SECURITIES PURCHASE AGREEMENT
EXHIBIT
99.1
This
Securities Purchase Agreement (this “Agreement”) is dated as
of April 26, 2017, between ChromaDex Corporation, a Delaware
corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and
collectively the “Purchasers”).
ARTICLE I.
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 set forth in this Section 1.1:
“Acquiring
Person” shall have the
meaning ascribed to such term in Section 4.4.
“Action” shall have the
meaning ascribed to such term in Section 3.1(j).
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.
“Board of Directors” means
the board of directors of the Company.
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
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“Change of Control” means
the occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events: (i) any
“person” (as such term is used in Section 13(d) and
14(d) of the Exchange Act (as defined below)) becomes the
“beneficial owner” (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the combined voting
power of the Company’s then outstanding securities other than
by virtue of a merger, consolidation or similar transaction; (ii)
the consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization (or
similar transaction), if more than fifty percent (50%) of the
combined voting power of the continuing or surviving entity’s
securities outstanding immediately after such merger, consolidation
or other reorganization (or similar transaction) is owned by
persons who were not stockholders of the Company immediately prior
to such merger, consolidation or other reorganization; or (iii) the
consummation of a sale, transfer or other disposition of all or
substantially all of the Company’s assets.
“Closings” means, as
applicable, the First Closing, the Second Closing and/or the Third
Closing.
“Closing Date” means, as
applicable, the First Closing Date, the Second Closing Date and/or
the Third Closing Date.
“Commission” means the
United States Securities and Exchange Commission.
“Common Stock” means the
common stock of the Company, par value $0.001 per share, and any
other class of securities into which such securities may hereafter
be reclassified or changed.
“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, right,
option, warrant or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock.
“Company
Counsel” means Xxxxxx LLP, with offices located at
0000 Xxxxxxxx Xxxx, Xxx Xxxxx, XX 00000.
“Employee Plan” means (A)
an employee benefit plan within the meaning of Section 3(3) of
ERISA whether or not subject to ERISA; (B) stock option plans,
stock purchase plans, bonus or incentive award plans, severance pay
plans, programs or arrangements, deferred compensation arrangements
or agreements, employment agreements, executive compensation plans,
programs, agreements or arrangements, change in control plans,
programs or arrangements, supplemental income arrangements,
vacation plans, and all other employee benefit plans, agreements,
and arrangements, not described in (A) above; and (C) plans or
arrangements providing compensation to employee and non-employee
directors, in each case in which the Company or any ERISA Affiliate
sponsors, contributes to, or provides benefits under or through
such plan, or has any obligation to contribute to or provide
benefits under or through such plan, or if such plan provides
benefits to or otherwise covers any current or former employee,
officer or director of the Company or any ERISA Affiliate (or their
spouses, dependents, or beneficiaries).
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“Equity
Interest” means any share, capital stock, partnership,
limited liability company, member or similar equity interest or
voting right in any Person, and any option, warrant, right
(including conversion, stock appreciation, put, call, redemption,
repurchase or similar rights), security (including debt
securities), commitment, obligation, agreement or arrangement that
is convertible, exchangeable or exercisable into or for, or give
any Person a right to subscribe for or acquire, or whose value is
linked to or based upon, any such share, capital stock,
partnership, limited liability company, member or similar equity
interest or voting right.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
“ERISA Affiliate” means
any entity that would have ever been considered a single employer
with the Company under Section 4001(b) of ERISA or part of the same
“controlled group” as the Company for purposes of
Section 302(d)(3) of ERISA.
“Evaluation
Date” shall have the meaning ascribed to such term in
Section 3.1(r).
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Exempt Issuance” means
the issuance of (a) shares of Common Stock, options or other equity
awards to employees, officers, directors or consultants of the
Company pursuant to any stock or option plan or other equity
incentive plan duly adopted for such purpose by a majority of the
non-employee members of the Board of Directors or a majority of the
members of a committee of non-employee directors established for
such purpose, (b) restricted Common Stock upon the exercise of any
Outstanding Company Options (as defined below) or Outstanding
Company Warrants (as defined below) issued and outstanding on the
date of this Agreement, or any options granted pursuant to clause
(a) of the definition hereof, provided that such securities have
not been amended since the date of this Agreement to increase the
number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities, and (c)
securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors
of the Company, provided that any such issuance shall only be to a
Person (or to the equity holders of a Person) which is, itself or
through its subsidiaries, an operating company or an owner of an
asset in a business synergistic with the business of the Company
and shall provide to the Company additional benefits in addition to
the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is
investing in securities.
“FCPA” means the Foreign
Corrupt Practices Act of 1977, as amended.
“FDA” shall have the
meaning ascribed to such term in Section 3.1(dd).
“FDCA” shall have the
meaning ascribed to such term in Section 3.1(dd).
“First Closing” means the
closing of the purchase and sale of the Shares pursuant to Section
2.1(a).
“First Closing Date” means
the date on which the First Closing is consummated.
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“First Closing Shares”
means 1,346,154 shares of Common Stock.
“First Closing Purchase
Price” means $3,500,000.40, which for the avoidance of
doubt, represents the product of (x) the First Closing Shares
multiplied by (y)
the Per Share Purchase Price.
“GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).
“Governmental Authority”
shall mean any federal, state, foreign or local government, or any
political subdivision thereof or any arbitrator, court,
administrative or regulatory agency, commission, department, board,
bureau, body or other government, authority or instrumentality or
any entity or Person exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
“Intellectual
Property Rights” shall have the meaning ascribed to
such term in Section 3.1(o).
“Law” or
“law”
shall mean any supranational, national, federal, state, regional,
provincial, local or municipal constitution, treaty, law, statute,
ordinance, code, determination, principle of common law or any
other requirement having the effect of law of any Governmental
Authority (including any rule, regulation, plan, injunction,
judgment, order, award, decree, ruling, requirement, guidance,
policy or charge thereunder or related thereto), in each case as
amended as of the date hereof, whether in the United States or a
foreign jurisdiction.
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right
of first refusal, mortgage, claim, easement, right-of-way, option,
title retention agreement, preemptive right or other
restriction.
“Material
Adverse Effect” shall mean any change, event,
condition, effect, development, state of facts or occurrence (each,
an “Effect”) that,
individually or when taken together with all other Effects, has had
or would be reasonably likely to have (a) a material adverse effect
on the business, condition (financial or other), assets,
liabilities or results of operations of the Company, taken as a
whole, or (b) a material adverse effect on the Company’s
ability to timely perform its obligations under, or timely
consummate any of the transactions contemplated by, the Agreement
(including the sale of the Shares), in accordance with the terms of
this Agreement; provided, that for purposes of
clause (a) hereof, the following Effects shall not constitute a
“Material Adverse Effect: (i) changes occurring after the
date hereof in conditions in the United States of America or global
economy or capital or financial markets generally, including
changes in interest or exchange rates, (ii) changes occurring after
the date hereof in law (or the interpretation thereof) or changes
to U.S. GAAP occurring after the date hereof that, in each case,
generally affect the biotechnology or biopharmaceutical industries,
(iii) acts of war, sabotage or terrorism occurring after the date
hereof, or any escalation or worsening of any such acts of war,
sabotage or terrorism, or (iv) earthquakes, hurricanes, floods or
other natural disasters occurring after the date hereof, provided,
however, that any Effect referred to in clauses (i)-(iv) above
shall be taken into account in determining whether a Material
Adverse Effect has occurred or would be reasonably likely to occur
only if such Effect has had or would be reasonably likely to have a
disproportionate effect on the Company or its Subsidiaries, taken
as a whole, compared to other companies in the general industries
in which the Company or any of its Subsidiaries
operate.
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“Material Permits” shall
have the meaning ascribed to such term in Section
3.1(m).
“Per Share Purchase Price”
equals $2.60, subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this
Agreement.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Proceeding” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or
threatened.
“Products” means products
and/or services currently or previously researched, designed,
developed, manufactured, performed, licensed, packaged, labeled,
tested, marketed, processed, handled, sold, stored, distributed,
transported, provided and/or otherwise made available by or on
behalf of the Company or its Subsidiaries.
“Purchaser Party” shall
have the meaning ascribed to such term in Section 4.6.
“Regulation FD” means
Regulation FD promulgated by the Commission pursuant to the
Exchange Act, as such Regulation may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted
by the Commission having substantially the same purpose and effect
as such Regulation.
“Required Approvals” shall
have the meaning ascribed to such term in Section
3.1(e).
“Requisite Stockholder
Approval” means that the issuance and sale of the
Third Closing Shares pursuant to and in accordance of this
Agreement shall have been approved by the requisite affirmative
vote of the holders of shares of Common Stock present and voting at
the Stockholders’ Meeting (as defined below) in accordance
with applicable Law.
“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“Rule 424” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
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“SEC Reports” shall have
the meaning ascribed to such term in Section 3.1(h).
“Second Closing” means the
closing of the purchase and sale of the Shares pursuant to Section
2.1(b), if and to the extent such closing is actually
consummated.
“Second Closing Date”
means the date on which the Second Closing is consummated, if and
to the extent such closing is actually consummated pursuant to
Section 2.1(b).
