per
share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
Broker/dealers engaged by the Selling Stockholders may arrange for
other brokers/dealers to participate in sales. Broker/dealers may receive
commissions from the Selling Stockholders (or, if any broker/dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions to exceed
what is customary in the types of transactions involved.
-1-
The Selling Stockholders may from time to time pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933
amending the list of Selling Stockholders to include the pledgee, transferee or
other successors in interest as Selling Stockholders under this prospectus.
The Selling Stockholders and any broker/dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker/dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions under the Securities Act. The Selling Stockholders have informed the
Company that it does not have any agreement or understanding, directly or
indirectly, with any person to distribute the Common Stock.
The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
-2-
EXHIBIT B-1
FORM OF SERIES A WARRANT
------------------------
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES
MIV THERAPEUTICS, INC.
SERIES A WARRANT TO PURCHASE ______ SHARES OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
(VOID AFTER MARCH ___, 2009)
PPW - __
THIS COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received,
_____________ (the "HOLDER"), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on
or after March ___, 2004 (the "EXERCISE DATE") and on or prior to the close of
business on March ___, 2009 (the "TERMINATION DATE"), but not thereafter, to
subscribe for and purchase from MIV Therapeutics, Inc., a Nevada corporation
(the "COMPANY"), up to ____________ [50% OF SHARES OF COMMON STOCK PURCHASED]
shares (the "WARRANT SHARES"), of common stock, par value $.001 per share, of
the Company (the "COMMON STOCK"). The initial purchase price of one (1) share of
Common Stock under this Warrant shall be (i) $0.66 (the "EXERCISE PRICE"). The
Exercise Price and the number of Warrant Shares for which the Warrant is
exercisable shall be subject to adjustment as provided elsewhere herein.
CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS
SET FORTH IN THAT CERTAIN SECURITIES PURCHASE AGREEMENT DATED THE DATE HEREOF
AND BETWEEN THE COMPANY AND THE PURCHASERS SET FORTH ON SCHEDULE 1 THERETO (THE
"PURCHASE AGREEMENT").
ARTICLE VI. Title to Warrant. Prior to the Termination Date and subject
to compliance with applicable laws and Section 7 of this Warrant, this Warrant
and all rights hereunder are transferable, in whole or in part, at the office or
agency of the Company by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed. The transferee shall sign an investment letter in form and
substance reasonably satisfactory to the Company.
ARTICLE VII. Authorization of Shares. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon exercise of the purchase rights
represented by this Warrant, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue and liens and charges incurred by the Holder).
ARTICLE VIII. Exercise of Warrant
8.1 Exercise of the purchase rights represented by this Warrant may be
made at any time or times on or after the Exercise Date and on or before the
Termination Date by the surrender of this Warrant and the Notice of Exercise
Form annexed hereto duly executed, at the office of the Company (or such other
office or agency of the Company as it may designate by notice in writing to the
registered Holder at the address of such Holder appearing on the books of the
Company), and upon payment of the Exercise Price of the Warrant Shares (subject
to Section 3(d) below), thereby purchased by wire transfer or cashier's check
drawn on a United States bank or by means of a cashless exercise pursuant and
subject to Section 3(d) (if applicable), the Holder shall be entitled to receive
a certificate for the number of Warrant Shares so purchased. Certificates for
Warrant Shares purchased hereunder shall be delivered to the Holder within three
(3) Trading Days after the date on which this Warrant shall have been exercised
as aforesaid. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the Holder
or any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been properly exercised by receipt by the Company of the Notice to
Exercise and payment to the Company of the Exercise Price and all taxes required
to be paid by the Holder, if any, pursuant to Section 5 have been paid. If such
conditions by the Holder have been met, and the Company fails to deliver to the
Holder a certificate or certificates representing the Warrant Shares pursuant to
this Section 3(a) by the close of business on the third (3nd ) Trading Day after
the date of such conditions being met by the Holder, then the Holder will have
the right to rescind such exercise. In addition to any other rights available to
the Holder, if the Company fails to deliver to the Holder a certificate or
certificates representing the Warrant Shares pursuant to a proper exercise, by
the Holder, by the close of business on the third (3nd) Trading Day after the
date of exercise, and if after such third (3rd) Trading Day the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such exercise (a
"BUY-IN"), then the Company shall, upon receipt of a letter from the Holder's
brokerage firm (or its clearing firm or similar organization) stating the amount
of the Buy-In, (1) pay in immediately available funds to the Holder the amount
by which (x) the Holder's total purchase price (including brokerage commissions,
if any) for the Warrant Shares so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue times (B) the
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price at which the sell order giving rise to such purchase obligation was
executed, and (2) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored or deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $100 to cover a Buy-In with respect to an
attempted exercise of Warrant Shares with an aggregate sale price giving rise to
such purchase obligation of $80, under clause (1) of the immediately preceding
sentence the Company shall be required to pay the Holder $20. The Holder shall
provide the Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In, together with applicable confirmations and other
evidence reasonably requested by the Company. Nothing herein shall limit a
Holder's right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing Warrant Shares as required pursuant to the terms
hereof.
8.2 If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.
8.3 The Company shall not effect any exercise of this Warrant, and the
Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 3(a) or otherwise, to the extent that after giving effect to
such issuance after exercise, the Holder (together with the Holder's
Affiliates), as set forth on the applicable Notice of Exercise, would
beneficially own five 5% percent or greater of the number of shares of the
Common Stock issued and outstanding immediately after giving effect to such
issuance. For purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such sentence is being made, but shall
exclude the number of shares of Common Stock which would be issuable upon (A)
exercise of the remaining, nonexercised portion of this Warrant beneficially
owned by the Holder or any of its Affiliates and (B) exercise or conversion of
the unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other Warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates. Except as set forth in the
preceding sentence, for purposes of this Section 3(c), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act. For
purposes of this Section 3(c), in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (x) the Company's most recent Form 10-QSB or Form
10-KSB, as the case may be, (y) a more recent public announcement by the Company
or (z) any other notice by the Company or the Company's transfer agent setting
forth the number of shares of Common Stock outstanding. Upon the written or oral
request of the Holder, the Company shall within three (3) Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock then
3
outstanding. In any case, the number of outstanding shares of Company Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder or its
Affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. The provisions of this Section 3(c) may be waived by
the Holder upon, at the election of the Holder, not less than 61 days' prior
notice to the Company, and the provisions of this Section 3(c) shall continue to
apply until such 61st day (or such later date, as determined by the Holder, as
may be specified in such notice of waiver). The Holder is solely responsible for
all calculations required in this Section 3(c).
