SECURITIES PURCHASE AGREEMENT
Exhibit
10.1
THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made as of the 6th day of
June, 2006 by and among North American Scientific, Inc. (the “Company”), a
Delaware corporation, with its principal offices at 00000 Xxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxx 00000, and the purchasers whose names and addresses
are
set forth on the signature pages hereto (the “Purchasers”).
IN
CONSIDERATION of the mutual covenants contained in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Purchasers hereby agree as follows:
Section
1. Purchase
and Sale of Securities.
Subject
to the terms and conditions of this Agreement, on the Closing Date (as defined
herein), each Purchaser agrees to purchase severally and not jointly and the
Company agrees to issue and sell to such Purchaser severally and not jointly
(i)
that number of whole shares (the “Shares”) of the Company’s common stock, $0.01
par value, (the “Common Stock”) and (ii) warrants to purchase shares of Common
Stock (the “Warrants,” together with the Shares, the “Securities”), shown below
such Purchaser’s name on the signature pages hereto at a purchase price that is
equal to $1.9525 per Security, of which $0.0625 is allocated as consideration
for the Warrants.
Section
2. The
Closing.
2.1 The
Closing.
(a) The
purchase and sale of the Securities upon the terms and conditions hereof will
take place at a closing (the “Closing”) to be held at the offices of Xxxxxx
& Xxxxxxx LLP, 00000 Xxxx Xxxxx Xxxxx, Xxx. 000, Xxx Xxxxx, XX 00000, or
such other location as the parties may agree, on the date hereof at such time
as
shall be agreed upon by the Company and the Purchasers (the “Closing Date”).
(b) The
Company shall provide wire transfer instructions for the payment of the Purchase
Price (as defined below) prior to the Closing.
(c) At
the
Closing, the Company and each Purchaser shall satisfy all of the conditions
set
forth in Sections 2.2(a) and (b), respectively.
2.2 Conditions
to Closing.
The
Company’s obligation to complete the purchase and sale of the Securities and
deliver such stock certificate(s) and warrant certificates to each Purchaser
is
subject to:
(i) receipt
by the Company of immediately available funds in the full amount of the purchase
price for the Securities being purchased hereunder as set forth below such
Purchaser’s name on such Purchaser’s signature page hereto (the “Purchase
Price”), in accordance with the wire transfer instructions delivered by the
Company pursuant to Section 2.1(b);
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(ii) the
accuracy in all material respects of the representations and warranties made
by
such Purchaser in Section 4 below as of the Closing Date and the fulfillment
in
all material respects of those undertakings of such Purchaser in this Agreement
to be fulfilled on or prior to the Closing Date;
(iii) confirmation
that the Shares and the Warrant Shares have been approved for quotation on
the
Nasdaq National Market; and
(iv) the
aggregate Purchase Price to be paid by the Purchasers for the Securities at
the
Closing shall be greater than or equal to $24,000,001.
(b) Each
Purchaser’s obligation to complete the purchase and sale of the Securities is
subject to:
(i) the
accuracy in all material respects of the representations and warranties made
by
the Company in Section 3 below as of the Closing Date and the fulfillment in
all
material respects of those undertakings of the Company in this Agreement to
be
fulfilled on or prior to the Closing Date;
(ii) confirmation
that the Shares and the Warrant Shares have been approved for quotation on
the
Nasdaq National Market;
(iii) delivery
by the Company to such Purchaser of an opinion, dated as of the Closing Date,
from Seyfarth Xxxx LLP, counsel to the Company, in the form attached hereto
as
Exhibit A;
(iv) delivery
by the Company to such Purchaser of an opinion related to certain intellectual
property matters, dated as of the Closing Date, from XxXxxxxxx Will & Xxxxx
LLP, counsel to the Company, in the form attached hereto as Exhibit
B;
(v) delivery
by the Company to such Purchaser of an opinion related to certain regulatory,
litigation and intellectual property matters, dated as of the Closing Date,
from
Xxxxx Xxxx, Vice President, General Counsel to the Company, in the form attached
hereto as Exhibit C;
(vi) the
Company’s delivery to its transfer agent of irrevocable instructions to issue,
subject to the fulfillment of conditions set forth in Section 2.2(a), to such
Purchaser or in such nominee name(s) as designated by such Purchaser in the
Securities Certificate Questionnaire attached hereto as Appendix I such number
of Shares set forth on such Purchaser’s signature page hereto, or if requested
by the Purchaser, one or more certificates representing such Securities
registered in such name(s) or nominee name(s) requested by such Purchaser;
and
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(vii) the
aggregate Purchase Price to be paid by the Purchasers for the Securities at
the
Closing shall be greater than or equal to $24,000,001.