“Second Closing Shares”
means 6,303,814 shares of Common Stock, which for the avoidance of
doubt, represents a number of shares of Common Stock equal to (x)
19.9% of the total issued and outstanding Common Stock as of the
date of the Agreement, minus (y) the First Closing
Shares.
“Second Closing Purchase
Price” means $16,389,916.40, which for the avoidance
of doubt is an amount equal to the product of (x) the Second
Closing Shares multiplied
by (y) the Per Share Purchase Price.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Shares” means,
collectively, the First Closing Shares, the Second Closing Shares
and the Third Closing Shares.
“Short Sales” means all
“short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not
be deemed to include locating and/or borrowing shares of Common Stock).
“Subscription
Amount” means, as to each Purchaser, its pro rata
share of the First Closing Purchase Price, Second Closing Purchase
Price and Third Closing Purchase Price, as specified below such
Purchaser’s name on the signature page of this Agreement and
next to the heading “Subscription Amount,” in United
States dollars and in immediately available funds. The parties
agree that the Subscription Amounts may be amended on the signature
page of this Agreement to account for the Second Closing Purchase
Price and Third Closing Purchase Price.
“Subsidiary” means any
subsidiary of the Company as set forth in the SEC Reports, and
shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date
hereof.
“Third Closing” means the
closing of the purchase and sale of the Shares pursuant to Section
2.1(c), if and to the extent such closing is actually
consummated.
“Third Closing Date” means
the date on which the Third Closing is consummated, if and to the
extent such closing is actually consummated pursuant to Section
2.1(c).
“Third Closing Shares”
means 1,965,417.00 shares of Common Stock.
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“Third Closing Purchase
Price” means $5,110,084.20, which for the avoidance of
doubt is an amount equal to the product of (x) the Third Closing
Shares multiplied
by (y) the Per Share Purchase Price.
“Trading
Day” means a day on which the principal Trading Market
is open for trading.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE MKT,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange (or any
successors to any of the foregoing).
“Transaction Documents”
means this Agreement, the Registration Rights Agreement and any
other documents or agreements executed in connection with the
transactions contemplated hereunder.
“Transfer Agent” means
Equity Stock Transfer LLC, the current transfer agent of the
Company, with a mailing address of 000 Xxxx 00xx Xxxxxx, Xxxxx 000,
Xxx Xxxx, Xxx Xxxx 00000 and any successor transfer agent of the
Company.
ARTICLE II.
(a) First
Closing. Upon satisfaction of the covenants and conditions
set forth in Sections 2.2 and 2.3, the First Closing shall occur at
10:00am (New York City time) on April 27, 2017 at the offices of
Company Counsel, or at such other time and location as the parties
shall mutually agree in writing. At the First Closing, upon the
terms and subject to the conditions set forth herein, the Company
agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase, the First Closing Shares in exchange for payment
by the Purchasers, severally and not jointly, of an aggregate
amount equal to the First Closing Purchase Price. Each
Purchaser’s applicable Subscription Amount as set forth on
the signature page hereto executed by such Purchaser shall be made
available for “Delivery Versus Payment” settlement with
the Company or its designee. At the First Closing, the Company
shall deliver to each Purchaser its respective pro rata share of
the First Closing Shares (based on such Purchaser’s
applicable Subscription Amount relative to the aggregate First
Closing Purchase Price) (such Purchaser’s “Applicable First Closing
Shares”), and the Company and each Purchaser shall
deliver the other items set forth in Section 2.2 deliverable at the
First Closing. Settlement of the First Closing Shares shall occur
via “Delivery Versus Payment”
(“DVP”) (i.e., on the First Closing Date,
the Company shall issue the Applicable First Closing Shares
registered in each Purchaser’s name and address and released
by the Transfer Agent directly to the account(s) identified by each
Purchaser, and payment therefor shall be made by each Purchaser (by
wire transfer to the Company)). All First Closing Shares shall be
delivered to the Purchasers hereunder free and clear of all Liens,
other than restrictions on transferability arising under applicable
federal securities laws.
(b) Second
Closing. The Second Closing shall occur at 10:00am (New York
City time) on third (3rd) Business Day
following the date on which all of the conditions set forth in
Section 2.3 shall have been satisfied or, if applicable, waived by
the party entitled to the benefit thereof, or at such other time
and location as the parties shall mutually agree in writing;
provided, that in
the event that the parties do not hold the Second Closing on or
prior to the date that is thirty (30) days after the First Closing
Date (the “Outside
Date”), the parties’ rights with regard to the
Second Closing and the possible issuance of the Second Closing
Shares by the Company to the Purchasers at the Second Closing shall
terminate and be of no further force or effect. The parties each
agree to use their reasonable best efforts to cause the
satisfaction of all the conditions required for the Second Closing
to occur, and to consummate the Second Closing, as promptly as
possible after the First Closing, and in any case within fourteen
(14) days after the First Closing Date; provided, that the foregoing
covenant shall not change the Outside Date. At the Second Closing,
upon the terms and subject to the conditions set forth herein, the
Company agrees to sell, and the Purchasers, severally and not
jointly, agree to purchase, the Second Closing Shares in exchange
for payment by the Purchasers, severally and not jointly, of an
aggregate amount equal to the Second Closing Purchase Price. Each
Purchaser’s applicable Subscription Amount as set forth on
the signature page hereto executed by such Purchaser shall be made
available for “Delivery Versus Payment” settlement with
the Company or its designee. At the Second Closing, the Company
shall deliver to each Purchaser its respective pro rata share of
the Second Closing Shares (based on such Purchaser’s
applicable Subscription Amount relative to the aggregate Second
Closing Purchase Price) (such Purchaser’s “Applicable Second Closing
Shares”), and the Company and each Purchaser shall
deliver the other items set forth in Section 2.2 deliverable at the
Second Closing. Settlement of the Second Closing Shares shall occur
via “Delivery Versus Payment”
(“DVP”) (i.e., on the Second Closing
Date, the Company shall issue the Applicable Second Closing Shares
registered in each Purchaser’s name and address and released
by the Transfer Agent directly to the account(s) identified by each
Purchaser, and payment therefor shall be made by each Purchaser (by
wire transfer to the Company)). All Second Closing Shares shall be
delivered to the Purchasers hereunder free and clear of all Liens,
other than restrictions on transferability arising under applicable
federal securities laws.
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(c) Third
Closing. If the Second Closing is consummated, then the
Third Closing shall occur at 10:00 am (New York City time) on the
third (3rd) Business Day
following the date on which all of the conditions set forth in
Section 2.3 shall have been satisfied or, if applicable, waived by
the party entitled to the benefit thereof, or at such other time
and location as the parties shall mutually agree in writing;
provided, that if
the Requisite Stockholder Approval is not successfully obtained at
the Stockholders’ Meeting (for clarity, the first such
meeting to occur), then the parties’ rights with regard to
the Third Closing and the possible issuance of the Third Closing
Shares by the Company to the Purchasers at the Third Closing shall
terminate and be of no further force or effect. At the Third
Closing, upon the terms and subject to the conditions set forth
herein, the Company agrees to sell, and the Purchasers, severally
and not jointly, agree to purchase, the Third Closing Shares in
exchange for payment by the Purchasers, severally and not jointly,
of an aggregate amount equal to the Third Closing Purchase Price.
Each Purchaser’s applicable Subscription Amount as set forth
on the signature page hereto executed by such Purchaser shall be
made available for “Delivery Versus Payment” settlement
with the Company or its designee. At the Third Closing, the Company
shall deliver to each Purchaser its respective pro rata share of
the Third Closing Shares (based on such Purchaser’s
applicable Subscription Amount relative to the aggregate Third
Closing Purchase Price) (such Purchaser’s “Applicable Third Closing
Shares”), and the Company and each Purchaser shall
deliver the other items set forth in Section 2.2 deliverable at the
Third Closing. Settlement of the Third Closing Shares shall occur
via “Delivery Versus Payment”
(“DVP”) (i.e., on the Third Closing Date,
the Company shall issue the Applicable Third Closing Shares
registered in each Purchaser’s name and address and released
by the Transfer Agent directly to the account(s) identified by each
Purchaser, and payment therefor shall be made by each Purchaser (by
wire transfer to the Company)). All Third Closing Shares shall be
delivered to the Purchasers hereunder free and clear of all Liens,
other than restrictions on transferability arising under applicable
federal securities laws.
(a) On
or prior to each Closing Date, the Company shall deliver or cause
to be delivered to each Purchaser the
following:
(i) a
legal opinion of Company Counsel, in form and substance reasonably
acceptable to the Purchasers;
(ii)
the Company’s wire instructions, on Company letterhead and
executed by the Chief Executive Officer or Chief Financial
Officer;
(iii)
a copy of the irrevocable instructions to the Transfer Agent
instructing the Transfer Agent to deliver to such Purchaser, on an
expedited basis, a certificate evidencing the number of such
Purchaser’s Applicable First Closing Shares, Applicable
Second Closing Shares, or Applicable Third Closing Shares, as
applicable, registered in the name of such Purchaser;
(iv) as
to the Third Closing alone, evidence satisfactory to the Purchasers
that the Requisite Stockholder Approval has been
obtained;
(v)
as to the Second Closing and the Third Closing alone, the Company
shall have delivered to each Purchaser a certificate, signed by a
duly elected officer of the Company, certifying as of the
applicable Closing Date as to the satisfaction of each of the
applicable conditions set forth in Section 2.3(b)(i)-(iv), (vii)
and (viii); and
(vi)
as to the First Closing alone, the Registration Rights Agreement,
in form and substance reasonably acceptable to the Purchasers,
executed by a duly authorized officer of the Company; provided,
that the Purchasers may waive delivery of such Registration Rights
Agreement at the First Closing, in which case, the provisions of
Section 4.14 shall apply.
