SECURITIES PURCHASE AGREEMENT
Exhibit 10.57
This Securities Purchase Agreement, dated on and as of August 23, 2007 (this
“Agreement”), is made between Xxxxxxxxxx, Inc., a Delaware corporation (f/k/a Ciphergen
Biosystems, Inc.) (the “Company”), the undersigned purchaser(s) (each a “Purchaser”
and collectively, the “Purchasers”) and each assignee of a Purchaser who becomes a party
hereto.
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506
of Regulation D promulgated thereunder, the Company desires to offer, issue and sell to the
Purchasers (the “Offering”), and the Purchasers, severally and not jointly, desire to
purchase from the Company, shares (the “Shares”) of the Company’s common stock, par value
$0.001 per share (the “Common Stock”), and five-year warrants to purchase shares of Common
Stock (the “Warrants”), with an exercise price per share equal to $0.925, which is a 25%
premium to the Share Purchase Price as defined below. The Shares and the Warrants are collectively
referred to herein as the “Securities”.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this
Agreement, and for other good and valuable consideration the receipt and adequacy of which is
hereby acknowledged, the Company and each of the Purchasers agree as follows:
A. Subscription
(1) Subject to the conditions to closing set forth herein, each Purchaser hereby irrevocably
subscribes for and agrees to purchase Securities for the aggregate purchase price set forth on the
signature page of such Purchaser hereto (the “Subscription Amount”). The Securities to be
issued to a Purchaser hereunder shall consist of (i) Shares in an amount equal to the quotient of
(x) the Subscription Amount, divided by (y) the sum of (1) the Share Purchase Price and (2) the
product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded down to the
nearest whole number, and (ii) a Warrant to purchase such number of shares of Common Stock to be
determined based on a ratio (the “Warrant Coverage Ratio”) of one (1) share of Common Stock
for every 1.25 Shares purchased hereunder, rounded down to the nearest whole number. The aggregate
amount of Securities to be issued pursuant to the Offering shall not exceed 25.0 million Shares and
Warrants to purchase 20.0 million shares of Common Stock.
(2) For the purposes of this Agreement, the purchase price for each Share shall be $0.74 (the
“Share Purchase Price”) and the purchase price for each Warrant shall be $0.125 per warrant
share (the “Warrant Purchase Price”).
(3) The Company shall use its reasonable best efforts to hold the closing of the Offering (the
“Closing”, and the date of the Closing, the “Closing Date”) within three (3)
business days after the date of this Agreement. Prior to the Closing, each Purchaser shall deliver
the applicable Subscription Amount, by wire transfer to such escrow account in accordance with the
wire transfer instructions set forth on Schedule A, and such amount shall be held in the
manner described in Paragraph (4) below. There is no minimum Subscription Amount required for
the Closing.
(4) All payments for Securities made by the Purchasers will be deposited as soon as
practicable for the undersigned’s benefit in a non-interest bearing escrow account. Payments for
Securities made by the Purchasers will be returned promptly, prior to an applicable Closing,
without interest or deduction, if, or to the extent, (i) the undersigned’s subscription is
rejected; (ii) the Offering is terminated for any reason; or (iii) upon request by the Purchaser,
if the Closing does not occur within five (5) business days after the date of this Agreement;
provided, however, that the foregoing clause (iii) shall not relieve any Purchaser of any liability
in the event the Closing does not occur within such five (5) business day period due to the failure
of a Purchaser to deliver such Purchaser’s applicable Subscription Amount.
(5) Upon receipt by the Company of the requisite payment for all Securities to be purchased by
the Purchasers whose subscriptions are accepted, the Company shall, at the Closing: (i) issue to
each Purchaser stock certificates representing the shares of Common Stock purchased at such Closing
under this Agreement; (ii) issue to each Purchaser a Warrant to purchase such number of shares of
Common Stock calculated based on the number of shares of Common Stock issued at such Closing and in
accordance with Paragraph (1) above; (iii) deliver to the Purchasers and to Xxxxxxxxxxx & Co. Inc.,
the placement agent for the Offering (the “Placement Agent”), a certificate stating that
the representations and warranties made by the Company in Section C of this Agreement were true and
correct in all material respects when made and are true and correct in all material respects on the
date of each such Closing relating to the Securities subscribed for pursuant to this Agreement as
though made on and as of such Closing Date (provided, however, that representations and warranties
that speak as of a specific date shall continue to be true and correct as of the Closing with
respect to such date); (iv) cause to be delivered to the Placement Agent and the Purchasers an
opinion of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP substantially in the form of Exhibit A
hereto and reasonably acceptable to counsel for the Placement Agent; (v) cause to be delivered to
the Placement Agent and the Purchasers as of a date within five (5) days of the Closing Date
evidence of the good standing and corporate existence of the Company and each of its subsidiaries
issued in each case by the Delaware Secretary of State; and (vi) cause to be delivered to the
Placement Agent a Lock-Up Agreement executed by each of its executive officers, directors and
affiliates substantially in the form of Exhibit B. Notwithstanding anything to the contrary
herein, the Company and Purchasers agree that no funds may be released to the Company from the
escrow account until all of the items required to be delivered by the Company pursuant to this
Paragraph (5) have been delivered in accordance with this Paragraph (5) and all other conditions to
Closing set forth in this Agreement have been satisfied or waived. Upon satisfaction or waiver of
all conditions to Closing set forth in this Agreement, funds may be released from the escrow
account upon mutual written instructions of the Company and the Placement Agent.
(6) Each Purchaser acknowledges and agrees, solely with respect to itself, that (i) the
purchase of Shares and Warrants by such Purchaser pursuant to the Offering is subject to all the
terms and conditions set forth in this Agreement; and (ii) this Agreement shall be binding upon
such Purchaser upon the execution and delivery to the Company, in care of the Placement Agent, of
such Purchaser’s signed counterpart signature page to this Agreement unless and until the Company
shall promptly reject the subscription being made hereby by such Purchaser.
2
B. Representations and Warranties of the Purchaser
Each Purchaser, severally and not jointly, hereby represents and warrants only as to itself to
the Company, and agrees with the Company as follows:
(1) Such Purchaser has carefully read this Agreement and the form of Warrant attached hereto
as Exhibit C (collectively the “Offering Documents”), and is familiar with and
understands the terms of the Offering. Specifically, and without limiting in any way the foregoing
representation, such Purchaser has carefully read and considered the Company’s (a) Annual Report on
Form 10-K for the fiscal year ended December 31, 2006, as amended (the “2006 Form 10-K”),
including, without limitation, the financial statements included therein and the sections therein
entitled “Item 1. Description of Business,” “Item 1A. Risk Factors,” “Item 6. Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” and (b) Quarterly Report
on Form 10-Q for the quarter ended June 30, 2007, including, without limitation, the subsections of
such Form 10-Q entitled “Part I, Item 1. Financial Statements,” “Part I, Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operation” and “Part II, Item 1A.
Risk Factors” and (c) Proxy Statement on Form – DEF 14A, filed with the Securities and Exchange
Commission (“SEC”) on May 15, 2007. Such Purchaser has relied only on the information
contained in the Offering Documents and this Agreement and has not relied on any representation
made by any other person. Such Purchaser fully understands all of the risks related to the purchase
of the Securities. Such Purchaser has carefully considered and has discussed with such Purchaser’s
professional legal, tax, accounting and financial advisors, to the extent such Purchaser has deemed
necessary, the suitability of an investment in the Securities for such Purchaser’s particular tax
and financial situation and has determined that the Securities being subscribed for by such
Purchaser are a suitable investment for such Purchaser. Such Purchaser recognizes that an
investment in the Securities involves substantial risks, including the possible loss of the entire
amount of such investment. Such Purchaser further recognizes that the Company has broad discretion
concerning the use and application of the proceeds from the Offering.
(2) Such Purchaser acknowledges that (i) such Purchaser has had the opportunity to request
copies of any documents, records, and books pertaining to this investment and (ii) any such
documents, records and books that such Purchaser requested have been made available for inspection
by such Purchaser, such Purchaser’s attorney, accountant or advisor(s).
(3) Such Purchaser and such Purchaser’s advisor(s) have had a reasonable opportunity to ask
questions of and receive answers from representatives of the Company or persons acting on behalf of
the Company concerning the Offering and all such questions have been answered to the full
satisfaction of such Purchaser. Such Purchaser understands that it is not relying on any
representation of any kind made by the Company or the Placement Agent regarding the Company, the
Securities or any other matter other than as set forth herein.
(4) Such Purchaser is not subscribing for Securities as a result of or subsequent to any
advertisement, article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar, meeting or
conference whose attendees have been invited by any general solicitation or general advertising.
3
(5) If such Purchaser is a natural person, such Purchaser has reached the age of majority in
the state in which such Purchaser resides. Such Purchaser has adequate means of providing for such
Purchaser’s current financial needs and contingencies, is able to bear the substantial economic
risks of an investment in the Securities for an indefinite period of time, has no need for
liquidity in such investment and can afford a complete loss of such investment.
(6) Such Purchaser has sufficient knowledge and experience in financial, tax and business
matters to enable such Purchaser to utilize the information made available to such Purchaser in
connection with the Offering, to evaluate the merits and risks of an investment in the Securities
and to make an informed investment decision with respect to an investment in the Securities on the
terms described in the Offering Documents.
(7) Such Purchaser will not sell or otherwise transfer the Securities without registration
under the Securities Act and applicable state securities laws or an applicable exemption therefrom.
Such Purchaser acknowledges that neither the offer nor sale of the Securities has been registered
under the Securities Act or under the securities laws of any state. Such Purchaser represents and
warrants that such Purchaser is acquiring the Securities for such Purchaser’s own account and not
with a current view toward resale or distribution within the meaning of the Securities Act. Such
Purchaser has not offered or sold the Securities being acquired nor does such Purchaser have any
present intention of selling, distributing or otherwise disposing of such Securities either
currently or after the passage of a fixed or determinable period of time or upon the occurrence or
non-occurrence of any predetermined event or circumstances in violation of the Securities Act.
Such Purchaser is aware that (i) the Securities are not currently eligible for sale in reliance
upon Rule 144 promulgated under the Securities Act and (ii) the Company has no obligation to
register the Securities subscribed for hereunder, except as provided in Section E hereof. By making
these representations herein, such Purchaser is not making any representation or agreement to hold
the Securities for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration statement or an available
exemption to the registration requirements of the Securities Act.
(8) Such Purchaser acknowledges that the certificates representing the Shares, the Warrants
and, upon the exercise of the Warrants, the shares of Common Stock issuable upon exercise of the
Warrants (the “Warrant Shares”), shall be stamped or otherwise imprinted with a legend
substantially in the following form:
The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, or any state securities laws and
neither the securities nor any interest therein may be offered,
sold, transferred, pledged or otherwise disposed of except pursuant
to an effective registration under such act or an exemption from
registration, which, in the opinion of counsel reasonably
satisfactory to this corporation, is available.
The Company shall cooperate with the Purchasers to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold pursuant to a Registration
Statement, which certificates shall be free, to the extent permitted by applicable law and the
4
Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to
be in such denominations and registered in such names as any Purchaser may request at least two (2)
Business Days prior to any sale of Registrable Securities. In connection therewith, the Company
shall promptly after the effectiveness of the Registration Statement cause an opinion of counsel to
be delivered to and maintained with its transfer agent, together with any other authorizations,
certificates and directions required by the transfer agent, which authorize and direct the transfer
agent to issue such Registrable Securities without legend upon sale by such Purchaser of such
shares of Registrable Securities under the Registration Statement.
Certificates evidencing the Shares and the Warrant Shares shall not be required to contain
such legend or any other legend (i) following any sale of such Shares or Warrant Shares pursuant to
Rule 144, or (ii) if such Shares or Warrant Shares are eligible for sale under Rule 144(k) or have
been sold pursuant to the Registration Statement (as defined in Section E hereof) and in compliance
with the obligations set forth in Section E(6), below, or (iii) such legend is not required under
applicable requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Securities and Exchange Commission), in each such case
(i) through (iii) to the extent reasonably determined by the Company’s legal counsel. Subject to
the foregoing, at such time and to the extent a legend is no longer required for the Shares or
Warrant Shares, the Company will use its reasonable best efforts to no later than three (3) trading
days following the delivery by a Purchaser to the Company or to the Company and the Company’s
transfer agent of a legended certificate representing such Shares or Warrant Shares (together with
such accompanying documentation or representations as reasonably required by counsel to the
Company), deliver or cause to be delivered a certificate representing such Shares or Warrant Shares
that is free from the foregoing legend.
If the Company shall fail to deliver or cause to be delivered for any reason or no reason such
unlegended certificate within the three (3) trading day period set forth herein (the “Delivery
Deadline”), then, in addition to all other remedies available to such Purchaser, if on or after
the trading day immediately following the Delivery Deadline such Purchaser purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by
such Purchaser of shares of Common Stock that were to be represented by the unlegended certificate
(a “Buy-In”), then, provided as of such purchase date such Purchaser had not received the
unlegended certificate, the Company shall, within three (3) business days after written request by
such Purchaser and in such Purchaser’s discretion, either (i) pay cash to such Purchaser in an
amount equal to the purchase price (including brokerage commissions, if any) paid by such Purchaser
for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the
Company’s obligation to deliver such unlegended certificate (or to issue such shares of Common
Stock) shall terminate, and, in the case where the shares that were to be represented by the
unlegended certificate were already issued to such Purchaser and held of record on the books of the
Company’s transfer agent, such Purchaser shall promptly deliver to the Company any documentation
reasonably required to transfer such shares from such Purchaser to the Company, or (ii) promptly
honor its obligation to deliver to such Purchaser a certificate or certificates representing such
shares of Common Stock and pay cash to such Purchaser in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the
Closing Sale Price on the Delivery Deadline. “Closing Sale Price” means, for any security
as of any date, the closing sale price for such security on the Nasdaq Capital Market, as reported
by Bloomberg, or, if the Nasdaq Capital
5
Market begins to operate on an extended hours basis and does not designate the closing sale
price then the last sale price of such security prior to 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if the Nasdaq Capital Market is not the principal securities exchange or trading
market for such security, the last sale price of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by Bloomberg, or if the
foregoing do not apply, the last sale price of such security in an over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no last sale price is
reported for such security by Bloomberg, the average of the ask prices of any market makers for
such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation
Bureau, Inc.). If the Closing Sale Price cannot be calculated for a security on a particular date
on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the
fair market value as mutually determined by the Company and such Purchaser. If the Company and
such Purchaser are unable to agree upon the fair market value of such security, then such dispute
shall be resolved pursuant to the dispute resolution provisions set forth below. All such
determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation period.
In the case of a dispute as to the determination of the Closing Sale Price, the Company shall
submit the disputed determinations via facsimile within two business days of receipt of such
Purchaser’s written request giving rise to such dispute to such Purchaser. If such Purchaser and
the Company are unable to agree upon such determination of the Closing Sale Price within three
business days of such disputed determination being submitted to such Purchaser, then the Company
shall, within two business days submit via facsimile the disputed determination of the Closing Sale
Price to an independent, reputable investment bank selected by the Company and approved by such
Purchaser. The Company, at the Company’s expense, shall use reasonable best efforts to cause at
its expense the investment bank to perform the determinations and notify the Company and such
Purchaser of the results no later than ten business days from the time it receives the disputed
determinations. Such investment bank’s determination shall be binding upon all parties absent
demonstrable error.
(9) If this Agreement is executed and delivered on behalf of a partnership, corporation,
trust, estate or other entity: (i) such partnership, corporation, trust, estate or other entity
has the full legal right and power and all authority and approval required (a) to execute and
deliver this Agreement and all other instruments executed and delivered by or on behalf of such
partnership, corporation, trust, estate or other entity in connection with the purchase of its
Securities, and (b) to purchase and hold such Securities; (ii) the signature of the party signing
on behalf of such partnership, corporation, trust, estate or other entity is binding upon such
partnership, corporation, trust, estate or other entity; and (iii) such partnership, corporation,
trust or other entity has not been formed for the specific purpose of acquiring such Securities,
unless each beneficial owner of such entity is qualified as an accredited investor within the
meaning of Rule 501(a) of Regulation D promulgated under the Securities Act and has submitted
information to the Company substantiating such individual qualification.
(10) If such Purchaser is a retirement plan or is investing on behalf of a retirement plan,
such Purchaser acknowledges that an investment in the Securities poses additional risks, including
the inability to use losses generated by an investment in the Securities to offset taxable income.
6
(11) The information contained in the purchaser questionnaire in the form of Exhibit D
attached hereto (the “Purchaser Questionnaire”) delivered by such Purchaser in connection
with this Agreement is complete and accurate in all respects, and such Purchaser is an “accredited
investor” as defined in Rule 501 of Regulation D under the Securities Act on the basis indicated
therein.
(12) The information contained in the selling stockholder questionnaire in the form of
Exhibit E attached hereto (the “Selling Stockholder Questionnaire”) delivered by
such Purchaser in connection with this Agreement is complete and accurate in all material respects.
(13) Such Purchaser acknowledges that the Company will have the authority to issue shares of
Common Stock, in excess of those being issued in connection with the Offering, and that the Company
may issue additional shares of Common Stock from time to time. The issuance of additional shares
of Common Stock may cause dilution of the existing shares of Common Stock and a decrease in the
market price of such existing shares. Suche Purchaser acknowledges and agrees that such Purchaser
shall have no preemptive rights, right of first refusal, or other rights to subscribe for or
purchase any shares of Common Stock the Company may issue in the future as a result of such
Purchaser’s purchase of Securities pursuant to this Agreement.