8.4 If, but only if, at the time of exercise of this Warrant (in whole
or in part) at any time after the Effectiveness Date (as defined in the
Registration Rights Agreement) there is no effective Registration Statement
registering the resale of the Warrant Shares by the Holder, this Warrant may
also be exercised at such time by means of a "cashless exercise" in which the
Holder shall be entitled to receive a certificate for the number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = the Closing Price on the Trading Day preceding the date
of such election;
(B) = the Exercise Price of the Warrants, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise of
the Warrants in accordance with the terms of this Warrant.
ARTICLE IX. No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.
ARTICLE X. Charges, Taxes and Expenses. Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder or in such name or
names as may be directed by the Holder; provided, however, that in the event
certificates for Warrant Shares are to be issued in a name other than the name
of the Holder, this Warrant when surrendered for exercise shall be accompanied
by the Assignment Form attached hereto duly executed by the Holder; and the
Company may require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.
ARTICLE XI. Closing of Books. The Company will not close its
stockholder books or records in any manner which prevents the timely exercise of
this Warrant, pursuant to the terms hereof.
ARTICLE XII. Transfer, Division and Combination.
12.1 Subject to compliance with any applicable securities laws and the
conditions set forth in Section 1 and Section 7(e) hereof and to the provisions
of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder
are transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued.
4
12.2 This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 7(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
12.3 The Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 7.
12.4 The Company agrees to maintain, at its aforesaid office, books for
the registration and the registration of transfer of the Warrants.
12.5 If, at the time of the surrender of this Warrant in connection
with any transfer of this Warrant, the transfer of this Warrant shall not be
registered pursuant to an effective registration statement under the Securities
Act and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such transfer (i) that the Holder or
transferee of this Warrant, as the case may be, furnish to the Company a written
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
such transfer may be made without registration under the Securities Act and
under applicable state securities or blue sky laws, (ii) that the holder or
transferee execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act.
5
ARTICLE XIII. No Rights as Shareholder Until Exercise. This Warrant
does not entitle the Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof. Upon the surrender of
this Warrant and the payment of the aggregate Exercise Price (or by means of a
cashless exercise), the Warrant Shares so purchased shall be and be deemed to be
issued to such Holder as the record owner of such shares as of the close of
business on the later of the date of such surrender or payment.
ARTICLE XIV. Loss, Theft, Destruction or Mutilation of Warrant. The
Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it
(which, in the case of the Warrant, shall not include the posting of any bond),
and upon surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of such Warrant or
stock certificate. ARTICLE XV. Saturdays, Sundays, Holidays, etc. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday in the
State of New York, then such action may be taken or such right may be exercised
on the next succeeding day not a Saturday, Sunday or legal holiday in the State
of New York.
ARTICLE XVI. Certain Adjustments to Exercise Price and Number of
Warrant Shares. The number and kind of securities purchasable upon the exercise
of this Warrant and the Exercise Price shall be subject to adjustment from time
to time upon the happening of any of the following. In case the Company shall
(i) pay a dividend in shares of Common Stock or make a distribution in shares of
Common Stock to holders of its outstanding Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the Holder shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which it would have owned or
have been entitled to receive had such Warrant been exercised in advance
thereof. Upon each such adjustment of the kind and number of Warrant Shares or
other securities of the Company which are purchasable hereunder pursuant to this
Section 11, the Holder shall thereafter be entitled to purchase the number of
Warrant Shares or other securities resulting from such adjustment at an Exercise
Price per Warrant Share or other security obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of Warrant
Shares purchasable pursuant hereto immediately prior to such adjustment and
dividing by the number of Warrant Shares or other securities of the Company
resulting from such adjustment. An adjustment made pursuant to this paragraph
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
6
ARTICLE XVII. Reorganization, Reclassification, Merger, Consolidation
or Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock (other than as set forth in Section 11),
consolidate or merge with or into another corporation (where the Company is not
the surviving corporation or where there is a change in or distribution with
respect to any class of common stock of the Company), or sell, transfer or
otherwise dispose of all or substantially all its property, assets or business
to another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("OTHER PROPERTY"), are
to be received by or distributed to the holders of Common Stock of the Company,
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and Other
Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) and, if an entity different
from the successor or acquiring corporation, the entity whose capital stock or
assets the holders of the Common Stock are entitled to receive as a result of
such transaction, shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Warrant to be
performed and observed by the Company and all the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate (as
determined in good faith by resolution of the Board of Directors of the Company)
in order to provide for adjustments of Warrant Shares for which this Warrant is
exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 12. For purposes of this Section 12,
"COMMON STOCK OF THE SUCCESSOR OR ACQUIRING CORPORATION" shall include stock of
such corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section 12 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
ARTICLE XVIII. Voluntary Adjustment by the Company. The Company may at
any time during the term of this Warrant reduce the then current Exercise Price
to any amount and for any period of time deemed appropriate by the Board of
Directors of the Company.
ARTICLE XIX. Notice of Adjustment. Whenever the number of Warrant
Shares or number or kind of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein provided,
the Company shall give notice thereof to the Holder, which notice shall state
the number of Warrant Shares (and other securities or property) purchasable upon
the exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made.
7
ARTICLE XX. Notice of Corporate Action. If at any time:
20.1 the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or other distribution,
or any right to subscribe for or purchase any evidences of its indebtedness, any
shares of stock of any class or any other securities or property, or to receive
any other right, or
20.2 there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,
20.3 there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 10 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 10
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their Warrant Shares for securities or other property
deliverable upon such disposition, dissolution, liquidation or winding up. Each
such written notice shall be sufficiently given if addressed to Holder at the
last address of Holder appearing on the books of the Company and delivered in
accordance with SECTION 17(d). Failure to give such notice, or any defect
therein, shall not affect the validity of such action, so long as such failure
does not materially prejudice the rights of the Holders.
8
ARTICLE XXI. Authorized Shares. The Company covenants that during the
period the Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this Warrant.
The Company will take all such reasonable action as may be necessary to assure
that such Warrant Shares may be issued as provided herein without violation of
any applicable law or regulation, or of any requirements of the principal
Trading Market upon which the Common Stock may be listed.