2.3 Election
of Directors by Three Arch Partners. On the Closing Date, the Company shall
increase the number of members of its Board of Directors from seven members
to
nine members and Three Arch Partners shall have the right but not the obligation
to designate two nominees (the “Three Arch Board Designees”) who shall be
reasonably acceptable to the Company to serve as members of the Board of
Directors. The Company acknowledges that Xxxxxxxx X.Xxxxx and Xxxxxxx X. Xxxxxx
are deemed acceptable Three Arch Board Designees as of the date hereof. The
Company shall cause the Three Arch Board Designees to become members of the
Board of Directors on the Closing Date or as soon thereafter as may be
reasonably practicable. The Company further covenants and agrees to use
commercially reasonable efforts to place the Three Arch Board Designees on
the
slate of directors presented to its stockholders at each meeting at which
directors are elected, subject to compliance with relevant Nasdaq rules and
regulations and subject to the approval of such nominees by the nominating
and
corporate governance committee of the Board. If the nominating and corporate
governance committee of the Board does not approve any proposed Three Arch
Board
Designee, Three Arch Partners shall be entitled to propose another candidate
who
shall be reasonably acceptable to the Company. The Company shall use all
commercially reasonable efforts, including preparation of proxy materials and
solicitation of the Company’s stockholders, to give effect to this Section 2.3.
The Company's obligations under this Section 2.3 shall terminate with respect
to
one of the Three Arch Board Designees if at any time Three Arch Partners
beneficially owns less than 3,500,000 shares of Common Stock issued pursuant
to
this Agreement (including shares of Common Stock issuable upon exercise of
the
Warrants, and as appropriately adjusted for stock splits, stock dividends and
recapitalizations), in such case, one of the Three Arch Board Designees shall
resign from the Board effective immediately. The Company's obligations under
this Section 2.3 shall terminate in their entirety if at any time Three Arch
Partners beneficially owns less than 2,000,000 shares of Common Stock issued
pursuant to this Agreement (including shares of Common Stock issuable upon
exercise of the Warrants, and as appropriately adjusted for stock splits, stock
dividends and recapitalizations), in such case, all Three Arch Board Designees
shall resign from the Board effective immediately.
Section
3. Representations,
Warranties and Covenants of the Company.
Except
as
set forth on the corresponding sections of the Company’s disclosure schedule
attached hereto as Exhibit E (the “Disclosure Schedules”), or as specifically
contemplated by this Agreement, the Company hereby represents and warrants
to,
and covenants with, each Purchaser as of the Closing Date (or such other
date
specified below) as follows:
3.1 No
Material Misstatement.
The
Confidential Private Placement Memorandum, dated June 5, 2006, relating to
the
offering of the Securities, including all exhibits, documents incorporated
by
reference and annexes thereto, as the same may be amended or supplemented,
(the
“Memorandum”), did not, as of its date, does not as of the date hereof, and will
not as of the Closing Date, contain any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
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3.2 Incorporated
Documents.
(a) The
documents incorporated by reference in the Memorandum or attached as exhibits
thereto and any further documents so filed and incorporated by reference in
the
Memorandum filed on or before the Closing Date, at the time they were filed
with
the Securities and Exchange Commission (the “Commission”), as the case may be,
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and
regulations of the Commission thereunder (the “Rules”), and none of such
documents as of such time contained an untrue statement of a material fact
or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) In
the
past 12 calendar months, the Company has filed all documents required to be
filed by it prior to the date hereof with the Commission pursuant to the
reporting requirements of the Exchange Act (the “SEC Documents”) on a timely
basis or has received a valid extension of such time of filing and has filed
any
such SEC Documents prior to the expiration of any such extension.
3.3 Financial
Statements.
The
financial statements of the Company (including all notes and schedules thereto)
included or incorporated by reference in the Memorandum present fairly and
in
all material respects the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of operations,
stockholders’ equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; and such financial statements and
related schedules and notes thereto, and the unaudited financial information
incorporated by reference in the Memorandum, have been prepared in conformity
with generally accepted accounting principles, consistently applied throughout
the periods involved subject, in the case of any unaudited financial
information, to the absence of note disclosure and normal year-end adjustments.
The summary and selected financial data included in the Memorandum present
fairly the information shown therein as at the respective dates and for the
respective periods specified and have been presented on a basis consistent
with
the consolidated financial statements set forth in the Memorandum and other
financial information, subject, in the case of any unaudited financial
information, to the absence of note disclosure and normal year-end
adjustments.
3.4 Independent
Accountants.