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(b) On
or prior to each Closing Date, each Purchaser shall deliver or
cause to be delivered to the Company such Purchaser’s
Subscription Amount, which shall be made available for
“Delivery Versus Payment” settlement with the Company
or its designee.
(a) The
obligations of the Company hereunder in connection with each
Closing are subject to the following conditions being
met:
(i) the
accuracy in all material respects (or, to the extent
representations or warranties are qualified by materiality or
Material Adverse Effect, in all respects) on the applicable Closing
Date of the representations and warranties of the Purchasers
contained herein (unless as of a specific date therein in which
case they shall be accurate in all material respects as of such
date);
(ii) all
obligations, covenants and agreements of each Purchaser required to
be performed at or prior to the applicable Closing Date shall have
been performed in all material respects; and
(iii) the
delivery by each Purchaser of the items set forth in Section 2.2(b)
of this Agreement.
(b) The
respective obligations of the Purchasers hereunder in connection
with each Closing are subject to the following conditions being
met:
(i) the
accuracy in all material respects (or, to the extent
representations or warranties are qualified by materiality or
Material Adverse Effect, in all respects) on the applicable Closing
Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein in which case they
shall be accurate in all material respects as of such
date);
(ii) all
obligations, covenants and agreements of the Company required to be
performed at or prior to the applicable Closing Date shall have
been performed in all material respects;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the
Company since the date hereof;
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(v) from
the date hereof to the applicable Closing Date, trading in the
Common Stock shall not have been suspended by the Commission or the
Company’s principal Trading Market, and, at any time prior to
the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades
are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each
case, in the reasonable judgment of such Purchaser, makes it
impracticable or inadvisable to purchase the Shares at the
Closing;
(vi) as
to the Second Closing alone, the Purchasers shall have completed
due diligence in a manner satisfactory to the Purchasers in their
sole discretion;
(vii)
as to the Third Closing alone, the Company shall have obtained the
Requisite Stockholder Approval;
(viii)
all authorizations, approvals, or permits, if any, of any
governmental authority or regulatory body of the United States or
of any state in the United States that are binding upon the Company
and that are required in connection with the lawful sale and
issuance of the Shares at the applicable Closing pursuant to this
Agreement shall have been duly obtained and shall be effective on
and as of the date of the applicable Closing, and no stop order or
other order enjoining the sale of the Shares shall have been issued
and no proceedings for such purpose shall be pending or, to the
knowledge of the Company, threatened by the Commission, or any
commissioner of corporations or similar officer of any state in the
United States having jurisdiction over this transaction;
and
(ix) the
sale and issuance of the Shares shall be legally permitted by all
laws and regulations to which Purchasers and the Company are
subject.
ARTICLE III.
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(f)
Issuance of Shares.
The Shares are duly authorized and, when issued and paid for in
accordance with the applicable Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of
all Liens, other than restrictions on transferability under
applicable federal securities laws. Each holder of the Shares will
not be subject to personal liability by reason of being such a
holder. The Shares are not and will not be subject to any
preemptive rights held by any holders of any security of the
Company or any similar contractual rights granted by the Company to
any Person. All corporate action required to be taken for the
authorization, issuance and sale of the Shares has been duly and
validly taken. The Shares shall be issued by the Company in
compliance with all federal and state securities laws.
(i)
As of the close of business on the date immediately prior to the
date of this Agreement (the “Capitalization Date”),
the authorized capital stock of the Company consists of 150,000,000
shares of Common Stock, of which 38,442,051 such shares of Common
Stock are issued and outstanding (the “Outstanding Common
Stock”).
(ii) As
of the close of business on the Capitalization Date, except as set
forth on Schedule
3.1(g)(ii) of the Disclosure Schedule, there are no Equity
Interests of the Company issued and outstanding or subject to
issuance except as set forth on Schedule 3(h)(ii) of the Disclosure
Schedules. Schedule 3(h)(ii) of the Disclosure Schedules sets forth
(x) a list of all stock options granted, awarded or otherwise
outstanding as of the Capitalization Date (including, among other
things, the name of grantee, number and type of Equity Interests
subject to the option, exercise price, xxxxx xxxxx, market price on
grant date, vesting schedule and grant date for each such listed
stock option) (collectively, the “Outstanding Company
Options”), (y) a list of all restricted stock grants
which are outstanding as of the Capitalization Date (including the
name of grantee, number and type of Equity Interests granted,
purchase price per share and grant date for each such listed
restricted stock grant) (collectively, the “Outstanding Company
RSAs”) and (z) a list of all warrants to purchase
capital stock of the Company which are outstanding as of the
Capitalization Date (including the name of the holder of, exercise
price for, expiration date of and number and type of Equity
Interests issuable under each such listed warrant) (collectively,
the “Outstanding
Company Warrants”).
12
(iii) The
Company has not issued any Equity Interests since its most recently
filed periodic or current report under the Exchange Act, other than
pursuant to the exercise of employee stock options under the
Company’s stock option plans, the issuance of shares of
Common Stock to employees pursuant to the Company’s employee
stock purchase plans and pursuant to the conversion and/or exercise
of other Equity Interests outstanding as of the date of the most
recently filed periodic report under the Exchange Act. No Person
has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except for
the Outstanding Company Options, the Outstanding Company RSAs, the
Outstanding Company Warrants and as a result of the purchase and
sale of the Shares, there are no outstanding options, warrants,
scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common
Stock or other Equity Interests, or contracts, commitments,
understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of
Common Stock or other Equity Interests. Except with respect to the
Outstanding Company Options and the Outstanding Company RSAs and
the related award agreements to which the Company is a party, there
are no obligations (whether outstanding or authorized) of the
Company or any Company Subsidiary requiring the repurchase of any
Equity Interests of the Company. The issuance and sale of the
Shares will not obligate the Company to issue shares of Common
Stock or other Equity Interests to any Person (other than the
Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset
price under any of such Equity Interests. All of the outstanding
Equity Interests of the Company are duly authorized, validly
issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and none of
such outstanding Equity Interests was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase
Equity Interests. The offers and sales of the Company’s
Equity Interests were at all relevant times either registered under
the Securities Act and the applicable state securities or Blue Sky
laws or, based in part on the representations and warranties of the
applicable purchasers, exempt from such registration requirements.
No further approval or authorization of any stockholder or the
Board of Directors is required for the issuance and sale of the
Shares pursuant to the Transaction Documents other than, in respect
of the Third Closing Shares alone, the Requisite Stockholder
Approval. Except as listed on Schedule 3.1(g)(ii), there are no
stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s Equity Interests to
which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s holders of Equity
Interests.
13
14
15
(i) The
Company and the Subsidiaries have, or have rights to (A) use, all
patents and patent applications (collectively, “Patents”); trademarks,
trademark applications, service marks, logos, packaging designs,
Internet domain names and trade names (collectively,
“Marks”); know-how and
trade secrets including without limitation any inventions (whether
or not patentable) (collectively, “Trade Secrets”),
copyrights, licenses and other intellectual property rights and
similar rights necessary or required for use in connection with
their respective businesses as described in the SEC Reports
(“Business”) and (B) to
sell all Products, and which the failure to do so could have a
Material Adverse Effect (collectively, the “Intellectual Property
Rights”). None of, and neither the Company nor any
Subsidiary has received a notice (written or otherwise) that any
of, the Intellectual Property Rights has expired, terminated or
been abandoned, or is expected to expire or terminate or be
abandoned, within two (2) years from the date of this Agreement,
except as could not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any Subsidiary has
received, since the date of the latest audited financial statements
included within the SEC Reports, a written notice of a claim or
otherwise has any knowledge that the Intellectual Property Rights
violate or infringe upon the rights of any Person, except as could
not reasonably be expected to result in a Material Adverse Effect.
All Intellectual Property Rights owned by or exclusively licensed
to the Company or the Subsidiaries that have been issued by, or
registered with, or the subject of an application filed with, as
applicable, the U.S. Patent and Trademark Office, the U.S.
Copyright Office or any similar office or agency anywhere in the
world are currently in material compliance with formal legal
requirements (including without limitation, as applicable, payment
of filing, assignment recordations, examination and maintenance
fees, inventor declarations, proofs of working or use, timely
post-registration filing of affidavits of use and incontestability,
and renewal applications). To the knowledge of the Company, all
such Intellectual Property Rights are valid and enforceable and
there is no existing infringement by another Person of any of the
Intellectual Property Rights. The Company and its Subsidiaries have
taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(ii)
No Patent has been or is now involved in any reissue,
re-examination, inter-partes review, post-grant review, or
opposition proceeding; all products made, used or sold under the
Patents have been marked with the proper patent
notice.