21.1 Except and to the extent as waived or consented to by the Holder,
the Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.
21.2 Before taking any action which would result in an adjustment in
the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
ARTICLE XXII. Miscellaneous.
22.1 Jurisdiction. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to the
conflicts of laws principles thereof. The parties hereto hereby irrevocably
agree that any suit or proceeding arising directly and/or indirectly pursuant to
or under this Agreement, shall be brought solely in a federal or state court
located in the City, County and State of New York. By its execution hereof, the
Company, and by its acceptance of this Warrant, the Holder, hereby covenant and
irrevocably submit to the IN PERSONAM jurisdiction of the federal and state
courts located in the City, County and State of New York and agree that any
process in any such action may be served upon any of them personally, or by
certified mail or registered mail upon them or their agent, return receipt
requested, with the same full force and effect as if personally served upon them
in New York City. The parties hereto waive any claim that any such jurisdiction
is not a convenient forum for any such suit or proceeding and any defense or
lack of IN PERSONAM jurisdiction with respect thereto. In the event of any such
action or proceeding, the party prevailing therein shall be entitled to payment
from the other party hereto of its reasonable counsel fees and disbursements.
9
22.2 Restrictions. The Holder acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered for resale under
the Securities Act, will have legends imprinted upon any stock certificates
evidencing such Warrant Shares and the Company will notify its transfer agent of
restrictions upon resale imposed by the applicable state and federal securities
laws.
22.3 Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination Date. If the
Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys' fees, including
those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
22.4 Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement;
provided, however, upon any permitted assignment of this Warrant, the assignee
shall promptly provide the Company with its contact information.
22.5 Limitation of Liability. No provision hereof, in the absence of
any affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
22.6 Remedies. Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
22.7 Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.
22.8 Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.
10
22.9 Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
22.10 Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
11
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.
Dated: March __, 2004
MIV THERAPEUTICS, INC.
By:
--------------------------------
Name:
Title:
12
NOTICE OF EXERCISE
To: MIV Therapeutics, Inc.
The undersigned hereby elects to purchase ________ Warrant Shares of MIV
Therapeutics, Inc. pursuant to the terms of the attached Series A Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in
full, together with all applicable transfer taxes, if any.
1. Payment shall take the form of (check applicable box):
o in lawful money of the United States; or
o the cancellation of such number of Warrant Shares as
is necessary, in accordance with and pursuant to
SECTION 3(D) (but only if, at the time of exercise of
this Warrant at any time after the Effectiveness Date
(as defined in the Registration Rights Agreement)
there is no effective Registration Statement
registering the resale of the Warrant Shares by the
Holder), to exercise this Series A Warrant with
respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise
procedures set forth in SECTION 3(D).
2. Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other
name as is specified below:
--------------------
The Warrant Shares shall be delivered to the following:
--------------------
3. The undersigned is an "accredited investor" as defined in
Regulation D promulgated under the Securities Act of 1933, as
amended, and reaffirms the representations and warranties set
forth in SECTION 3.2 of the Purchase Agreement as if made on
the date hereof.
[PURCHASER]
By:
-----------------------------
Name:
Title:
1
FORM OF ASSIGNMENT*
-------------------
FOR VALUE RECEIVED the undersigned registered owner of this Series A Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within the Series A Warrant, with respect to
the number of shares of Common Stock set forth below:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
---------------- ------- -------------
and does hereby irrevocably constitute and appoint __________________
Attorney to make such transfer on the books of MIV Therapeutics, Inc.,
maintained for the purpose, with full power of substitution in the premises.
Dated:
--------------------
-----------------------------------
(Signature)
-----------------------------------
(Witness)
The undersigned Assignee of the Series A Warrant hereby makes to MIV
Therapeutics, Inc., as of the date hereof, with respect to the Assignee, all of
the representations and warranties made by the Holder in the Registration Rights
Agreement and the Purchase Agreement, and the undersigned Assignee agrees to be
bound by all the terms and conditions of the Purchase Agreement, the Series A
Warrant and the Registration Rights Agreement.
Dated:
--------------------
-----------------------------------
(Signature)
------------------
* All capitalized terms not otherwise defined herein shall have the meanings set
forth in the Warrant.
EXHIBIT B-2
FORM OF SERIES B WARRANT
------------------------
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES
MIV THERAPEUTICS, INC.
SERIES B WARRANT TO PURCHASE ______ SHARES OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
(VOID AFTER MARCH ___, 2009)
PPW - __
THIS COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received,
_____________ (the "HOLDER"), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on
or after the Effective Date (the "EXERCISE DATE") and on or prior to the close
of business on the date which is six months after the Effective Date (but in no
event later than March ___, 2009) (the "TERMINATION DATE"), but not thereafter,
to subscribe for and purchase from MIV Therapeutics, Inc., a Nevada corporation
(the "COMPANY"), up to (i) ____________ [50% OF SHARES OF COMMON STOCK
PURCHASED] shares (the "ADDITIONAL WARRANT SHARES I"), of common stock, par
value $.001 per share, of the Company (the "COMMON STOCK") at a purchase price
of $0.66 per share (the "ADDITIONAL EXERCISE PRICE I") and (ii) ____________
[25% OF SHARES OF COMMON STOCK PURCHASED] shares (the "ADDITIONAL WARRANT SHARES
II," together with the Additional Warrant Shares I, the "WARRANT SHARES"), of
Common Stock at a purchase price of $0.75 per share (the "ADDITIONAL EXERCISE
PRICE II," together with the Additional Exercise Price I, the "EXERCISE PRICE")
of Common Stock. The Exercise Price and the number of Warrant Shares for which
the Warrant is exercisable shall be subject to adjustment as provided elsewhere
herein.
CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS
SET FORTH IN THAT CERTAIN SECURITIES PURCHASE AGREEMENT DATED THE DATE HEREOF
AND BETWEEN THE COMPANY AND THE PURCHASERS SET FORTH ON SCHEDULE 1 THERETO (THE
"PURCHASE AGREEMENT").
ARTICLE XXIII. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and Section 7 of this Warrant, this Warrant and
all rights hereunder are transferable, in whole or in part, at the office or
agency of the Company by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed. The transferee shall sign an investment letter in form and
substance reasonably satisfactory to the Company.
ARTICLE XXIV. Authorization of Shares. The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously with such
issue and liens and charges incurred by the Holder).