Singer
Lewak Xxxxxxxxx & Xxxxxxxxx LLP and PricewaterhouseCoopers LLP, whose
reports are filed with the Commission as a part of the information incorporated
by reference in the Memorandum, are and, during the periods covered by their
reports, were independent certified public accountants as required by the
Securities Act and the Rules.
3.5 Organization;
Good Standing.
The
Company and each of its subsidiaries is duly organized, validly existing and
in
good standing under the laws of their respective jurisdictions of incorporation
or organization. The Company and each of its subsidiaries is duly qualified
to
do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted by it or location
of
the assets or properties owned, leased or licensed by it requires such
qualification, except for such jurisdictions where the failure to so qualify
individually or in the aggregate would not have a material adverse effect on
the
assets, properties, condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Company and its
subsidiaries considered as a whole (a “Material Adverse Effect”); and to the
Company’s knowledge, no proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.
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3.6 Permits.
The
Company and each of its subsidiaries has all requisite corporate power and
authority, and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental or regulatory
bodies or any other person or entity (collectively, the “Permits”), to own,
lease and license its assets and properties and conduct its business, all of
which are valid and in full force and effect, except where the lack of such
Permits, individually or in the aggregate, would not have a Material Adverse
Effect. The Company and each of its subsidiaries has fulfilled and performed
in
all material respects all of its material obligations with respect to such
Permits and no event has occurred that allows, or after notice or lapse of
time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the Company hereunder. Except as may be required
under the Securities Act and state and foreign Blue Sky laws, no other Permits
are required to enter into, deliver and perform this Agreement and to issue
and
sell the Securities.
3.7 Intellectual
Property.
The
Company and each of its subsidiaries owns or possesses legally enforceable
rights to use all patents, patent rights, inventions, trademarks, trademark
applications, trade names, service marks, copyrights, copyright applications,
licenses, know-how and other similar rights and proprietary knowledge
(collectively, “Intangibles”) necessary for the conduct of its business. Except
as otherwise disclosed in the SEC Documents and the Memorandum, neither the
Company nor any of its subsidiaries has received any notice of, or is not aware
of, any infringement of or conflict with asserted rights of others with respect
to any Intangibles.
3.8 Real
and Personal Property.
The
Company and each of its subsidiaries has good and marketable title in fee simple
to all real property, and good and marketable title to all other property owned
by it, in each case free and clear of all liens, encumbrances, claims, security
interests and defects, except such as do not materially affect the value of
such
property and do not materially interfere with the use made or proposed to be
made of such property by the Company and its subsidiaries and except as
otherwise disclosed in the Disclosure Schedules attached hereto. All property
held under lease by the Company and its subsidiaries is held by them under
valid, existing and enforceable leases, free and clear of all liens,
encumbrances, claims, security interests and defects, except such as are not
material and do not materially interfere with the use made or proposed to be
made of such property by the Company and its subsidiaries except as otherwise
disclosed in the Disclosure Schedules attached hereto.
3.9 No
Material Adverse Change.
Since
the date of the most recent financial statements of the Company incorporated
by
reference in the Memorandum and except as otherwise discussed in the Memorandum
(i) except as otherwise disclosed in the Disclosure Schedules attached hereto,
there has not been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries, or any dividend or distribution of any
kind
declared, set aside for payment, paid or made by the Company on any class of
capital stock, or any material adverse change, or any development involving
a
prospective material adverse change, in or affecting the business, properties,
management, financial position, stockholders’ equity, results of operations or
prospects of the Company and its subsidiaries taken as a whole; (ii) neither
the
Company nor any of its subsidiaries has sustained any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor disturbance or dispute
or
any action, order or decree of any court or arbitrator or governmental or
regulatory authority, and (iii) except as otherwise disclosed in the Disclosure
Schedules attached hereto, since the date of the latest balance sheet included
in the Memorandum, neither the Company nor its subsidiaries has (A) issued
any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money, except such liabilities or obligations incurred in the ordinary
course of business or (B) entered into any transaction not in the ordinary
course of business.
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3.10 Material
Contracts.
Each
description of any contract, document or other agreement in the Memorandum
accurately reflects in all respects the terms of the underlying contract,
document or other agreement. Each such contract, document or other agreement
is
in full force and effect and is valid and enforceable by and against the Company
or its subsidiary, as the case may be, in accordance with its terms. Neither
the
Company nor any of its subsidiaries, if a subsidiary is a party, nor to the
Company’s knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any such
agreement, and no event has occurred which with notice or lapse of time or
both
would constitute such a default, in any such case which default or event,
individually or in the aggregate, would have a Material Adverse Effect. No
default exists, and no event has occurred which with notice or lapse of time
or
both would constitute a default, in the due performance and observance of any
term, covenant or condition, by the Company or its subsidiary, if a subsidiary
is a party thereto, of any other agreement or instrument to which the Company
or
any of its subsidiaries is a party or by which Company or its properties or
business or a subsidiary or its properties or business may be bound or affected
which default or event, individually or in the aggregate, would have a Material
Adverse Effect.
