Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made as of
March 30, 2005, by and between DOBI Medical International, Inc., a Delaware
corporation with its principal office at 0000 XxxXxxxxx Xxxx., Xxxxxx, Xxx
Xxxxxx 00000 (the "Company"), and each of the several purchasers named in
Exhibit A attached hereto (each, a "Purchaser" and collectively, the
"Purchasers").
WHEREAS, the Company desires to issue and sell to the Purchasers (i) an
aggregate of up to 21,000,000 shares (the "Shares") of the authorized but
unissued shares of the Company's common stock, par value $.0001 per share (the
"Common Stock") and (ii) warrants to purchase an aggregate of up to 10,500,000
shares of the Common Stock (the "Warrants"); and
WHEREAS, each Purchaser, severally, wishes to purchase the number of
Shares shown next to its name on Exhibit A hereto, all upon the terms and
subject to the conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual agreements,
representations, warranties and covenants herein contained, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
"Affiliate" of a party means any other Person controlling,
controlled by or under common control with the specified Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and all of the rules and regulations promulgated thereunder.
"GAAP" means United States generally accepted accounting
principles.
"Majority Purchasers" shall mean Purchasers which, at any given
time, hold greater than fifty percent (50%) of the outstanding Shares.
"Material Adverse Effect" shall mean a material adverse effect
on the prospects, condition (financial or other), business, operations, assets,
liabilities, or results of operations of the Company and its subsidiaries, taken
as a whole.
"Person" shall mean an individual, corporation, company,
partnership, firm, association, joint venture, trust, unincorporated
organization, government, governmental body, agency, political subdivision or
other entity.
"Registration Rights Agreement" shall mean that certain
Registration Rights Agreement, dated as of the Closing Date, among the Company
and the Purchasers.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Warrant Share" shall mean the shares of Common Stock issuable
or issued upon the exercise of the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as amended, and all of
the rules and regulations promulgated thereunder.
2. Purchase and Sale of Shares and Warrants.
2.1 Purchase and Sale. Subject to and upon the terms and
conditions set forth in this Agreement, the Company agrees to issue, sell and
deliver to each Purchaser, and each Purchaser, severally, hereby agrees to
purchase from the Company, at the Closing, (i) the number of shares of Common
Stock set forth opposite the name of such Purchaser under the heading "Number of
Shares to be Purchased" on Exhibit A hereto, at a purchase price of $.50 per
share (the "Purchase Price") and (ii) one or more Warrants to purchase the
number of shares of Common Stock set forth opposite the name of such Purchaser
under the heading "Number of Shares to be Issued upon Exercise of Warrants" on
Exhibit A hereto, at an exercise price of $.75 per Warrant Share for the first
50% of the shares of Common Stock purchased thereunder and $1.25 for the next
50% of the shares of Common Stock purchased thereunder. The total purchase price
payable by each Purchaser for the number of shares of Common Stock and the
Warrants that such Purchaser is hereby agreeing to purchase is set forth
opposite the name of such Purchaser under the heading "Purchase Price" on
Exhibit A hereto. The Company shall be obligated to register the Shares and the
Warrant Shares pursuant to the terms and conditions set forth in the
Registration Rights Agreement.
2.2 Closing. The closing of the transactions contemplated under
this Agreement (the "Closing") shall take place at 10:00 a.m. at the offices of
Xxxxxxxxx Xxxxxxx, LLP in New York, New York, on March 30, 2005, or at such
other location, date and time as may be agreed upon between the Majority
Purchasers and the Company (the "Closing Date"). At the Closing, the Company
shall authorize its transfer agent to issue to each Purchaser, against delivery
of payment for the Shares and the Warrants by wire transfer of immediate
available funds in accordance with the Company's instructions, (i) one or more
stock certificates registered in the name of each Purchaser, representing the
number of shares set forth opposite the appropriate Purchaser's name on Exhibit
A hereto and (ii) one or more warrant certificates registered in the name of
each Purchaser to purchase the number of shares of Common Stock set forth
opposite the appropriate Purchaser's name on Exhibit A hereto, and, in the case
of both (i) and (ii) above, bearing the legend set forth in Section 6.2 hereof.
Closing documents may be delivered by facsimile with original signature pages
sent by overnight courier.
2.3 Independent Purchasers. The Company acknowledges and agrees
that each of the Purchasers is acting solely in the capacity of an arm's length
purchaser with respect to this Agreement and the transactions contemplated
hereby and that each Purchaser has separately negotiated the terms of this
Agreement. Nothing contained herein or in any agreement or document relating to
this transaction, and no action taken by any Purchaser, shall be deemed to
constitute the Purchasers as, or to create any presumption that the Purchasers
are in any way acting in concert or as, a group with respect to the obligations
or transaction hereunder. No Purchaser has relied upon any other Purchaser for
advice in entering into the transactions contemplated hereby.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Purchasers as follows:
3.1 Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority, and all necessary
licenses and permits, to own and lease its properties and assets and to conduct
its business as now conducted. Each subsidiary as referred to in the SEC
Documents (as hereinafter defined) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite power and authority, and all necessary
licenses
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and permits, to own and lease its properties and assets and to conduct its
business as now conducted. The Company and its subsidiaries are each qualified
to do business as a foreign corporation and are in good standing in all states
where the conduct of their respective businesses or their ownership or leasing
of property requires such qualification, except where the failure to so qualify
would not have a Material Adverse Effect. The Company does not own or control,
directly or indirectly, any interest in any other corporation, partnership,
limited liability company, unincorporated business organization, association,
trust or other business entity.
3.2 Capitalization.
(a) The authorized capital stock of the Company
consists of: (i) 10,000,000
shares of preferred stock of the Company, par value $.0001 per share, of which
186.453 shares of Series A Convertible Preferred Stock shares are issued and
outstanding; and (ii) 140,000,000 shares of Common Stock, par value $.0001 per
share, of which, immediately prior to the consummation of the transactions
contemplated hereby, (A) 44,257,155 shares are issued and outstanding and all
such outstanding shares are validly issued, fully paid and non-assessable; (B)
6,638,573 shares of Common Stock are reserved for issuance pursuant to the
Company's 2000 Stock Incentive Plan; (C) 2,621,720 shares are reserved for
issuance upon the conversion of the 186.453 outstanding shares of Series A
Convertible Preferred Stock of the Company; and (D) 22,521,719 shares of Common
Stock are reserved for issuance upon exercise of outstanding warrants, plus
additional warrants to purchase 170,000 shares of Common Stock to be issued to
Xxxxxx Xxxxxxx. With respect to the 2000 Stock Incentive Plan, an aggregate of
4,544,000 stock options have been granted or issued and are outstanding as of
the Closing Date.