ARTICLE XXV. Exercise of Warrant
25.1 Exercise of the purchase rights represented by this Warrant may be
made at any time or times on or after the Exercise Date and on or before the
Termination Date by the surrender of this Warrant and the Notice of Exercise
Form annexed hereto duly executed, at the office of the Company (or such other
office or agency of the Company as it may designate by notice in writing to the
registered Holder at the address of such Holder appearing on the books of the
Company), and upon payment of the Exercise Price of the Warrant Shares (subject
to Section 3(d) below), thereby purchased by wire transfer or cashier's check
drawn on a United States bank, the Holder shall be entitled to receive a
certificate for the number of Warrant Shares so purchased. Certificates for
Warrant Shares purchased hereunder shall be delivered to the Holder within three
(3) Trading Days after the date on which this Warrant shall have been exercised
as aforesaid. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the Holder
or any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been properly exercised by receipt by the Company of the Notice to
Exercise and payment to the Company of the Exercise Price and all taxes required
to be paid by the Holder, if any, pursuant to Section 5 have been paid. If such
conditions by the Holder have been met, and the Company fails to deliver to the
Holder a certificate or certificates representing the Warrant Shares pursuant to
this Section 3(a) by the close of business on the third (3rd ) Trading Day after
the date of such conditions being met by the Holder, then the Holder will have
the right to rescind such exercise. In addition to any other rights available to
the Holder, if the Company fails to deliver to the Holder a certificate or
certificates representing the Warrant Shares pursuant to a proper exercise, by
the Holder, by the close of business on the third (3rd) Trading Day after the
date of exercise, and if after such third (3rd) Trading Day the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such exercise (a
"BUY-IN"), then the Company shall, upon receipt of a letter from the Holder's
brokerage firm (or its clearing firm or similar organization) stating the amount
of the Buy-In, (1) pay in immediately available funds to the Holder the amount
by which (x) the Holder's total purchase price (including brokerage commissions,
if any) for the Warrant Shares so purchased exceeds (y) the amount obtained by
2
multiplying (A) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue times (B) the
price at which the sell order giving rise to such purchase obligation was
executed, and (2) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored or deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $100 to cover a Buy-In with respect to an
attempted exercise of Warrant Shares with an aggregate sale price giving rise to
such purchase obligation of $80, under clause (1) of the immediately preceding
sentence the Company shall be required to pay the Holder $20. The Holder shall
provide the Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In, together with applicable confirmations and other
evidence reasonably requested by the Company. Nothing herein shall limit a
Holder's right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing Warrant Shares as required pursuant to the terms
hereof.
25.2 If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.
25.3 The Company shall not effect any exercise of this Warrant, and the
Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 3(a) or otherwise, to the extent that after giving effect to
such issuance after exercise, the Holder (together with the Holder's
Affiliates), as set forth on the applicable Notice of Exercise, would
beneficially own five 5% percent or greater of the number of shares of the
Common Stock issued and outstanding immediately after giving effect to such
issuance. For purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such sentence is being made, but shall
exclude the number of shares of Common Stock which would be issuable upon (A)
exercise of the remaining, nonexercised portion of this Warrant beneficially
owned by the Holder or any of its Affiliates and (B) exercise or conversion of
the unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other Warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates. Except as set forth in the
preceding sentence, for purposes of this Section 3(c), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act. For
purposes of this Section 3(c), in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (x) the Company's most recent Form 10-QSB or Form
10-KSB, as the case may be, (y) a more recent public announcement by the Company
or (z) any other notice by the Company or the Company's transfer agent setting
3
forth the number of shares of Common Stock outstanding. Upon the written or oral
request of the Holder, the Company shall within three (3) Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Company Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder or its
Affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. The provisions of this Section 3(c) may be waived by
the Holder upon, at the election of the Holder, not less than 61 days' prior
notice to the Company, and the provisions of this Section 3(c) shall continue to
apply until such 61st day (or such later date, as determined by the Holder, as
may be specified in such notice of waiver). The Holder is solely responsible for
all calculations required in this Section 3(c).
ARTICLE XXVI. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.
ARTICLE XXVII. Charges, Taxes and Expenses. Issuance of certificates for Warrant
Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
ARTICLE XXVIII. Closing of Books. The Company will not close its stockholder
books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
ARTICLE XXIX. Transfer, Division and Combination.
29.1 Subject to compliance with any applicable securities laws and the
conditions set forth in Section 1 and Section 7(e) hereof and to the provisions
of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder
are transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued.
4
29.2 This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 7(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
29.3 The Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 7.
29.4 The Company agrees to maintain, at its aforesaid office, books for
the registration and the registration of transfer of the Warrants.
29.5 If, at the time of the surrender of this Warrant in connection
with any transfer of this Warrant, the transfer of this Warrant shall not be
registered pursuant to an effective registration statement under the Securities
Act and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such transfer (i) that the Holder or
transferee of this Warrant, as the case may be, furnish to the Company a written
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
such transfer may be made without registration under the Securities Act and
under applicable state securities or blue sky laws, (ii) that the holder or
transferee execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act.
5
ARTICLE XXX. No Rights as Shareholder Until Exercise. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price (or by means of a cashless exercise),
the Warrant Shares so purchased shall be and be deemed to be issued to such
Holder as the record owner of such shares as of the close of business on the
later of the date of such surrender or payment.
ARTICLE XXXI. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.
ARTICLE XXXII. Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday in the State of New York,
then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday in the State of New York.