3.11 Statistical
Data.
The
statistical and market related data included in the Memorandum are based on
or
derived from sources that the Company believes to be reliable and
accurate.
3.12 No
Violation.
Neither
the Company nor any of its subsidiaries is in violation of any term or provision
of its charter or by-laws or of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, where the consequences of such
violation, individually or in the aggregate, would have a Material Adverse
Effect.
3.13 Due
Authorization.
This
Agreement and the Warrant Agreement to be entered into between the Company
and
the Warrant Agent, dated as of the Closing Date (the “Warrant Agreement”) have
been duly authorized, executed and delivered by the Company and assuming proper
execution by each of the parties thereto other than the Company, constitute
the
legal, valid and binding obligation of the Company, enforceable in accordance
with their terms. All necessary corporate action has been duly and validly
taken
by the Company to authorize the execution, delivery and performance of this
Agreement, the Warrant Agreement and the issuance and sale of the Securities
by
the Company.
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3.14 No
Default or Consents.
Neither
the execution, delivery and performance of this Agreement by the Company nor
the
consummation of any of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the Securities) will give
rise to a right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or provision of,
or
constitute a default (or an event which with notice or lapse of time or both
would constitute a default) under, or require any consent or waiver under,
or
result in the execution or imposition of any lien, charge or encumbrance upon
any properties or assets of the Company or its subsidiaries pursuant to the
terms of, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which either the Company or its subsidiaries or any of their properties or
businesses is bound, or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation applicable to the Company or any of its subsidiaries
or violate any provision of the charter or by-laws of the Company or any of
its
subsidiaries, except for such consents or waivers which have already been
obtained and are in full force and effect.
3.15 Capitalization.
The
Company has authorized and outstanding capital stock as set forth under the
caption “Description of Common Stock and Warrants” in the Memorandum. The
certificates evidencing the Shares and the Warrants are in due and proper legal
form and have been duly authorized for issuance by the Company. All of the
issued and outstanding shares of Common Stock have been duly and validly issued
and are fully paid and nonassessable. There are no statutory preemptive or
other
similar rights to subscribe for or to purchase or acquire any shares of Common
Stock of the Company or any of its subsidiaries or any such rights pursuant
to
its Certificate of Incorporation or by-laws or any agreement or instrument
to or
by which the Company or any of its subsidiaries is a party or bound. The Shares,
when issued and delivered and paid for as provided herein, will be duly and
validly issued, and will be fully paid and nonassessable and will be issued
free
and clear of any security interests, liens, encumbrances, equities or claims.
The Company has reserved from its duly authorized capital stock the maximum
number of shares of Common Stock issuable pursuant to the Warrants (the “Warrant
Shares”). The Warrant Shares, when issued and delivered upon exercise of the
Warrants in accordance with their terms, will be duly authorized, validly
issued, fully paid and nonassessable and will be issued free and clear of any
security interests, liens, encumbrances, equities or claims. Except as disclosed
in the Memorandum, the SEC Documents and the Disclosure Schedules attached
hereto, there is no outstanding option, warrant or other right calling for
the
issuance of, and there is no commitment, plan or arrangement to issue, any
share
of stock of the Company or any of its subsidiaries or any security convertible
into, or exercisable or exchangeable for, such stock. The Common Stock and
the
Securities conform in all material respects to all statements in relation
thereto contained in the Memorandum. All outstanding shares of capital stock
of
each of the Company’s subsidiaries have been duly authorized and validly issued,
and are fully paid and nonassessable and are owned directly by the Company
or by
another wholly-owned subsidiary of the Company free and clear of any security
interests, liens, encumbrances, equities or claims, except as disclosed in
the
Disclosure Schedules attached hereto. The Company has taken all action necessary
to exempt (i) the issuance and sale of the Securities, and (ii) the issuance
of
the Warrant Shares upon due exercise of the Warrants, from the provisions of
any
stockholder rights plan or other “poison pill” arrangement, any anti-takeover,
business combination or control share law or statute binding on the Company
or
to which the Company or any of its assets and properties may be subject and
any
provision of the Company’s Certificate of Incorporation or Bylaws that is or
could reasonably be expected to become applicable to any Purchaser as a result
of the transactions contemplated hereby, including without limitation, the
issuance of the Securities and the ownership, disposition or voting of the
Securities by each Purchaser or the exercise of any right granted to each
Purchaser pursuant to this Agreement or the Warrant Agreement. The issuance
and
sale of the Securities hereunder will not obligate the Company to issue shares
of Common Stock or other securities to any other Person (other than the
Purchasers) and will not result in the adjustment of the exercise, conversion,
exchange or reset price of any outstanding security, except as disclosed in
the
Disclosure Schedules attached hereto.