(b) There are no preemptive or similar rights to
purchase or otherwise acquire shares of capital stock of the Company pursuant to
any provision of law or the Certificate of Incorporation or By-laws of the
Company or by agreement or otherwise. Except for the Warrants, as set forth in
this Section 3.2 and except as set forth in the SEC Documents, there are no
outstanding subscriptions, warrants, options or other rights or commitments of
any character to subscribe for or purchase from the Company, or obligating the
Company to issue, any shares of capital stock of the Company or any securities
convertible into or exchangeable for such shares.
(c) There are no stockholder agreements, voting agreements,
or similar agreements with respect to the Common Stock to which the Company is a
party, or to the knowledge of the Company, by or between any stockholders of the
Company or any of its Affiliates.
3.3 Authorization. The Company has all requisite corporate
power to enter into this Agreement and the Registration Rights Agreement, to
issue the Shares, the Warrants and the Warrant Shares and to carry out and
perform its obligations under the terms of this Agreement and the Registration
Rights Agreement (including, without limitation, the issuance of the Shares, the
Warrants and the Warrant Shares). All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution, delivery and performance of this Agreement and the
Registration Rights Agreement and the consummation of the transactions
contemplated herein and therein has been taken or will be taken prior to the
Closing Date. When executed and delivered by the Company, each of this Agreement
and the Registration Rights Agreement shall constitute the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with their respective terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
and by general equitable principles.
3.4 Valid Issuance of the Shares and the Warrant Shares. The
Shares and the Warrant Shares will, upon issuance pursuant to the terms hereof,
be validly issued, fully paid and non-assessable, free from all liens, claims,
encumbrances with respect to the issuance of such Shares and
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Warrant Shares and will not be subject to any preemptive or similar rights.
Except for blue sky filing fees, if any, there are no state or city taxes, fees
or other charges payable in connection with the execution or delivery of this
Agreement, the Registration Rights Agreement, the Shares, the Warrants and the
Warrant Shares.
3.5 Financial Statements. The Company has furnished to each
Purchaser its audited Consolidated Statements of Operations, Stockholders'
Equity and Cash Flows for the year ended December 31, 2004, its audited
Consolidated Balance Sheet as of December 31, 2004. All such financial
statements are hereinafter referred to collectively as the "Financial
Statements." The Financial Statements have been prepared in accordance with U.S.
generally accepted accounting principles applied on a consistent basis during
the periods involved, and fairly present, in all material respects, the
financial position of the Company and the results of its operations as of the
date and for the periods indicated thereon. Since December 31, 2004, to the
Company's knowledge, (i) there has been no development or change (actual or
threatened), individually or in the aggregate, having a Material Adverse Effect,
(ii) except as set forth in an SEC Document (as defined below), there does not
exist any condition reasonably likely to result in a Material Adverse Effect and
(iii) the Company has conducted its business only in the ordinary course
consistent with past practice. The Company has no indebtedness, obligations or
liabilities of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due) which were not fully reflected in, reserved
against or otherwise described in the Financial Statements or the notes thereto,
or incurred in the ordinary course of business consistent with the Company's
past practices, all of which individually and in the aggregate do not or would
not have a Material Adverse Effect.
3.6 SEC Documents. The Company has made available to each
Purchaser, a true and complete copy of the Company's Annual Report on Form
10-KSB for the year ended December 31, 2004, and any other statement, report,
registration statement (other than registration statements on Form S-8) or
definitive proxy statement filed by the Company with the SEC during the period
commencing on December 31, 2004 and ending on the date hereof. The Company will,
promptly upon the filing thereof, also make available to each Purchaser on its
website, xxx.xxxxxxxxxxx.xxx, all statements, reports (including, without
limitation, Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K),
registration statements and definitive proxy statements filed by the Company
with the SEC during the period commencing on the date hereof and ending on the
Closing Date (all such materials required to be furnished to each Purchaser
pursuant to this sentence or pursuant to the next preceding sentence of this
Section 3.6 being called, collectively, including any amendments thereto, the
"SEC Documents"). Since January 1, 2005, the Company has timely made all filings
required to be made by it under the Exchange Act and the securities laws of any
state, and any rules and regulations promulgated thereunder. The SEC Documents
comply in all material respects with the requirements of the Exchange Act or the
Securities Act, as applicable, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, as of
their respective filing dates, except to the extent corrected by a subsequently
filed SEC Document filed prior to the date hereof.
3.7 Consents. Except for filings under federal and applicable
state securities laws and except for Permits (as defined below), the absence of
which either individually or in the aggregate would not have a Material Adverse
Effect, all permits, consents, approvals, orders, authorizations of, or
declarations to (collectively, "Permits") or filings with any federal, state,
local or foreign court, governmental or regulatory authority, or other person
(including third party consents) required on the part of the Company in
connection with the execution, delivery or performance of this Agreement and the
Registration Rights Agreement and the consummation of the transactions
contemplated herein and therein
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have been obtained or will be obtained prior to the Closing Date, and will be
effective as of the Closing Date.
3.8 No Conflict. The execution and delivery of this Agreement
and the Registration Rights Agreement by the Company and the consummation of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Shares, the Warrants and the Warrant Shares) will not (x)
conflict with or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the Certificate of Incorporation or By-laws
of the Company or (ii) any agreement or instrument, Permit, franchise, license,
judgment, order, statute, law, ordinance, rule or regulations, applicable to the
creation of any lien, security interest, charge or encumbrance upon the
Company's or any of its subsidiaries' assets, properties or outstanding capital
stock.
3.9 Brokers or Finders. Except for X.X. Xxxxxxxxx, Towbin LLC,
a Delaware limited liability company (the "Placement Agent"), the Company has
not dealt with any broker or finder in connection with the transactions
contemplated by this Agreement, and, except for certain fees and expenses
payable by the Company to the Placement Agent, the Company has not incurred, and
shall not incur, directly or indirectly, any liability for any brokerage or
finders' fees or agents commissions or any similar charges in connection with
this Agreement or any transaction contemplated hereby.
3.10 OTC Bulletin Board. The Common Stock is listed on the
Over-the-Counter Bulletin Board and there are no proceedings to revoke or
suspend such listing. The Common Stock is registered pursuant to Section 12(g)
of the Exchange Act. The Company has taken no action designed to, or which to
its knowledge is likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act, delisting the Common Stock from the OTC
Bulletin Board. The Company has not received any notification that, and has no
knowledge that, the SEC is contemplating terminating such listing or
registration. The issuance of the Shares, the Warrants and the Warrant Shares
does not require stockholder approval.
3.11 Absence of Litigation. Except as set forth in the SEC
Documents, there is no action, suit or proceeding or, to the Company's
knowledge, any investigation, pending, or to the Company's knowledge, threatened
by or before any governmental body against the Company, its subsidiaries, its
activities, properties or assets or any officer, director, or employee of the
Company in connection with such officer's, director's or employee's relationship
with, or actions taken on behalf of the Company and in which an unfavorable
outcome, ruling or finding in any said matter, or for all matters taken as a
whole, might have a Material Adverse Effect. The foregoing includes, without
limitation, any such action, suit, proceeding or investigation that questions
this Agreement or the Registration Rights Agreement or the right of the Company
to execute, deliver and perform under same. The Company is not a party to or
subject to the provisions of any order, writ, injunction or decree of any court
or government agency.