(iii) There
are no pending or, to the knowledge of the Company, threatened
claims against the Company alleging that any of the operation of
the Business or any activity by the Company, or manufacture, sale,
offer for sale, importation, and/or use of any Product infringes or
violates (or in the past infringed or violated) the rights of
others (“Third Party
IP Assets”) or constitutes a misappropriation of (or
in the past constituted a misappropriation of) any subject matter
of any Third Party IP Assets or that any of the Intellectual
Property Rights are invalid or unenforceable.
(iv)
Neither the operation of the Business, nor any activity by the
Company, nor manufacture, use, importation, offer for sale and/or
sale of any Product, to the knowledge of the Company, infringes or
violates (or in the past infringed or violated) any Third Party IP
Asset or constitutes a misappropriation of (or in the past
constituted a misappropriation of) any subject matter of any Third
Party IP Asset.
(v) The
Company owns all
rights in or to all inventions, improvements, ideas, discoveries,
writings, works of authorship, other intellectual property, and
information relating to the Business that have been created or
developed by each employee, consultant or contractor of the Company
or the Subsidiaries within the scope of employment or engagement,
as applicable, and all Intellectual Property Rights related
thereto; in each case where a Patent is held by the Company or the
Subsidiaries by assignment, the assignment has been duly recorded
with the U.S. Patent and Trademark Office and all similar offices
and agencies anywhere in the world in which foreign counterparts
are registered or issued.
(vi)
Schedule 3.1(o)(vi) contains a complete and accurate list of all
Patents owned by the Company and the Subsidiaries or used or held
for use by the Company or the Subsidiaries in the Business,
registered and material unregistered Marks owned by the Company or
the Subsidiaries or used or held for use by the Company or the
Subsidiaries in the Business and registered and material
unregistered copyrights owned by the Company or the Subsidiaries or
used or held for use by the Company or the Subsidiaries in the
Business.
16
(vii)
Each agreement, contract, plan, lease, arrangement or commitment
entered into by the Company or the Subsidiaries during the ninety
(90) day period immediately following the date of this Agreement
that is material to the Business will be a valid and binding
agreement of the Company or the Subsidiary that is party to such
agreement and is in full force and effect, and, except as set forth
in the SEC Reports, neither the Company, the Subsidiary nor, to the
knowledge of the Company, any other party thereto is in default or
breach in any respect under the terms of any such agreement,
contract, plan, lease, arrangement or commitment, except for any
such defaults or breaches that could not reasonably be expected to
result in a Material Adverse Effect. The Company has not received
written notice that any counterparty to any such agreement intends
to exercise any change of control provision or any other provisions
for cancellation or termination which may be triggered by the
transactions contemplated by this Agreement.
(p)
Insurance. The
Company and the Subsidiaries are insured by insurers of
nationally-recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
businesses in which the Company and the Subsidiaries are engaged,
including, but not limited to, directors and officers insurance
coverage. Neither the Company nor any Subsidiary has received any
notice of cancellation of any such insurance, nor, to the
Company’s knowledge, will it or any Subsidiary be unable to
renew their respective existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business without a
significant increase in cost.
17
(s)
Certain Fees. No
brokerage or finder’s fees or commissions are or will be
payable by the Company, any Subsidiary or Affiliate of the Company
to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. The Company
has not made any direct or indirect payments (in cash, securities
or otherwise) to: (i) any person, as a finder’s fee,
consulting fee or otherwise, in consideration of such person
raising capital for the Company or introducing to the Company
persons who raised or provided capital to the Company; (ii) any
FINRA member; or (iii) any person or entity that has any direct or
indirect affiliation or association with any FINRA member, within
the twelve months prior to the Execution Date. None of the net
proceeds of the Offering will be paid by the Company to any
participating FINRA member or its affiliates, except as
specifically authorized herein.
18
(x)
Disclosure. The SEC
Reports, when they were filed with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the
applicable rules and regulations, and none of such documents, when
they were filed with the Commission, contained any untrue statement
of a material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under
which they were made not misleading. There are no documents
required to be filed with the Commission in connection with the
transaction contemplated hereby that (x) have not been filed as
required pursuant to the Securities Act or (y) will not be filed
within the requisite time period. The press releases disseminated
by the Company during the twelve months preceding the date of this
Agreement taken as a whole do not contain any untrue statement of a
material fact or omit 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
and when made, not misleading.
(y)
No Integrated
Offering. Neither the Company, nor any of its Affiliates,
nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would
cause this offering of the Shares pursuant to the Transaction
Documents to be integrated with prior offerings by the Company for
purposes of any applicable law, regulation or stockholder approval
provisions, including, without limitation, under the rules and
regulations of any Trading Market on which any of the securities of
the Company are listed or designated.
(z)
Solvency. Based on
the consolidated financial condition of the Company as of the
Closing Date, after giving effect to the receipt by the Company of
the proceeds from the sale of the Shares hereunder, (i) the fair
saleable value of the Company’s assets exceeds the amount
that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the
Company, consolidated and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of
the Company, together with the proceeds the Company would receive,
were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all
amounts on or in respect of its liabilities when such amounts are
required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in
respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the
Closing Date. The SEC Reports sets forth as of the date hereof all
outstanding secured and unsecured indebtedness of the Company or
any Subsidiary, or for which the Company or any Subsidiary has
commitments.
19
(aa)
Tax Status. Except
as set forth on Schedule 3.1(aa) of the Disclosure Schedule, the
Company and its Subsidiaries each (i) has timely and properly filed
all United States federal, state, local and foreign Tax returns,
Tax reports, information returns, declarations of estimated Tax and
other declarations and statements with respect to Taxes
(collectively, the “Tax Returns”) required to
be filed by it, (ii) such Tax Returns are true, correct and
complete in all material respects and the Company has paid all
Taxes and other governmental assessments and charges that are
material in amount and required to be paid (whether disputed or
not) by it, whether or not shown on the Tax Returns to be due, and
(iii) has set aside on its books provision reasonably adequate for
the payment of all material Taxes for periods subsequent to the
periods to which such Tax Returns 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 or of any
Subsidiary know of no basis for any such claim. The provisions for
Taxes payable, if any, shown on the financial statements filed with
the SEC Reports are sufficient for all accrued and unpaid taxes,
whether or not disputed, and for all periods to and including the
dates of such consolidated financial statements. Neither the
Company nor any Subsidiary of the Company is a party to any claim,
dispute, audit, pending action or proceeding, nor is any such
claim, dispute, action or proceeding threatened by any Taxing
authority, for the assessment or collection of any Taxes and no
claim for the assessment or collection of any Taxes has been
asserted against the Company or any Subsidiary that has not been
settled with all amounts due having been paid. Neither the
Company nor any Subsidiary of the Company has been notified that
either the Internal Revenue Service or any other Taxing authority
has raised any issues, or notified the Company or a Subsidiary of
an intent to raise such issues, in connection with any Tax Return
of the Company. No Lien with respect to Taxes has been filed and no
deficiency or addition to Taxes, interest or penalties for any
Taxes with respect to any income, properties or operations of the
Company or any Subsidiary of the Company has been proposed,
asserted or assessed against the Company or any Subsidiary of the
Company. The Company has never been a “United States real
property holding corporation” as defined in
Section 897(c)(2) of the Internal Revenue Code of 1986, as
amended (the “Code”) and
Section 1.897-2(b) of the Treasury Regulations promulgated
thereunder. The Company and each of its Subsidiaries has complied
in all material respects with all applicable Laws relating to the
payment and withholding of Taxes, including sales and use Taxes,
and has withheld and paid over all amounts required by Law to be
withheld and paid from the wages or salaries of employees, and
neither the Company nor any of its Subsidiaries is liable for any
Taxes for failure to comply with such Laws. No claim, or notice of
claim, has ever been made by an authority in a jurisdiction where
the Company or a Subsidiary of the Company does not file Tax
Returns that the Company or a Subsidiary is or may be subject to
taxation by that jurisdiction. Neither the Company nor any
Subsidiary of the Company has been a member of an affiliated group
of corporations within the meaning of Section 1504(a) of the
Code filing a combined federal income Tax return nor does the
Company or any Subsidiary of the Company have any liability for
Taxes of any other Person under Treasury Regulations
§ 1.1502-6 (or any similar provision of foreign, state or
local Law) or otherwise, other than the consolidated group of which
the Company is currently the parent corporation. Neither the
Company nor any Subsidiary of the Company is a party to any Tax
allocation, indemnity or sharing arrangement. Neither the Company
nor any Subsidiary of the Company has engaged in any transaction
that could give rise to a disclosure obligation as a
“reportable transaction” under Section 6011 of the
Code and Treasury Regulations promulgated thereunder. Neither the
Company nor any Subsidiary of the Company will be required to
include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof)
ending after the Third Closing Date as a result of any: (i)
change in method of accounting for a taxable period ending on or
prior to the Third Closing Date; (ii) use of an improper method of
accounting for a taxable period ending on or prior to the Third
Closing Date; (iii) “closing agreement” as described in
Section 7121 of the Code (or any corresponding or similar provision
of U.S. state, local or non-U.S. income Tax law) executed on or
prior to the Third Closing Date; (iv) intercompany transactions or
any excess loss account described in Treasury Regulations under
Section 1502 of the Code (or any corresponding or similar provision
of U.S. state, local or non-U.S. income Tax law); (v) installment
sale or open transaction disposition made on or prior to the Third
Closing Date; (vi) prepaid amount received on or prior to the Third
Closing Date; (vii) election made under Section 108(i) of the Code
prior to the Third Closing; (viii) the application of Section
952(c)(2) of the Code; (ix) application of Section 951 of the Code
with respect to income earned or recognized or payments received
prior to the Third Closing; or (x) any similar election, action, or
agreement that would have the effect of deferring any liability for
Taxes of the Company or any of its Subsidiaries from any period
ending on or before the Third Closing Date to any period ending
after such date. The Company has not distributed stock of another
entity, and has not had its stock distributed by another entity, in
a transaction that was purported or intended to be governed in
whole or in part by Section 355 or 361 of the Code. The term
“Taxes”
means (A) all federal, state, local, foreign, and other net income,
gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, alternative or
add-on minimum taxes, customs, unclaimed property or escheat,
duties or other taxes, fees, assessments, or charges of any kind
whatsoever, together with any interest and any penalties, additions
to tax, or additional amounts with respect thereto and (B) any
liability for the payment of any amount of the type described in
the immediately preceding clause (A) as a result of
(1) being a “transferee” (within the meaning of
Section 6901 of the Code or any other applicable law) of
another Person, (2) being a member of an affiliated, combined,
consolidated or unitary group or (3) any contractual
liability.