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3.16 No
Registration Rights.
Except
as otherwise disclosed in the SEC Documents, the Memorandum and the Disclosure
Schedules attached hereto, no holder of any security of the Company has any
right, which has not been waived, to have any security owned by such holder
included in the offering of Securities contemplated by the Memorandum or to
demand registration of any security owned by such holder for the period from
the
date of this Agreement through the ninetieth day following the effective date
of
the Registration Statement. Each director and executive officer of the Company
has delivered to the Placement Agent his, her or its enforceable written lock-up
agreement in the form attached to this Agreement as Exhibit D hereto (“Lock-Up
Agreement”).
3.17 Legal
Proceedings.
Except
as otherwise disclosed in the SEC Documents and the Memorandum, there are no
legal or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or
any
of its subsidiaries could individually or in the aggregate have a Material
Adverse Effect; and to the knowledge of the Company, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
Except as otherwise disclosed in the SEC Documents and the Memorandum, the
Company is not aware of any threatened or pending litigation between the Company
or its subsidiaries and any of its executive officers which, if adversely
determined, could have a Material Adverse Effect and has no reason to believe
that such officers will not remain in the employment of the
Company.
3.18 Employees.
Neither
the Company nor any of its subsidiaries is involved in any labor dispute nor,
to
the knowledge of the Company, is any such dispute threatened, which dispute
would have a Material Adverse Effect. The Company is not aware of any existing
or imminent labor disturbance by the employees of any of its principal suppliers
or contractors which would have a Material Adverse Effect.
3.19 Market
Stabilization.
The
Company has not taken, nor will it take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or result in, or
which has constituted or which might reasonably be expected to constitute,
the
stabilization or manipulation of the price of the Common Stock or any security
of the Company to facilitate the sale or resale of any of the Shares or the
Warrant Shares.
3.20 Taxes.
The
Company and each of its subsidiaries has filed all Federal, state, local and
foreign tax returns which are required to be filed through the date hereof,
which returns are true and correct in all material respects or has received
timely extensions thereof, and has paid all taxes shown on such returns and
all
assessments received by it to the extent that the same are material and have
become due. There are no tax audits or investigations pending, which if
adversely determined would have a Material Adverse Effect; nor, to the Company’s
knowledge, are there any material proposed additional tax assessments against
the Company or any of its subsidiaries.
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3.21 Listing
Compliance.
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
the
quotation of the Common Stock on the Nasdaq National Market, nor, except as
described in the Memorandum and the SEC Documents, has the Company received
any
notification that the Commission or the Nasdaq National Market is contemplating
terminating such registration or quotation. The transactions contemplated by
this Agreement will not contravene the rules and regulations of the Nasdaq
National Market. The Company will use commercially reasonable efforts to
continue the listing and trading of its Common Stock on the Nasdaq National
Market and to comply in all material respects with the Company’s reporting,
filing and other obligations under the rules of the Nasdaq National Market.
The
Shares and the Warrant Shares have been duly authorized for quotation on the
Nasdaq National Market.
3.22 Books
and Record Keeping.
The
books, records and accounts of the Company and its subsidiaries accurately
and
fairly reflect, in all material respects, in reasonable detail, the transactions
in, and dispositions of, the assets of, and the results of operations of, the
Company and its subsidiaries. The Company and each of its subsidiaries maintains
a system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
3.23 Internal
Controls.
The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15 under the Exchange Act), which: (i) are
designed to ensure that material information relating to the Company is made
known to the Company’s principal executive officer and its principal financial
officer by others within the Company; (ii) provide for the periodic evaluation
of the effectiveness of such disclosure controls and procedures at the end
of
the periods in which the periodic reports are required to be prepared; and
(iii)
are effective in all material respects to perform the functions for which they
were established.
3.24 No
Deficiencies or Frauds.
Based
on the evaluation of its disclosure controls and procedures, the Company is
not
aware of (i) any significant deficiency in the design or operation of internal
controls which could adversely affect the Company’s ability to record, process,
summarize and report financial data or any material weaknesses in internal
controls; or (ii) any fraud, whether or not material, that involves management
or other employees who have a role in the Company’s internal
controls.