(14) Such Purchaser acknowledges that the Company has engaged the Placement Agent in
connection with the Offering and, as consideration for its services, has agreed to pay the
Placement Agent an aggregate cash commission equal to six percent (6.0%) of the gross proceeds
resulting from the Offering and issue five-year warrants (the “Placement Agent Warrants”)
to purchase such number of shares of the Company’s Common Stock equal to four percent (4%) of the
aggregate Shares sold in the Offering; provided that the Placement Agent shall be entitled to 75%
of the amounts it would otherwise be entitled to under this Section B(14) with respect to any
subscription by Quest Diagnostics, Incorporated (“Quest”); and provided further, that the
Placement Agent shall be entitled to 50% of the amounts it would otherwise be entitled to under
this Section B(14) with respect to any subscription by any officers or directors of the Company.
(15) Prohibited Transactions.
(a) Such Purchaser agrees that beginning on the date hereof until the Offering is publicly
announced by the Company (which the Company has agreed to undertake in accordance with the
provisions of Section F.3. hereof), such Purchaser will not enter into any Short Sales. For
purposes of the foregoing sentence, a “Short Sale” by a Purchaser means a sale of Common
Stock that is marked as a short sale and that is executed at a time when such Purchaser has no
equivalent offsetting long position in the Common Stock, exclusive of the Shares. For purposes of
determining whether a Purchaser has an equivalent offsetting long position in the Common Stock, all
Common Stock that would be issuable upon exercise in full of all options, warrants or convertible
securities then held by such Purchaser (assuming that such options were then fully exercisable or
convertible, notwithstanding any provisions to the contrary, and giving effect to any exercise
price adjustments scheduled to take effect in the future) shall be deemed to be held long by such
Purchaser. Such Purchaser understands and acknowledges that the SEC currently takes the position
that coverage of Short Sales “against the
7
box” prior to the Effective Date of the Registration Statement is a violation of Section 5 of
the Securities Act, as set forth in Item 65, Section A, of the Manual of Publicly Available
Telephone Interpretations, dated July 1997, complied by the Office of Chief Counsel, Division of
Corporation Finance.
C. Representations and Warranties of the Company
The Company hereby makes the following representations and warranties to the Purchasers and
the Placement Agent as of the date of this Agreement and immediately prior to Closing and except as
set forth in the disclosure schedules attached hereto as Exhibit F (the “Company
Disclosure Schedule”):
(1) Organization, Good Standing and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to conduct its business as currently conducted. The Company is
duly qualified to do business as a foreign corporation and is in good standing in all jurisdictions
in which the character of the property owned or leased or the nature of the business transacted by
it makes qualification necessary, except where the failure to be so qualified would not have a
material adverse effect on the business, properties, assets, financial condition or results of
operations of the Company and its subsidiaries taken as a whole (a “Material Adverse
Effect”).
(2) Capitalization. The authorized capital stock of the Company consists of
150,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.001 per
share. As of July 31, 2007, there were (i) 39,263,842 shares of Common Stock and no shares of
preferred stock issued and outstanding; (ii) approximately 7,475,681 shares of Common Stock
reserved for future issuance to employees, directors and consultants pursuant to the Company’s
employee stock plans, of which approximately 5,755,329 shares of Common Stock were subject to
outstanding options; (iii) 2,400,000 shares of Common Stock reserved for future issuance upon
exercise of warrants, (iv) 272,082 shares of Common Stock reserved for issuance upon conversion of
the Company’s outstanding 4.5% Convertible Senior Notes due September 1, 2008, and (v) 8,250,000
shares of Common Stock reserved for issuance upon conversion of the Company’s 7% Convertible Senior
Notes due September 1, 2011. Other than as set forth above or as contemplated in this Agreement,
there are no other options, warrants, calls, rights, commitments or agreements of any character to
which the Company is a party or by which either the Company is bound or obligating the Company to
issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of the Company or obligating the Company to grant, extend
or enter into any such option, warrant, call, right, commitment or agreement.
(3) Issuance; Reservation of Shares. The issuance of the Shares has been duly and
validly authorized by all necessary corporate and stockholder action, and the Shares, when issued
and paid for pursuant to this Agreement, will be validly issued, fully paid and non-assessable
shares of Common Stock of the Company. The issuance of the Warrants has been duly and validly
authorized by all necessary corporate and stockholder action, and the Warrant Shares, when issued
upon the due exercise of the Warrants, will be validly issued, fully paid and non-assessable shares
of Common Stock of the Company. The Company has reserved, and will
8
reserve, at all times that the Warrants or Placement Agent Warrants remain outstanding, such
number of shares of Common Stock sufficient to enable the full exercise of the then outstanding
Warrants and Placement Agent Warrants.
(4) Authorization; Enforceability. The Company has all corporate right, power and
authority to enter into this Agreement, the Warrants and to consummate the transactions
contemplated hereby and thereby. All corporate action on the part of the Company, its directors
and stockholders necessary for the authorization, execution, delivery and performance of this
Agreement by the Company, the authorization, sale, issuance and delivery of the Securities
contemplated herein and the performance of the Company’s obligations hereunder and thereunder has
been taken. This Agreement has been duly executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company, enforceable against the Company in accordance
with its terms and subject to laws of general application relating to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting
creditors’ rights generally and rules of law governing specific performance, injunctive relief or
other equitable remedies, and to limitations of public policy. At the Closing, the Warrants will
have been duly executed and delivered by the Company and constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with its terms and
subject to laws of general application relating to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally
and rules of law governing specific performance, injunctive relief or other equitable remedies, and
to limitations of public policy. The issuance and sale of the Securities contemplated hereby will
not give rise to any preemptive rights or rights of first refusal on behalf of any person, except
for those that which have been complied with or waived.
(5) No Conflict; Governmental and Other Consents.
(a) The execution and delivery by the Company of this Agreement and the Warrants and the
consummation of the transactions contemplated hereby and thereby will not result in the violation
of any law, statute, rule, regulation, order, writ, injunction, judgment or decree of any court or
governmental authority to or by which the Company or any of its subsidiaries is bound, or of any
provision of the Certificate of Incorporation or Bylaws of the Company or any of its subsidiaries,
and will not conflict with, or result in a breach or violation of, any of the terms or provisions
of, or constitute (with due notice or lapse of time or both) a default under, any lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which it is bound or to which any of its
properties or assets is subject, nor result in the creation or imposition of any lien upon any of
the properties or assets of the Company except to the extent that any such violation, conflict or
breach would not be reasonably likely to have a Material Adverse Effect. Except for (i) Bio-Rad
Laboratories, Inc. (“Bio-Rad”) pursuant to the terms of the Stock Purchase Agreement, dated
November 13, 2006 (the “Bio-Rad Stock Purchase Agreement”), by and among Bio-Rad and the
Company and (ii) Quest pursuant to the terms of the Stock Purchase Agreement, dated July 22, 2005
(the “Quest Stock Purchase Agreement”), by and among Quest and the Company, no holder of
any of the securities of the Company or any of its subsidiaries has any rights (“demand,”
“piggyback” or otherwise) to have such securities registered by reason of the intention to file,
filing or effectiveness of a Registration Statement,
9
which have not been complied with or waived.
(b) No consent, approval, authorization or other order of any governmental authority or other
third-party is required to be obtained by the Company in connection with the authorization,
execution and delivery of this Agreement or the Warrants or with the authorization, issue and sale
of the Securities, except (i) such approval as may be required under the Securities Act and
applicable state securities laws in respect of the registration of the Shares and Warrant Shares as
contemplated by Section E hereof, (ii) the approval of the Nasdaq Stock Market, Inc. for the
listing of the Shares and Warrant Shares on the Nasdaq Capital Market and (iii) such post-Closing
filings as may be required to be made with the SEC, the National Association of Securities Dealers,
Inc. (“NASD”), and with any state or foreign blue sky or securities regulatory authority.
(6) Litigation. Except as disclosed in filings (“SEC Filings”) by the Company
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), there are no
pending or, to the Company’s knowledge, threatened legal or governmental proceedings against the
Company or any of its subsidiaries, which, if adversely determined, would be reasonably likely to
have a Material Adverse Effect. There is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body (including, without limitation, the SEC) pending or,
to the knowledge of the Company, threatened against or affecting the Company or any of its
subsidiaries wherein an unfavorable decision, ruling or finding could adversely affect the validity
or enforceability of, or the authority or ability of the Company to perform its obligations under
this Agreement or the Warrants.
(7) Accuracy of Reports. All reports required to be filed by the Company in the
period commencing January 1, 2006 and ending on the date of this Agreement (the “SEC
Reports”) under the Exchange Act have been filed with the SEC, complied at the time of filing
in all material respects with the requirements of their respective forms and, except to the extent
updated or superseded by any subsequently filed report, were complete and correct in all material
respects as of the dates at which the information was furnished, and contained (as of such dates)
no untrue statements of a material fact nor omitted to state any material fact necessary in order
to make the statements contained therein, in the light of the circumstances under which they were
made, not misleading.
(8) Financial Information. The Company’s financial statements that appear in the SEC
Reports have been prepared in accordance with United States generally accepted accounting
principles (“GAAP”) in effect as of the date of the applicable financial statements and
supporting schedules, as applicable, except as may be indicated therein or in the notes thereto,
applied on a consistent basis throughout the periods indicated and such financial statements fairly
present in all material respects the financial condition and results of operations of the Company
and its subsidiaries as of the dates and for the periods indicated therein, subject in the case of
interim financial statements, to normal year-end adjustments.
(9) Accounting Controls. The Company and its subsidiaries each maintain a system of
internal accounting controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with GAAP
10
and to maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(10) Xxxxxxxx-Xxxxx Act of 2002. The Company is in compliance in all material
respects with all applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and all rules and
regulations promulgated thereunder or implementing the provisions thereof that are in effect and is
taking reasonable steps to ensure that it will be in compliance with other applicable provisions of
the Xxxxxxxx-Xxxxx Act of 2002 not currently in effect upon the effectiveness of such provisions.
(11) Absence of Certain Changes. Except as set forth in the SEC Filings, since the
date of the Company’s financial statements in the latest of the SEC Reports containing financial
statements of the Company, there has not occurred any undisclosed event that has caused a Material
Adverse Effect or any occurrence, circumstance or combination thereof that reasonably would be
likely to result in such Material Adverse Effect.
(12) Investment Company. The Company is not an “investment company” within the
meaning of such term under the Investment Company Act of 1940, as amended, and the rules and
regulations of the SEC thereunder.
(13) Subsidiaries. The Company’s subsidiaries are set forth on Schedule B hereof
(collectively referred to herein as the Company’s “subsidiaries”). Each of the Company’s
subsidiaries has been duly formed, is validly existing and is in good standing under the law of the
jurisdiction of its formation, has the requisite power and authority to own its property and to
conduct its business as described in the SEC Reports and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect.
(14) Indebtedness. The financial statements in the SEC Reports reflect, to the extent
required, as of the date thereof all outstanding secured and unsecured Indebtedness (as defined
below) of the Company or any subsidiary, or for which the Company or any subsidiary has
commitments. Neither the Company nor any of its subsidiaries has incurred any material
Indebtedness or commitments for Indebtedness since the date of the most recent such SEC Report. For
purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed
money or amounts owed (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in the Company’s balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of business; and (c) the
present value of any lease payments due under leases required to be capitalized in accordance with
GAAP. The Company is not in default with respect to any Indebtedness. The Company is not insolvent
and will not be insolvent after giving effect to the transactions contemplated herein. For purposes
of this Paragraph (14), “insolvent” shall mean an inability to pay debts when due.
11
(15) Certain Fees. Other than fees payable to the Placement Agent, no brokers’,
finders’ or financial advisory fees or commissions will be payable by the Company with respect to
the transactions contemplated by this Agreement.
(16) Material Agreements. Except as set forth in the SEC Filings, neither the Company
nor any of its subsidiaries is a party to any written or oral contract, instrument, agreement,
commitment, obligation, plan or arrangement, a copy of which would be required to be filed with the
SEC as an exhibit to Form 10-K (each, a “Material Agreement”). The Company and each of its
subsidiaries has in all material respects performed all the obligations required to be performed by
them to date under the foregoing agreements, have received no notice of default by the Company or
the subsidiary that is a party thereto, as the case may be, and, to the Company’s knowledge, are
not in default under any Material Agreement now in effect, the result of which would be reasonably
likely to have a Material Adverse Effect.
(17) Transactions with Affiliates. Except as set forth in the SEC Filings, to the
Company’s knowledge, there are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing transactions between (a) the Company, its
subsidiaries or any of their respective customers or suppliers on the one hand, and (b) on the
other hand, any person who would be covered by Item 404(a) of Regulation S-K or any company or
other entity controlled by such person.
(18) Taxes. The Company and its subsidiaries have prepared and filed all federal,
state, local, foreign and other tax returns for income, gross receipts, sales, use and other taxes
and custom duties (“Taxes”) required by law to be filed by them, except for tax returns,
the failure to file which, individually or in the aggregate, do not and would not have a Material
Adverse Effect. Such filed tax returns are complete and accurate, except for such omissions and
inaccuracies, which individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. The Company and its subsidiaries have paid or made provisions for the
payment of all Taxes shown to be due on such tax returns and all additional assessments, and
adequate provisions have been and are reflected in the financial statements of the Company and the
subsidiaries for all current Taxes to which the Company or any subsidiary is subject and which are
not currently due and payable, except for such Taxes which, if unpaid, individually or in the
aggregate, do not and would not have a Material Adverse Effect. None of the federal income tax
returns of the Company or any of its subsidiaries for the past five years has been audited by the
Internal Revenue Service. Neither the Company nor any of its subsidiaries has received written
notice of any assessments, adjustments or contingent liability (whether federal, state, local or
foreign) in respect of any Taxes pending or threatened against the Company or any subsidiary for
any period which, if unpaid, would have a Material Adverse Effect.
(19) Insurance. The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as the
Company believes are prudent and customary in the businesses in which the Company and its
subsidiaries are engaged. The Company has no reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its and its subsidiaries’ businesses without
an increase in cost significantly greater than general increases in cost experienced for similar
companies in similar industries with respect to similar coverage.
12
(20) Environmental Matters. Except as disclosed in the SEC Filings, to the Company’s
knowledge, all real property owned, leased or otherwise operated by the Company and its
subsidiaries is free of contamination from any substance, waste or material currently identified to
be toxic or hazardous pursuant to, within the definition of a substance which is toxic or hazardous
under, or which may result in liability under, any Environmental Law (as defined below), including,
without limitation, any asbestos, polychlorinated biphenyls, radioactive substance, methane,
volatile hydrocarbons, industrial solvents, oil or petroleum or chemical liquids or solids, liquid
or gaseous products, or any other material or substance (“Hazardous Substance”) which has
caused or would reasonably be expected to cause or constitute a threat to human health or safety,
or an environmental hazard in violation of Environmental Law or to result in any environmental
liabilities that would be reasonably likely to have a Material Adverse Effect. Neither the Company
nor any of its subsidiaries has caused or suffered to occur any release, spill, migration, leakage,
discharge, disposal, uncontrolled loss, seepage, or filtration of Hazardous Substances that would
reasonably be expected to result in environmental liabilities that would be reasonably likely to
have a Material Adverse Effect. The Company and its subsidiaries have generated, treated, stored
and disposed of any Hazardous Substances in compliance with applicable Environmental Laws, except
for such non-compliances that would not be reasonably likely to have a Material Adverse Effect.
The Company and its subsidiaries have obtained, or has applied for, and is in compliance with and
in good standing under all permits required under Environmental Laws (except for such failures that
would not be reasonably likely to have a Material Adverse Effect) and neither the Company nor any
of its subsidiaries has knowledge of any proceedings to substantially modify or to revoke any such
permit. There are no investigations, proceedings or litigation pending or, to the Company’s
knowledge, threatened against the Company, its subsidiaries or any of their respective facilities
relating to Environmental Laws or Hazardous Substances. “Environmental Laws” shall mean
all federal, national, state, regional and local laws, statutes, ordinances and regulations, in
each case as amended or supplemented from time to time, and any judicial or administrative
interpretation thereof, including orders, consent decrees or judgments relating to the regulation
and protection of human health, safety, the environment and natural resources.
(21) Intellectual Property Rights and Licenses. Except as disclosed in the SEC
Filings, the Company and its subsidiaries own or has the right to use any and all information,
know-how, trade secrets, patents, copyrights, trademarks, trade names, software, formulae, methods,
processes and other intangible properties that are of a such nature and significance to the
business that the failure to own or have the right to use such items would have a Material Adverse
Effect (“Intangible Rights”). Except as disclosed in the SEC Filings, neither the Company
nor any of its subsidiaries has received any notice that it is in conflict with or infringing upon
the asserted intellectual property rights of others in connection with the Intangible Rights, and,
to the Company’s knowledge, neither the use of the Intangible Rights nor the operation of the
Company’s and its subsidiaries’ businesses is infringing or has infringed upon any intellectual
property rights of others in a manner that would be reasonably expected to have a Material Adverse
Effect. All payments have been duly made that are necessary to maintain the Intangible Rights in
force. Except as disclosed in the SEC Filings, no claims have been made, and to the Company’s
knowledge, no claims are threatened, that challenge the validity or scope of any material
Intangible Right of the Company or any of its subsidiaries. The Company and its subsidiaries have
taken reasonable steps to obtain and maintain in force all licenses and other permissions under
Intangible Rights of third parties necessary to conduct their
13
businesses as heretofore conducted by them, and now being conducted by them, and as expected
to be conducted, and neither the Company nor its subsidiaries is or has been in material breach of
any such license or other permission.
(22) Labor, Employment and Benefit Matters.
(a) There are no existing, or to the Company’s knowledge, threatened strikes or other labor
disputes against the Company or any of its subsidiaries that would be reasonably likely to have a
Material Adverse Effect. Except as disclosed in the SEC Filings, there is no organizing activity
involving employees of the Company or its subsidiaries pending or, to the Company’s knowledge,
threatened by any labor union or group of employees. There are no representation proceedings
pending or, to the Company’s knowledge, threatened with the National Labor Relations Board, and no
labor organization or group of employees of the Company or its subsidiaries has made a pending
demand for recognition.