20
(i) Since
January 1, 2011, each Product of the Company or the Subsidiaries
has been in all material respects: (i) formulated, developed,
designed, licensed, manufactured, tested, processed, handled,
stored, labeled, packaged, transported, marketed and advertised in
compliance with all applicable Laws and requirements, including,
but not limited to, the statutes and regulations enforced by the
U.S. Food and Drug Administration (“FDA”) and the
Federal Trade Commission (“FTC”) and (ii) in compliance
with all applicable Laws, rules and regulations relating to
registration, investigational use, premarket clearance, licensure,
or application approval, good manufacturing practices, good
laboratory practices, good clinical practices, product listing,
quotas, labeling, advertising, record keeping and filing of
reports.
(ii) Since
January 1, 2011, there have been no product holds, stop sales, or
other corrective action taken by the Company or its Subsidiaries
(or their agents) or requested or ordered or any adverse action
taken by any Governmental Authority relating to the Company, its
Subsidiaries, or their respective Products, and the Company or its
Subsidiaries have not initiated or participated in a recall, market
withdrawal, safety alert, dear health care professional letter or
other corrective action.
21
(iii) Since
January 1, 2011, there has been no pending, completed or, to the
Company's knowledge, threatened, claim, charge, complaint, or
Action against the Company or any of its Subsidiaries, and none of
the Company or any of its Subsidiaries has received any notice,
warning letter or other communication from the FDA, FTC, or any
other Governmental Authority, which: (i) contests the premarket
clearance, licensure, registration, or approval, use, development,
distribution, manufacture, packaging, testing, processing,
handling, sale, labeling and/or promotion of any Product, (ii)
withdraws its approval of, requests the recall, suspension, or
seizure of, or withdraws or orders the withdrawal of advertising or
sales promotional materials relating to, any Product, (iii) imposes
a clinical hold on any clinical investigation by the Company or any
of its Subsidiaries, (iv) enjoins production at any facility of the
Company or any of its Subsidiaries, (v) enters or proposes to enter
into a consent decree of permanent injunction with the Company or
any of its Subsidiaries, or (vi) otherwise alleges any violation of
any Laws, rules or regulations by the Company or any of its
Subsidiaries.
(iv)
Since January 1, 2011, the properties, business and operations of
the Company and its Subsidiaries have been and are being conducted
in all material respects in accordance with all applicable Laws,
rules and regulations of the FDA or other Governmental Authority.
The Company has not been informed by the FDA that the FDA will
prohibit the development, marketing, sale, license or use in the
United States of any product proposed to be developed, produced or
marketed by or on behalf of the Company or its Subsidiaries, nor
has the FDA expressed any concern as to approving or clearing for
marketing any product or product claim being, or proposed to be,
developed or used by the Company. All Products claiming to be or
containing a New Dietary Ingredient (NDI) or having an ingredient
that is claimed to be Generally Recognized as Safe (GRAS) have
complied with the applicable statutes and regulations enforced by
the FDA
(ee)
Office of Foreign Assets
Control. Neither the Company nor any Subsidiary nor, to the
Company's knowledge, any director, officer, agent, employee or
affiliate of the Company or any Subsidiary is currently subject to
any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department.
(gg)
Bank Holding Company
Act. Neither the Company nor any of its Subsidiaries or
Affiliates is subject to the Bank Holding Company Act of 1956, as
amended (the “BHCA”) and to regulation by the Board of
Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or
Affiliates owns or controls, directly or indirectly, five percent
(5%) or more of the outstanding shares of any class of voting
securities or twenty-five percent (25%) or more of the total equity
of a bank or any entity that is subject to the BHCA and to
regulation by the Federal Reserve. Neither the Company nor any of
its Subsidiaries or Affiliates exercises a controlling influence
over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal
Reserve.
22
(kk)
Regulation M
Compliance. The Company has not, and to its knowledge
no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Shares, (ii) sold, bid
for, purchased, or, paid any compensation for soliciting purchases
of, any of the Shares, or (iii) paid or agreed to pay to any Person
any compensation for soliciting another to purchase any other
securities of the Company.
23
(mm)
Warranties and Product
Liabilities. Since January 1, 2011, there have been no
claims against the Company or its Subsidiaries for product
liability, personal injury, property damage, indemnity, warranty or
other similar claims arising from the ingestion or other use of the
Products of the Company or its Subsidiaries. There are no material
Liabilities arising from any injury resulting from the ingestion or
other use of the Company’s Products, or arising from warranty
or other claims or returns with respect to any Product(s),
individually or in the aggregate. All Products have been designed,
developed, manufactured, labeled, packaged, processed, handled,
stored, advertised, marketed, sold, transported and/or distributed
so as to meet and comply in all material respects with all
applicable standards and requirements of any Governmental
Authority, product specifications, applicable licenses or
contractual commitments and express warranties.
(i) Each
Employee Plan that is intended to qualify under Section 401(a) of
the Code is so qualified and has received a favorable determination
or approval letter from the IRS with respect to such qualification,
or may rely on an opinion letter issued by the IRS with respect to
a prototype plan adopted in accordance with the requirements for
such reliance, or has time remaining for application to the IRS for
a determination of the qualified status of such Employee Plan for
any period for which such Employee Plan would not otherwise be
covered by an IRS determination and, to the knowledge of the
Company, no event or omission has occurred that would cause any
Employee Plan to lose such qualification.
(ii)
Each Employee Plan is, and has been operated in material compliance
with applicable laws and regulations and is and has been
administered in all material respects in accordance with applicable
laws and regulations and with its terms. No litigation or
governmental administrative proceeding, audit or other proceeding
(other than those relating to routine claims for benefits) is
pending or, to the knowledge of the Company, threatened with
respect to any Employee Plan or, to the knowledge of the Company,
any fiduciary or service provider thereof, and, to the knowledge of
the Company, there is no reasonable basis for any such litigation
or proceeding. All payments and/or contributions required to have
been made with respect to all Employee Plans either have been made
or have been accrued in accordance with the terms of the applicable
Employee Plan and applicable law. The Employee Plans satisfy in all
material respects any applicable minimum coverage and
discrimination requirements under the Code.
24
(iii) Neither
the Company nor any ERISA Affiliate has ever maintained,
contributed to, or been required to contribute to (a) any employee
benefit plan that is or was subject to Title IV of ERISA, Section
412 of the Code, Section 302 of ERISA, (b) a Multiemployer Plan,
(c) any funded welfare benefit plan within the meaning of Section
419 of the Code, (d) any “multiple employer plan”
(within the meaning of Section 210 of ERISA or Section 413(c) of
the Code), or (e) any “multiple employer welfare
arrangement” (as such term is defined in Section 3(40) of
ERISA), and neither the Company nor any ERISA Affiliate has ever
incurred any liability under Title IV of ERISA that has not been
paid in full.
(iv)
None of the Employee Plans provides health care or any other
non-pension benefits to any employees after their employment is
terminated (other than as required by Part 6 of Subtitle B of Title
I of ERISA or similar state law) and the Company has never promised
to provide such post-termination benefits, other than employment
agreements or offer letters with certain of the company’s
officers that provide for post-termination health
benefits.
(v) The
per share exercise price of each Company Option is no less than the
fair market value of a share of Common Stock on the date of grant
of such Company Option determined in a manner consistent with
Section 409A of the Code. Each Employee Plan that constitutes in
any part a nonqualified deferred compensation plan within the
meaning of Section 409A of the Code has been operated and
maintained in all material respects in operational and documentary
compliance with Section 409A of the Code and applicable guidance
thereunder. No payment to be made under any Employee Plan is, or to
the knowledge of the Company, will be, subject to the penalties of
Section 409A(a)(1) of the Code.
(vi) No
Employee Plan is subject to the laws of any jurisdiction outside
the United States.