ARTICLE XXXIII. Certain Adjustments to Exercise Price and Number of Warrant
Shares. The number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the happening of any of the following. In case the Company shall (i) pay a
dividend in shares of Common Stock or make a distribution in shares of Common
Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, or (iv) issue any shares of its capital stock in a reclassification of
the Common Stock, then the number of Warrant Shares purchasable upon exercise of
this Warrant immediately prior thereto shall be adjusted so that the Holder
shall be entitled to receive the kind and number of Warrant Shares or other
securities of the Company which it would have owned or have been entitled to
receive had such Warrant been exercised in advance thereof. Upon each such
adjustment of the kind and number of Warrant Shares or other securities of the
Company which are purchasable hereunder pursuant to this Section 11, the Holder
shall thereafter be entitled to purchase the number of Warrant Shares or other
securities resulting from such adjustment at an Exercise Price per Warrant Share
or other security obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto immediately prior to such adjustment and dividing by the number
of Warrant Shares or other securities of the Company resulting from such
adjustment. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
6
ARTICLE XXXIV. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock (other than as set forth in Section 11),
consolidate or merge with or into another corporation (where the Company is not
the surviving corporation or where there is a change in or distribution with
respect to any class of common stock of the Company), or sell, transfer or
otherwise dispose of all or substantially all its property, assets or business
to another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("OTHER PROPERTY"), are
to be received by or distributed to the holders of Common Stock of the Company,
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and Other
Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) and, if an entity different
from the successor or acquiring corporation, the entity whose capital stock or
assets the holders of the Common Stock are entitled to receive as a result of
such transaction, shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Warrant to be
performed and observed by the Company and all the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate (as
determined in good faith by resolution of the Board of Directors of the Company)
in order to provide for adjustments of Warrant Shares for which this Warrant is
exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 12. For purposes of this Section 12,
"COMMON STOCK OF THE SUCCESSOR OR ACQUIRING CORPORATION" shall include stock of
such corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section 12 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
ARTICLE XXXV. Voluntary Adjustment by the Company. The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.
7
ARTICLE XXXVI. Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall give notice thereof to the Holder, which notice shall state the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.
ARTICLE XXXVII. Notice of Corporate Action. If at any time:
37.1 the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or other distribution,
or any right to subscribe for or purchase any evidences of its indebtedness, any
shares of stock of any class or any other securities or property, or to receive
any other right, or
37.2 there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,
37.3 there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 10 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 10
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their Warrant Shares for securities or other property
deliverable upon such disposition, dissolution, liquidation or winding up. Each
such written notice shall be sufficiently given if addressed to Holder at the
last address of Holder appearing on the books of the Company and delivered in
accordance with SECTION 17(D). Failure to give such notice, or any defect
therein, shall not affect the validity of such action, so long as such failure
does not materially prejudice the rights of the Holders.
8
ARTICLE XXXVIII. Authorized Shares. The Company covenants that during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the principal Trading
Market upon which the Common Stock may be listed.
38.1 Except and to the extent as waived or consented to by the Holder,
the Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.
38.2 Before taking any action which would result in an adjustment in
the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
ARTICLE XXXIX. Miscellaneous.
39.1 Jurisdiction. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to the
conflicts of laws principles thereof. The parties hereto hereby irrevocably
agree that any suit or proceeding arising directly and/or indirectly pursuant to
or under this Agreement, shall be brought solely in a federal or state court
located in the City, County and State of New York. By its execution hereof, the
Company, and by its acceptance of this Warrant, the Holder, hereby covenant and
irrevocably submit to the IN PERSONAM jurisdiction of the federal and state
courts located in the City, County and State of New York and agree that any
process in any such action may be served upon any of them personally, or by
certified mail or registered mail upon them or their agent, return receipt
requested, with the same full force and effect as if personally served upon them
in New York City. The parties hereto waive any claim that any such jurisdiction
is not a convenient forum for any such suit or proceeding and any defense or
lack of IN PERSONAM jurisdiction with respect thereto. In the event of any such
action or proceeding, the party prevailing therein shall be entitled to payment
from the other party hereto of its reasonable counsel fees and disbursements.
9
39.2 Restrictions. The Holder acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered for resale under
the Securities Act, will have legends imprinted upon any stock certificates
evidencing such Warrant Shares and the Company will notify its transfer agent of
restrictions upon resale imposed by the applicable state and federal securities
laws.
39.3 Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination Date. If the
Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys' fees, including
those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
39.4 Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement;
provided, however, upon any permitted assignment of this Warrant, the assignee
shall promptly provide the Company with its contact information.
39.5 Limitation of Liability. No provision hereof, in the absence of
any affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
39.6 Remedies. Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
39.7 Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.
39.8 Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.
10
39.9 Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
39.10 Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
11
IN WITNESS WHEREOF, the Company has caused this Series B Warrant to be
executed by its officer thereunto duly authorized.
Dated: March __, 2004
MIV THERAPEUTICS, INC.
By:
-------------------------------
Name:
Title:
12
NOTICE OF EXERCISE
To: MIV Therapeutics, Inc.
The undersigned hereby elects to purchase ________ Additional Warrant Shares I
and ________ Additional Warrant Shares II of MIV Therapeutics, Inc. pursuant to
the terms of the attached Series B Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
4. Payment shall take the form of lawful money of the United
States.
5. Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other
name as is specified below:
----------------------
The Warrant Shares shall be delivered to the following:
----------------------
6. The undersigned is an "accredited investor" as defined in
Regulation D promulgated under the Securities Act of 1933, as
amended, and reaffirms the representations and warranties set
forth in SECTION 3.2 of the Purchase Agreement as if made on
the date hereof.
[PURCHASER]
By:
-------------------------------
Name:
Title:
1
FORM OF ASSIGNMENT*
-------------------
FOR VALUE RECEIVED the undersigned registered owner of this Series B Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within the Series B Warrant, with respect to
the number of shares of Common Stock set forth below (please also specify
whether shares are exercisable pursuant to Additional Warrant Shares I or
Additional Warrant Shares II):
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
---------------- ------- -------------
and does hereby irrevocably constitute and appoint ___________________
Attorney to make such transfer on the books of MIV Therapeutics, Inc.,
maintained for the purpose, with full power of substitution in the premises.
Dated:
---------------------------
-----------------------------------
(Signature)
-----------------------------------
(Witness)
The undersigned Assignee of the Series B Warrant hereby makes to MIV
Therapeutics, Inc., as of the date hereof, with respect to the Assignee, all of
the representations and warranties made by the Holder in the Registration Rights
Agreement and the Purchase Agreement, and the undersigned Assignee agrees to be
bound by all the terms and conditions of the Purchase Agreement, the Series B
Warrant and the Registration Rights Agreement.
Dated:
---------------------------
-----------------------------------
(Signature)
--------------------------
* All capitalized terms not otherwise defined herein shall have the meanings set
forth in the Series B Warrant.
2
EXHIBIT C
FORM OF SELLING SHAREHOLDER QUESTIONNAIRE
-----------------------------------------
MIV THERAPEUTICS, INC.
SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE
The undersigned beneficial owner of (i) common shares (the "SHARES"),
par value $.001 (the "COMMON STOCK") of MIV Therapeutics, Inc. (the "COMPANY"),
and (ii) warrants (the "WARRANTS") to purchase shares of Common Stock (the
Shares and the shares of Common Stock issuable upon exercise of the Warrants
shall collectively be hereinafter referred to as the ("REGISTRABLE SECURITIES"),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the "COMMISSION") a registration statement on Form SB-2
(or other eligible form) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), of the Registrable
Securities, in accordance with the terms of the Securities Purchase Agreement
and the Registration Rights Agreement (collectively, the "AGREEMENTS"), between
the Company and the Purchasers named therein.
In order to sell or otherwise dispose of any Registrable Securities
pursuant to the Registration Statement, a beneficial owner of Registrable
Securities generally will be required to be named as a selling securityholder in
the related prospectus, deliver a prospectus to purchasers of Registrable
Securities and be bound by those provisions of the Agreements applicable to such
beneficial owner (including certain indemnification provisions as described
below). Beneficial owners that do not complete this Notice and Questionnaire and
deliver it to the Company as provided below will not be named as selling
securityholders in the prospectus and therefore will not be permitted to sell
any Registrable Securities pursuant to the Registration Statement.
Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the "SELLING SECURITYHOLDER") of
Registrable Securities hereby gives notice to the Company of its intention to
sell or otherwise dispose of Registrable Securities beneficially owned by it and
listed below in Item 3 (unless otherwise specified under such Item 3) pursuant
to the Registration Statement. The undersigned, by signing and returning this
Notice and Questionnaire, understands that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Agreements.
Pursuant to the Agreements, the undersigned has agreed to indemnify and
hold harmless the Company's directors and officers and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), from and against certain losses arising in connection with
statements concerning the undersigned made in the Company's Registration
Statement or the related prospectus in reliance upon the information provided in
this Notice and Questionnaire.
If the Selling Securityholder transfers all or any portion of the
Registrable Securities listed in Item 3 below after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Agreements.
QUESTIONNAIRE
Please respond to every item, even if your response is "none." If you
need more space for any response, please attach additional sheets of paper. In
addition, on the attached sheets, please be sure to indicate your name (as well
as signature) and the corresponding number of the questionnaire item you are
addressing. Please note that you may be asked to answer additional questions
depending on your responses to the following questions.
If you have any questions about the contents of this Questionnaire or
as to who should complete this Questionnaire, please contact Xxxxxx X. Xxxxx at
Xxxxx & Company, at telephone number (000) 000-0000.
The undersigned hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
o YOUR IDENTITY AND BACKGROUND AS THE BENEFICIAL OWNER OF THE
REGISTRABLE SECURITIES.
(a) Your full legal name: ________________________________________
(b) Your business address (including street address) (or residence
if no business address), telephone number and facsimile number
and email address:
Address: ___________________________________________________
___________________________________________________
Telephone: ___________________________________________________
Fax: ___________________________________________________
E-mail: ___________________________________________________
(c) Are you a broker-dealer registered pursuant to Section 15 of
the Exchange Act?
[ ] Yes.
[ ] No.
(d) If your response to Item 1(c) above is NO, are you an
"affiliate" of a broker-dealer registered pursuant to Section
15 of the Exchange Act?
[ ] Yes.
[ ] No.
For the purposes of this Item 1(d), an "AFFILIATE" of a registered
broker-dealer shall include any company that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or
is under common control with, such broker-dealer, and does not include
any individuals employed by such broker-dealer or its affiliates.
o YOUR RELATIONSHIP WITH THE COMPANY.
(e) Have you or any of your affiliates, officers, directors or
principal equity holders (owners of 5% or more of the equity
securities of the undersigned) held any position or office or
have you had any other type of material relationship with the
Company (or its predecessors or affiliates) within the past
three years?
[ ] Yes.
[ ] No.
(f) If your response to Item 2(a) above is YES, please state the
nature and duration of your relationship with the Company:
______________________________________________________________
______________________________________________________________
o YOUR INTEREST IN THE REGISTRABLE SECURITIES.
(g) State the principal amount or number of Registrable Securities
you beneficially own (as defined on Exhibit A hereto),
specifically stating the amount and type of each security.
Number of shares: ____________________________________________
(h) Did you acquire the securities listed in Item 3(a) above
pursuant to the Agreements?
[ ] Yes.
[ ] No.
(i) Aside from the securities addressed in section 3(a) above, do
you beneficially own any other securities of the Company?
[ ] Yes.
[ ] No.
(j) If your answer to Item 3(c) above is YES, please state the
type, the aggregate amount and CUSIP No. of such other
securities of the Company you beneficially own:
Type: ________________________________________________________
Aggregate amount: ____________________________________________
3
(k) Regarding securities acquired pursuant to the Agreements, do
you have arrangements or understandings, either directly or
indirectly, in respect to the distribution of the securities?
[ ] Yes.
[ ] No.
(l) If your response to Item 3(e) above is YES, please describe
such arrangements or understandings:
______________________________________________________________
______________________________________________________________
o NATURE OF YOUR BENEFICIAL OWNERSHIP.
(m) If the name of the beneficial owner of the Registrable
Securities set forth in your response to Item 1(a) above is
that of a limited partnership, state the names of the general
partners of such limited partnership:
______________________________________________________________
______________________________________________________________
______________________________________________________________
(n) With respect to each general partner listed in Item 4(a) above
who (i) is not a natural person, and (ii) is not a publicly
held entity, name each shareholder (or holder of partnership
interests, if applicable) of such general partner. If any of
these named shareholders are not natural persons or publicly
held entities, please provide the same information. This
process should be repeated until all such shareholders are
disclosed.
______________________________________________________________
______________________________________________________________
______________________________________________________________
(o) Name each person or entity who will have sole or shared voting
or dispositive power over the shares purchased pursuant to the
Agreements (the "CONTROLLING ENTITY"). If the Controlling
Entity is not a natural person and is not a publicly held
entity, name each shareholder of such Controlling Entity. If
any of these named shareholders are not natural persons or
publicly held entities, please provide the same information.
This process should be repeated until all such shareholder are
disclosed.