3.12 Fiduciary Duties. The Company represents and warrants
that, to the best of its knowledge, none of its directors or officers is or has
been the subject of, or a defendant in: (i) an enforcement action or prosecution
(or settlement in lieu thereof) brought by a governmental authority relating to
a violation of securities, fiduciary or criminal laws, or (ii) a civil action
(or settlement in lieu thereof) brought by stockholders or investors for
violation of duties owed to the stockholders or investors.
3.13 Title to Property and Assets. Except as disclosed in the
SEC Documents, each of the Company and its subsidiaries owns its property and
assets free and clear of all mortgages, liens, loans, claims, charges and
encumbrances, and except such encumbrances and liens that arise in the ordinary
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course of business and do not materially impair their respective ownership or
use of such property or assets. With respect to property and assets it leases,
the Company is in material compliance with such leases and, to the best of its
knowledge, holds a valid leasehold interest free of any liens, charges, claims
or encumbrances, except to the extent any such lien, charge, claim or
encumbrance would not have a Material Adverse Effect.
3.14 Patents, Trademarks, Proprietary Rights.
(a) To the Company's knowledge, each of the Company and its
subsidiaries owns or has the right to use all of the Intellectual Property
Rights (as defined below), except where such failure would not have a Material
Adverse Effect on the business, properties or assets of the Company and its
subsidiaries, taken as a whole. For purposes of this Agreement, "Intellectual
Property Rights" means all patents, copyrights, trademarks, service marks, trade
names, permits, trade secrets, computer programs, software designs and related
materials and other intellectual property that are used by the Company or a
subsidiary and are material to the conduct of the Company's or a subsidiary's
business.
(b) To the Company's knowledge, the Company's and each
subsidiary's use and enjoyment of the Intellectual Property Rights do not
violate any license or conflict with or infringe the intellectual property
rights of others in a manner which would materially and adversely affect the
business, assets, properties, operations or condition (financial or otherwise)
of the Company and its subsidiaries, taken as a whole.
3.15 Environmental Matters. Except as set forth in the SEC
Documents, to the Company's knowledge, neither the Company nor any of its
subsidiaries is in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, which violation
could reasonably be expected to result in a Material Adverse Effect, and to the
best of its knowledge, no expenditures are required in order to comply with any
such existing statute, law or regulation, which expenditures could reasonably be
expected to result in a Material Adverse Effect.
3.16 Permits. Each of the Company and its subsidiaries possesses
all Permits or similar authority necessary to conduct its business as described
in the SEC Documents, except where the failure to possess such Permits would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company or its subsidiaries ("Material Permits"), and neither the Company nor
any such subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
3.17 Employees. To the Company's knowledge, no strike, labor
dispute or union organizing activities are pending or threatened against the
Company or any of its subsidiaries by its employees. No employees belong to a
union or collective bargaining unit. To the Company's knowledge, neither the
Company nor any of its subsidiaries has any workers' compensation liabilities.
3.18 Tax Matters. The Company has filed all tax returns and
reports as required by federal, state, local, and foreign law and has paid all
taxes shown thereon that have become due and payable. Such returns and reports
were materially accurate and complete when filed and reflect all taxes and other
assessments due thereunder to be paid by the Company, except those contested by
it in good faith. The provision for taxes of the Company included in the
provision for accrued liabilities in the Company's Financial Statements is
adequate for taxes due or accrued as of the dates thereof. The Company has never
had any material tax deficiency proposed or assessed against it.
3.19 Compliance with Certificate of Incorporation and By-Laws;
Compliance with Laws. The Company is not in violation or default of any
provisions of its Certificate of Incorporation or
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By-laws. The business and operations of the Company and each of its subsidiaries
have been conducted in accordance with all applicable laws, rules and
regulations of all governmental agencies, authorities and instrumentalities
(including, without limitation, under the Employee Retirement Income Security
Act of 1974, as amended, laws and regulations administered by the Food and Drug
Administration, and all laws relating to the employment of labor), except for
such violations which would not, individually or in the aggregate, have a
Material Adverse Effect.
3.20 Insurance. The Company and each of its subsidiaries
maintains insurance of the type and in the amount reasonably adequate for its
business, including, but not limited to, insurance covering all real and
personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism, and all other risks customarily insured against
by similarly situated companies, all of which insurance is in full force and
effect.
3.21 Investment Company Act. The Company is not an "Investment
Company" within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and the Company is not directly or indirectly
controlled by or acting on behalf of any person that is an "Investment Company"
within the meaning of the Investment Company Act.
3.22 Compliance with Securities Laws. Assuming the accuracy of
the representations and warranties of the Purchasers set forth in Section 4
hereof, the offer and sale by the Company of the Shares and the Warrants are
exempt from the registration and prospectus delivery requirements of the
Securities Act. Other than pursuant to an effective registration statement under
the Securities Act, the Company has not issued, offered or sold any shares of
Common Stock (including for this purpose any securities of the same or a similar
class as the Common Stock) within the six (6) month period preceding the date
hereof or taken any other action, or failed to take any action, that, in any
such case, would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale of the Shares and the Warrants as contemplated hereby or (ii)
cause the offering of the Shares or the Warrants pursuant to this Agreement to
be integrated with prior offerings by the Company for purposes of the Securities
Act or any applicable stockholder approval provisions. The Company shall not
directly or indirectly take, and shall not permit any of its directors, officers
or Affiliates directly or indirectly to take, any action (including, without
limitation, any offering or sale to any Person of the Shares, the Warrants or
any Common Stock) that will make unavailable the exemption from registration
under the Securities Act being relied upon by the Company for the offer and sale
to the Purchasers of the Shares and the Warrants as contemplated by this
Agreement, including, without limitation, the filing of a registration statement
under the Securities Act. No form of general solicitation or advertising within
the meaning of Rule 502(c) under the Securities Act has been used or authorized
by the Company or any of its officers, directors or Affiliates in connection
with the offer or sale of the Shares and the Warrants as contemplated by this
Agreement or any other agreement to which the Company is a party.
3.23 Registration Rights. Except as set forth in the SEC
Documents, there are no Persons (except the Purchasers and their permitted
transferors hereunder) with registration or other similar rights to have any
securities registered pursuant to the Registration Statement or otherwise
registered by the Company under the Securities Act which have not been
satisfied.