3.25 Off
Balance Sheet Arrangements.
There
are no material off-balance sheet arrangements (as defined in Item 303 of
Regulation S-K) that have or are reasonably likely to have a material current
or
future effect on the Company’s financial condition, revenues or expenses,
changes in financial condition, results of operations, liquidity, capital
expenditures or capital resources.
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3.26 Audit
Committee.
The
Company’s Board of Directors has validly appointed an audit committee whose
composition satisfies the requirements of Rule 4350(d)(2) of the Rules of the
National Association of Securities Dealers (the “NASD Rules”) and the Board of
Directors and/or the audit committee has adopted a charter that satisfies the
requirements of Rule 4350(d)(1) of the NASD Rules. The audit committee has
reviewed the adequacy of its charter within the past twelve months.
3.27 Xxxxxxxx-Xxxxx
Act.
The
Company is in compliance with all other applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002, any related rules and regulations promulgated by
the
Commission and corporate governance requirements under the NASD Rules upon
the
effectiveness of such provisions and has no reason to believe that it will
not
be able to comply with such provisions at the time of
effectiveness.
3.28 Insurance.
The
Company and its subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary for companies of approximately equal size to the Company and its
subsidiaries which are engaged in the businesses in which they are engaged
or
propose to engage after giving effect to the transactions described in the
Memorandum; all policies of insurance and fidelity or surety bonds insuring
the
Company or any of its subsidiaries or the Company’s or its subsidiaries’
respective businesses, assets, employees, officers and directors are in full
force and effect; the Company and each of its subsidiaries are in compliance
with the terms of such policies and instruments in all material respects; and
neither the Company nor any subsidiary of the Company has any 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 business at a cost that is not materially greater
than the current cost. Neither the Company nor any of its subsidiaries has
been
denied any insurance coverage which it has sought or for which it has
applied.
3.29 Consents
and Approvals.
Each
approval, consent, order, authorization, designation, declaration or filing
of,
by or with any regulatory, administrative or other governmental body necessary
in connection with the execution and delivery by the Company of this Agreement
and the consummation of the transactions herein contemplated required to be
obtained or performed by the Company has been obtained or performed.
3.30 Environmental
Laws.
(a) (i)
Each
of the Company and each of its subsidiaries is in compliance in all material
respects with all rules, laws and regulation relating to the use, treatment,
storage and disposal of toxic substances and protection of health or the
environment (“Environmental Law”) which are applicable to its business; (ii)
neither the Company nor its subsidiaries has received any notice from any
governmental authority or third party of an asserted claim under Environmental
Laws; (iii) each of the Company and each of its subsidiaries has received all
permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and is in compliance with all terms
and conditions of any such permit, license or approval (except where failure
to
receive such permits, licenses or approvals would not have a Material Adverse
Effect); (iv) to the Company’s knowledge, no facts currently exist that will
require the Company or any of its subsidiaries to make future material capital
expenditures to comply with Environmental Laws; and (v) no property which is
or
has been owned, leased or occupied by the Company or its subsidiaries has been
designated as a Superfund site pursuant to the Comprehensive Environmental
Response, Compensation of Liability Act of 1980, as amended (42 U.S.C. Section
9601, et. seq.) or otherwise designated as a contaminated site under applicable
state or local law. Neither the Company nor any of its subsidiaries has been
named as a “potentially responsible party” under the CERCLA 1980.
10
(b) In
the
ordinary course of its business, the Company periodically reviews the effect
of
Environmental Laws on the business, operations and properties of the Company
and
its subsidiaries, in the course of which the Company identifies and evaluates
associated costs and liabilities (including, without limitation, any capital
or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws, or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or in
the
aggregate, have a Material Adverse Effect.
3.31 Investment
Company.
The
Company is not and, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the
Memorandum, will not be an “investment company” or an entity “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the “Investment Company Act”).
3.32 Foreign
Corrupt Practices Act.
The
Company or any other person associated with or acting on behalf of the Company
including, without limitation, any director, officer, agent or employee of
the
Company or its subsidiaries, has not, directly or indirectly, while acting
on
behalf of the Company or its subsidiaries (i) used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity; (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; (iii) violated any provision of
the
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any other
unlawful payment.
3.33 Foreign
Transactions Reporting Act.
The
operations of the Company and its subsidiaries are and have been conducted
at
all times in compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as
amended, the money laundering statutes of all jurisdictions, the rules and
regulations hereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of it subsidiaries with respect to the Money
Laundering Laws is pending, or to the best knowledge of the Company,
threatened.