(b) Except as set forth in the SEC Filings, neither the Company nor any of its subsidiaries
is, or during the five years preceding the date of this Agreement was, a party to any labor or
collective bargaining agreement and there are no labor or collective bargaining agreements which
pertain to employees of the Company or any of its subsidiaries.
(c) Each employee benefit plan is in compliance with all applicable law, except for such
noncompliance that would not be reasonably likely to have a Material Adverse Effect.
(d) Neither the Company nor any of its subsidiaries have any liabilities, contingent or
otherwise, including, without limitation, liabilities for retiree health, retiree life, severance
or retirement benefits, which are not fully reflected, to the extent required by GAAP, on the
Balance Sheet or fully funded. The term “liabilities” used in the preceding sentence shall be
calculated in accordance with reasonable actuarial assumptions.
(e) Neither the Company nor any of its subsidiaries has (i) terminated any “employee pension
benefit plan” as defined in Section 3(2) of ERISA (as defined below) under circumstances that
present a material risk of the Company or any of its subsidiaries incurring any liability or
obligation that would be reasonably likely to have a Material Adverse Effect, or (ii) incurred or
expects to incur any outstanding liability under Title IV of the Employee Retirement Income
Security Act of 1974, as amended and all rules and regulations promulgated thereunder
(“ERISA”).
(23) Compliance with Law. The Company and its subsidiaries are in compliance in all
material respects with all applicable laws, except for such noncompliance that would not reasonably
be likely to have a Material Adverse Effect. Neither the Company or its subsidiaries has received
any notice of, nor does the Company have any knowledge of, any violation (or of any investigation,
inspection, audit or other proceeding by any governmental entity involving allegations of any
violation) of any applicable law involving or related to the Company or any of its subsidiaries
which has not been dismissed or otherwise disposed of that would be reasonably likely to have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries has received notice or
otherwise has any knowledge that the Company or any of its subsidiaries is
14
charged with, threatened with or under investigation with respect to, any violation of any
applicable law that would reasonably be likely to have a Material Adverse Effect. Neither the
Company nor any of its subsidiaries nor, to the Company’s knowledge, any employee or agent of the
Company or any subsidiary has made any contribution or other payment to any official of, or
candidate for, any federal, state or foreign office in violation of any law. The Company, its
subsidiaries and, to the Company’s knowledge, their respective directors, officers, employees and
agents have complied in all material respects with the Foreign Corrupt Practices Act of 1977, as
amended, and any related rules and regulations.
(24) Ownership of Property. Except as disclosed in the SEC Filings, the Company and
its subsidiaries has (i) good and marketable fee simple title to its owned real property, if any,
free and clear of all liens, except for liens which do not individually or in the aggregate have a
Material Adverse Effect; (ii) a valid leasehold interest in all leased real property, and each of
such leases is valid and enforceable in accordance with its terms (subject to laws of general
application relating to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws relating to or affecting creditors’ rights generally and rules of law governing
specific performance, injunctive relief or other equitable remedies, and to limitations of public
policy) and is in full force and effect, and (iii) good title to, or valid leasehold interests in,
all of its other properties and assets free and clear of all liens, except for liens disclosed in
the SEC Filings or which otherwise do not individually or in the aggregate have a Material Adverse
Effect.
(25) Compliance with Nasdaq Capital Market Requirements. The Company’s Common Stock
is registered pursuant to Section 12(b) of the Exchange Act and is quoted on the Nasdaq Capital
Market, trading in the Common Stock has not been suspended, and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or disqualifying the Common Stock from quotation on the Nasdaq Capital
Market, nor to the Company’s knowledge is the Nasdaq Stock Market, Inc. currently contemplating
terminating the eligibility of the Company’s Common Stock to be quoted on the Nasdaq Capital
Market. The Company and the Common Stock meet the criteria for continued quotation on the Nasdaq
Capital Market.
(26) No Integrated Offering. Assuming the accuracy of each Purchaser’s
representations and warranties set forth in Section B hereof, neither the Company, nor any of its
affiliates or other person acting on the Company’s 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 the Offering of the Securities to be integrated with prior offerings by the
Company for purposes of the Securities Act, when integration would cause the Offering not to be
exempt from the requirements of Section 5 of the Securities Act.
(27) General Solicitation. Neither the Company nor, to its knowledge, any person
acting on behalf of the Company, has offered or sold any of the Securities by any form of “general
solicitation” within the meaning of Rule 502 under the Securities Act. To the knowledge of the
Company, no person acting on its behalf has offered the Securities for sale other than to the
Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the
Securities Act.
15
(28) No Manipulation of Stock. The Company has not taken and will not take, in
violation of applicable law, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to facilitate the sale
or resale of the Securities.
(29) No Registration. Assuming the accuracy of the representations and warranties
made by, and compliance with the covenants of, the Purchasers in Section B hereof, no registration
of the Securities under the Securities Act (other than as contemplated by Section E hereof) is
required in connection with the offer and sale of the Securities by the Company to the Purchasers
as contemplated by this Agreement.
(30) Disclosure. The Company understands and acknowledges that each of the Purchasers
will rely on the foregoing representations in purchasing the Securities of the Company hereunder.
All disclosure provided by the Company to the Purchasers regarding the Company, its business and
the transactions contemplated hereby furnished by or on the behalf of the Company are, taken as a
whole, true and correct in all material respects and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading. To the
Company’s knowledge, no material event or circumstance has occurred or information exists with
respect to the Company or its business, properties, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed.
D. Understandings
Each of the Purchasers understands, acknowledges and agrees with the Company as follows:
(1) The execution of this Agreement by the Purchaser or solicitation of the investment
contemplated hereby shall create no obligation on the part of the Company to accept any
subscription or complete the Offering. If the Company accepts a subscription for Securities made
by a Purchaser, it shall countersign this Agreement within one (1) business day of its receipt
thereof. If this Agreement is not countersigned within one (1) business day of the Company’s
receipt thereof, the Purchaser shall have the option to withdraw its investment by delivering
written notice thereof to the Company. This Agreement, however, shall remain valid unless and
until the Company has received such written notice of withdrawal. Each Purchaser hereby
acknowledges and agrees that the subscription hereunder, once accepted by the Company, is
irrevocable by such Purchaser, and that, except as required by law, such Purchaser is not entitled
to cancel, terminate or revoke this Agreement or any agreements of such Purchaser hereunder, except
that the obligations under this Agreement shall not survive the death or disability of such
Purchaser.
(2) No federal or state agency or authority has made any finding or determination as to the
accuracy or adequacy of the Offering Documents or as to the fairness of the terms of the Offering
nor any recommendation or endorsement of the Securities. Any representation to the contrary is a
criminal offense. In making an investment decision, Purchasers must rely on their
16
own examination of the Company and the terms of the Offering, including the merits and risks
involved.
(3) The Offering is intended to be exempt from registration under the Securities Act by virtue
of Section 4(2) of the Securities Act and the provisions of Rule 506 of Regulation D thereunder,
which is in part dependent upon the truth, completeness and accuracy of the statements made by the
Purchaser herein and in the Purchaser Questionnaire.
(4) Notwithstanding the registration obligations provided herein, there can be no assurance
that the Purchaser will be able to sell or dispose of the Securities. It is understood that in
order not to jeopardize the Offering’s exempt status under Section 4(2) of the Securities Act and
Regulation D, any transferee may, at a minimum, be required to fulfill the investor suitability
requirements thereunder.
(5) The Purchaser acknowledges that the Offering is confidential and non-public and agrees
that all information about the Offering shall be kept in confidence by the Purchaser until the
public announcement of the Offering by the Company. The Purchaser acknowledges that the foregoing
restrictions on the Purchaser’s use and disclosure of any such confidential, non-public information
contained in the above-described documents restricts the Purchaser from trading in the Company’s
securities to the extent such trading is on the basis of material, non-public information of which
the Purchaser is aware. Except for the terms of the transaction documents and the fact that the
Company is considering consummating the transactions contemplated therein (which information the
Company has agreed to disclose in accordance with Section F.3 hereof), the Company confirms that
neither the Company nor, to its knowledge, any other person acting on its behalf, has provided any
of the Purchasers or their agents or counsel with any information that constitutes material,
non-public information.
E. Registration Rights
(1) Certain Definitions. For purposes of this Section E, the following terms shall
have the meanings ascribed to them below.
(a) “Prospectus” means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the Offering of any portion of the Registrable Securities covered by
the Registration Statement, and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed to be incorporated
by reference in such Prospectus.
(b) “Registrable Securities” shall mean any Shares and Warrant Shares issued or
issuable pursuant to the Offering Documents together with any securities issued or issuable upon
any stock split, dividend or other distribution, adjustment, recapitalization or similar event with
respect to the foregoing; provided, however, that any such securities shall cease to be Registrable
Securities upon the earlier of the date when (i) such Registrable Securities have been registered
under the Securities Act and disposed of in accordance with the Registration
17
Statement or (ii) such Registrable Securities may be sold without registration or restriction
pursuant to Rule 144(k) under the Securities Act or any successor provision.
(c) “Registration Statement” means the registration statement required to be filed
under this Section E, including the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by reference in such
registration statement.
(2) Shelf Registration.
(a) The Company shall use its best efforts to cause to prepare and file with the SEC a “Shelf”
Registration Statement covering the resale of all Registrable Securities for an offering to be made
on a continuous basis pursuant to Rule 415 under the Securities Act on or prior to the
30th day (the “Filing Default Date”) following the Closing (such date of actual
filing, the “Filing Date”). The Registration Statement shall be on Form S-3; provided that
if the Company shall determine in good faith that Form S-3 is not then available to it, the
Registration Statement shall be on Form S-1. The Registration Statement shall contain (except if
otherwise directed in writing by the Purchasers) a “Plan of Distribution” substantially in the form
attached hereto as Exhibit F. Each Purchaser will furnish to the Company, within five days
of the Closing, a completed questionnaire in the form set forth as Exhibit G hereto. Each
Purchaser agrees to promptly update such questionnaire in order to make the information previously
furnished to the Company by such Purchaser complete and not materially misleading. The
Registration Statement shall register the Registrable Securities for resale by the holders thereof.
(b) The Company shall use its best efforts to cause the Registration Statement to be declared
effective by the SEC on or prior to the 90th day following the Closing (the
“No-Review Effectiveness Default Date”) if there is no SEC review of the Registration
Statement or the 120th day following the Closing (the “SEC-Review Effectiveness
Default Date”) in the event of an SEC review of the Registration Statement, and shall use its
best efforts to keep the Registration Statement continuously effective under the Securities Act
until the earliest of (i) the date when all Registrable Securities covered thereby may be sold
without registration or restriction pursuant to Rule 144(k) under the Securities Act or any
successor provision or (ii) the date when all Registrable Securities covered by such Registration
Statement have been sold (the “Effectiveness Period”).
(c) The Company shall request effectiveness of the Registration Statement (and any
post-effective amendments thereto) within five (5) business days following the Company’s receipt of
notice from the SEC that the Registration Statement will not be reviewed by the SEC or that the SEC
has completed its review of such Registration Statement and has no further comments. The Company
shall request effectiveness of the Registration Statement (and any post-effective amendments
thereto) at 5:00 p.m., New York City time, on the effective date, and file with the SEC and deliver
the Prospectus (or any supplements thereto), which delivery may be made electronically, by 8:00
a.m. New York City time on the business day after such effective date.
18
(d) Upon the occurrence of any Event (as defined below), as partial relief for the damages
suffered therefrom by the Purchasers (which remedy shall be exclusive of any other remedies which
are available at law and which remedy shall not be exclusive of any remedy available in equity; and
provided further that the Purchasers shall be entitled to pursue an action for specific performance
of the Company’s obligations under Paragraph (2)(b) above and any such actions), the Company shall
pay to each Purchaser, as liquidated damages and not as a penalty (it being agreed that it would
not be feasible to ascertain the extent of such damages with precision), such amounts and at such
times as shall be determined pursuant to this Paragraph (2)(d). For such purposes, each of the
following shall constitute an “Event”:
(i) the Filing Date does not occur on or prior to the Filing Default Date, in which
case the Company shall pay to each Purchaser an amount in cash equal to one-thirtieth of one
and one half percent (1.5%) of the aggregate purchase price paid by such Purchaser for each
day from the Filing Default Date until the Filing Date, payable at the end of each 30-day
period after the Filing Default Date; or
(ii) (A) there is no SEC review of the Registration Statement and the Registration
Statement is not declared effective on or prior to the No-Review Effectiveness Default Date,
in which case the Company shall pay to each Purchaser for each day after the No-Review
Effectiveness Default Date until the date upon which the Registration Statement is first
declared effective, an amount in cash equal to one-thirtieth of one and one half percent
(1.5%) of the aggregate purchase price paid by such Purchaser; or (B) there is an SEC review
of the Registration Statement and the Registration Statement is not declared effective on or
prior to the SEC-Review Effectiveness Default Date, in which case the Company shall pay to
each Purchaser an amount in cash equal to one-thirtieth of one and one half percent (1.5%)
of the aggregate purchase price paid by such Purchaser for each day after the SEC-Review
Effectiveness Default Date until the date the Registration Statement is first declared
effective, in each case payable at the end of each 30-day period after the No-Review
Effectiveness Default Date or SEC-Review Effectiveness Default Date, as applicable; or
(iii) if during the Effectiveness Period, the SEC issues any stop order suspending the
effectiveness of the Registration Statement or the Company exceeds the suspension periods
set forth in Section (E)(3)(g), in which case the Company shall pay to each Purchaser for
each day after the issuance of such SEC stop order or after the suspension periods are
exceeded until the date upon which the Registration Statement is again declared effective or
not suspended or the end of the Effectiveness Period, whichever is earlier, an amount in
cash equal to one-thirtieth of one and one half percent (1.5%) of the aggregate purchase
price paid by such Purchaser with respect to any Shares not previously sold or transferred
by such Purchaser pursuant to the Registration Statement as of the time of the issuance of
the stop order, payable at the end of each 30-day period after the issuance of the SEC stop
order or the suspension periods are exceeded.
The payment obligations of the Company under this Section E(2)(d) shall be cumulative,
provided that the aggregate amount of such liquidated damages payable to each Purchaser under this
Section E(2)(d), together with the amount of any liquidated damages previously paid
19
pursuant to any provision of this Agreement, shall under no circumstances exceed ten percent
(10.0%) of the aggregate amount invested by such Purchaser pursuant to this Agreement; and
provided, further, that such liquidated damages shall only accrue with respect to Shares for which
the Company has received a Selling Stockholder Questionnaire, and for which a Stockholder is named
as a selling securityholder on the Registration Statement. Such payments shall be in full
compensation to each Purchaser, and shall constitute such Purchaser’s exclusive remedy for such
events; provided, however, that the Purchasers shall retain the right to pursue all available
equitable remedies. If any payment under this Section E(2)(d) is not received by the Purchasers
when such payment is due, then in addition to any other remedies that may be available to the
Purchasers, interest at the rate of 1.5% per 30-day period (prorated for periods less than 30 days)
shall accrue on the outstanding balance of the delinquent payment until such delinquent payment is
paid in full.
(e) The Purchasers acknowledge that the SEC has recently given enhanced scrutiny to
registration statements attempting to register the resale of shares and warrant shares obtained by
purchasers in private placements and that such SEC reviews have resulted in registrants being
denied the use of Rule 415(a)(1)(i). Accordingly, notwithstanding anything herein to the contrary,
the Purchasers agree that (i) the Company shall not be obligated to pay any amount of liquidated
damages under Section (E)(2)(d)(ii)(B) in the event the Registration Statement is not declared
effective on or prior to the SEC-Review Effectiveness Default Date solely as a result of or in
connection with a determination by the SEC that either the Company or the Purchasers are ineligible
to rely on Rule 415(a)(1)(i) under the Securities Act with respect to the registration of any of
the Registrable Securities for resale by the Purchasers on a continuous or delayed basis; provided,
that the Company shall thereafter use its reasonable best efforts to find alternative methods to
register the Registrable Securities with the SEC for resale; and (ii) in the event the Company,
after conducting a pre-filing conference with the SEC, if possible, and after consultation with the
Placement Agent, reasonably determines that it is unable to, or it is inadvisable for the Company
to attempt to, register all of the Registrable Securities in a single Registration Statement, the
Company may elect to fulfill the registration requirements of this Section (E)(2) by registering
the Registrable Securities in two or more Registration Statements, provided that the Company shall
use its best efforts to file each subsequent Registration Statement no later than 6 months
following the date on which the preceding Registration Statement was declared effective, provided
further that the Company shall prioritize the registration of the Shares and the warrant shares as
follows: first the Shares of Common Stock issued pursuant to this Agreement, next
the shares of Common Stock underlying the Warrants issued to the Purchasers, and last the
shares of Common Stock underyling any Warrants issued in favor of the Placement Agent.
(3) Registration Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:
(a) Use its best efforts to (i) prepare and file with the SEC such amendments, including
post-effective amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the Registrable Securities for the
Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424;
and (iii) respond as promptly as reasonably possible to any comments received from the
20
SEC with respect to the Registration Statement or any amendment thereto and as promptly as
reasonably possible provide the Placement Agent true and complete copies of all correspondence from
and to the SEC relating to the Registration Statement.