(i)(A) Full legal name of Controlling Entity(ies) or natural
person(s) with who have sole or shared voting or
dispositive power over the Registrable Securities:
_____________________________________________________
(B) Business address (including street address) (or
residence if no business address), telephone number
and facsimile number of such person(s):
Address: ____________________________________________
4
__________________________________________
__________________________________________
Telephone: __________________________________________
Fax: __________________________________________
(C) Name of shareholders:
____________________________________________________
____________________________________________________
(p) If the name of the beneficial owner of the securities set
forth in your response to Item 4(c) above is that of a limited
partnership, state the names of the general partners of such
limited partnership:
______________________________________________________________
______________________________________________________________
______________________________________________________________
(q) With respect to each general partner listed in Item 4(d) above
who is not a natural person, and is not publicly held, name
each shareholder (or holder of partnership interests, if
applicable) of such general partner. If any of these named
shareholders are not natural persons or publicly held
entities, please provide the same information. This process
should be repeated until all such shareholders are disclosed.
______________________________________________________________
______________________________________________________________
______________________________________________________________
(r) Name each person or entity who will have sole or shared voting
or dispositive power over the shares listed in Item 3(c) (the
"ITEM 3(c) CONTROLLING ENTITY"). If the Item 3(c) Controlling
Entity is not a natural person and is not a publicly held
entity, name each shareholder of such Item 3(c) Controlling
Entity. If any of these named shareholders are not natural
persons or publicly held entities, please provide the same
information. This process should be repeated until you all
such shareholders are disclosed.
(i)(A) Full legal name of Item 3(c) Controlling Entity(ies)
or natural person(s) with who have sole or shared
voting or dispositive power over the Registrable
Securities:
_____________________________________________________
5
(B) Business address (including street address) (or
residence if no business address), telephone number
and facsimile number of such person(s):
Address: __________________________________________
__________________________________________
__________________________________________
Telephone: __________________________________________
Fax: __________________________________________
(C) Name of shareholders:
_____________________________________________________
_____________________________________________________
IF YOU NEED MORE SPACE FOR THIS RESPONSE, PLEASE ATTACH ADDITIONAL SHEETS OF
PAPER. IF YOU NEED MORE SPACE FOR ANY RESPONSE, PLEASE ATTACH ADDITIONAL SHEETS
OF PAPER. IN ADDITION, ON THE ATTACHED SHEETS, PLEASE BE SURE TO INDICATE YOUR
NAME (AS WELL AS SIGNATURE) AND THE CORRESPONDING NUMBER OF THE QUESTIONNAIRE
ITEM YOU ARE ADDRESSING. PLEASE NOTE THAT YOU MAY BE ASKED TO ANSWER ADDITIONAL
QUESTIONS DEPENDING ON YOUR RESPONSES TO THE FOLLOWING QUESTIONS.
o PLAN OF DISTRIBUTION.
Except as set forth below, the undersigned (including its donees or pledgees)
intends to distribute the Registrable Securities listed above in Item 3 pursuant
to the Registration Statement only as follows (if at all): Such Registrable
Securities may be sold from time to time directly by the undersigned or,
alternatively, through underwriters, broker-dealers or agents. If the
Registrable Securities are sold through underwriters, broker-dealers or agents,
the Selling Securityholder will be responsible for underwriting discounts or
commissions or agents' commissions. Such Registrable Securities may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale or at negotiated
prices. Such sales may be effected in transactions (which may involve block
transactions) (i) on any national securities exchange or quotation service on
which the Registrable Securities may be listed or quoted at the time of sale,
(ii) in the over-the-counter market, (iii) in transactions otherwise than on
such exchanges or services or in the over-the-counter market, or (iv) through
the writing of options. In connection with sales of the Registrable Securities
or otherwise, the undersigned may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the Registrable
Securities in the course of hedging positions they assume. The undersigned may
also sell Registrable Securities short and deliver Registrable Securities to
close out short positions, or loan or pledge Registrable Securities to
broker-dealers that in turn may sell such securities.
State any exceptions here:
________________________________________________________________________________
________________________________________________________________________________
6
The undersigned acknowledges that its obligation to comply with the
provisions of the Securities Exchange Act of 1934, as amended and the rules
thereunder relating to stock manipulation, particularly Regulation M thereunder
(or any successor rules or regulations), in connection with any offering of
Registrable Securities pursuant to the Agreements. The undersigned agrees that
neither it nor any person acting on its behalf will engage in any transaction in
violation of such provisions.
The undersigned beneficial owner and Selling Securityholder hereby
acknowledges its obligations under the Agreements to indemnify and hold harmless
certain persons as set forth therein. Pursuant to the Agreements, the Company
has agreed under certain circumstances to indemnify the undersigned beneficial
owner and Selling Securityholder against certain liabilities.
In accordance with the undersigned's obligation under the Agreements to
provide such information as may be required by law for inclusion in the
Registration Statement, the undersigned agrees to promptly notify the Company of
any inaccuracies or changes in the information provided herein that may occur
subsequent to the date hereof at any time while the Registration Statement
remains effective.
All notices to the beneficial owner hereunder and pursuant to the
Agreements shall be made in writing to the undersigned at the address set forth
in Item 1(b) of this Notice and Questionnaire.
By signing below, the undersigned acknowledges that it is the
beneficial owner of the Registrable Securities set forth herein, represents that
the information provided herein is accurate, consents to the disclosure of the
information contained in this Notice and Questionnaire and the inclusion of such
information in the Registration Statement and the related prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Registration Statement
and the related prospectus. The undersigned agrees to indemnify the Company and
hold it harmless against any and all losses, damages, liabilities, costs and
expenses which it may sustain or incur in connection with the material breach by
the undersigned of any representation or warranties made herein by the
undersigned; PROVIDED, HOWEVER, that such indemnification shall be limited to
the amount of gross proceeds actually received by the undersigned from the
undersigned's sale of the Registrable Securities.
Once this Notice and Questionnaire is executed by the undersigned
beneficial owner and received by the Company, the terms of this Notice and
Questionnaire, and the representations and warranties contained herein, shall be
binding on, shall inure to the benefit of and shall be enforceable by the
respective successors, heirs, personal representatives and assigns of the
Company and the undersigned beneficial owner. This Notice and Questionnaire
shall be governed in all respects by the laws of the State of New York.
7
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.