(vii)
Neither the execution and delivery of this Agreement, the Requisite
Stockholder Approval, nor the consummation of the transactions
contemplated hereby could (either alone or in conjunction with any
other event): (a) result in, or cause the accelerated vesting,
payment, funding or delivery of, or increase the amount or value
of, any payment or benefit to any employee, officer, director or
other service provider of the Company or any of its Subsidiaries;
(b) result in any “parachute payment” as defined in
Section 280G(b)(2) of the Code (whether or not such payment is
considered to be reasonable compensation for services rendered); or
(c) result in a requirement to pay any tax “gross-up”
or similar “make-whole” payments to any employee,
director or consultant of the Company or any
Subsidiary.
25
(viii)
No Employee Plan, individually or collectively, could give rise to
the payment of any amount that would not be deductible pursuant to
Section 162(m) of the Code or any other provision of the Code or
any similar foreign law, as a result of the transactions
contemplated by this Agreement alone or together with any other
event.
26
(d) Experience
of Such Purchaser. Such
Purchaser, either alone or together with its representatives, has
such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Shares, 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 Shares
and, at the present time, is able to afford a complete loss of such
investment.
(e)
Access to
Information. Such Purchaser
acknowledges that it has had the opportunity to review the
Transaction Documents (including all exhibits and schedules
thereto) and the SEC Reports and has been afforded, (i) the
opportunity to ask such questions as it has deemed necessary of,
and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Shares
and the merits and risks of investing in the Shares; (ii) access to
information about the Company and its financial condition, results
of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense
that is necessary to make an informed investment decision with
respect to the investment.
(f)
Certain
Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, such Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with such
Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during
the period commencing as of the time that such Purchaser first
received a term sheet (written or oral) from the Company or any
other Person representing the Company setting forth the material
pricing terms of the transactions contemplated hereunder and ending
immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such
Purchaser’s assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets,
the representation set forth above shall only apply with respect to
the portion of assets managed by the portfolio manager that made
the investment decision to purchase the Shares covered by this
Agreement. Other than to other Persons party to this Agreement or
to such Purchaser’s representatives, including, without
limitation, its officers, directors, partners, legal and other
advisors, employees, agents and Affiliates, such Purchaser has
maintained the confidentiality of all disclosures made to it in
connection with this transaction (including the existence and terms
of this transaction).
27
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED,
SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE
COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED TO THE EXTENT THAT SUCH OPINION IS REQUIRED PURSUANT
TO THAT CERTAIN COMMON STOCK PURCHASE AGREEMENT UNDER WHICH THE
SECURITIES WERE ISSUED.
28
The
Company acknowledges and agrees that the representations contained
in this Section 3.2 shall not modify, amend or affect such
Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of
the transactions contemplated hereby.
ARTICLE IV.
(a) Until
the time that no Purchaser owns Shares, the Company covenants to
timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange
Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.
(b) From
the date of this Agreement until the earlier of the Second Closing
Date or the Outside Date, the Company shall, and shall cause its
Subsidiaries to (i) provide to each Purchaser and their
respective officers, directors, employees, accountants,
consultants, legal counsel, investment bankers, advisors and
authorized agents (collectively, the “Purchaser
Representatives”) reasonable access during normal
business hours in such a manner as not to interfere unreasonably
with the operation of any business conducted by the Company and its
Subsidiaries, upon prior written notice to the Company, to the
officers, employees, properties, offices and other facilities of
the Company and its Subsidiaries and to the books and records
thereof, (ii) use commercially reasonable efforts to furnish
during normal business hours upon prior notice such information
concerning the business, properties, contracts, assets and
liabilities of the Company and its Subsidiaries as each Purchaser
or their respective Purchaser Representatives may reasonably
request; provided,
that the Company shall not be required to (or to cause any
Subsidiary to) afford such access or furnish such information to
the extent that the Company reasonably believes in good faith that
doing so would (A) result in the loss of attorney-client, work
product or other privilege, (B) result in the disclosure of any
trade secrets of third parties or violate any obligations of the
Company or any of its Subsidiaries with respect to confidentiality
to any third party or otherwise breach, contravene or violate any
then-effective contract to which the Company or any of its
Subsidiaries is a party, or (C) breach, contravene or violate any
applicable Law.
(c) Following
the Second Closing, if any Purchaser is not then-entitled to
nominate a Purchaser Nominee (as defined below), such Purchaser
shall be entitled to consult with and advise management of the
Company on significant business issues, including
management’s proposed annual operating plans, and management
will meet with such Purchaser regularly during each year at the
Company’s facilities at mutually agreeable times for such
consultation and advice and to review progress in achieving said
plans, which advice the Company shall not be required to implement
or otherwise incorporate into its operations.
29
(d) Following
the Second Closing, each Purchaser may examine the books and
records of the Company and inspect its facilities and may request
information at reasonable times and intervals concerning the
general status of the Company’s financial condition and
operations, provided that access to highly confidential proprietary
information and facilities need not be provided.
(e) With
respect to Sections 4.1(b), (c) and (d), the following shall
apply:
(i) All
of such information shall be treated as confidential information
and shall not be disclosed by the Purchasers to any other Person
(other than such Purchaser’s Purchaser Representatives);
provided that each
such Purchaser Representative shall be informed that such
confidential information is strictly confidential and subject to
confidentiality restrictions and to agree not to disclose or use
such information except in accordance with such restrictions;
provided, that the
foregoing shall not prevent the disclosure of any information that
is required to be disclosed by order of a court of competent
jurisdiction, administrative body or other Governmental Authority,
or by subpoena, summons or legal process, or by law, rule or
regulation, provided that, to the extent
permitted by Law, the Purchaser or Purchaser Representative
required to make such disclosure shall provide to the Board of
Directors prompt notice of such disclosure (other than any such
disclosure required by any administrative body or other
Governmental Authority in the exercise of its regulatory or other
oversight authority with respect to such Purchaser or Purchaser
Representative). The confidentiality obligations herein shall, with
respect to any particular Purchaser, expire on the second
(2nd)
anniversary of the date on which such Purchaser ceases to hold any
Shares.
(ii)
In the event that any Purchaser ceases to hold at least 33.33% of
the Shares purchased hereunder by such Purchaser at the Closings
(after giving effect to any share splits, reclassifications or
similar corporate transactions), the Company shall cease to have
any obligations under Sections 4.1(b), (c) and (d) with respect to
such Purchaser and its Purchaser Representatives. For the avoidance
of doubt, in any such instance, the Company’s obligations in
respect of the other Purchasers’ rights in this Section 4.1
shall remain unaffected.
(f) The
rights set forth in this Section 4.1 shall terminate upon the
consummation of a Change of Control.
30
4.3 Securities
Laws Disclosure; Publicity. The
Company shall (a) prior to 8:00 a.m. (New York City time) on the
Trading Day immediately following the date hereof, issue a press
release (the “Press
Release”) in form and
substance reasonably acceptable to the Purchasers disclosing the
material terms of the transactions contemplated hereby, and (b)
file a Current Report on Form 8-K, describing the terms of the
transactions contemplated by the Transaction Documents in the form
required by the Exchange Act and attaching the material Transaction
Documents as exhibits thereto, with the Commission within the time
required by the Exchange Act (such filing, together with all
attachments and exhibits, the “8-K
Filing”). From and after
the issuance of the Press Release, the Company represents to the
Purchasers that it shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers by the
Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. In
addition, effective upon the issuance of such Press Release, the
Company acknowledges and agrees that any and all confidentiality or
similar obligations under any agreement, whether written or oral,
between the Company, any of its Subsidiaries or any of their
respective officers, directors, agents, employees or Affiliates on
the one hand, and any of the Purchasers or any of their Affiliates
on the other hand, shall terminate, except for the confidentiality
and similar obligations provided pursuant to Section 4.1 and
Section 4.11 and any confidentiality agreement referenced in
Section 4.11 or Section 5.2. The Company shall consult with
Purchasers, and consider in good faith any comments Purchasers may
have on, the 8-K Filing. Without limiting the generality of the
foregoing, from and after the date of this Agreement until the date
on which the Purchasers cease to hold any Shares, the Company shall
not, directly or indirectly, issue any press release or make any
filing with the Commission, in each case, to the extent such press
release or filing identifies any Purchaser or the transactions
contemplated by this Agreement, unless the Company first consults
with each Purchaser, and considers in good faith any comments that
any Purchaser may have on, such materials; provided,
that the Company may make any subsequent press release or filings
with the Commission that are substantially consistent in form with
any such materials previously approved by the Purchasers in the
manner provided for in this Section 4.3 without being required
to first consult the Purchasers as otherwise required in this
Section 4.3.
31
32
(a) From
the consummation of the First Closing until thirty (30) days after
the First Closing Date, or, if the Second Closing occurs before
thirty (30) days after the First Closing Date, then one hundred
eighty (180) days after the First Closing Date (such applicable
period, the “Restricted Period”),
neither the Company nor any Subsidiary shall issue, enter into any
agreement to issue or announce the issuance or proposed issuance of
any shares of Common Stock or Common Stock
Equivalents.