(b) Notify the Placement Agent and the Purchasers as promptly as reasonably possible, and (if
requested by the Placement Agent) confirm such notice in writing of any of the following events:
(i) the SEC notifies the Company whether there will be a “review” of the Registration Statement;
(ii) the SEC comments in writing on the Registration Statement (in which case the Company shall
deliver to the Placement Agent a copy of such comments and of all written responses thereto); (iii)
the SEC or any other Federal or state governmental authority in writing requests any amendment or
supplement to the Registration Statement or Prospectus or requests additional information related
thereto; (iv) if the SEC issues any stop order suspending the effectiveness of the Registration
Statement or initiates any action, claim, suit, investigation or proceeding (a
“Proceeding”) for that purpose; (v) the Company receives notice in writing of any
suspension of the qualification or exemption from qualification of any Registrable Securities for
sale in any jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (vi)
the financial statements included in the Registration Statement become ineligible for inclusion
therein or any statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference is untrue in any material respect or
any revision to the Registration Statement, Prospectus or other document is required so that it
will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding the foregoing, the
Company shall not include any material non-public information in any notice provided to any
Purchaser under this Section E(3)(b).
(c) Use its reasonable best efforts to avoid the issuance of or, if issued, obtain the prompt
withdrawal of (i) any order suspending the effectiveness of the Registration Statement or (ii) any
suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction.
(d) Use its reasonable best efforts to deliver to each Purchaser, which delivery may be made
electronically, by 8:00 a.m. New York City time on the business day after the date first available,
without charge, such reasonable number of copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Purchasers may reasonably
request. The Company hereby consents (except during the continuance of any event described in
Sections E(3)(b)(iii)-(vi) above) to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Purchasers in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or supplement thereto.
(e) In the event the Company’s Common Stock is then listed on the Nasdaq Capital Market: (i)
In the time and manner required by the Nasdaq Stock Market, Inc., prepare and file with Nasdaq
Stock Market, Inc. an additional shares listing application covering all of the Registrable
Securities and a notification form regarding the change in the number of the Company’s outstanding
Shares; (ii) use its reasonable best efforts to take all steps reasonably necessary to cause such
Registrable Securities to be approved for listing on the Nasdaq Capital
21
Market as soon as possible thereafter; (iii) provide to the Purchasers notice of such listing;
and (iv) use its reasonable best efforts to maintain the listing of such Registrable Securities on
the Nasdaq Capital Market.
(f) To the extent required by law, prior to any public offering of Registrable Securities, use
its reasonable best efforts to register or qualify or cooperate with the selling Purchasers in
connection with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the securities or “blue sky”
laws of such jurisdictions within the United States as any Purchaser requests in writing, to keep
each such registration or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company shall not be required for any such purpose to (i)
qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not
be otherwise required to qualify but for the requirements of this Paragraph (3)(f), (ii) file any
general consent to service of process in any jurisdiction where it is not as of the date hereof so
subject, or (iii) otherwise subject itself to taxation.
(g) Upon the occurrence of any event described in Sections E(3)(b)(iii)-(vi) above, as
promptly as reasonably possible, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Company may suspend sales
pursuant to the Registration Statement for a period of up to twenty (20) consecutive days or for a
total of not more than forty-five (45) days in any twelve-month period if the Company furnishes to
the holders of the Registrable Securities a certificate signed by the Company’s Chief Executive
Officer stating that in the good faith judgment of the Company’s Board of Directors, there is some
material development relating to the operations or condition (financial or other) of the Company
that has not been disclosed to the general public and as to which it is in the Company’s best
interests not to disclose such development, and the Company shall not disclose such development to
the Purchasers. Each violation of the Company’s obligation not to suspend sales pursuant to the
Registration Statement longer than permitted pursuant to the proviso of this Section E(3)(g) shall
be deemed an “Event” and for each such default, Purchaser shall be entitled to the payment
provisions set forth in Section E(2)(d).
(h) The Company shall effect a filing with respect to the public offering contemplated by the
Registration Statement (an “Issuer Filing”) with the NASD Corporate Financing Department
pursuant to NASD Rule 2710 (b)(4)(A)(i) within one trading day of the Filing Date and pay the
filing fee required by such Issuer Filing. The Company shall use reasonable best efforts to pursue
the Issuer Filing until the NASD issues a letter confirming that it does not object to the terms of
the offering contemplated by the Registration Statement. A copy of the Issuer Filing and all
related correspondence with respect thereto shall be provided to the Placement Agent and its
counsel.
22
(4) Registration Expenses. The Company shall pay (or reimburse the Purchasers for)
all fees and expenses incident to the performance of or compliance with this Agreement by the
Company, including without limitation (a) all registration and filing fees and expenses, including
without limitation those related to filings with the SEC, Nasdaq and in connection with applicable
state securities or “Blue Sky” laws, (b) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing copies of Prospectuses
reasonably requested by the Purchasers), (c) messenger, telephone and delivery expenses, (d) and
fees and expenses of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. Notwithstanding the foregoing, each Purchaser
shall pay any and all costs, fees, discounts or commissions attributable to the sale of its
respective Registrable Securities.
(5) Indemnification.
(a) Indemnification by the Company. In consideration of each Purchaser’s execution
and delivery of this Agreement and in addition to the Company’s other obligations hereunder, the
Company shall, notwithstanding any termination of this Agreement, indemnify, defend, protect and
hold harmless each Purchaser, its officers and directors, partners, members, agents, brokers and
employees of each of them, each Person who controls any such Purchaser (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors,
partners, members, agents and employees of each such controlling Person, and each underwriter of
Registrable Securities, to the fullest extent permitted by applicable law, from and against any and
all losses, claims, damages, liabilities, settlement costs and expenses, including without
limitation costs of preparation and reasonable attorneys’ fees (collectively, “Losses”), as
incurred, arising out of or relating to (A) any untrue or alleged untrue statement of a material
fact contained in the Registration Statement, any Prospectus or form of prospectus or in any
amendment or supplement thereto, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the extent, but only to the
extent, that (i) such untrue statements or omissions are based upon information regarding such
Purchaser furnished in writing to the Company by such Purchaser expressly for use therein, or to
the extent that such information related to such Purchaser or such Purchaser’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved in writing by such
Purchaser expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (which shall, however, be deemed to include
disclosure substantially in accordance with the “Plan of Distribution” attached hereto), or (ii) in
the case of an occurrence of an event of the type specified in Paragraph (3)(b) above, the use by
such Purchaser of an outdated or defective Prospectus after the Company has duly notified such
Purchaser in writing that the Prospectus is outdated or defective and prior to the receipt by such
Purchaser of the Advice contemplated in Paragraph (6) below; (B) any misrepresentation or material
breach of any representation or warranty made by the Company in the Offering Documents; or (C) any
material breach of any covenant, agreement or obligation of the Company contained in the Offering
Documents. The Company shall notify the Purchasers promptly of the institution, threat or assertion
of any Proceeding of which the Company is aware in connection with the transactions contemplated by
this Agreement.
23
(b) Indemnification by Purchasers. Each Purchaser shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and employees, and each
Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject to appeal or
review) arising out of or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement, any Prospectus, or any form of prospectus or in any
amendment or supplement thereto, or arising out of or based upon any omission of a material fact
required to be stated therein or necessary to make the statements therein not misleading to the
extent, but only to the extent, that such untrue statement or omission is contained in any
information furnished in writing by such Purchaser to the Company specifically for inclusion in
such Registration Statement or Prospectus or to the extent that (i) such untrue statements or
omissions are based upon information regarding such Purchaser furnished in writing to the Company
by such Purchaser expressly for use therein, or to the extent that such information related to such
Purchaser or such Purchaser’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Purchaser expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto
(which shall, however, be deemed to include disclosure substantially in accordance with the “Plan
of Distribution” attached hereto), or (ii) in the case of an occurrence of an event of the type
specified in Paragraph (3)(b) above, the use by such Purchaser of an outdated or defective
Prospectus after the Company has notified such Purchaser in writing that the Prospectus is outdated
or defective and prior to the receipt by such Purchaser of the Advice contemplated in Paragraph (6)
below. In no event shall the liability of any selling Purchaser hereunder be greater in amount
than the dollar amount of the net proceeds received by such Purchaser upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the
“Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense thereof, provided, that
the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party
of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that
such failure shall have prejudiced the Indemnifying Party. An Indemnified Party shall have the
right to employ separate counsel in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or
(ii) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and
to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or
(iii) the named parties to any such Proceeding (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel were to represent such
Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
24
expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and such counsel shall be at the expense of the Indemnifying Party; provided,
however, that in the event that the Indemnifying Party shall be required to pay the fees and
expenses of separate counsel, the Indemnifying Party shall only be required to pay the fees and
expenses of one separate counsel for such Indemnified Party or Parties. The Indemnifying Party
shall not be liable for any settlement of any such Proceeding affected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending Proceeding in
respect of which any Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the subject matter of such
Proceeding. All fees and expenses of the Indemnified Party (including reasonable fees and expenses
to the extent incurred in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred,
within ten trading days of written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder;
provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined that such Indemnified
Party is not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Paragraph (5)(a) or (b) is
unavailable to an Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or related to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Paragraph (5)(c), any reasonable attorneys’ or other reasonable
fees or expenses incurred by such party in connection with any Proceeding to the extent such party
would have been indemnified for such fees or expenses if the indemnification provided for in this
Paragraph 5(d) was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Paragraph (5)(d) were determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provision of this Paragraph (5)(d), no Purchaser shall be
required to contribute, in the aggregate, any amount in excess of the amount of net proceeds
actually received by such Purchaser from the sale of the Registrable Securities subject to the
Proceeding. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
25
The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties and any cause of action
or similar right of the Indemnified Parties against the Indemnifying Parties or others.
(6) Dispositions. Each Purchaser agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement. Each Purchaser further agrees that,
upon receipt of a notice from the Company of the occurrence of any event of the kind described in
Paragraphs (3)(b), such Purchaser will discontinue disposition of such Registrable Securities under
the Registration Statement until such Purchaser’s receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated by Paragraph (3)(g), or until it is
advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus
may be resumed, and, in either case, has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to enforce the provisions of this
paragraph.
(7) Piggy-Back on Registrations. Except for Bio-Rad pursuant to the terms of the
Bio-Rad Stock Purchase Agreement and (ii) Quest pursuant to the terms of the Quest Stock Purchase
Agreement, neither the Company nor any of its security holders (other than the Purchasers and the
Placement Agent, with respect to the shares of Common Stock issuable upon the exercise of the
Placement Agent Warrants, in such capacities pursuant hereto) may include securities of the Company
in the Registration Statement other than the Registrable Securities, and the Company shall not
after the date hereof enter into any agreement providing any such right with respect to the
Registration Statement to any of its security holders.
(8) Piggy-Back Registrations. If at any time during the Effectiveness Period, other
than any suspension period referred to in Section E(3)(g) above, there is not an effective
Registration Statement covering all of the Registrable Securities and the Company shall determine
to prepare and file with the SEC a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity securities, other
than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection with stock option or other
employee benefit plans, then the Company shall send to each Purchaser written notice of such
determination and if, within ten (10) days after receipt of such notice, any such Purchaser shall
so request in writing, the Company shall use its reasonable best efforts to include in such
registration statement all or any part of such Registrable Securities not already covered by an
effective Registration Statement such Purchaser requests to be registered; provided, however, that
the Company shall have the right to postpone or withdraw any registration effected pursuant to this
Section E(8).
If the registration of which the Company gives notice is for a registered public offering
involving an underwriting, the Company shall so indicate in the notice given pursuant to this
Section E(9). In such event the right of any Purchaser to registration pursuant to this Section
E(9) shall be conditioned upon Purchaser’s agreeing to participate in such underwriting and in the
inclusion of such Purchaser’s Registrable Securities in the underwriting to the extent provided
26
herein. The Purchaser shall (together with the Company and the other holders distributing their
securities through such underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company or by other holders
exercising any demand registration rights. Notwithstanding any other provision of this Section
E(9), if the underwriter determines that marketing factors require a limitation of the number of
shares to be underwritten, the underwriter may exclude some or all Registrable Securities or other
securities from such registration and underwriting (hereinafter an “Underwriter Cutback”).
In the event of an Underwriter Cutback, the Company shall so advise the Purchaser and the other
holders distributing their securities through such underwriting, and the number of Registrable
Securities that may be included in the registration and underwriting shall be allocated in
proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by
the Purchaser and the other holders distributing their securities through such underwriting at the
time of filing the registration statement. If any Purchaser disapproves of the terms of any such
underwriting, such Purchaser may elect to withdraw therefrom by written notice to the Company and
the underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn
from such registration.
(9) Rule 144. For a period of two years following the date hereof, the Company agrees
with each holder of Registrable Securities to:
(a) use its best efforts to comply with the requirements of Rule 144(c) under the Securities
Act with respect to current public information about the Company;
(b) use its best efforts to file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act (at any time it is
subject to such reporting requirements); and
(c) furnish to any holder of Registrable Securities upon request (i) a written statement by
the Company as to its compliance with the requirements of said Rule 144(c) and the reporting
requirements of the Securities Act and the Exchange Act (at any time it is subject to such
reporting requirements), (ii) a copy of the most recent annual or quarterly report of the Company,
and (iii) such other reports and documents of the Company as such holder may reasonably request to
avail itself of any similar rule or regulation of the SEC allowing it to sell any such securities
without registration.
F. Covenants of the Company
(1) The Company hereby agrees that, for a period of ninety (90) days after effectiveness of
the first Registration Statement, it shall not issue or sell any Common Stock of the Company, any
warrants or other rights to acquire Common Stock or any other securities that are convertible,
exchangeable or exercisable for or into Common Stock, with the exception of issuances or sales
related to a strategic transaction, pursuant to the exercise of an option, warrant or other right
to acquire Common Stock outstanding as of the date of this Agreement (that are not amended from and
after the date of this Agreement), or to an employee, director, consultant, supplier, lender or
lessor, or any option grant or issuance.
27
(2) Except in connection with the rights of Quest under the Quest Stock Purchase Agreement,
until ninety (90) days following effectiveness of the first Registration Statement, the Company
shall not file any registration statement, other than the Registration Statement contemplated
hereby, any registration statement on Form S-8 or other appropriate form related to securities
issued or to be issued pursuant to any option or other plan for the benefit of the Company’s
employees, officers, directors or consultants, or any registration statement filed on Form S-4
relating to securities issued in connection with a merger or other acquisition; provided, however,
that nothing herein shall prohibit the Company from maintaining the effectiveness of any currently
outstanding registration statement filed by the Company under the Securities Act, including,
without limitation, the filing of post-effective amendments to such registration statements.
(3) The Company shall make a public announcement of the execution of this Agreement and the
terms of the transaction documents by issuing a press release and filing with the SEC a Current
Report on Form 8-K not later than 8:30 a.m. New York City time on the business day following the
date of this Agreement. As a result of the forgoing issuance and filing, all material, non-public
information previously provided to the Purchasers or their agents or counsel shall have been
publicly announced and disclosed. Notwithstanding anything in this Agreement to the contrary,
following the foregoing issuance and filing the Company shall have no obligation to, and will not,
disclose or provide any material, non-public information to the Purchasers or their agents or
counsel.
(4) The Company shall make a public announcement of the Closing of the Offering by issuing a
press release not later than 8:30 a.m. New York City time on the business day following the
Closing, and thereafter the Company shall file with the SEC a Current Report on Form 8-K within the
time frame required by law.
(5) During the period any Securities issued pursuant to the Offering Documents remain
outstanding, the Company shall use its reasonable best efforts to ensure the Company’s Common Stock
is either quoted on the Nasdaq Capital Market, or listed for trading on a national securities
exchange, in the sole discretion of the Company. The Company and the Purchasers expressly agree
that the quotation of the Company’s Common Stock on the “pink sheets” shall not be considered to
satisfy the Company’s obligations pursuant to this covenant.
(6) Form D. The Company agrees to file one or more Forms D with respect to the
Securities on a timely basis as required under Regulation D under the Securities Act to claim the
exemption provided by Rule 506 of Regulation D and to provide a copy thereof to the Purchasers and
their counsel promptly after such filing.
(7) Certain Future Financings and Related Actions. The Company will not sell, offer
to sell, solicit offers to buy or otherwise negotiate in respect of any “security” (as defined in
the Securities Act) that is or could be integrated with the sale of the Securities in a manner that
would require the registration of the Securities under the Securities Act.
(8) Use of Proceeds. The Company intends that the net proceeds from the Offering will
be used to fund the continued development of its diagnostic tests and other products, research and
development and general corporate purposes, and the Company does not intend to
28
use any of the proceeds for the repayment of any Indebtedness or repurchase of any capital
stock of the Company.
(9) No Reverse Split. Prior to January 1, 2008, the Company will not effect or become
a party to any reverse stock split or file of a proxy seeking shareholder approval of the
authorization to effectuate a reverse stock split, except for the purpose of meeting the minimum
bid requirement to remain listed on The Nasdaq Stock Market pursuant to Nasdaq Marketplace Rule
4310.
G. Miscellaneous
(1) All pronouns and any variations thereof used herein shall be deemed to refer to the
masculine, feminine, singular or plural, as identity of the person or persons may require.
(2) Any notice or other document required or permitted to be given or delivered to the
Purchasers shall be in writing and sent (a) by fax if the sender on the same day sends a confirming
copy of such notice by an internationally recognized overnight delivery service (charges prepaid)
or (b) by an internationally recognized overnight delivery service (with charges prepaid):
| (i) | if to the Company, at |
Xxxxxxxxxx, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Chief Financial Officer
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Chief Financial Officer
or such other address as it shall have specified to the Purchaser in writing, with a copy (which shall not constitute notice) to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
Five Palo Alto Square, Xxxxx Xxxxx
Xxxx Xxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Five Palo Alto Square, Xxxxx Xxxxx
Xxxx Xxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
| (ii) | if to the Purchaser, at its address set forth on the signature page to this Agreement, or such other address as it shall have specified to the Company in writing. |
(3) Failure of the Company to exercise any right or remedy under this Agreement or any other
agreement between the Company and the Purchaser, or otherwise, or delay by the Company in
exercising such right or remedy, will not operate as a waiver thereof. No waiver by the Company
will be effective unless and until it is in writing and signed by the Company.