NAME OF BENEFICIAL OWNER:
___________________________________
(PLEASE PRINT)
Signature: ________________________
Date: _____________________________
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO
______________________________
One (1) Copy by Facsimile to - Xxxxxx Xxxxx, Fax: (000) 000-0000
With the Original copy to Follow to:
Xxxxxx X. Xxxxx
Xxxxx & Company
#000 - 000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX
X0X 0X0
8
EXHIBIT A
---------
"BENEFICIAL OWNERSHIP" shall have the meaning set forth in Rule 13d-3
under the Securities Exchange Act of 1934, as amended, which provides in
relevant part that:
ARTICLE XL. a beneficial owner of a security includes any person who, directly
or indirectly, through any contract, arrangement, understanding, relationship,
or otherwise has or shares:
40.1 Voting power which includes the power to vote, or to direct the
voting of, such security; and/or
40.2 investment power which includes the power to dispose, or to direct
the disposition of, such security.
ARTICLE XLI. Any person who, directly or indirectly, creates or uses a trust,
proxy, power of attorney, pooling arrangement or any other contract,
arrangement, or device with the purpose or effect of divesting such person of
beneficial ownership of a security or preventing the vesting of such beneficial
ownership as part of a plan or scheme to evade the reporting requirements of
Section 13(d) or 13(g) of the Exchange Act shall be deemed for purposes of such
sections to be the beneficial owner of such security.
ARTICLE XLII. All securities of the same class beneficially owned by a person,
regardless of the form which such beneficial ownership takes, shall be
aggregated in calculating the number of shares beneficially owned by such
person.
ARTICLE XLIII. Notwithstanding the provisions of paragraphs (a) and (c) of this
rule:
(a) (i) A person shall be deemed to be the beneficial owner of a
security, subject to the provisions of paragraph (b) of this rule, if that
person has the right to acquire beneficial ownership of such security ... within
sixty days, including but not limited to any right to acquire: (A) through the
exercise of any option, warrant or right; (B) through the conversion of a
security; (C) pursuant to the power to revoke a trust, discretionary account, or
similar arrangement; or (D) pursuant to the automatic termination of a trust,
discretionary account or similar arrangement.
9
SCHEDULE 1
----------
LIST OF PURCHASERS AND AMOUNTS
------------------------------
NAME OF PURCHASER AMOUNT OF SHARES AND WARRANT SHARES PURCHASED
----------------- ---------------------------------------------
1. ALKI PARTNERS, L.P. 400,000 Shares 200,000 Series A Warrant Shares
200,000 Series B Warrant Shares ($ 0.66)
100,000 Series B Warrant Shares ($ 0.75)
2. ALKI FUND, LTD. 266,667 Shares 133,333 Series A Warrant Shares
133,333 Series B Warrant Shares ($ 0.66)
66,667 Series B Warrant Shares ($ 0.75)
3. ALPHA CAPITAL AG 777,778 Shares 388,889 Series A Warrant Shares
388,889 Series B Warrant Shares ($ 0.66)
194,444 Series B Warrant Shares ($ 0.75)
4. BRIDGES AND PIPES LLC 722,222 Shares 361,111 Series A Warrant Shares
361,111 Series B Warrant Shares ($ 0.66)
180,556 Series B Warrant Shares ($ 0.75)
5. BRISTOL INVESTMENT 888,889 Shares 444,444 Series A Warrant Shares
FUND, LTD. 444,444 Series B Warrant Shares ($ 0.66)
222,222 Series B Warrant Shares ($ 0.75)
6. XXXXXXX X. XXXXXXXX 300,000 Shares 150,000 Series A Warrant Shares
150,000 Series B Warrant Shares ($ 0.66)
75,000 Series B Warrant Shares ($ 0.75)
7. XXXXXXXXXXX X.X. 833,333 Shares 416,667 Series A Warrant Shares
416,667 Series B Warrant Shares ($ 0.66)
208,333 Series B Warrant Shares ($ 0.75)
8. SRG CAPITAL LLC 450,000 Shares 225,000 Series A Warrant Shares
225,000 Series B Warrant Shares ($ 0.66)
112,500 Series B Warrant Shares ($ 0.75)
9. TCMP(3) PARTNERS 333,333 Shares 166,667 Series A Warrant Shares
166,667 Series B Warrant Shares ($ 0.66)
83,333 Series B Warrant Shares ($ 0.75)
10. WHALEHAVEN FUND 222,178 Shares 111,089 Series A Warrant Shares
LIMITED 111,089 Series B Warrant Shares ($ 0.66)
55,544 Series B Warrant Shares ($ 0.75)
SCHEDULE 3.1(a)
---------------
SUBSIDIARIES
------------
WHOLLY OWNED SUBSIDIARIES
Both subsidiaries are in the same business as the Company and operations have
been consolidated in the financial statements and other disclosure information
that has been provided.
M-I VASCULAR INNOVATIONS, INC.
A Delaware Corporation
Xxxx 0, 0000 Xxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
MIVI TECHNOLOGIES, INC.
A Yukon Corporation
Xxxx 0, 0000 Xxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
SCHEDULE 3.1(g)
---------------
CAPITALIZATION
--------------
The authorized capital stock of the Company consists of 80,000,000 shares of
Common Stock, $0.001 par value and 20,000,000 shares of preferred stock, $0.001
par value. Holders of the Common Stock have no preemptive rights to purchase
additional shares of Common Stock or other subscription rights. The Common Stock
carries no conversion rights and is not subject to redemption or to any sinking
fund provisions. All shares of Common Stock are entitled to share equally in
dividends from sources legally available, therefore, when, as and if declared by
the Board of Directors, and upon liquidation or dissolution of the Company,
whether voluntary or involuntary, to share equally in the assets of the company
available for distribution to stockholders. All outstanding shares of Common
Stock are validly authorized and issued, fully paid and non-assessable. The
Board of Directors is authorized to issue additional shares of Common Stock not
to exceed the amount authorized by the Company's Articles of Incorporation, on
such terms and conditions and for such consideration as the Board may deem
appropriate without further stockholder action.
As of February 29, 2004, the Company had the following securities issued and
outstanding:
Common Shares 37,020,567
Options 4,180,000
Warrants 13,821,985
SCHEDULE 3.1(z)
---------------
REGISTRATION RIGHTS
-------------------
Xxxxx Xxx and Xxxxx Xxxxx 100,000 Warrants @ $0.75
Xxxxxxx-Xxxxxx Group 71,429 Common Shares
Xxxxxx Xxxxxx 125,000 Common Shares
Affaires Financiers SA 57,143 Common Shares
LOM SECURITIES (BERMUDA) LTD. 95,000 COMMON SHARES
----------------------
Total 448,572