(b) During
the Restricted Period, the Company shall be prohibited from
effecting or entering into an agreement to effect any issuance by
the Company or any of its Subsidiaries of Common Stock or Common
Stock Equivalents (or a combination of units thereof) involving a
Variable Rate Transaction. “Variable Rate
Transaction” means a transaction in which the Company
(i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the
right to receive additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price
that is based upon and/or varies with the trading prices of or
quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities, or (B) with a
conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such debt
or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock or (ii) enters into,
or effects a transaction under, any agreement, including, but not
limited to, an equity line of credit, whereby the Company may issue
securities at a future determined price. Any Purchaser shall be
entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to
any right to collect damages.
(c) Notwithstanding
the foregoing, this Section 4.8 shall not apply in respect of an
Exempt Issuance, except that no Variable Rate Transaction shall be
an Exempt Issuance.
33
4.10
Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with
the other Purchasers, covenants that neither it nor any Affiliate
acting on its behalf or pursuant to any understanding with it will
execute any purchases or sales, including Short Sales of any of the
Company’s securities during the period commencing with the
execution of this Agreement and ending at such time that the
transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in
Section 4.3. Each Purchaser, severally and not jointly with
the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed
by the Company pursuant to the initial press release as described
in Section 4.3, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information
included in the Disclosure Schedule. Notwithstanding the
foregoing, with respect to any time when the Purchasers do not have
a right to designate Observers or Purchaser Nominees pursuant to
Section 4.11 or to seek information from the Company in accordance
with Section 4.1, the Company expressly acknowledges and agrees
that (i) no Purchaser makes any representation, warranty or
covenant hereby that it will not engage in effecting transactions
in any securities of the Company after the time that the
transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in
Section 4.3 (so long as such transactions comply with all
applicable Law and, if applicable, the Company’s xxxxxxx
xxxxxxx, securities trading and similar policies), (ii) no
Purchaser shall be restricted or prohibited from effecting any
transactions in any securities of the Company in accordance with
applicable securities laws from and after the time that the
transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in
Section 4.3 (so long as such transactions comply with all
applicable Law and, if applicable, the Company’s xxxxxxx
xxxxxxx, securities trading and similar policies) and (iii) no
Purchaser shall have any duty of confidentiality or duty not to
trade in the securities of the Company to the Company or its
Subsidiaries after the issuance of the initial press release as
described in Section 4.3 (other than, if applicable, under
confidentiality policies of the Company, any confidentiality
agreements referenced in Section 4.11 or Section 5.2 or the
confidentiality obligations set forth in Section 4.1).
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the covenant set forth
above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision
to purchase the Shares covered by this
Agreement.
34
(i) Following
the Second Closing, the Company shall allow two (2) individuals
(collectively, the “Observers”), with each
Purchaser being entitled to nominate one (1) Observer, to attend
all meetings of the Board of Directors in a non-voting capacity,
and in connection therewith, the Company shall give the Observers
copies of all notices, minutes, consents and other materials,
financial or otherwise, which the Company provides to the Board of
Directors, which copies shall be sent to the Observers at the same
time that they are sent to the Board of Directors; provided, however, that the Company
reserves the right to exclude the Observers from access to any
material or meeting or portion thereof if the Company believes,
upon written advice of outside legal counsel, that such exclusion
is reasonably necessary to preserve the attorney-client privilege
or is prohibited by applicable Law; and provided, further, that the Observers
shall enter into confidentiality agreements in mutually agreeable
form before any Observer may attend any meeting of the Board of
Directors or obtain any copies of the foregoing materials provided
to the Board of Directors. The good faith decision of the Board of
Directors with respect to the privileged or confidential nature of
such information shall be final and binding. The observer rights
applicable to any particular Purchaser provided by this Section
4.11(a)(i) shall terminate on the date on which such
Purchaser’s Purchaser Nominee is first actually appointed or
elected to the Board of Directors. For purposes of clarity, the
parties acknowledge and agree that, in the event the Second Closing
does not occur in accordance with the terms of this Agreement, this
Section 4.11 shall be null and void and the Purchasers shall have
no rights to designate Observers or Purchaser
Nominees.
(ii)
To the extent permitted by applicable law and the rules of the
principal exchange on which the Common Stock is then listed or
traded, following and conditioned upon the Second Closing, and in
any case only after the Company’s 2017 Annual Meeting of
Stockholders, each Purchaser shall, subject to the other terms of
this Section 4.11, have the right to nominate one (1) individual
for election to the Board of Directors (the “Purchaser Nominees”) in
each election of directors from and after the Company’s 2017
Annual Meeting of Stockholders. The number of Purchaser Nominees
shall not exceed two (2) individuals.
(iii)
If the Second Closing is consummated, (x) the Board of Directors
shall promptly expand the Board of Directors so that there are an
additional two (2) vacant seats on the Board of Directors and shall
fill such vacancies with the Purchaser Nominees and (y) the Company
shall take all action necessary to call, give notice of, convene
and hold a meeting of the stockholders of the Company to consider
and vote on a proposal to approve the issuance and sale of the
Third Closing Shares pursuant to and in accordance with the terms
of this Agreement (the “Stockholder Proposal”
and, such meeting, the “Stockholders’
Meeting”), including taking all action necessary to
file or cause to be filed with the Commission a proxy statement
(the “Proxy
Statement”) in respect of such Stockholders’
Meeting and Stockholder Proposal. The Stockholders’ Meeting
shall be held (on a date selected by the Company in consultation
with Purchasers) as promptly as practicable after the Second
Closing Date. The Board of Directors shall recommend that the
stockholders of the Company adopt and approve the Stockholder
Proposal and the Company shall include such recommendation in the
Proxy Statement.
35
(iv) The
Company shall use commercially reasonable efforts to cause the
Proxy Statement to comply in all material respects in form and
substance with the rules and regulations promulgated by the
Commission and to respond promptly to any comments of the
Commission or its staff with respect to the Proxy Statement. The
Purchasers shall furnish to the
Company all information concerning themselves and the Purchaser
Nominees as the Company may reasonably request in connection with
the preparation of the Proxy Statement or which may be required
under applicable Law. The Company shall promptly notify the
Purchasers upon the receipt of any comments from the Commission or
its staff or any request from the Commission or its staff for
amendments or supplements to the Proxy Statement, shall consult
with the Purchasers prior to responding to any such comments or
requests or filing any amendment or supplement to the Proxy
Statement, and shall provide the Purchasers with copies of all
correspondence between the Company and its representatives, on the
one hand, and the Commission and its staff, on the other
hand. The Company will
use commercially reasonable efforts to cause the Proxy Statement to
be mailed, or distributed electronically in compliance with the
Commission’s Notice and Access model, to all of the
stockholders of the Company as promptly as practicable following
the clearance of the Proxy Statement by the Commission (or
expiration of applicable period for comments). Notwithstanding
anything to the contrary stated above, prior to filing and mailing
the Proxy Statement (or any amendment or supplement thereto) or
responding to any comments of the Commission with respect thereto,
the Company shall provide the Purchasers a reasonable opportunity
to review and comment on such document or response and shall
discuss with the Purchasers and include in such document or
response comments reasonably proposed by the
Purchasers.
(v)
Each Purchaser will notify the Company promptly, and in any event
within two (2) Business Days, of any event that results in a
reduction in the number of shares of Common Stock that such
Purchaser beneficially owns, which notice will set forth the number
of Shares beneficially owned by such Purchaser immediately
following the occurrence of such event.
(vi)
For so long as any Purchaser has the right to nominate a Purchaser
Nominee for election pursuant to Section 4.11(a)(ii), in connection
with each election of directors, subject to this Section
4.11(a)(vi), the Company shall nominate such Purchaser Nominee for
election as a director as part of the slate that is included in the
proxy statement of the Company relating to the election of
directors; provided, however, that in the event that
any Purchaser ceases to both beneficially own at least four and
one-half percent (4.5%) of the total issued and outstanding Common
Stock as of any particular date and hold at least 67% of the Shares
purchased hereunder by such Purchaser at the Closings (after giving
effect to any share splits, reclassifications or similar corporate
transactions), then the Company shall cease to have any obligations
to nominate the Purchaser Nominee nominated by such Purchaser for
election as a director under this Section 4.11. For the avoidance
of doubt, in any such instance, the Company’s obligations in
respect of the other Purchaser’s Purchaser Nominee shall
remain unaffected.
(vii)
In the event that any Purchaser Nominee shall cease to serve as a
director for any reason (other than the failure of the stockholders
of the Company to elect such person as a director or the
resignation or removal of such director as a result of the
Purchasers not having the right to nominate a director pursuant to
Section 4.11(a)(vi)), the Purchaser who nominated such Purchaser
Nominee shall have the right to designate another individual to
fill the vacancy resulting therefrom. For the avoidance of doubt,
it is understood that the failure of the stockholders of the
Company to elect any Purchaser Nominees shall not affect the right
of any Purchaser, as the case may be, to designate a Purchaser
Nominee for election pursuant to Section 4.11(a)(ii) in connection
with any future election of directors of the Company.