11
3.34 OFAC.
Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, agent, employee or affiliate of the Company or any of
its
subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and
the Company will not directly or indirectly use the proceeds of the offering,
or
lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of financing
the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
3.35 ERISA.
The
Company has fulfilled its obligations, if any, under the minimum funding
standards of Section 302 of the U.S. Employee Retirement Income Security Act
of
1974 (“ERISA”) and the regulations and published interpretations hereunder with
respect to each “plan” as defined in Section 3(3) of ERISA and such regulations
and published interpretations in which its employees are eligible to participate
and each such plan is in compliance in all material respects with the presently
applicable provisions of ERISA and such regulations and published
interpretations. No “Reportable Event” (as defined in 12 ERISA) has occurred
with respect to any “Pension Plan” (as defined in ERISA) for which the Company
could have any liability.
3.36 Brokers
or Finders.
No
broker, investment banker, financial advisor or other individual, corporation,
general or limited partnership, limited liability company, firm, joint venture,
association, enterprise, joint securities company, trust, unincorporated
organization or other entity (each a “Person”), other than the Placement Agent,
the fees and expenses of which will be paid by the Company, is entitled to
any
broker’s, finder’s, financial advisor’s financial advisor’s or other similar fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
3.37 Use
of
Proceeds.
The
Company intends to use the net proceeds from the sale of the Securities as
described in the Memorandum.
3.38 Solicitation;
Other Issuances of Securities.
Neither
the Company, its subsidiaries or any affiliates, nor any Person acting on its
or
their behalf, (i) has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of the Securities, (ii) has, directly or
indirectly, made any offer or sale of any security or solicited any offer to
buy
any security, under any circumstances that would require registration of the
Securities under the Securities Act or (iii) has issued any shares of Common
Stock or shares of any series of preferred stock or other securities or
instruments convertible into, exchangeable for or otherwise entitling the holder
thereof to acquire shares of Common Stock which would be integrated with the
sale of the Securities to such Purchaser for purposes of the Securities Act
or
of any applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of the Nasdaq National Market,
nor
will the Company or any of its subsidiaries or affiliates take any action or
steps that would require registration of any of the Securities under the
Securities Act or cause the offering of the Securities to be integrated with
other offerings. Assuming the accuracy of the representations and warranties
of
Purchasers, the offer and sale of the Securities by the Company to the
Purchasers pursuant to this Agreement will be exempt from the registration
requirements of the Securities Act.
12
3.39 No
Restrictions on Subsidiaries.
Except
as otherwise disclosed in the Disclosure Schedules attached hereto, the
subsidiaries of the Company are not currently prohibited, directly or
indirectly, under any agreement or other instrument to which any subsidiary
is a
party or is subject, from paying any dividends to the Company, from making
any
other distribution on the subsidiary’s capital stock, from repaying to the
Company any loans or advances to the subsidiary from the Company or from
transferring any of such subsidiary’s properties or assets to the
Company.
3.40 SEC
Filing.
The
Company shall file not later than one (1) business day from the date hereof
with
the SEC a Current Report on Form 8-K under the Exchange Act describing the
transactions contemplated hereby and attaching as exhibits thereto all material
documents relating to the transactions contemplated hereby. In the event such
Form 8-K is not filed by the Company, the Purchasers shall each have the right
to make a public disclosure, in the form of a press release, of the transactions
contemplated hereby only upon the review and approval of such public disclosure
by the Company, which such approval shall not be unreasonably
withheld.
3.41 Registration
Statement.
The
Company meets, and will use reasonable best efforts to meet upon filing and
effectiveness, the requirements for use of Form S-3 under the Securities Act
for
secondary offerings.
3.42 Related
Party Transactions.
Except
for those transactions that are not required to be disclosed by the Company
pursuant to the rules and regulations of the Exchange Act, no transaction has
occurred between or among the Company or its subsidiaries and any of its
officers or directors, shareholders or any affiliate of any such officer or
director or shareholder that is not described in the Memorandum.
Section
4. Representations,
Warranties and Covenants of Each Purchaser.
Each
Purchaser for itself and no other Purchaser hereby represents and warrants
to,
and covenants with, the Company as of the Closing Date (or such other date
specified below) as follows:
4.1 Organization.
Such
Purchaser is an entity duly organized and validly existing in good standing
(to
the extent such concepts are applicable) under the laws of its jurisdiction
of
organization. Such Purchaser has all requisite corporate power and authority
and
all necessary governmental approvals to carry on its business as now being
conducted, except as would not result in a Material Adverse Effect on such
Purchaser’s ability to consummate the transactions contemplated by this
Agreement. Such Purchaser’s principal executive offices are in the jurisdiction
set forth immediate below the Purchaser’s name on the signature pages
hereto.