3.24 Related Party Transactions. Except as set forth in the
SEC Documents, neither the Company nor any of its officers, directors or
Affiliates nor any family member of any officer, director or Affiliate of the
Company has borrowed any moneys from or has outstanding any indebtedness or
other similar obligations to the Company. Except as set forth in the SEC
Documents, no director or Affiliate nor any family member of any officer,
director or Affiliate of the Company (i) owns any direct or indirect interest
constituting more than a 1% equity (or similar profit participation) interest
in, or controls or is a
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director, officer, partner, member or employee of, or consultant or lender to or
borrower from, or has the right to participate in the profits of, any person or
entity which is a participant in any transaction to which the Company or any
subsidiary is a party or (ii) is a party to any contract, agreement, commitment
or other arrangement with the Company or any subsidiary or (iii) has entered
into any transaction with the Company or any subsidiary that would be required
to be disclosed under Item 404 of Regulation S-K. The Company will pay Xxxxxxx
Xxxxxxxxx a success fee in connection with the consummation of the transactions
contemplated hereby.
3.25 Contracts. All contracts and agreements filed or required
to be filed as exhibits to the SEC Documents filed prior to the date hereof,
except such contracts and agreements that have expired by their own terms
(collectively, "Contracts") are in full force and effect and constitute legal,
valid and binding obligations of the Company and, to the best knowledge of the
Company, the other parties thereto; the Company and, to the best knowledge of
the Company, each other party thereto, have performed in all material respects
all obligations required to be performed by them under the Contracts, and no
material violation or default exists in respect thereof, nor any event that with
notice or lapse of time, or both, would constitute a default thereof, on the
part of the Company or, to the best knowledge of the Company, any other party
thereto; none of the Contracts is currently being renegotiated; and the
validity, effectiveness and continuation of all Contracts will not be materially
adversely affected by the transactions contemplated by this Agreement.
3.26 Disclosure. Neither this Agreement nor the SEC Documents
taken together contain any untrue statement of a material fact nor omit to state
a material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. To the Company's knowledge, neither it nor, any Person on its
behalf, has provided any of the Purchasers or their agents or counsel with any
information that constitutes, or might reasonably be expected to constitute,
material, non-public information. The Company understands and confirms that each
of such Purchasers will rely on the foregoing representations in effecting
transactions in securities of the Company.
3.27 Xxxxxxxx-Xxxxx Act. The Chief Executive Officer and the
Chief Financial Officer of the Company have signed, and the Company has
furnished to the SEC, all certifications required by Sections 302 and 906 of the
Xxxxxxxx-Xxxxx Act of 2002. Such certifications contain no qualifications or
exceptions to the matters certified therein and have not been modified or
withdrawn; and neither the Company nor any of its officers has received notice
from any governmental entity questioning or challenging the accuracy,
completeness, form or manner of filing or submission of such certifications.
3.28 Disclosure Controls and Procedures. The Company and its
subsidiaries maintain a system of disclosure controls and procedures (as defined
in Rules 13a-15 and 15d-15 of the Exchange Act), to the extent applicable to a
"small business issuer," as defined in Item 10 of Regulation S-B, which is not
an "accelerated filer," as defined in Exchange Act Rule 12b-2. To the Company's
knowledge, the Company's disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in reports that
it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC rules and forms.
3.39 General Solicitation. Neither the Company nor any other
person or entity authorized by the Company to act on its behalf has engaged in a
general solicitation or general advertising (within the meaning of Regulation D
of the Securities Act) of investors with respect to offers or sales of the
Shares or the Warrants.
3.40 No Integrated Offering. Neither the Company, nor any
Affiliate of the Company, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any
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security or solicited any offers to buy any security, under circumstances that
would cause this offering of the Shares and the Warrants to be integrated with
prior offerings by the Company for purposes of the Securities Act which would
cause the exemptions from SEC registration upon which the Company is relying for
the sale of the Shares and the Warrants to be unavailable, any applicable state
securities laws or any applicable stockholder approval provisions, nor will the
Company take any action or steps that would cause the offering of the Shares and
the Warrants to be integrated with other offerings.
4. Representations, Warranties and Agreements of the Purchasers. Each
Purchaser severally for itself, and not jointly with the other Purchasers,
represents and warrants to, and agrees with, the Company as follows:
4.1 Authorization. Such Purchaser has all requisite power
under its constituent documents to enter into each of this Agreement and the
Registration Rights Agreement and to carry out and perform its obligations under
the terms of this Agreement and the Registration Rights Agreement. All action on
the part of such Purchaser and, if applicable, its officers, directors,
stockholders, managers, members and equity holders necessary for the
authorization, execution, delivery and performance of this Agreement and the
Registration Rights Agreement and the consummation of the transactions
contemplated herein and therein has been taken. When executed and delivered,
each of this Agreement and the Registration Rights Agreement will constitute the
legal, valid, binding and irrevocable obligation of such Purchaser, enforceable
against such Purchaser in accordance with its terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and by general equitable principles.
4.2 Purchase Entirely for Own Account. Such Purchaser is
acquiring the Shares and the Warrants being purchased by it hereunder for
investment, for its own account, and not for resale or with a view to
distribution thereof in violation of the Securities Act.
4.3 Investor Status; Etc. Such Purchaser certifies and
represents to the Company that at the time such Purchaser acquires any of the
Shares or Warrants, such Purchaser will be an "Accredited Investor" as defined
in Rule 501 of Regulation D promulgated under the Securities Act and was not
organized for the purpose of acquiring the Shares or the Warrants. Such
Purchaser's financial condition is such that it is able to bear the risk of
holding the Shares, the Warrants or the Warrant Shares for an indefinite period
of time and the risk of loss of its entire investment. Such Purchaser has
sufficient knowledge and experience in investing in companies similar to the
Company in terms of the Company's stage of development so as to be able to
evaluate the risks and merits of its investment in the Company. Such Purchaser
has received and carefully reviewed this Agreement, the SEC Documents and other
materials relating thereto that such Purchaser has requested. Such Purchaser has
had an opportunity to ask questions of and receive answers from the authorized
representatives of the Company, and to review any relevant documents and records
concerning the business of the Company and the terms and conditions of this
investment, and that any such questions have been answered to such Purchaser's
full satisfaction. No Person other than the Company or its authorized
representatives, has offered the securities to the Purchaser. Such Purchaser is
acquiring the Shares and the Warrants in the ordinary course of business for
such Purchaser's own account as principal (and not as a nominee or agent), for
investment purposes only, and not with a view to, or for, resale, distribution
or fractionalization thereof, in whole or in part, in any manner in violation of
applicable United States federal or state securities laws or the rules or
regulations promulgated thereunder. Such Purchaser has made no agreement, direct
or indirect, with any other Person regarding any sale, transfer, assignment or
other disposition of any interest in the Shares, the Warrants or the Warrant
Shares. Such Purchaser is aware that, in the view of the SEC and certain state
securities commissions, a purchase of the Shares or the Warrants now with an
intent to resell by reason of any foreseeable specific contingency or
anticipated change in market values or any change in the condition of the
Company, or in connection with a contemplated liquidation or settlement of
9
any loan obtained for the acquisition of the Shares, the Warrants or the Warrant
Shares and for which the Shares, the Warrants or the Warrant Shares were pledged
as security, would represent an intent inconsistent with this representation.