36
(viii)
Notwithstanding the foregoing, as a condition to any Purchaser
Nominee’s appointment to the Board of Directors and
nomination for election as a director of the Company at the
Company’s annual meetings of stockholders:
(A)
Purchasers and each
such Purchaser Nominee must in all material respects provide to the
Company (1) all information reasonably requested by the Company
that is required to be or customarily disclosed for directors,
candidates for directors, and their affiliates and representatives
in a proxy statement or other filings under applicable law or
regulation or stock exchange rules or listing standards, in each
case, relating to their nomination or election as a director of the
Company or the Company’s operations in the ordinary course of
business and (2) information reasonably requested by the Company in
connection with assessing eligibility, independence and other
criteria applicable to directors or satisfying compliance and legal
or regulatory obligations, in each case, relating to their
nomination or election as a director of the Company or the
Company’s operations in the ordinary course of business, with
respect to Purchasers, its Affiliates and the applicable Purchaser
Nominee;
(B)
each such Purchaser
Nominee must be qualified to serve as a director of the Company
under the Delaware General Corporation Law to the same extent as
all other directors of the Company;
(C)
each such Purchaser
Nominee shall satisfy all relevant Nasdaq Stock Market, or other
applicable exchange, rules and regulations;
(D)
each such Purchaser
Nominee shall be reasonably acceptable to the Nominating and
Corporate Governance Committee of the Board; and
(E)
each such Purchaser
Nominee must satisfy the requirements set forth in the
Company’s code of conduct and securities trading policy and
other similar policies, in each case as currently in effect with
such changes thereto (or such successor policies) as are applicable
to all other directors, as are adopted in good faith by the Board,
and do not by their terms adversely impact any Purchaser Nominee
relative to all other directors.
37
The
Company will make all information requests pursuant to this Section
4.11(a)(viii) in good faith in a timely manner that allows
Purchasers and each such Purchaser Nominee a reasonable amount of
time to provide such information, and will cooperate in good faith
with Purchasers and each such Purchaser Nominee in connection with
their efforts to provide the requested information.
(ix) Purchasers
hereby covenant and agree (A) not to designate or participate in
the designation of any director designee who, to Purchasers’
knowledge, does not satisfy all relevant Nasdaq Stock Market, or
other applicable exchange, rules and regulations (a
“Disqualified
Designee”), (B) that in the event Purchasers become
aware that any individual previously designated by Purchasers is or
has become a Disqualified Designee, then Purchasers shall notify
the Company promptly in writing and as promptly as practicable
Purchasers shall take such actions as are necessary to remove any
such Disqualified Designee from the Board and designate a
replacement designee who is not a Disqualified Designee, and (C)
for so long as there is any Purchaser Nominee or Observer,
Purchasers will, and will cause any Purchaser Nominee to, comply
with the Company’s xxxxxxx xxxxxxx policy, securities trading
policy and other similar policies.
4.12 Reservation
of Shares. 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 for the purpose of enabling the
Company to issue Shares pursuant to this Agreement.
4.13 Voting
Agreement. From and after
the date hereof, upon prior written request thereof by any
Purchaser, the Company shall use reasonable efforts to enter into
one or more voting agreements with one or more of the Purchasers
and such other substantial holders of Common Stock as reasonably
requested by such Purchaser(s) and agreed to by the Company in
respect of the election of the Purchaser Nominees.
4.14 Registration
Rights Agreement. In the event that
the Purchasers waive in writing the condition precedent to the
First Closing contained in Section 2.2(a)(vi), then from and after
the First Closing, the Purchasers and the Company shall use
reasonable best efforts to negotiate, in good faith, the terms of
the Registration Rights Agreement, and the Company and the
Purchasers shall enter into the Registration Rights Agreement
promptly after the First Closing (and in any event within forty
eight (48) hours thereafter).
38
ARTICLE V.
5.1
Fees and
Expenses. Each party shall pay
all fees and expenses that it incurs (including on account of any
of their respective advisers, counsel, accountants and other
experts) in connection with the negotiation, preparation, execution
and delivery of this Agreement (including all Transfer Agent fees
(including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company),
stamp taxes and other taxes and duties levied in connection with
the delivery of any Shares to the Purchasers) (collectively, the
“Transaction
Expenses”);
provided,
however,
that the Company shall, at the Second Closing and conditioned upon
the consummation of the Second Closing, reimburse the Transaction
Fees of the Purchasers in an amount not to exceed $200,000;
provided,
further,
that all Transfer Agent Fees and transfer taxes arising in
connection with the sale and transfer of the Shares hereunder shall
be borne by the Company.
5.3 Notices.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number or email attachment at the email
address as set forth on the signature pages attached hereto at or
prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the
next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or
email attachment at the email address as set forth on the signature
pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the
second (2nd)
Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set
forth on the signature pages attached hereto. To the extent that
any notice provided pursuant to any Transaction Document
constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K.
39
5.8 Governing
Law. All questions concerning
the construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and
enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal Proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective
affiliates, directors, officers, stockholders, partners, members,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any
of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any Action or Proceeding, any claim that it
is not personally subject to the jurisdiction of any such court,
that such Action or Proceeding is improper or is an inconvenient
venue for such Proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such Action or Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law. If any party shall commence an Action or Proceeding to enforce
any provisions of the Transaction Documents, then, in addition to
the obligations of the Company under Section 4.6, the prevailing
party in such Action or Proceeding shall be reimbursed by the
non-prevailing party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation,
preparation and prosecution of such Action or
Proceeding.
40
5.9
Survival. The representations
and warranties contained herein shall survive the Closing and the
delivery of the Shares.
5.10
Attorneys’ Fees. In the event that any
Action is instituted under or in relation to this Agreement,
including without limitation to enforce any provision in this
Agreement, the prevailing party in such dispute shall be entitled
to recover from the losing party all fees, costs and expenses of
enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation, such reasonable
fees and expenses of attorneys and accountants, which shall
include, without limitation, all fees, costs and expenses of
appeals.
5.12
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.
5.13
Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does
not timely perform its related obligations within the periods
therein provided, then, until the time the Company performs such
obligations, such Purchaser may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company,
any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
41
42
5.22
Disclosure
Schedule. Any matter or item
disclosed in one section of the Disclosure Schedule shall be deemed
to have been disclosed in each other section of the Disclosure
Schedule in which it is reasonably apparent on the face of such
disclosure that the information is required to be so disclosed. The
Disclosure Schedule may be updated as follows: (i) in connection
with the Second Closing, to include any event or condition first
arising or occurring from and after the First Closing Date and
prior to the Second Closing and (ii) in connection with the Third
Closing, to include any event or condition first arising or
occurring from and after the Second Closing Date and prior to the
Third Closing.
43
(Signature Pages Follow)
44
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.
|
CHROMADEX CORPORATION
|
Address for
Notice:
|
|
By:
/s/ Xxxxx
Xxxxxx
Name:
Xxxxx Xxxxxx
Title:
Chief Executive Officer
With a
copy to (which shall not constitute notice):
|
Fax:
E-Mail:
xxxxx.xxxxxx@xxxxxxxxx.xxx
|
|
Xxxxxx
LLP
Xxxxxx
X. Xxxx
E-mail:
xxxxxx@xxxxxx.xxx
Fax:
(000) 000-0000
|
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR
PURCHASER FOLLOWS]
45
IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.
Name of
Purchaser: Champion River Ventures Limited
Signature of Authorized Signatory of
Purchaser: /s/ Xxx
Xxx Xxx Xxxx
Name of
Authorized Signatory: Xxx Xxx Xxx Xxxx
Title
of Authorized Signatory: Director
Email
Address of Authorized Signatory: xxxx.xxx@xxxx.xxx.xx
/ Xxxxxx.xxxxx.xxxx.xxx.xx
Facsimile Number of
Authorized Signatory: 852-2128-8001
Address
for Notice to Purchaser:
c/o
7/F, Xxxxxx Kong Center
2
Queen’s Road Central
Hong
Kong
Attention: Xx. Xxxx
Xxx and Xx. Xxxxxx Xxxxx
Address
for Delivery of Shares to Purchaser (if not same as address for
notice):
|
|
First Closing
|
Second Closing
|
Third Closing
|
|
Subscription
Amount
|
$2,099,999.20
|
XXX
|
XXX
|
|
Shares
|
807,692
First Closing Shares
|
XXX
|
XXX
|
EIN
Number: N/A
46
IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.
Name of
Purchaser: Pioneer Step Holdings Limited
Signature of Authorized Signatory of
Purchaser: /s/ Xxxx
Xxx Shuen Xxxxxx Xxxxx
Name of
Authorized Signatory: Xxxx Xxx Shuen Xxxxxx Xxxxx
Title
of Authorized Signatory: Director
Email
Address of Authorized Signatory: Xxxxxxx.xx@xxxxxxxx.xxx.xx
/ xxxx.xxx@xxxxxxxx.xxx.xx
Facsimile Number of
Authorized Signatory: 852-3741-1011
Address
for Notice to Purchaser:
x/x
00xx
Xxxxx, Xxxxxxx Xxxxxx
00
Xxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx
Attention: Xxxxx
Xxxx and Xxxxxxx Xx
Address
for Delivery of Shares to Purchaser (if not same as address for
notice):
|
|
First Closing
|
Second Closing
|
Third Closing
|
|
Subscription
Amount
|
$1,400,001.20
|
XXX
|
XXX
|
|
Shares
|
538,462
First Closing Shares
|
XXX
|
XXX
|
EIN
Number: N/A
47