(4) All questions concerning the construction, validity, enforcement and interpretation of
this Agreement shall be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
29
State of New York or any other jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State 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, and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the address for such 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 manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
(5) This Agreement shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns, including any purchasers of the Shares or the Warrants. The
Company shall not assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of at least a majority of the aggregate number of Shares issued and
issuable hereunder. A Purchaser may assign some or all of its rights hereunder without the consent
of the Company, in which event such assignee shall be deemed to be a Purchaser hereunder with
respect to such assigned rights.
(6) If any provision of this Agreement is held to be invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed modified to conform with
such statute or rule of law. Any provision hereof that may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provisions hereof.
(7) The parties understand and agree that, unless provided otherwise herein, money damages
would not be a sufficient remedy for any breach of the Agreement by the Company or a Purchaser and
that the party against which such breach is committed shall be entitled to equitable relief,
including injunction and specific performance, as a remedy for any such breach. Such remedies
shall not, unless provided otherwise herein, be deemed to be the exclusive remedies for a breach by
either party of the Agreement but shall be in addition to all other remedies available at law or
equity to the party against which such breach is committed.
(8) This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person.
(9) The representations, warranties, covenants and agreements of the Company and the
Purchasers shall survive the Closing. Each Purchaser shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
30
(10) The obligations of each Purchaser under this Agreement are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser hereunder. Nothing contained herein, and no
action taken by any Purchaser pursuant hereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any similar entity, or create a presumption that
the Purchasers are in any way acting in concert or as a group with respect to such obligations or
the transactions contemplated hereby and the Company acknowledges, and each Purchaser confirms,
that the Purchasers are not acting in concert or as a group with respect to such obligations or the
transactions contemplated by this Agreement. The Company acknowledges and each Purchaser confirms
that it has independently participated in the negotiation of the transaction contemplated hereby
with the advice of its own counsel and advisors. Each Purchaser shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights arising out of this
Agreement or out of any other Offering Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such purpose.
(11) This Agreement, together with the agreements and documents executed and delivered in
connection with this Agreement, constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof.
H. Signature
The signature page of this Agreement is contained as part of the applicable subscription
package, entitled “Signature Page”.
* * * * * * *
31
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 17 , 2007 | |
| 2. | Total Subscription Amount: $ 300,000.00 |
/s/ Xxxxx X.X.Xxxx |
||||
(and title, if applicable) |
(if any) |
|||
[omitted] |
||||
Taxpayer Identification or Social Security Number |
Taxpayer Identification or Social Security Number of Joint Purchaser (if any) |
|||
Xxxxx X.X. Xxxx |
||||
on stock certificate) |
||||
0000 Xxxxxx
Xxx Xxxx, Xxxxx 0000 |
||||
Naples,
Florida
34108 |
||||
ACCEPTED BY:
XXXXXXXXXX, INC.
By:
|
/s/ Xxxx X. Page | |||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 21 , 2007 | |
| 2. | Total Subscription Amount: $ 2,000,000.00 |
/s/
[illegible], Mgr. |
||||
(and title, if applicable) |
(if any) |
|||
| 00-0000000 |
||||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
Quest Diagnostics Incorporated |
||||
on stock certificate) |
||||
0000 Xxxx Xxxxxx Xxxx
|
||||
Lyndhurst, NJ
07071
|
ACCEPTED BY:
XXXXXXXXXX, INC.
By:
|
/s/ Xxxx X. Page | |||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 23 , 2007 | |
| 2. | Total Subscription Amount: $ 1,500,000.00 |
/s/
[illegible], General Partner |
||||
(and title, if applicable) |
(if any) |
|||
| 00-0000000 Security Number |
Security Number of Joint Purchaser (if any) |
|||
Falcon Technology Partners, LP
on stock certificate) |
||||
000 Xxxxx Xxxxxx
|
||||
Berwyn, PA
19312
|
ACCEPTED BY:
XXXXXXXXXX, INC.
By:
|
/s/ Xxxx X. Page | |||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 23 , 2007 | |
| 2. | Total Subscription Amount: $ 4,090,200.00 |
/s/ Xxxxx X. Xxxxxxx, General Partner |
||||
(and title, if applicable)
|
(if any) | |||
| 00-0000000 |
||||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
Phronesis Partners, LP
on stock certificate) |
||||
000 X. Xxxxx Xxxxxx, Xxx. 0000
|
||||
Columbus, OH
43215 |
||||
ACCEPTED BY:
XXXXXXXXXX, INC.
By:
|
/s/ Xxxx X. Page | |||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 24 , 2007 | |
| 2. | Total Subscription Amount: $ 6,636.00 |
/s/
[illegible] |
||||
Signature of Subscriber
|
Signature of Joint Purchaser | |||
(and title, if applicable)
|
(if any) | |||
N/A
Domiciled in Ireland |
||||
Taxpayer Identification or Social
|
Taxpayer Identification or Social | |||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
Xxxx & Co (Baring Global Opportunities Fund)
|
||||
on stock certificate) |
||||
0 Xxx Xxxx Xxxxx
|
||||
New York, NY 10004
|
||||
ACCEPTED BY: |
||||
XXXXXXXXXX, INC. |
By:
|
/s/ Xxxx X. Page
|
|||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 24 , 2007 | |
| 2. | Total Subscription Amount: $ 26,292.00 |
/s/
[illegible] |
||||
Signature of Subscriber
|
Signature of Joint Purchaser | |||
(and title, if applicable)
|
(if any) | |||
00-0000000 |
||||
Taxpayer Identification or Social
|
Taxpayer Identification or Social | |||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
BBH & Co (OFI Institutional Global Opportunities Fund)
|
||||
on stock certificate) |
||||
000 Xxxxxxxx Xx.
|
||||
New York, NY 10005-1101
|
||||
ACCEPTED BY: |
||||
XXXXXXXXXX, INC. |
By:
|
/s/ Xxxx X. Page
|
|||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 23 , 2007 | |
| 2. | Total Subscription Amount: $ 21,084.00 |
/s/ [illegible] |
||||
Signature of Subscriber
|
Signature of Joint Purchaser | |||
(and title, if applicable)
|
(if any) | |||
N/A
Domiciled in Ireland |
||||
Taxpayer Identification or Social
|
Taxpayer Identification or Social | |||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
IFT Co. (Xxxxxxx Xxxxx Global Opportunities)
|
||||
on stock certificate) |
||||
00 Xxxxx Xxxxxx
|
||||
NY, NY 10041
|
||||
ACCEPTED BY: |
||||
XXXXXXXXXX, INC. |
By:
|
/s/ Xxxx X. Page
|
|||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 23 , 2007 | |
| 2. | Total Subscription Amount: $ 297,447.36 |
/s/ [illegible] |
||||
Signature of Subscriber
|
Signature of Joint Purchaser | |||
(and title, if applicable)
|
(if any) | |||
N/A
Domiciled in Ireland |
||||
Taxpayer Identification or Social
|
Taxpayer Identification or Social | |||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
IFT Co. (Xxxxxxx Global Opportunities Fund)
|
||||
on stock certificate) |
||||
00 Xxxxx Xxxxxx
|
||||
NY, NY 10041
|
||||
ACCEPTED BY: |
||||
XXXXXXXXXX, INC. |
By:
|
/s/ Xxxx X. Page
|
|||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 24 , 2007 | |
| 2. | Total Subscription Amount: $ 3,648,540.00 |
/s/ [illegible] |
||||
Signature of Subscriber
|
Signature of Joint Purchaser | |||
(and title, if applicable)
|
(if any) | |||
00-0000000 |
||||
Taxpayer Identification or Social
|
Taxpayer Identification or Social | |||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
BBH
& Co. (Oppenheimer Global Opportunities)
|
||||
on stock certificate) |
||||
000 Xxxxxxxx Xx.
|
||||
New York, NY 10005-1101
|
||||
ACCEPTED BY: |
||||
XXXXXXXXXX, INC. |
By:
|
/s/ Xxxx X. Page
|
|||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 23 , 2007 | |
| 2. | Total Subscription Amount: $ 4,599,999.60 |
/s/ Xxxx X. Chill, Managing Director |
||||
Signature of Subscriber
|
Signature of Joint Purchaser | |||
(and title, if applicable)
|
(if any) | |||
Taxpayer Identification or Social
|
Taxpayer Identification or Social | |||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
Highbridge International LLC
|
||||
on stock certificate) |
||||
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
|
||||
New York, NY 10019
|
||||
ACCEPTED BY: |
||||
XXXXXXXXXX, INC. |
By:
|
/s/ Xxxx X. Page
|
|||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 23 , 2007 | |
| 2. | Total Subscription Amount: $ 1,878,200.52 |
/s/ Xxx Xxxxxx, Managing Member |
||||
Signature of Subscriber
|
Signature of Joint Purchaser | |||
(and title, if applicable)
|
(if any) | |||
00-0000000 |
||||
Taxpayer Identification or Social
|
Taxpayer Identification or Social | |||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
Fort Xxxxx Master, LP
|
||||
on stock certificate) |
||||
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
|
||||
San Francisco, CA 94104
|
||||
ACCEPTED BY: |
||||
XXXXXXXXXX, INC. |
By:
|
/s/ Xxxx X. Page
|
|||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 23 , 2007 | |
| 2. | Total Subscription Amount: $ 121,800.00 |
/s/ Xxx Xxxxxx, Managing Member |
||||
Signature of Subscriber
|
Signature of Joint Purchaser | |||
(and title, if applicable)
|
(if any) | |||
00-0000000 |
||||
Taxpayer Identification or Social
|
Taxpayer Identification or Social | |||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
Fort Xxxxx Partners, LP
|
||||
on stock certificate) |
||||
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
|
||||
San Francisco, CA 94104
|
||||
ACCEPTED BY: |
||||
XXXXXXXXXX, INC. |
By:
|
/s/ Xxxx X. Page
|
|||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 23 , 2007 | |
| 2. | Total Subscription Amount: $ 121,800.00 |
/s/ [illegible], Director |
||||
Signature of Subscriber
|
Signature of Joint Purchaser | |||
(and title, if applicable)
|
(if any) | |||
Taxpayer Identification or Social
|
Taxpayer Identification or Social | |||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
Xxxxxxxx Investment Master Fund Ltd.
|
||||
on stock certificate) |
||||
ACCEPTED BY: |
||||
XXXXXXXXXX, INC. |
By:
|
/s/ Xxxx X. Page
|
|||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 23 , 2007 | |
| 2. | Total Subscription Amount: $ 1,000,000.00 |
/s/ [illegible] |
||||
Signature of Subscriber
|
Signature of Joint Purchaser | |||
(and title, if applicable)
|
(if any) | |||
00-0000000 |
||||
Taxpayer Identification or Social
|
Taxpayer Identification or Social | |||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
Iroquois Master Fund Ltd.
|
||||
on stock certificate) |
||||
000 Xxxxxxxxx Xxx 26th Floor
|
||||
New York, NY 10022
|
||||
ACCEPTED BY: |
||||
XXXXXXXXXX, INC. |
By:
|
/s/ Xxxx X. Page
|
|||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
SIGNATURE PAGE
The Purchaser hereby subscribes for (i) such number of Shares as shall equal (x) the
Subscription Amount as set forth below divided by (y) the sum of (1) the Share Purchase Price and
(2) the product of the Warrant Purchase Price multiplied by the Warrant Coverage Ratio, rounded
down to the nearest whole number, and (ii) a Warrant to purchase such number of shares of Common
Stock equal to the product of the Warrant Coverage Ratio multiplied by the number of Shares
purchased hereunder, rounded down to the nearest whole number, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
| 1. | Dated: August 23 , 2007 | |
| 2. | Total Subscription Amount: $ 100,800.00 |
/s/ Xxxxx Xxx Colen |
||||
Signature of Subscriber
|
Signature of Joint Purchaser | |||
(and title, if applicable)
|
(if any) | |||
[omitted] |
||||
Taxpayer Identification or Social
|
Taxpayer Identification or Social | |||
Security Number
|
Security Number of Joint Purchaser (if any) | |||
Xxxxx Xxx Xxxxx
|
||||
on stock certificate) |
||||
00 Xxxxxxxxx Xx. Xxx. 0X |
||||
Number and Street |
||||
New York, NY 10024
|
||||
ACCEPTED BY: |
||||
XXXXXXXXXX, INC. |
By:
|
/s/ Xxxx X. Page
|
|||
| Title: CEO | ||||
Dated: |
||||
[Signature Page to Securities Purchase Agreement]
Schedule A
Escrow Instructions
PLEASE SEND WIRE TRANSFERS TO THE ESCROW ACCOUNT AS FOLLOWS:
Bank:
|
The Bank of New York | |
ABA No.:
|
000-000-000 | |
Account No.:
|
GLA/111565 | |
Customer Account No.:
|
200119 | |
Account Name:
|
Xxxxxxxxxx / Oppenheimer |
Schedule B
Subsidiaries of the Company
IllumeSys Pacific, Inc. — California
Ciphergen Technologies, Inc. — California
Ciphergen Biosystems Ltd. — U.K.
Ciphergen Biosystems A/S — Denmark
Ciphergen Biosystems GmbH — Germany
Ciphergen Biosystems AG — Switzerland
Ciphergen Biosystems KK — Japan
Ciphergen Biosystems International, Inc. — Delaware
Ciphergen (Beijing) Biosystems Co., Ltd. — China
Ciphergen Biosystems S.r.l. — Italy
Ciphergen Biosystems EURL — France
Exhibit A
Legal Matters
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP shall deliver an opinion covering
the following matters. The opinion shall be subject to and include customary assumptions,
limitations and qualifications.
1. The Company is a corporation, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority under the laws of the State
of Delaware to conduct its business as it is described in the Company’s Form 10-Q for the quarter
ended June 30, 2007 and Form 10-K for the fiscal year ended December 31, 2006, as amended, and to
enter into and perform its obligations under the Agreement.
2. The authorized capital stock of the Company consists of 150,000,000 shares of common stock,
par value $0.001 per share (the “Common Stock”), and 5,000,000 shares of preferred stock,
par value $0.001 per share (the “Preferred Stock”).
3. The Shares have been duly authorized or reserved for issuance by all necessary corporate
action on the part of the Company; and the Shares, when issued and delivered against payment
therefore in accordance with the provisions of the Agreement, will be validly issued, fully paid
and non-assessable. The Warrants have been duly authorized by all necessary corporate action on
the part of the Company, and the Warrant Shares have been duly reserved for issuance and, when
issued and delivered against payment therefore upon the due exercise of the Warrants in accordance
with the provisions thereof, will be validly issued, fully paid and non-assessable shares of Common
Stock.
4. The execution and delivery by the Company of the Agreement and the Warrants, and the
consummation by the Company of the transactions contemplated thereby, have been duly authorized by
all necessary corporate action on the part of the Company. The Agreement and the Warrants each
constitute the valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
5. The execution and delivery by the Company of the Agreement and the Warrants, and the
consummation by the Company of the transactions contemplated thereby, do not (a) violate the
provisions of any federal law of the United States of America or the General Corporation Law of the
State of Delaware applicable to the Company; (b) violate the provisions of the Company’s
Certificate of Incorporation or By-laws; or, (c) to our knowledge, violate any existing obligation
of the Company under any judgment, decree, order or award of any court, governmental body or
arbitrator specifically naming the Company and of which we are aware, without any inquiry; or (d)
conflict with or result in the material breach or termination of any material term or provision of,
or constitute a material default under any material indenture, instrument or contract filed by the
Company on its Form 10-K for the fiscal year ended December 31, 2006 or Form 10-Q for the quarter
ended June 30, 2007.
6. Assuming (a) the accuracy of the representations made by each Purchaser in the Agreement;
(b) that neither the Company, the Placement Agent nor any person acting on behalf
of either the Company or the Placement Agent has offered or sold the Securities by any form of
general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D
promulgated (the “Regulation D”) under the Securities Act; (c) that no offerings or sales
of securities of the Company after the date hereof in a transaction can be “integrated” with any
sales of the Securities; and (d) that each person or entity that purchased securities of the
Company directly from the Company or its agents and without registration between the date six
months prior to the Closing of the Offering and the date of the Agreement was, as of the date of
such purchase, an “accredited investor” as defined in Rule 501 of Regulation D, the sale of the
Securities to the Purchasers at the Closing under the circumstances contemplated by this Agreement
are exempt from the registration and prospectus delivery requirements of Section 5 of the
Securities Act.
7. To our knowledge, without any inquiry (including, without limitation, without any docket
search or other inquiry), there is no action, proceeding or litigation pending or overtly
threatened against the Company before any court, governmental or administrative agency or body
required to be described in the Company’s Form 10-Q for the quarter ended June 30, 2007 and the
Company’s Form 10-K for the fiscal year ended December 31, 2006, which is not otherwise disclosed
therein or in the Agreement.
The foregoing will be subject to standard qualifications, exceptions and assumptions.
Exhibit B
Form of Lock-Up Agreement
_________________, 2007
Xxxxxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
| Re: | Xxxxxxxxxx Inc. (the “Company”) |
Ladies and Gentlemen:
The undersigned owns of record or beneficially certain shares of common stock, par value
$0.001 per share (“Common Stock”), of the Company or securities convertible into or exchangeable or
exercisable for Common Stock.
This letter is being delivered to you in connection with a private placement of Common Stock
and warrants (the “Warrants”) to purchase Common Stock (the “Offering”) for which you have acted as
placement agent. The undersigned recognizes that the Offering will be of benefit to the undersigned
and will benefit the Company by, among other things, raising additional capital for the Company’s
operations. The undersigned acknowledges that you are relying on the representations and agreements
of the undersigned contained in this letter in carrying out the Offering.