Such Purchaser further represents and agrees that if, contrary to the foregoing
intentions, such Purchaser should later desire to dispose of or transfer any of
the Shares, the Warrant Shares or the Warrants in any manner, such Purchaser
shall not do so without first complying with the provisions of Section 6.1. Such
Purchaser understands that no federal or state agency has passed upon or made
any recommendation or endorsement of an investment in the Shares, the Warrant
Shares or the Warrants. The foregoing shall in no way limit or modify the
representations of the Company set forth in Section 3 hereof.
4.4 Shares and Warrants Not Registered. Such Purchaser
understands that the Shares and the Warrants have not been registered under the
Securities Act, by reason of their issuance by the Company in a transaction
exempt from the registration requirements of the Securities Act, and that the
Shares and the Warrants must continue to be held by such Purchaser unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from such registration. The Purchaser understands that the exemptions
from registration afforded by Rule 144 (the provisions of which are known to it)
promulgated under the Securities Act depend on the satisfaction of various
conditions, and that, if applicable, Rule 144 may afford the basis for sales
only in limited amounts.
4.5 No Conflict. The execution and delivery of this Agreement
and the Registration Rights Agreement by such Purchaser and the consummation by
it of the transactions contemplated hereby and thereby will not conflict with or
result in any violation of or default by such Purchaser (with or without notice
or lapse of time, or both) under (i) any provision of the organizational
documents of such Purchaser or (ii) any judgment, order, statute, law,
ordinance, rule or regulations, applicable to such Purchaser or its respective
properties or assets.
4.6 Brokers. Such Purchaser has not retained, utilized or been
represented by any broker or finder in connection with the transactions
contemplated by this Agreement.
4.7 Consents. All consents, approvals, orders and
authorizations required on the part of such Purchaser in connection with the
execution, delivery or performance of this Agreement and the Registration Rights
Agreement and the consummation of the transactions contemplated herein have been
obtained and are effective as of the Closing Date.
4.8 Agreement with Respect to Short Sales. Neither the
Purchasers nor any of their respective Affiliates nor any person acting on their
behalf will have entered into for a period of five (5) days prior to the Closing
Date, any "short sale" (as such term is defined in Rule 3b-3 under the
Securities Exchange Act of 1934, as amended).
5. Conditions Precedent.
5.1 Conditions to the Obligation of the Purchasers to
Consummate the Closing. The obligation of each Purchaser to consummate the
Closing and to purchase and pay for the Shares and the Warrants being purchased
by it pursuant to this Agreement is subject to the satisfaction of the following
conditions precedent (or waiver by such Purchaser):
(a) The representations and warranties contained herein of
the Company that are qualified as to "materiality" shall be true and correct,
and the representations and warranties contained herein of the Company that are
not so qualified shall be true and correct in all material respects, in each
case, as of the date of this Agreement and as of the Closing Date (except for
such representations and
10
warranties which are made expressly as of a specified date or period, which
shall be true and correct or true and correct in all material respects, as
herein above required, as of such specified date or period).
(b) The Company shall have performed all covenants,
agreements, obligations and conditions herein required to be performed or
observed by the Company on or prior to the Closing Date.
(c) Prior to the Closing Date, no event shall have occurred
which has had a Material Adverse Effect shall have occurred.
(d) No suit, action, or other proceeding challenging this
Agreement or the transactions contemplated hereby, or seeking to prohibit,
alter, prevent or materially delay the Closing, shall have been instituted
before any court, arbitrator or governmental body, agency or official and shall
be pending.
(e) The purchase of and payment for the Shares and the
Warrants by such Purchasers shall not be prohibited by any law or governmental
order or regulation. All necessary consents, approvals, licenses, permits,
orders and authorizations of, or registrations, declarations and filings with,
any governmental or administrative agency or of any other person with respect to
any of the transactions contemplated hereby (including, without limitation, the
issuance of the Shares, the Warrants and the Warrant Shares) shall have been
duly obtained or made and shall be in full force and effect.
(f) The Company shall have complied with all applicable
requirements of federal and state securities or "blue sky" laws with respect to
the issuance of the Shares and the Warrants, and each Purchaser, at such
Purchaser's request, shall have been provided reasonable evidence thereof.
(g) The Common Stock of the Company (i) shall be designated
for quotation or listed on the OTC Bulletin Board and (ii) shall not have been
suspended from trading on the OTC Bulletin Board.
(h) The Registration Rights Agreement shall have been
executed and delivered by the Company.
(i) A certificate shall have been delivered by the Company,
signed by its Chief Executive Officer or Chief Financial Officer, dated as of
the Closing Date, certifying as to the fulfillment of the conditions specified
in Sections 5.1(a) and (b).
(k) (i) A stock certificate shall have been delivered by
the Company representing the number of shares of Common Stock purchased by such
Purchaser and (ii) one or more warrants to purchase the number of shares of
Common Stock set forth opposite each Purchaser's name on Exhibit A shall have
been delivered by the Company, and in each case shall be, registered in the name
of such Purchaser or nominee as designated by such Purchaser in writing, free of
all restrictive and other legends (except as provided in Section 6.2 hereof) and
against payment of the purchase price therefor by wire transfer of immediately
available funds to such account or accounts as the Company shall designate in
writing.
(l) All instruments and corporate proceedings in connection
with the transactions contemplated by this Agreement to be consummated at the
Closing shall be satisfactory in form and substance to such Purchaser, and such
Purchaser shall have received copies (executed or certified, as may be
appropriate) of all documents which such Purchaser may have reasonably requested
in connection with such transactions.
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(m) No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted before any court,
arbitrator or governmental body, agency or official and shall be pending.
(n) The Company shall have delivered to the Purchasers a
certificate of the Company executed by the Company's Secretary attaching and
certifying to the truth and correctness of (i) the Company's Certificate of
Incorporation, (ii) the Company's By-laws and (iii) the resolutions adopted by
the Company's Board of Directors in connection with the transactions
contemplated by this Agreement.
(o) The Company shall have delivered to the Purchasers a
certificate of the Secretary of State of the State of Delaware, dated as of a
date within five days of the date of the Closing, with respect to the good
standing of the Company.
(p) The Purchasers will have received an opinion on behalf
of the Company, dated as of the date of the Closing, from Xxxxxxxxx Xxxxxxx,
LLP, counsel to the Company, in the form attached as Exhibit B.
(q) The Purchasers shall have committed, pursuant to the
terms and subject to the conditions contained in this Agreement, to purchase
Shares for an aggregate amount of at least $5.0 million.