In consideration of the foregoing, and as a condition of the closing of the Offering, the
undersigned hereby agrees that the undersigned will not (and will cause any spouse or minor child
or immediate family member of the spouse or the undersigned living in the undersigned’s household
not to), without your prior written consent (which consent may be withheld in your sole
discretion), directly or indirectly, sell, offer, contract or grant any option to sell (including
without limitation any short sale), pledge, transfer, or otherwise dispose of any shares of Common
Stock, options or warrants to acquire shares of Common Stock, or securities exchangeable or
exercisable for or convertible into shares of Common Stock currently or hereafter owned either of
record or beneficially (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) by the undersigned (or such spouse or minor child or family member) (collectively, the
“Undersigned’s Shares”), or publicly announce an intention to do any of the foregoing, for a period
commencing on the date hereof and continuing through the later of (i) the date that is one hundred
eighty (180) days from the closing date of the Offering, or (ii) the date that is ninety (90) days
from the effective date of the registration statement filed under the Securities Act of 1933, as
amended, covering the resale of the Common Stock sold in the Offering, including the shares of
Common Stock issuable up exercise of the Warrants. The undersigned also agrees and consents to the
entry of stop transfer instructions with the Company’s transfer agent and registrar against the
transfer of the Undersigned’s Shares except in compliance with the foregoing restrictions.
Notwithstanding the foregoing, the undersigned may transfer the Undersigned’s Shares (i) as a
bona fide gift or gifts, provided that the donee or donees thereof agree in writing to be bound by
the restrictions set forth herein; or (ii) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that the trustee of the trust
agrees in writing to be bound by the restrictions set forth herein, and provided further that any
such transfer shall not involve a disposition for value. For purposes of the foregoing, “immediate
family” shall mean any relationship by blood, marriage or adoption, not more remote than first
cousin.
This agreement is irrevocable and will be binding on the undersigned and the respective
successors, heirs, personal representatives, and assigns of the undersigned.
| Printed Name of Holder | ||||
| Signature of Holder | ||||
Exhibit C
Form of Warrant
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 5 OF THIS WARRANT
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 5 OF THIS WARRANT
| Warrant No. [ ] |
Number of Shares: [ ] (subject to adjustment) |
|
| Date of Issuance: [ ], 2007 | ||
| Original Issue Date (as defined in
subsection 2(a)): August 29, 2007 |
Xxxxxxxxxx, Inc.
Common Stock Purchase Warrant
(Void after August 29, 2012)
Xxxxxxxxxx, Inc., a Delaware corporation (the “Company”), for value received, hereby certifies
that [ ], or its registered assigns (the “Registered Holder”), is entitled, subject
to the terms and conditions set forth below, to purchase from the Company, at any time or from time
to time on or after [the date hereof] and on or before 5:00 p.m. (New York City time) on [
], 2012 (the “Exercise Period”), [ ] shares of Common Stock, $0.001 par value per share,
of the Company (“Common Stock”), at a purchase price of $0.925 per share. The shares purchasable
upon exercise of this Warrant, and the purchase price per share, each as adjusted from time to time
pursuant to the provisions of this Warrant, are hereinafter referred to as the “Warrant Shares” and
the “Purchase Price,” respectively. This Warrant is one of a series of Warrants issued by the
Company in connection with a private placement of Common Stock and of like tenor, except as to the
number of shares of Common Stock subject thereto (collectively, the “Company Warrants”).
1. Exercise.
(a) Exercise for Cash. The Registered Holder may, at its option, elect to exercise
this Warrant, in whole or in part and at any time or from time to time during the Exercise Period,
by surrendering the purchase form appended hereto as Exhibit I duly executed by or on
behalf of the Registered Holder, at the principal office of the Company, or at such other office or
agency as the Company may designate, accompanied by payment in full, in lawful money of the United
States, of the Purchase Price payable in respect of the number of Warrant Shares purchased upon
such exercise. A facsimile signature of the Registered Holder on the purchase form shall be
sufficient for purposes of exercising this Warrant, provided that the Company receives the
Registered Holder’s original signature with three (3) business days thereafter.
(b) Cashless Exercise.
(i) At any time during the Exercise Period when the resale of the Warrant Shares by the
Registered Holder is not registered pursuant to an effective registration statement filed with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended (the “Securities Act”), the Registered Holder may, at its option, elect to exercise
this Warrant, in whole or in part, on a cashless basis, by surrendering this Warrant, with the
purchase form appended hereto as Exhibit I duly executed by or on behalf of the Registered
Holder, at the principal office of the Company, or at such other office or agency as the Company
may designate, by canceling a portion of this Warrant in payment of the Purchase Price payable in
respect of the number of Warrant Shares purchased upon such exercise. In the event of an exercise
pursuant to this subsection 1(b), the number of Warrant Shares issued to the Registered Holder
shall be determined according to the following formula:
 |
Where:
|
X = | the number of Warrant Shares that shall be issued to the Registered Holder; | ||
| Y = | the number of Warrant Shares for which this Warrant is being exercised (which shall include both the number of Warrant Shares issued to the Registered Holder and the number of Warrant Shares subject to the portion of the Warrant being cancelled in payment of the Purchase Price); | |||
| A = | the Fair Market Value (as defined below) of one share of Common Stock, as of the date prior to the Exercise Date; and | |||
| B = | the Purchase Price then in effect. |
(ii) “Fair Market Value” means, for any security as of any date, the closing sale price for
such security on the Nasdaq Capital Market, as reported by Bloomberg, or, if the Nasdaq Capital
Market begins to operate on an extended hours basis and does not designate the closing sale price
then the last sale price of such security prior to 4:00:00 p.m., New York City time, as reported by
Bloomberg, or, if the Nasdaq Capital Market is not the principal securities exchange or trading
market for such security, the last sale price of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by Bloomberg, or if the
foregoing do not apply, the last sale price of such security in an over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no last sale price is
reported for such security by Bloomberg, the average of the ask prices of any market makers for
such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation
Bureau, Inc.). If the Fair Market Value cannot be calculated for a security on a particular date
on any of the foregoing bases, the Fair Market Value of such security on such date shall be the
fair market value as mutually determined by the Company and the Registered Holder. If the Company
and the Registered Holder are unable to agree upon the Fair Market Value of such security, then
such dispute shall be resolved pursuant to Section 13 hereof. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during the applicable calculation period.
(c) Exercise Date. Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which the applicable
- 2 -
purchase form shall have been surrendered to the Company as provided in subsection 1(a) or
1(b) above (the “Exercise Date”). At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as provided in subsection 1(d)
below shall be deemed to have become the holder or holders of record of the Warrant Shares
represented by such certificates.
(d) Issuance of Certificates. As soon as practicable after the exercise of this
Warrant in whole or in part, and in any event within three (3) trading days thereafter, the
Company, at its expense, will cause to be issued in the name of, and delivered to, the Registered
Holder, or as the Registered Holder (upon payment by the Registered Holder of any applicable
transfer taxes) may direct:
(i) a certificate or certificates for the number of full Warrant Shares to which the
Registered Holder shall be entitled upon such exercise plus, in lieu of any fractional share to
which the Registered Holder would otherwise be entitled, cash in an amount determined pursuant to
Section 3 hereof; provided that in the event the Company’s transfer agent is participating
in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the
request of the Registered Holder in connection with the Registered Holder’s sale of such Warrant
Shares pursuant to an effective registration statement under the Securities Act or an exemption
from the registration requirements of the Securities Act, the Company shall credit such aggregate
number of shares of Common Stock to which the Registered Holder is entitled pursuant to such
exercise to the Registered Holder’s or its designee’s balance account with DTC through its Deposit
Withdrawal Agent Commission system; and
(ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof)
of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant
Shares equal (without giving effect to any adjustment therein) to the number of such shares called
for on the face of this Warrant minus the number of Warrant Shares for which this Warrant was so
exercised (which, in the case of an exercise pursuant to subsection 1(b), shall include both the
number of Warrant Shares issued to the Registered Holder pursuant to such partial exercise and the
number of Warrant Shares subject to the portion of the Warrant being cancelled in payment of the
Purchase Price).
If the Company shall fail to deliver or cause to be delivered for any reason or no reason the
shares of Common Stock as provided for above (the “Delivery Deadline”), then, in addition to all
other remedies available to the Registered Holder, if on or after the trading day immediately
following the Delivery Deadline the Registered Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Registered Holder of
shares of Common Stock that were to be represented by the shares of Common Stock to be issued as
provided for above (a “Buy-In”), then, provided as of such purchase date the Registered Holder had
not received such shares of Common Stock, the Company shall, within three (3) business days after
written request by the Registered Holder and in the Registered Holder’s discretion, either (i) pay
cash to the Registered Holder in an amount equal to the purchase price (including brokerage
commissions, if any) paid by the Registered Holder for the shares of Common Stock so purchased (the
“Buy-In Price”), at which point the Company’s obligation to issue such shares of Common Stock shall
terminate, or (ii) promptly honor its obligation to deliver to the Registered Holder a certificate
or certificates representing such shares of Common Stock and pay cash to the Registered Holder in
an amount equal to the
- 3 -
excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common
Stock, times (B) the Fair Market Value on the Delivery Deadline.
[The following provision shall be included in this Warrant at the request of the Registered
Holder: (e) Beneficial Ownership. The Company shall not effect the exercise of this
Warrant, and the Registered Holder shall not have the right to exercise this Warrant, to the extent
that after giving effect to such exercise, the Registered Holder (together with the Registered
Holder’s affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the
shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the
Registered Holder and its affiliates shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which the determination of such sentence is being
made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the
remaining, unexercised portion of this Warrant beneficially owned by the Registered Holder and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company beneficially owned by the Registered Holder and its affiliates
(including, without limitation, any convertible notes or convertible preferred stock or warrants)
subject to a limitation on conversion or exercise analogous to the limitation contained herein.
Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership
shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Warrant, in determining the number of outstanding shares of Common
Stock, the Registered Holder may rely on the number of outstanding shares of Common Stock as
reflected in (1) the Company’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or
other public filing with the Securities and Exchange Commission, as the case may be, (2) a more
recent public announcement by the Company or (3) any other notice by the Company or the Company’s
transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at
any time, upon the written or oral request of the Registered Holder, the Company shall within one
business day confirm orally and in writing to the Registered Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of securities of the Company,
including the Company Warrants, by the Registered Holder and its affiliates since the date as of
which such number of outstanding shares of Common Stock was reported. By written notice to the
Company, the Registered Holder may from time to time increase or decrease the Maximum Percentage to
any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such
increase will not be effective until the sixty-first (61st) day after such notice is
delivered to the Company, and (ii) any such increase or decrease will apply only to the Registered
Holder and not to any other holder of Company Warrants.]
2. Adjustments.
(a) Adjustment for Stock Splits and Combinations. If the Company shall at any time or
from time to time after the date on which this Warrant was first issued (or, if this Warrant was
issued upon partial exercise of, or in replacement of, another warrant of like tenor, then the date
on which such original warrant was first issued) (the “Original Issue Date”) effect a subdivision
of the outstanding Common Stock, the Purchase Price then in effect immediately before that
subdivision shall be proportionately decreased. If the Company shall at any time or
- 4 -
from time to time after the Original Issue Date combine the outstanding shares of Common
Stock, the Purchase Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this paragraph shall become effective at the close
of business on the date the subdivision or combination becomes effective.
(b) Adjustment for Certain Dividends and Distributions. In the event the Company at
any time, or from time to time after the Original Issue Date shall make or issue, or fix a record
date for the determination of holders of Common Stock entitled to receive, a dividend or other
distribution payable in additional shares of Common Stock, then and in each such event the Purchase
Price then in effect immediately before such event shall be decreased as of the time of such
issuance or, in the event such a record date shall have been fixed, as of the close of business on
such record date, by multiplying the Purchase Price then in effect by a fraction:
(1) the numerator of which shall be the total number of shares of
Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record
date, and
(2) the denominator of which shall be the total number of shares
of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record
date plus the number of shares of Common Stock issuable in payment of such dividend or
distribution; provided, however, that if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed therefore, the
Purchase Price shall be recomputed accordingly as of the close of business on such record date and
thereafter the Purchase Price shall be adjusted pursuant to this paragraph as of the time of actual
payment of such dividends or distributions; and provided further that in no event shall the
Purchase Price be reduced pursuant to this Section 2(b)(2) below the Fair Market Value of the
Common Stock on the Original Issue Date.
(c) Adjustments for Other Dividends and Distributions. In the event the Company at
any time or from time to time after the Original Issue Date shall make or issue, or fix a record
date for the determination of holders of Common Stock entitled to receive, a dividend or other
distribution payable in securities of the Company (other than shares of Common Stock) or in cash or
other property (other than regular cash dividends paid out of earnings or earned surplus,
determined in accordance with generally accepted accounting principles), then and in each such
event provision shall be made so that the Registered Holder shall receive upon exercise hereof, in
addition to the number of shares of Common Stock issuable hereunder, the kind and amount of
securities of the Company, cash or other property which the Registered Holder would have been
entitled to receive had this Warrant been exercised on the date of such event and had the
Registered Holder thereafter, during the period from the date of such event to and including the
Exercise Date, retained any such securities receivable during such period, giving application to
all adjustments called for during such period under this Section 2 with respect to the rights of
the Registered Holder.
(d) Adjustment for Reorganization.
- 5 -
(i) If there shall occur any reorganization, recapitalization, reclassification, consolidation
or merger involving the Company in which the Common Stock is converted into or exchanged for
securities, cash or other property (collectively, a “Reorganization”), then, following
such Reorganization, the Registered Holder shall receive upon exercise hereof the kind and amount
of securities, cash or other property which the Registered Holder would have been entitled to
receive pursuant to such Reorganization if such exercise had taken place immediately prior to such
Reorganization.
(ii) Notwithstanding the foregoing, in the event of a Reorganization that is (1) a
transaction
where the consideration paid to the holders of the Common Stock consists solely of cash, (2) a
“Rule 13e-3 transaction” as defined in Rule 13e-3 under the Securities Exchange Act of 1934, as
amended, or (3) a Reorganization involving a person or entity not traded on a national securities
exchange, the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market
(any of the events described in clauses (1), (2) or (3) above, each a “Cash
Reorganization”), at the request of the Holder delivered before the 90th day after
such Reorganization, the Company (or the successor entity to the Company) at the Holder’s request
shall purchase this Warrant from the Holder by paying to the Holder, within five (5) Business Days
after such request (or, if later, on the effective date of the Reorganization), cash in an amount
equal to the value of the remaining unexercised portion of this Warrant on the date of such
Reorganization, which value shall be determined by use of the Black Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg using (i) a price per share of Common Stock equal to
the VWAP of the Common Stock for the Trading Day immediately preceding the date of consummation of
the applicable Reorganization, (ii) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of such as of the date of
consummation of the applicable Reorganization and (iii) an expected volatility equal to the greater
of (A) 40% and (B) the 100 day volatility obtained from the HVT function on Bloomberg determined as
of the Trading Day immediately following the announcement of the Reorganization, not to exceed 85%.
(iii) Notwithstanding the foregoing, in the event of a Reorganization, other than a Cash
Reorganization, that is (x) a transaction in which the Common Stock is converted into or exchanged
for anything other than solely equity securities, and (y) the common stock of the acquiring or
surviving company is publicly traded, then, as part of such Reorganization, (i) the Registered
Holder shall have the right thereafter to receive upon the exercise hereof such number of shares of
common stock of the acquiring or surviving company as is determined by multiplying (A) the number
of shares of Common Stock subject to this Warrant immediately prior to such Reorganization by (B) a
fraction, the numerator of which is the Fair Market Value (as defined in subsection 1(b)(ii) above)
per share of Common Stock as of the effective date of such Reorganization, and the denominator of
which is the fair market value per share of common stock of the acquiring or surviving company as
of the effective date of such transaction, as determined in good faith by the Board, and (ii) the
exercise price per share of common stock of the acquiring or surviving company shall be the
Purchase Price divided by the fraction referred to in clause (B) above.
(iv) The provisions of this paragraph (d) shall similarly apply to subsequent transactions
analogous to a Reorganization. In any such case, appropriate adjustment (as determined in good
faith by the Board) shall be made in the application of the provisions set
- 6 -
forth herein with respect to the rights and interests thereafter of the Registered Holder, to
the end that the provisions set forth in this Section 2 (including provisions with respect to
changes in and other adjustments of the Purchase Price) shall thereafter be applicable, as nearly
as reasonably may be, in relation to any securities, cash or other property thereafter deliverable
upon the exercise of this Warrant.
(e) Adjustment for Certain Subsequent Offerings.
(i) In the event the Company, at any time after the Original Issue Date, shall issue shares of
Additional Stock (as defined below) for consideration per share less than the Purchase Price in
effect immediately prior to such issuance, then the Purchase Price in effect immediately prior to
such issuance shall be adjusted in accordance with the following formula, provided, however, that
in no event shall the Purchase Price be reduced pursuant to this Section 2(e) below the Fair Market
Value of the Common Stock on the Original Issue Date:
where:
AP = the adjusted Purchase Price.
P = the then current Purchase Price.
O = the number of shares outstanding (on a fully-diluted basis, assuming the
full conversion, exercise or exchange of all convertible securities then
outstanding) immediately prior to the issuance of such additional shares.
C = the aggregate consideration received for the issuance of such additional
shares.
A = the number of shares outstanding (on a fully-diluted basis, assuming the
full conversion, exercise or exchange of all convertible securities then
outstanding) immediately after the issuance of such additional shares.