5.2 Conditions to the Obligation of the Company to Consummate
the Closing. The obligation of the Company to consummate the Closing, to issue
and sell to each Purchaser the Shares and the Warrants to be purchased by it at
the Closing is subject to the satisfaction of the following conditions precedent
(or waiver by the Company):
(a) The representations and warranties contained herein of
such Purchaser shall be true and correct on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date (it being
understood and agreed by the Company that, in the case of any representation and
warranty of each Purchaser contained herein which is not hereinabove qualified
by application thereto of a materiality standard, such representation and
warranty need be true and correct only in all material respects in order to
satisfy as to such representation or warranty the condition precedent set forth
in the foregoing provisions of this Section 5.2(a)).
(b) The Registration Rights Agreement shall have been
executed and delivered by each Purchaser.
(c) Such Purchaser shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to the
Closing Date.
(d) No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted before any court,
arbitrator or governmental body, agency or official and shall be pending.
(e) The sale of the Shares and the Warrants by the Company
shall not be prohibited by any law or governmental order or regulation. All
necessary consents, approvals, licenses, permits, orders and authorizations of,
or registrations, declarations and filings with, any governmental or
administrative agency or of any other person with respect to any of the
transactions contemplated hereby shall have been duly obtained or made and shall
be in full force and effect.
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(f) Such Purchaser shall have executed and delivered to the
Company an executed Investor Questionnaire, in substantially the form attached
hereto as Exhibit C, pursuant to which each such Purchaser shall provide
information necessary to confirm each such Purchaser's status as an "Accredited
Investor" (as such term is defined in Rule 501 promulgated under the Securities
Act).
(g) The Company shall have received executed agreements
(which may be a counterpart signature to this Agreement) from each of the
Purchasers to purchase, in accordance with this Agreement, the number of shares
of Common Stock and Warrants set forth on Exhibit A opposite its name.
(h) All instruments and corporate proceedings in connection
with the transactions contemplated by this Agreement to be consummated at the
Closing shall be satisfactory in form and substance to the Company, and the
Company shall have received counterpart originals, or certified or other copies
of all documents, including, without limitation, records of corporate or other
proceedings, which it may have reasonably requested in connection therewith.
(i) No Purchaser nor any of its Affiliates nor any person
acting on behalf of such Persons will have entered into for a period of five (5)
days prior to the Closing Date, any "short sale" (as such term is defined in
Rule 3b-3 under the Securities Exchange Act of 1934, as amended).
(j) The Purchasers shall have committed, pursuant to the
terms and subject to the conditions contained in this Agreement, to purchase
Shares for an aggregate amount of at least $5.0 million.
6. Transfer; Legends; Anti-Dilution.
6.1 Securities Law Transfer Restrictions. No Purchaser shall
sell, assign, pledge, transfer or otherwise dispose or encumber any of the
Shares, the Warrants, and if applicable, the Warrant Shares, being purchased by
it hereunder, except: (i) pursuant to an effective registration statement under
the Securities Act or (ii) pursuant to an available exemption from registration
under the Securities Act and applicable state securities laws and, if reasonably
requested by the Company, upon delivery by such Purchaser of an opinion of
counsel reasonably satisfactory to the Company to the effect that the proposed
transfer is exempt from registration under the Securities Act and applicable
state securities laws. Any transfer or purported transfer of the Shares, the
Warrants, and if applicable, the Warrant Shares, in violation of this Section
6.1 shall be voidable by the Company; provided, however, that no opinion will be
required in connection with (1) a public sale or transfer of Shares, the
Warrants, and if applicable, the Warrant Shares, pursuant to an effective
registration statement in connection with which such Purchaser represents in
writing to the Company that such Shares, and if applicable, Warrant Shares, have
been or are being sold pursuant to such registration statement; (2) a public
sale of Shares, and if applicable, Warrant Shares pursuant to Rule 144 under the
Securities Act if such Purchaser has delivered to the Company a customary and
accurate Rule 144 broker's and seller's representation letter; or (3) a sale of
shares pursuant to Rule 144(k) under the Securities Act if such Purchaser has
delivered to the Company a customary and accurate Rule 144 seller's
representation letter. The Company shall not register any transfer of the
Shares, the Warrants, and if applicable, the Warrant Shares in violation of this
Section 6.1. The Company may, and may instruct any transfer agent for the
Company, to place such stop transfer orders as may be required on the transfer
books of the Company in order to ensure compliance with the provisions of this
Section 6.1.
6.2 Legends. Each certificate representing any of the Shares,
the Warrants and, if applicable, the Warrant Shares shall be endorsed with a
legend in substantially the form set forth below, and each Purchaser covenants
that, except to the extent such restrictions are waived by the Company, it
13
shall not transfer the securities represented by any such certificate without
complying with the restrictions on transfer described in this Agreement and the
legends endorsed on such certificate:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY ONLY BE
OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE
DISPOSED OF PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND SUCH LAWS OR (II) AN EXEMPTION
FROM REGISTRATION UNDER SAID ACT, AND TO THE EXTENT
PERMITTED BY SECTION 6.1 OF THE SECURITIES PURCHASE
AGREEMENT PURSUANT TO WHICH THE SECURITIES REPRESENTED
HEREBY WERE ACQUIRED, UPON DELIVERY OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED
TRANSFER IS EXEMPT FROM THE ACT AND SUCH LAWS.
6.3 Removal of Legends. Any legend endorsed on a certificate
evidencing the Shares and, if applicable, the Warrant Shares shall be removed,
and the Company shall issue a certificate without such legend to the holder of
such Shares and, if applicable, the Warrant Shares if such Shares and, if
applicable, the Warrant Shares will be sold (i) pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144
promulgated thereunder, (ii) at any time the Shares and, if applicable, the
Warrant Shares become eligible for sale under Rule 144(k) under the Securities
Act or (iii) if, in the opinion of counsel, such legends are no longer required
under applicable requirements of the Securities Act, and the purchaser thereof
may immediately resell such Shares and, if applicable, Warrant Shares without
restriction and without registration; provided, however, that in the case of a
sale pursuant to Rule 144, such holder of Shares and, if applicable, Warrant
Shares shall provide such information as is reasonably requested by the Company
to ensure that such Shares and, if applicable, the Warrant Shares may be sold in
reliance on Rule 144. The Company shall cause its counsel to issue a legal
opinion to the Company's transfer agent promptly after the effective date of the
Company's registration statement covering the Shares and Warrant Shares, if
required by the Company's transfer agent to effect the removal of the legend
hereunder for sale transactions. If the Purchaser shall so instruct when
surrendering legended certificates for removal of legends pursuant hereto, the
securities represented by such certificates shall be transmitted by the transfer
agent of the Company to the Purchaser or its designee by crediting the account
of such broker with the Depository Trust Company System as the Purchaser shall
direct.