(ii) As used in this Section 2(e), “Additional Stock” shall mean any shares of
Common Stock
issued by the Company or deemed to be issued pursuant to this Section 2(e) after the Original Issue
Date, except shares of Common Stock issued (A) by reason of a stock split, combination, dividend,
or other distribution or issuance of shares of Common Stock that is covered by Sections 2(a), 2(b),
2(c) or 2(d); (B) to employees or directors of, or consultants or advisors to, the Company or any
of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors
of the Company; (C) upon exercise of the Company Warrants or any other warrants or convertible
securities issued by the Company and outstanding as of the Original Issue Date; (D) to banks,
equipment lessors or other financial institutions in connection with loans or other extensions of
credit made to the Company; (E) to
- 7 -
suppliers or third party service providers in connection with the provision of goods or services
(the primary purpose of which is not to raise equity capital); or (F) in connection with sponsored
research, collaborations, technology license, development, marketing or other similar agreements or
mergers, acquisitions or strategic partnerships (the primary purpose of which is not to raise
equity capital).
(iii) For the purpose of the adjustment required under this Section 2(e), if the Company
issues or sells (i) stock or other securities convertible into, shares of Additional Stock (such
convertible stock or securities being herein referred to as “Convertible Securities”) or (ii)
rights or options for the purchase of shares of Additional Stock or Convertible Securities and if
the Effective Price of such shares of Additional Stock is less than the Purchase Price in each case
the Company shall be deemed to have issued at the time of the issuance of such rights or options or
Convertible Securities the maximum number of shares of Additional Stock issuable upon exercise or
conversion thereof and to have received as consideration for the issuance of such shares an amount
equal to the total amount of the consideration, if any, received by the Company for the issuance of
such rights or options or Convertible Securities, plus, in the case of such rights or options, the
minimum amounts of consideration, if any, payable to the Company upon the exercise of such rights
or options, plus, in the case of Convertible Securities, the minimum amounts of consideration, if
any, payable to the Company (other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities) upon the conversion thereof; provided that if in the case of
Convertible Securities the minimum amounts of such consideration cannot be ascertained, but are a
function of antidilution or similar protective clauses, the Company shall be deemed to have
received the minimum amounts of consideration without reference to such clauses; provided further
that if the minimum amount of consideration payable to the Company upon the exercise or conversion
of rights, options or Convertible Securities is reduced over time or on the occurrence or
non-occurrence of specified events other than by reason of antidilution adjustments, the Effective
Price shall be recalculated using the figure to which such minimum amount of consideration is
reduced; provided further that if the minimum amount of consideration payable to the Company upon
the exercise or conversion of such rights, options or Convertible Securities is subsequently
increased, the Effective Price shall be again recalculated using the increased minimum amount of
consideration payable to the Company upon the exercise or conversion of such rights, options or
Convertible Securities. No further adjustment of the Purchase Price, as adjusted upon the issuance
of such rights, options or Convertible Securities, shall be made as a result of the actual issuance
of shares of Additional Stock on the exercise of any such rights or options or the conversion of
any such Convertible Securities. If any such rights or options or the conversion privilege
represented by any such Convertible Securities shall expire without having been exercised, the
Purchase Price as adjusted upon the issuance of such rights, options or Convertible Securities
shall be readjusted to the Purchase Price which would have been in effect had an adjustment been
made on the basis that the only shares of Additional Stock so issued were the shares of Additional
Stock, if any, actually issued or sold on the exercise of such rights or options or rights of
conversion of such Convertible Securities, and such shares of Additional Stock, if any, were issued
or sold for the consideration actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of all such rights or
options, whether or not exercised, plus the consideration received for issuing or selling the
Convertible Securities, whether or not converted, plus the consideration, if any, actually received
by the Company (other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) on the
- 8 -
conversion of such Convertible Securities. As used herein, the “Effective Price” of the shares of
Additional Stock shall mean the quotient determined by dividing the total number of shares of
Additional Stock issued or sold, or deemed to have been issued or sold by the Company under this
Section 2(e), into the aggregate consideration received, or deemed to have been received by the
Company for such issue under this Section 2(e), for such shares of Additional Stock.
(f) Certificate as to Adjustments. Upon the occurrence of each adjustment or
readjustment of the Purchase Price pursuant to this Section 2, the Company at its expense shall, as
promptly as reasonably practicable but in any event not later than 10 days thereafter, compute such
adjustment or readjustment in accordance with the terms hereof and furnish to the Registered Holder
a certificate setting forth such adjustment or readjustment (including the kind and amount of
securities, cash or other property for which this Warrant shall be exercisable and the Purchase
Price) and showing in detail the facts upon which such adjustment or readjustment is based. The
Company shall, as promptly as reasonably practicable after the written request at any time of the
Registered Holder (but in any event not later than 10 days thereafter), furnish or cause to be
furnished to the Registered Holder a certificate setting forth (i) the Purchase Price then in
effect and (ii) the number of shares of Common Stock and the amount, if any, of other securities,
cash or property which then would be received upon the exercise of this Warrant.
3. Fractional Shares. The Company shall not be required upon the exercise of this
Warrant to issue any fractional shares, but shall pay the value thereof to the Registered Holder in
cash on the basis of the Fair Market Value per share of Common Stock, as determined pursuant to
subsection 1(b) above.
4. Transfers, etc.
(a) Notwithstanding anything to the contrary contained herein, this Warrant and the Warrant
Shares shall not be sold or transferred unless either (i) they first shall have been registered
under the Securities Act of 1933, as amended (the “Act”), or (ii) such sale or transfer shall be
exempt from the registration requirements of the Act and the Company shall have been furnished with
an opinion of legal counsel, reasonably satisfactory to the Company, to the effect that such sale
or transfer is exempt from the registration requirements of the Act. Notwithstanding the
foregoing, no registration or opinion of counsel shall be required for (i) a transfer by a
Registered Holder which is an entity to a wholly owned subsidiary or affiliate of such entity, a
transfer by a Registered Holder which is a partnership to a partner of such partnership or a
retired partner of such partnership or to the estate of any such partner or retired partner, or a
transfer by a Registered Holder which is a limited liability company to a member of such limited
liability company or a retired member or to the estate of any such member or retired member,
provided that the transferee in each case agrees in writing to be subject to the terms of
this Section 4, or (ii) a transfer made in accordance with Rule 144 under the Act.
(b) Each certificate representing Warrant Shares shall bear a legend substantially in the
following form:
“The securities represented hereby have not been registered under
the Securities Act of 1933, as amended, or any state securities laws
and neither the securities nor any interest therein may be offered,
- 9 -
sold, transferred, pledged or otherwise disposed of except pursuant
to an effective registration under such act or an exemption from
registration, which, in the opinion of counsel reasonably
satisfactory to counsel for this corporation, is available.”
The foregoing legend shall be removed from the certificates representing any Warrant Shares,
at the request of the holder thereof, at such time as they become eligible for resale pursuant to
Rule 144(k) under the Act or at such time as the Warrant Shares are sold or transferred in
accordance with the requirements of a registration statement of the Company on Form S-1, or such
other form as may then be in effect.
(c) The Company will maintain a register containing the name and address of the Registered
Holder of this Warrant. The Registered Holder may change its address as shown on the warrant
register by written notice to the Company requesting such change.
(d) Subject to the provisions of this Section 4, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Warrant with a properly executed
assignment (in the form of Exhibit II hereto) at the principal office of the Company (or,
if another office or agency has been designated by the Company for such purpose, then at such other
office or agency).
5. No Impairment. The Company will not, by amendment of its charter or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in order to protect
the rights of the Registered Holder against impairment.
6. Notices of Record Date, etc. In the event:
(a) the Company shall take a record of the holders of its Common Stock (or other stock or
securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling
or enabling them to receive any dividend or other distribution, or to receive any right to
subscribe for or purchase any shares of stock of any class or any other securities, or to receive
any other right; or
(b) of any capital reorganization of the Company, any reclassification of the Common Stock of
the Company, any consolidation or merger of the Company with or into another corporation, or any
transfer of all or substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,
then, and in each such case, the Company will send or cause to be sent to the Registered Holder a
notice specifying, as the case may be, (i) the record date for such dividend, distribution or
right, and the amount and character of such dividend, distribution or right, or (ii) the effective
date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock (or such other stock or securities at the time
- 10 -
deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of
Common Stock (or such other stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be sent at least five (5) days prior to the record date or effective
date for the event specified in such notice.
7. Reservation of Stock. The Company will at all times reserve and keep available,
solely for issuance and delivery upon the exercise of this Warrant, such number of Warrant Shares
and other securities, cash and/or property, as from time to time shall be issuable upon the
exercise of this Warrant.
8. Exchange or Replacement of Warrants.
(a) Upon the surrender by the Registered Holder, properly endorsed, to the Company at the
principal office of the Company, the Company will, subject to the provisions of Section 5 hereof,
issue and deliver to or upon the order of the Registered Holder, at the Company’s expense, a new
Warrant or Warrants of like tenor, in the name of the Registered Holder or as the Registered Holder
(upon payment by the Registered Holder of any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock (or other
securities, cash and/or property) then issuable upon exercise of this Warrant.
(b) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon
delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this
Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.
9. Notices. All notices and other communications from the Company to the Registered
Holder in connection herewith shall be mailed by certified or registered mail, postage prepaid, or
sent via a reputable nationwide overnight courier service guaranteeing next business day delivery,
to the address last furnished to the Company in writing by the Registered Holder. All notices and
other communications from the Registered Holder to the Company in connection herewith shall be
mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide
overnight courier service guaranteeing next business day delivery, to the Company at its principal
office set forth below. If the Company should at any time change the location of its principal
office to a place other than as set forth below, it shall give prompt written notice to the
Registered Holder and thereafter all references in this Warrant to the location of its principal
office at the particular time shall be as so specified in such notice. All such notices and
communications shall be deemed delivered one business day after being sent via a reputable
international overnight courier service guaranteeing next business day delivery.
10. No Rights as Stockholder. Until the exercise of this Warrant, the Registered
Holder shall not have or exercise any rights by virtue hereof as a stockholder of the Company.
Notwithstanding the foregoing, in the event (i) the Company effects a split of the Common Stock by
means of a stock dividend and the Purchase Price of and the number of Warrant Shares are adjusted
as of the date of the distribution of the dividend (rather than as of the record date for
- 11 -
such dividend), and (ii) the Registered Holder exercises this Warrant between the record date
and the distribution date for such stock dividend, the Registered Holder shall be entitled to
receive, on the distribution date, the stock dividend with respect to the shares of Common Stock
acquired upon such exercise, notwithstanding the fact that such shares were not outstanding as of
the close of business on the record date for such stock dividend.
11. Amendment or Waiver. Any term of this Warrant may be amended or waived (either
generally or in a particular instance and either retroactively or prospectively) with the written
consent of the Company and the holders of Company Warrants representing at least two-thirds of the
number of shares of Common Stock then subject to outstanding Company Warrants. Notwithstanding the
foregoing, (a) this Warrant may be amended and the observance of any term hereunder may be waived
without the written consent of the Registered Holder only in a manner which applies to all Company
Warrants in the same fashion and (b) the number of Warrant Shares subject to this Warrant and the
Purchase Price of this Warrant may not be amended, and the right to exercise this Warrant may not
be waived, without the written consent of the Registered Holder (it being agreed that an amendment
to or waiver under any of the provisions of Section 2 of this Warrant shall not be considered an
amendment of the number of Warrant Shares or the Purchase Price). The Company shall give prompt
written notice to the Registered Holder of any amendment hereof or waiver hereunder that was
effected without the Registered Holder’s written consent. No waivers of any term, condition or
provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such term, condition or provision.
12. Dispute Resolution. In the case of a dispute as to the determination of the
Purchase Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within two business days of
receipt of the Purchase Form giving rise to such dispute, as the case may be, to the Registered
Holder. If the Holder and the Company are unable to agree upon such determination or calculation
of the Purchase Price or the Warrant Shares within three business days of such disputed
determination or arithmetic calculation being submitted to the Registered Holder, then the Company
shall, within two business days submit via facsimile (a) the disputed determination of the Purchase
Price to an independent, reputable investment bank selected by the Company and approved by the
Registered Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s
independent, outside accountant. The Company, at the Company’s expense, shall use reasonable best
efforts to cause at its expense the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the Registered Holder of the
results no later than ten business days from the time it receives the disputed determinations or
calculations. Such investment bank’s or accountant’s determination or calculation, as the case may
be, shall be binding upon all parties absent demonstrable error.
- 12 -
13. Section Headings. The section headings in this Warrant are for the convenience of
the parties and in no way alter, modify, amend, limit or restrict the contractual obligations of
the parties.
14. Governing Law. This Warrant will be governed by and construed in accordance with
the internal laws of the State of New York (without reference to the conflicts of law provisions
thereof).
15. Facsimile Signatures. This Warrant may be executed by facsimile signature or
electronic document in PDF format.
* * * * * * *
- 13 -
EXECUTED as of the Date of Issuance indicated above.
| XXXXXXXXXX, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| ATTEST: | ||||
|
|
- 14 -
EXHIBIT I
PURCHASE FORM
| To: Xxxxxxxxxx, Inc. | Dated: |
The undersigned, pursuant to the provisions set forth in the attached Warrant (No.
),
hereby elects to purchase (check applicable box):
___
shares of the Common Stock of Xxxxxxxxxx, Inc. covered by such Warrant; or
___
the maximum number of shares of Common Stock covered by such Warrant pursuant to the
cashless exercise procedure set forth in subsection 1(b).
The undersigned herewith makes payment of the full purchase price for such shares at the price
per share provided for in such Warrant. Such payment takes the form of (check applicable box or
boxes):
$___
in lawful money of the United States; and/or
| the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 1(b), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 1(b). |
Notwithstanding anything to the contrary contained herein, this Purchase Form shall constitute
a representation by the holder of the Warrant submitting this Purchase Form that, after giving
effect to the exercise provided for in this Purchase Form, such holder (together with its
affiliates) will not have beneficial ownership (together with the beneficial ownership of such
Person’s affiliates) of a number of shares of Common Stock which exceeds the Maximum Percentage of
the total outstanding shares of Common Stock as determined pursuant to the provisions of Section
1(e) of this Warrant.
| Signature: | ||||||
| Address: | ||||||
EXHIBIT II
ASSIGNMENT FORM
FOR VALUE RECEIVED,
hereby sells, assigns and transfers
all of the rights of the undersigned under the attached Warrant (No. ___) with respect to the
number of shares of Common Stock of Xxxxxxxxxx, Inc. covered thereby set forth below, unto:
Name of Assignee
|
Address | No. of Shares |
| Dated: | ||||||
| Signature: | ||||||
| Signature Guaranteed: | ||||||
| By: | ||||||
The signature should be guaranteed by an eligible guarantor institution (banks, stockbrokers,
savings and loan associations and credit unions with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended.
Exhibit X
Xxxxxxxxxx, Inc.
Confidential Purchaser Questionnaire
Confidential Purchaser Questionnaire
| Before any sale of Shares or Warrants by Xxxxxxxxxx, Inc. can be made to you, this Questionnaire must be completed and returned to Xxxxxxxxxxx & Co. Inc. Attn: Investment Banking Department, 000 Xxxxx Xx., Xxx Xxxx, XX 00000, FAX: 000-000-0000 |
| 1. | IF YOU ARE AN INDIVIDUAL PLEASE FILL IN THE IDENTIFICATION QUESTIONS IN (A) IF YOU ARE AN ENTITY PLEASE FILL IN THE IDENTIFICATION QUESTIONS IN (B) |
| A. | INDIVIDUAL IDENTIFICATION QUESTIONS |
Name
(Exact name as it should appear on stock certificate)
Residence Address
Home Telephone Number
Fax Number
Date of Birth
Social Security Number
(Exact name as it should appear on stock certificate)
Residence Address
Home Telephone Number
Fax Number
Date of Birth
Social Security Number
| B. | IDENTIFICATION QUESTIONS FOR ENTITIES |
Name
(Exact name as it will appear on stock certificate)
Address of Principal Place of Business
State (or Country) of Formation or Incorporation
Contact Person
Telephone Number ( )
Type of Entity
(corporation, partnership, trust, etc.)
Was entity formed for the purpose of this investment?
Yes o No o
(Exact name as it will appear on stock certificate)
Address of Principal Place of Business
State (or Country) of Formation or Incorporation
Contact Person
Telephone Number ( )
Type of Entity
(corporation, partnership, trust, etc.)
Was entity formed for the purpose of this investment?
Yes o No o
| 2. | DESCRIPTION OF INVESTOR | |
| The following information is required to ascertain whether you would be deemed an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act. Please check whether you are any of the following: |
| o | a corporation or partnership with total assets in excess of $5,000,000, not organized for the purpose of this particular investment | |||
| o | private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, a U.S. venture capital fund which invests primarily through private placements in non-publicly traded securities and makes available (either directly or through co-investors) to the portfolio companies significant guidance concerning management, operations or business objectives | |||
| o | a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958 | |||
| o | an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act |
| o | a trust not organized to make this particular investment, with total assets in excess of $5,000,000 whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Securities Act of 1933 and who completed item 4 below of this questionnaire | |||
| o | a bank as defined in Section 3(a)(2) or a savings and loan association or other institution defined in Section 3(a)(5)(A) of the Securities Act of 1933 acting in either an individual or fiduciary capacity | |||
| o | an insurance company as defined in Section 2(13) of the Securities Act of 1933 | |||
| o | an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 (i) whose investment decision is made by a fiduciary which is either a bank, savings and loan association, insurance company, or registered investment advisor, or (ii) whose total assets exceed $5,000,000, or (iii) if a self-directed plan, whose investment decisions are made solely by a person who is an accredited investor and who completed Part I of this questionnaire; | |||
| o | a charitable, religious, educational or other organization described in Section 501(c)(3) of the Internal Revenue Code, not formed for the purpose of this investment, with total assets in excess of $5,000,000 an entity not located in the U.S. none of whose equity owners are U.S. citizens or U.S. residents | |||
| o | a broker or dealer registered under Section 15 of the Securities Exchange Act of 1934 | |||
| o | a plan having assets exceeding $5,000,000 established and maintained by a government agency for its employees | |||
| o | an individual who had individual income from all sources during each of the last two years in excess of $200,000 or the joint income of you and your spouse (if married) from all sources during each of such years in excess of $300,000 and who reasonably excepts that either your own income from all sources during the current year will exceed $200,000 or the joint income of you and your spouse (if married) from all sources during the current year will exceed $300,000 | |||
| o | an individual whose net worth as of the date you purchase the securities offered, together with the net worth of your spouse, be in excess of $1,000,000 | |||
| o | an entity in which all of the equity owners are accredited investors |
| 3. | BUSINESS, INVESTMENT AND EDUCATIONAL EXPERIENCE |
Occupation &nbs
p;
&nbs
p;
Number of Years &n bsp; &nbs p;
Present Employer ; &nb sp; & nbsp;
Position/Title ; &nb sp;
Educational Background &nb sp;
Number of Years &n bsp; &nbs p;
Present Employer ; &nb sp; & nbsp;
Position/Title ; &nb sp;
Educational Background &nb sp;
- 2 -
| Frequency of prior investment (check one in each column): |
| Stocks & Bonds | Venture Capital Investments | |||
Frequently
|
||||
Occasionally
|
||||
Never |
| 4. | SIGNATURE |
The above information is true and correct. The undersigned recognizes that the Company and its
counsel are relying on the truth and accuracy of such information in reliance on the exemption
contained in Subsection 4(2) of the Securities Act of 1933, as amended, and Regulation D
promulgated thereunder. The undersigned agrees to notify the Company promptly of any changes in
the foregoing information, which may occur prior to the investment.