6.4 Anti-Dilution Provision for Discounted Common Stock.
(a) Subject to Section 6.4(b), if the Company shall
hereafter at any time and from time to time on or prior to March 30, 2006, issue
any shares of its Common Stock, or any stock options, warrants, convertible
securities or other rights to purchase or acquire shares of Common Stock, for an
aggregate consideration per share of Common Stock (the "Offering Price") which
is less than the per share Purchase Price, the Company shall, within twenty (20)
days after each such issuance, (i) deliver to the Purchaser a written statement
setting forth in reasonable detail the nature of such issuance, the type(s) of
securities issued, the applicable Offering Price, and a detailed calculation of
the number of additional shares issuable under the following clause (ii), and
(ii) without requirement of any further payment or consideration, issue to the
Purchaser, and deliver to the Purchaser stock certificates representing, a
number of additional shares of Common Stock equal to the difference of (A) the
aggregate number of shares of Common Stock theretofore issued pursuant to this
Agreement, and (B) the number of shares of Common Stock that would have been
purchased hereunder had the aggregate Purchase Price hereunder been applied to
the purchase of Common Stock at a price per share equal to the Adjusted Price.
14
As used herein, the term "Adjusted Price" means the Purchase Price multiplied by
a fraction, the numerator of which is the sum of the shares of Common Stock
outstanding prior to the issuance of such shares, plus the number of additional
shares of Common Stock which the aggregate consideration received for such
issuance of shares would purchase at the per share Purchase Price, and the
denominator of which is the number of shares of Common Stock outstanding (or
deemed outstanding) after giving effect to the issuance (or deemed issuance) of
such additional shares.
(b) Notwithstanding anything to the contrary set forth in
this Section 6.4, no adjustment shall be made pursuant to Section 6.4(a) in the
case of shares or other securities issued: (A) upon exercise of stock options
granted to the Company's officers, directors, employees and consultants under a
plan or plans adopted by the Company's Board of Directors and approved by its
stockholders (but only to the extent that the aggregate number of shares
excluded hereby and issued after the date hereof, shall not exceed 15% of the
Company's Common Stock outstanding, on a fully-diluted basis, at the time of any
issuance); (B) upon the exercise of stock options, warrants, convertible
securities and convertible debentures outstanding as of the date hereof; (C) in
respect of the conversion of the shares of the Company's Series A Convertible
Preferred Stock; (D) to stockholders of any corporation which merges into the
Company in proportion to their stock holdings of such corporation immediately
prior to such merger, upon such merger; (E) upon the exercise of warrants
granted to any commercial bank or equipment lessor; (F) issued in a private
placement or placements with respect to which less than 1,000 shares in the
aggregate are issued or where the offering price for such shares is at least 90%
of the current market price; (G) issued in a bona fide public offering pursuant
to a firm commitment underwriting; or (H) issued in connection with strategic
alliances or acquisitions of one or more businesses, products or technologies
which have been approved by a majority of the Company's directors.
7. Termination; Liabilities Consequent Thereon. This Agreement may be
terminated and the transactions contemplated hereunder abandoned at any time
prior to the Closing only as follows:
(a) with respect to a Purchaser, by such Purchaser, upon
notice to the Company if the conditions set forth in Section 5.1 shall not have
been satisfied on or prior to March 31, 2005; or
(b) with respect to a Purchaser, by the Company, upon notice
to such Purchaser if the conditions set forth in Section 5.2 to be satisfied by
such Purchaser shall not have been satisfied on or prior to March 31, 2005; or
(c) at any time by mutual agreement of the Company and
Purchasers who represent at least fifty percent (50%) of the Shares being sold
hereunder; or
(d) with respect to a Purchaser, by such Purchaser, if there has
been any breach of any representation or warranty or any material breach of any
covenant of the Company contained herein and the same has not been cured within
15 days after notice thereof (it being understood and agreed by each Purchaser
that, in the case of any representation or warranty of the Company contained
herein which is not hereinabove qualified by application thereto of a
materiality standard, such representation or warranty will be deemed to have
been breached for purposes of this Section 7.1(d) only if such representation or
warranty was not true and correct in all material respects at the time such
representation or warranty was made by the Company); or
(e) by the Company with respect to a Purchaser, if there has
been any breach of any representation, warranty or any material breach of any
covenant of such Purchaser contained herein and the same has not been cured
within 15 days after notice thereof (it being understood and agreed by the
Company that, in the case of any representation and warranty of the Purchaser
contained herein which is not hereinabove qualified by application thereto of a
materiality standard, such representation or warranty
15
will be deemed to have been breached for purposes of this Section 7.1(e) only if
such representation or warranty was not true and correct in all material
respects at the time such representation or warranty was made by such
Purchaser).
Any termination pursuant to this Section 7 shall be without
liability on the part of any party, unless such termination is the result of a
material breach of this Agreement by a party to this Agreement in which case
such breaching party shall remain liable for such breach notwithstanding any
termination of this Agreement.
8. Miscellaneous Provisions.
8.1 Use of Proceeds. The Company shall use the net proceeds
from the sale of the Shares and Warrants for general corporate and working
capital purposes.
8.2 Filings. The Company shall make all necessary filings with
the SEC and "blue sky" filings required to be made by the Company in connection
with the sale of the Shares and, if applicable, the Warrant Shares to the
Purchasers as required by all applicable laws, and shall provide a copy thereof
to the Purchasers promptly after such filing.
8.3 Public Statements or Releases. Each of the parties to this
Agreement agrees that it shall not make, issue, or release any announcement,
whether to the public generally, or to any of its suppliers or customers, with
respect to this Agreement or the transactions provided for herein, or make any
statement or acknowledgment of the existence of, or reveal the status of, this
Agreement or the transactions provided for herein, without the prior consent of
the other parties, which shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, nothing in this Section 8.3 shall prevent any
party hereto from making such public announcements or filings as it may consider
necessary in order to satisfy its legal obligations, or from releasing a public
statement acceptable to each of the parties hereto upon the completion of the
offering contemplated hereby. Notwithstanding the foregoing, as soon as possible
but not later than 9:00 a.m. (New York time) on the first business day following
the Closing Date, the Company will issue a press release acceptable to the
Placement Agent and in accordance with applicable law describing the
transactions contemplated by this Agreement, and promptly thereafter file a
Current Report on Form 8-K with the SEC, attaching such press release.
8.4 Further Assurances. The parties agree to cooperate fully to
execute such further instruments, documents and agreements and to give such
further written assurances, as may be reasonably requested by any party to
better evidence and reflect the transactions described herein and contemplated
hereby, and to carry into effect the intents and purposes of this Agreement.
8.5 Notification of Effectiveness of Registration Statement. The
Company covenants that it will provide written notice to each Purchaser (which
notice may be in electronic form) that the Company's registration statement on
Form SB-2 registering the Shares and, if applicable, the Warrant Shares sold
hereunder to the Purchasers has been declared effective by the SEC, which notice
shall be given promptly after the Company has received notice of such
effectiveness from the SEC.
8.6 Rights Cumulative. Each and all of the various rights,
powers and remedies of the parties hereto shall be considered to be cumulative
with and in addition to any other rights, powers and remedies which such parties
may have at law or in equity in the event of the breach of any of the terms of
this Agreement. The exercise or partial exercise of any right, power or remedy
shall neither constitute the exclusive election thereof nor the waiver of any
other right, power or remedy available to such party.
16
8.7 Pronouns. All pronouns or any variation thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
8.8 Notices.
(a) Any notices, reports or other correspondence
(hereinafter collectively referred to as "Correspondence") required or permitted
to be given hereunder shall be sent by postage prepaid first class mail, courier
or facsimile or delivered by hand to the party to whom such correspondence is
required or permitted to be given hereunder. The date of giving any notice shall
be the date of its actual receipt.
(b) All correspondence to the Company shall be addressed as
follows:
DOBI Medical International, Inc.
0000 XxxXxxxxx Xxxx.
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx
General Counsel and Secretary
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx Traurig, LLP
MetLife Building
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(c) All correspondence to any Purchaser shall be sent
to such Purchaser at the
address set forth in Exhibit A.
(d) Any Person may change the address to which
correspondence to it is to be addressed by notification as provided for herein.
8.9 Captions. The captions and paragraph headings of this
Agreement are solely for the convenience of reference and shall not affect its
interpretation.
8.10 Severability. Should any part or provision of this
Agreement be held unenforceable or in conflict with the applicable laws or
regulations of any jurisdiction, the invalid or unenforceable part or provisions
shall be replaced with a provision which accomplishes, to the extent possible,
the original business purpose of such part or provision in a valid and
enforceable manner, and the remainder of this Agreement shall remain binding
upon the parties hereto.
8.11 Governing Law; Injunctive Relief.
17
(a) This Agreement shall be governed by and construed
and enforced in accordance with the internal and substantive laws of the State
of New York and without regard to any conflicts of laws concepts that would
apply the substantive law of any other jurisdiction.
(b) Each of the parties hereto acknowledges and agrees that
damages will not be an adequate remedy for any material breach or violation of
this Agreement if such material breach or violation would cause immediate and
irreparable harm (an "Irreparable Breach"). Accordingly, in the event of a
threatened or ongoing Irreparable Breach, each party hereto shall be entitled to
seek, in any state or federal court in the State of New York, equitable relief
of a kind appropriate in light of the nature of the ongoing or threatened
Irreparable Breach, which relief may include, without limitation, specific
performance or injunctive relief; provided, however, that if the party bringing
such action is unsuccessful in obtaining the relief sought, the moving party
shall pay the non-moving party's costs, including actual attorney's fees,
incurred in connection with defending such action. Such remedies shall not be
the parties' exclusive remedies, but shall be in addition to all other remedies
provided in this Agreement.
8.12 Waiver. No waiver of any term, provision or condition of
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be, or be construed as, a further or continuing waiver of any
such term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
8.13 Fees, Costs and Expenses. All fees, costs and expenses
(including attorneys' fees and expenses) incurred by any party hereto in
connection with the preparation, negotiation and execution of this Agreement and
the exhibits hereto and the consummation of the transactions contemplated hereby
and thereby (including the costs associated with any filings with, or compliance
with any of the requirements of, any governmental authorities), shall be the
sole and exclusive responsibility of such party.
8.14 Assignment. The rights and obligations of the parties
hereto shall inure to the benefit of and shall be binding upon the authorized
successors and permitted assigns of each party. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Majority Purchasers. Any Purchaser may assign its rights under
this Agreement to any person to whom the Purchaser assigns or transfers any
Shares, Warrants, and, if applicable, Warrant Shares provided that such
transferee agrees in writing to be bound by the terms and provisions of this
Agreement, and such transfer is in compliance with the terms and provisions of
this Agreement and permitted, with the approval of counsel to the Company, by
federal and state securities laws.
8.15 Survival. The respective representations and warranties
given by the parties hereto, and the other covenants and agreements contained
herein, shall survive the Closing Date and the consummation of the transactions
contemplated herein for a period of two years, without regard to any
investigation made by any party.
8.16 Entire Agreement. This Agreement and exhibits attached
hereto and incorporated herewith constitute the entire agreement between the
parties hereto respecting the subject matter hereof and supersedes all prior
agreements, negotiations, understandings, representations and statements
respecting the subject matter hereof, whether written or oral.
8.17 Amendments. No modification, alteration, waiver or change
in any of the terms of this Agreement shall be valid or binding upon the parties
hereto unless made in writing and duly executed by the Company and (a) prior to
Closing, Purchasers who represent at least 66-2/3% of the Shares being sold
hereunder or (b) following Closing, Purchasers holding at least 66-2/3% of the
Shares;
18
provided, however, that, in each case, no such amendment shall increase the
obligations of any Purchaser without such Purchaser's written consent.
8.18 Confidential Information. Each of the Company and each
Purchaser agrees to keep confidential, and not to disclose to or use for the
benefit of any third party, the terms of this Agreement or any other information
which at any time is communicated by the other party as being confidential,
without the prior written approval of the other party; provided, however, that
this provision shall not apply to information which, at the time of disclosure,
is already part of the public domain (except by breach of this Agreement) and
information which is required to be disclosed by law (including, without
limitation, pursuant to Item 601(b)(10) of Regulation S-K under the Securities
Act and the Exchange Act) and provided further the Company will not furnish
confidential information to a Purchaser without (i) informing such Purchaser
regarding the nature of such information and (ii) receiving the prior express
written agreement of such Purchaser. Notwithstanding anything herein to the
contrary, any party to this Agreement (and any employee, representative, or
other agent of any party to this Agreement) may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of the
transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to it relating to
such tax treatment and tax structure. However, any such information relating to
the tax treatment or tax structure is required to be kept confidential to the
extent necessary to comply with any applicable federal or state securities laws.
8.19 Stock Splits, Dividends and other Similar Events. The
provisions of this Agreement shall be appropriately adjusted to reflect any
stock split, stock dividend, reorganization or other similar event that may
occur with respect to the Company after the date hereof.
8.20 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS.]
IN WITNESS WHEREOF, the parties hereto have executed this
Securities Purchase Agreement as of the day and year first above written.
DOBI MEDICAL INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx
Chief Executive Officer
[Investor signature pages follow.]
19
INVESTOR SIGNATURE PAGE
DOBI MEDICAL INTERNATIONAL, INC.
SECURITIES PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Securities Purchase
Agreement (the "Agreement") to which this signature page is attached, which,
together with all counterparts of the Agreement and signature pages of the other
parties named in the Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
Print Name:
-----------------------------------
By:
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Name:
-----------------------------------------
Title:
----------------------------------------
Address:
--------------------------------------
Telephone:
-------------------------------------
Facsimile:
-------------------------------------
E-mail:
--------------------------------------
SSN/EIN#:
-------------------------------------
Number of Shares of Common Stock
Purchased:
------------------------------------
Number of Warrants Purchased:
-----------------
Aggregate Purchase Price:
---------------------