Executed at
, on , 2007
- 3 -
Exhibit E
Selling Stockholder Questionnaire
| To: | Xxxxxxxxxx, Inc. x/x Xxxx, Xxxxxxxx, Xxxxxxxx & Xxxxxx XXX 0 Xxxx Xxxx Square, Xxxxx Xxxxx, Xxxx Xxxx, XX 00000-0000 Attention: Xxxxxx X. Xxxxxxxx, Esq. |
Reference is made to the Securities Purchase Agreement (the “Agreement”), made between
Xxxxxxxxxx, Inc., a Delaware corporation (the “Company”), and the Purchasers noted therein.
Pursuant to Section B(12) of the Agreement, the undersigned hereby furnishes to the Company
the following information for use by the Company in connection with the preparation of the
Registration Statement contemplated by Section E of the Agreement.
| (1) Name and Contact Information: | ||||||
| Full legal name of record holder: | ||||||
| Address of record holder: |
|
|||||
|
|
||||||
| Social Security Number or Taxpayer | ||||||
| identification number of record holder: |
|
|||||
| Identity of beneficial owner (if | ||||||
| different than record holder): |
|
|||||
| Name of contact person: |
|
|||||
| Telephone number of contact person: |
|
|||||
| Fax number of contact person: |
|
|||||
| E-mail address of contact person: |
|
(2) Beneficial Ownership of Registrable Securities: |
||||
(a) Number of Registrable Securities owned by Selling
Stockholder: |
||||
|
|
||||
(b) Number of Registrable Securities requested to be registered: |
||||
|
|
||||
(3) Beneficial Ownership of Other Securities of the Company Owned by the Selling
Stockholder: |
||||
| Except as set forth below in this Item (3), the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed above in Item (2)(a). | ||||
| Type and amount of other securities beneficially owned by the Selling Stockholder: | ||||
|
|
||||
|
|
||||
(4) Relationships with the Company: |
||||
| Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years. | ||||
| State any exceptions here: | ||||
|
|
||||
|
|
||||
(5) Plan of Distribution: |
||||
| Except as set forth below, the undersigned intends to distribute pursuant to the Registration Statement the Registrable Securities listed above in Item (2) in accordance with the “Plan of Distribution” section set forth therein: | ||||
| State any exceptions here: | ||||
|
|
||||
|
|
- 2 -
(6) Selling Stockholder Affiliations: |
||||
| (a) Is the Selling Stockholder a registered broker-dealer? | ||||
|
|
||||
| (b) Is the Selling Stockholder an affiliate of a registered broker-dealer(s)? (For purposes of this response, an “affiliate” of, or person “affiliated” with, a specified person, is a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.) | ||||
|
|
||||
| (c) If the answer to Item (6)(b) is yes, identify the registered broker-dealer(s) and describe the nature of the affiliation(s): | ||||
|
|
||||
| (d) If the answer to Item (6)(b) is yes, did the Selling Stockholder acquire the Registrable Securities in the ordinary course of business (if not, please explain)? | ||||
|
|
||||
| (e) If the answer to Item (6)(b) is yes, did the Selling Stockholder, at the time of purchase of the Registrable Securities, have any agreements, plans or understandings, directly or indirectly, with any person to distribute the Registrable Securities (if yes, please explain)? | ||||
|
|
||||
(7) Voting or Investment Control over the Registrable Securities: |
||||
| If the Selling Stockholder is not a natural person, please identify the natural person or persons who have voting or investment control over the Registrable Securities listed in Item (2) above: | ||||
|
|
||||
Pursuant to Section E(3) of the Agreement, the undersigned acknowledges that the Company may,
by notice to the Placement Agent and to each Purchaser at its last known address, suspend or
withdraw the Registration Statement and require that the undersigned immediately cease sales of
Registrable Securities pursuant to the Registration Statement under certain circumstances described
in the Agreement. At any time that such notice has been given, the undersigned may not sell
Registrable Securities pursuant to the Registration Statement.
- 3 -
The undersigned hereby acknowledges receipt of a draft of the Registration Statement dated [
], 2007 and confirms that the undersigned has reviewed such draft including, without
limitation, the sections captioned “Selling Stockholders” and “Plan of Distribution,” and confirms
that, to the best of the undersigned’s knowledge, the same is true, complete and accurate in every
respect except as indicated in this Questionnaire. The undersigned hereby further acknowledges
that pursuant to Section B(12) of the Agreement, the undersigned shall indemnify the Company and
each of its directors and officers against, and hold the Company and each of its directors and
officers harmless from, any losses, claims, damages, expenses or liabilities (including reasonable
attorneys fees) to which the Company or its directors and officers may become subject by reason of
any statement or omission in the Registration Statement made in reliance upon, or in conformity
with, a written statement by the undersigned, including the information furnished in this
Questionnaire by the undersigned.
By signing below, the undersigned consents to the disclosure of the information contained
herein in its answers to Items (1) through (7) above and the inclusion of such information in the
Registration Statement, any amendments thereto and the related prospectus. The undersigned
understands that such information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related prospectus.
The undersigned has reviewed the answers to the above questions and affirms that the same are
true, complete and accurate. THE UNDERSIGNED AGREES TO NOTIFY THE COMPANY IMMEDIATELY OF ANY
CHANGES IN THE FOREGOING INFORMATION.
Dated: , 2007
|
|
|||
| (Please sign your name in exactly the same manner as the certificate(s) for the shares being registered) |
- 4 -
Exhibit F
Company Disclosure Schedule
XXXXXXXXXX, INC.
DISCLOSURE SCHEDULE
This Disclosure Schedule is made and given pursuant to Section C of the Securities Purchase
Agreement, dated as of August 23, 2007 (the “Agreement”), among Xxxxxxxxxx, Inc. (the “Company”),
the undersigned purchaser(s) thereto (each, a “Purchaser” and collectively, the “Purchasers”) and
each assignee of a Purchaser who becomes a party thereto. For the avoidance of doubt, this
Disclosure Schedule is dated as of August 23, 2007. All capitalized terms used but not defined
herein shall have the meanings as defined in the Agreement, unless otherwise provided. The section
numbers below correspond to the section numbers of the representations and warranties in the
Agreement; provided, however, that any information disclosed herein under any section number shall
be deemed to be disclosed and incorporated into any other section number under the Agreement to the
extent such information and disclosures are otherwise apparent to a reasonably prudent person based
upon the face of such disclosure in the Schedule of Exceptions would be applicable to such other
representation and warranty.
Nothing in this Disclosure Schedule is intended to broaden the scope of any representation or
warranty contained in the Agreement or to create any covenant. Inclusion of any item in this
Disclosure Schedule (1) does not represent a determination that such item is material or establish
a standard of materiality, (2) does not represent a determination that such item did not arise in
the ordinary course of business, (3) does not represent a determination that the transactions
contemplated by the Agreement require the consent of third parties, and (4) shall not constitute,
or be deemed to be, an admission to any third party concerning such item. This Disclosure Schedule
includes brief descriptions or summaries of certain agreements and instruments. Such descriptions
do not purport to be comprehensive, and are qualified in their entirety by reference to the text of
the documents described.
Schedule C.(2)
Capitalization
| 1. | As consideration for, and contingent upon, Quest’s investment pursuant to this Agreement, the Quest Stock Purchase Agreement will be amended to reduce Quest’s warrant exercise price to purchase 2,200,000 shares of the Company’s common stock from $3.50 per share to $2.50 per share. The maturity of the warrant will be extended through July 22, 2011. |
- 2 -
Schedule C.(5)(a)
No Conflict; Governmental and Other Consents
| 1. | Stock Purchase Agreement, dated November 13, 2006, between Xxxxxxxxxx, Inc. and Bio-Rad Laboratories, Inc. | |
| Pursuant to Section 4.1 and for a period of two years following the date of this Agreement, Bio-Rad Laboratories shall be granted piggyback registration rights any time the Company proposes to file with the SEC a registration statement relating to an offering of any of its securities for its own account or the account of security holders exercising their demand registration rights (other than on Form S-4 or Form S-8 or their then equivalents relating to securities to be issued solely in connection with an acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans). | ||
| 2. | Stock Purchase Agreement, dated July 22, 2005, between Xxxxxxxxxx, Inc. and Quest Diagnostics Incorporated | |
| Subject to conditions outlined in Section 4.1(c), Section 4.1 of this Agreement grants Quest Diagnostics Incorporated demand registration rights. | ||
| 3. | Exchange and Redemption Agreement, dated November 3, 2006, by and between Highbridge
International LLC and Xxxxxxxxxx, Inc. |
|
| Pursuant to Section 3.9 and for a period of 18 months following closing, this Agreement grants Highbridge International LLC (“Highbridge”) preemptive rights to purchase shares offered by the Company pursuant to a Subsequent Placement, as defined therein, so long as Highbridge continues to hold at least 25% of the New Notes it was issued pursuant to the Agreement. | ||
| 4. | Exchange and Redemption Agreement, dated November 3, 2006, by and between Deerfield Partners L.P. and Xxxxxxxxxx, Inc. | |
| Pursuant to Section 3.9 and for a period of 18 months following closing, this Agreement grants Deerfield Partners L.P. (“Deerfield”) preemptive rights to purchase shares offered by the Company pursuant to a Subsequent Placement, as defined therein, so long as Deerfield continues to hold at least 25% of the New Notes it was issued pursuant to the Agreement. |
- 3 -
| 5. | Exchange and Redemption Agreement, dated November 3, 2006, by and between Deerfield
International Limited and Xxxxxxxxxx, Inc. |
|
| Pursuant to Section 3.9 and for a period of 18 months following closing, this Agreement grants Deerfield International Limited (“Deerfield International”) preemptive rights to purchase shares offered by the Company pursuant to a Subsequent Placement, as defined therein, so long as Deerfield International continues to hold at least 25% of the New Notes it was issued pursuant to the Agreement. | ||
| 6. | Exchange and Redemption Agreement, dated November 3, 2006, by and between Xxxxx Fund, Inc. and Xxxxxxxxxx, Inc. | |
| Pursuant to Section 3.9 and for a period of 18 months following closing, this Agreement grants Xxxxx Fund, Inc. preemptive rights to purchase shares offered by the Company pursuant to a Subsequent Placement, as defined therein, so long as Xxxxx Fund, Inc. continues to hold at least 25% of the New Notes it was issued pursuant to the Agreement. | ||
| 7. | Exchange and Redemption Agreement, dated November 3, 2006, by and between Professional Life &
Casualty and Xxxxxxxxxx, Inc. |
|
| Pursuant to Section 3.9 and for a period of 18 months following closing, this Agreement grants Professional Life & Casualty preemptive rights to purchase shares offered by the Company pursuant to a Subsequent Placement, as defined therein, so long as Professional Life & Casualty continues to hold at least 25% of the New Notes it was issued pursuant to the Agreement. |
- 4 -
Schedule C.(6)
Litigation
| 1. | On July 9, 2007, Molecular Analytical Systems (“MAS”) filed a lawsuit in the Superior Court for the County of Santa Xxxxx naming the Company and Bio-Rad Laboratories, Inc. (“Bio-Rad”) as defendants. The complaint alleges, among other things, that the Company is in breach of the license agreement between the Company and MAS relating to Surface Enhanced Laser Desorption/Ionization (“SELDI”) technology as a result of the Company’s entry into a sublicense with Bio-Rad. | |
| The complaint alleges the following against the Company: (1) breach of contract , (2) breach of covenant of good faith and fair dealing, (3) fraud, and (4) accounting. Against Bio-Rad, the complaint alleges (1) interference with contractual relations, (2) conversion, (3) breach of contract, and (4) accounting. The final cause of action is declaratory relief against both defendants. |
- 5 -
Schedule C.(25)
Compliance with Nasdaq Capital Market Requirements
| 1. | On August 15, 2007, the Company received a letter from the Nasdaq Stock Market that indicated the Company is not in compliance with Marketplace Rule 4310(c)(3), which requires it to have (i) a minimum of $2,500,000 in stockholders’ equity; (ii) $35,000,000 market value of listed securities; or (iii) $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years. | |
| In accordance with Marketplace Rule 4310(c)(8)(C), the Company has a minimum of 30 calendar days, or until September 14, 2007, to regain compliance. If, at any time prior to September 14, 2007, the market value of the Company’s common stock is $35,000,000 or more for at least 10 consecutive business days, Nasdaq may determine that the Company complies with this Rule. If the Company does not achieve this requirement by September 14, 2007, Nasdaq may provide written notification that the Company’s securities will be delisted. At that time, the Company may appeal Nasdaq’s decision. |
- 6 -
Exhibit G
Plan of Distribution
We are registering the shares offered by this prospectus on behalf of the selling
stockholders. The selling stockholders, which as used herein includes donees, pledgees, transferees
or other successors-in-interest selling shares of common stock or interests in shares of common
stock received after the date of this prospectus from a selling stockholder as a gift, pledge,
partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise
dispose of any or all of their shares of common stock or interests in shares of common stock on any
stock exchange, market or trading facility on which the shares are traded or in private
transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of
sale, at prices related to the prevailing market price, at varying prices determined at the time of
sale, or at negotiated prices. To the extent any of the selling stockholders gift, pledge or
otherwise transfer the shares offered hereby, such transferees may offer and sell the shares from
time to time under this prospectus, provided that this prospectus has been amended under Rule
424(b)(3) or other applicable provision of the Securities Act to include the name of such
transferee in the list of selling stockholders under this prospectus.
The selling stockholders may use any one or more of the following methods when disposing of
shares or interests therein:
| • | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; | ||
| • | block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; | ||
| • | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; | ||
| • | an exchange distribution in accordance with the rules of the applicable exchange; | ||
| • | privately negotiated transactions; | ||
| • | short sales; | ||
| • | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; | ||
| • | broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; | ||
| • | a combination of any such methods of sale; and | ||
| • | any other method permitted pursuant to applicable law. |
The selling stockholders may, from time to time, pledge or grant a security interest in some
or all of the shares of common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the shares of common stock,
from time to time, under this prospectus, or under an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus.
In connection with the sale of our common stock or interests therein, the selling stockholders
may enter into hedging transactions with broker-dealers or other financial institutions, which may
in turn engage in short sales of the common stock in the course of hedging the positions they
assume. The selling stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common stock to broker-dealers
that in turn may sell these securities. The selling stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
The aggregate proceeds to the selling stockholders from the sale of the common stock offered
by them will be the purchase price of the common stock less discounts or commissions, if any. Each
of the selling stockholders reserves the right to accept and, together with their agents from time
to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly
or through agents. We will not receive any of the proceeds from this offering. Upon any exercise of
the warrants by payment of cash, however, we will receive the exercise price of the warrants.
The selling stockholders also may resell all or a portion of the shares in open market
transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet
the criteria and conform to the requirements of that rule.
The selling shareholders might be, and any broker-dealers that act in connection with the sale
of securities will be, deemed to be “underwriters” within the meaning of Section 2(11) of the
Securities Act, and any commissions received by such broker-dealers and any profit on the resale of
the securities sold by them while acting as principals will be deemed to be underwriting discounts
or commissions under the Securities Act.
To the extent required, the shares of our common stock to be sold, the names of the selling
stockholders, the respective purchase prices and public offering prices, the names of any agents,
dealer or underwriter, any applicable commissions or discounts with respect to a particular offer
will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.
- 2 -
In order to comply with the securities laws of some states, if applicable, the common stock
may be sold in these jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the common stock may not be sold unless it has been registered or
qualified for sale or an exemption from registration or qualification requirements is available and
is complied with.
We have advised the selling stockholders that the anti-manipulation rules of Regulation M
under the Exchange Act may apply to sales of shares in the market and to the activities of the
selling stockholders and their affiliates. In addition, we will make copies of this prospectus (as
it may be supplemented or amended from time to time) available to the selling stockholders for the
purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling
stockholders may indemnify any broker-dealer that participates in transactions involving the sale
of the shares against certain liabilities, including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities, including
liabilities under the Securities Act and state securities laws, relating to the registration of the
shares offered by this prospectus.
We have agreed with the selling stockholders to keep the registration statement that includes
this prospectus effective until the earliest of (1) such time as all of the shares covered by this
prospectus have been disposed of pursuant to and in accordance with the registration statement, (2)
two years following [ ] or (3) the date on which the shares may be sold pursuant to Rule
144(k) of the Securities Act.
- 3 -