4.2 Authorization,
Enforcement, and Validity.
Such
Purchaser has the requisite power and authority to enter into this Agreement
and
to consummate the transactions contemplated hereby. Such Purchaser has taken
all
necessary action to authorize the execution, delivery and performance of this
Agreement. Upon the execution and delivery of this Agreement, this Agreement
shall constitute a valid and binding obligation of the Purchaser enforceable
in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity.
13
4.3 Consents
and Approvals; No Violation.
The
execution, delivery and performance of this Agreement by such Purchaser and
the
consummation by such Purchaser of the transactions contemplated hereby will
not
(i) result in a violation of such Purchaser’s organizational documents; (ii)
conflict with, or constitute a default or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
indenture or instrument to which such Purchaser is a party (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations
and
violations as would not, individually or in the aggregate, result in a Material
Adverse Effect on such Purchaser’s ability to consummate the transactions
contemplated by this Agreement); or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree applicable to such Purchaser or
any
of its Subsidiaries, except for such violations as would not, individually
or in
the aggregate, result in a Material Adverse Effect on such Purchaser’s ability
to consummate the transactions contemplated by this Agreement. Such Purchaser
is
not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency or any regulatory
or self-regulatory agency in order for it to execute, deliver or perform any
of
its obligations under or contemplated by this Agreement, except where the
failure to obtain such consents, authorization or orders or to make such filings
or registrations would not, individually or in the aggregate, result in a
Material Adverse Effect on such Purchaser’s ability to consummate the
transactions contemplated by this Agreement.
4.4 Investment
Experience.
Such
Purchaser is an accredited investor within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investments in shares representing an investment decision like that involved
in
the purchase of the Securities.
4.5 Limitation
on Dispositions.
(a)
Such Purchaser is acquiring Securities for its own account and has no intention
of selling or distributing any of such Securities or any arrangement or
understanding with any other Persons regarding the sale or distribution of
such
Securities except in accordance with the provisions of Section 6 and except
as
would not result in a violation of the Securities Act, (b) such Purchaser will
not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose
of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Securities except in accordance with the provisions of Section
6
or pursuant to and in accordance with the Securities Act and (c) such Purchaser
has completed or caused to be completed the Registration Statement Questionnaire
attached hereto as part of Appendix I for use in preparation of the Registration
Statement, and the answers thereto are true and correct as of the date hereof
and will be true and correct as of the effective date of the Registration
Statement and such Purchaser will notify the Company immediately of any material
change in any such information provided in the Registration Statement
Questionnaire until such time as such Purchaser has sold all of its Securities
or until the Company is no longer required to keep the Registration Statement
effective, except that such Purchaser shall not be required to advise the
Company of any sales of the Registrable Securities pursuant to the Registration
Statement.
14
4.6 Information
and Risk.
(a) Such
Purchaser has received and reviewed the Memorandum and has requested, received,
reviewed and considered all other information relevant in making an informed
decision to purchase the Securities. Such Purchaser has had an opportunity
to
discuss the Company’s business, management and financial affairs with its
management and also had an opportunity to ask questions of officers of the
Company that were answered to such Purchaser’s satisfaction.
(b) Such
Purchaser recognizes that an investment in the Securities involves a high degree
of risk, including a risk of total loss of such Purchaser’s investment. Such
Purchaser is able to bear the economic risk of holding the Securities for an
indefinite period, and has knowledge and experience in the financial and
business matters such that it is capable of evaluating the risks of the
investment in the Securities.
(c) Such
Purchaser has, in connection with such Purchaser’s decision to purchase
Securities, not relied upon any representations or other information (whether
oral or written) other than as set forth in the representations and warranties
of the Company contained herein, the Memorandum, the SEC Documents and the
other
information described in Section 4.6(a), and such Purchaser has, with respect
to
all matters relating to this Agreement and the offer and sale of the Securities,
relied solely upon the advice of such Purchaser’s own counsel and has not relied
upon or consulted any counsel to the Placement Agents or counsel to the
Company.
4.7 Disclosures
to the Company.
Such
Purchaser understands that the Company is relying on the statements contained
herein to establish an exemption from registration under federal and state
securities laws. Such Purchaser will promptly notify the Company of any changes
in the information set forth in the Registration Statement regarding such
Purchaser.
4.8 Nature
of Purchasers.
To the
knowledge of such Purchaser, such Purchaser: (i) is not an affiliate (as such
term is defined pursuant to Rule 12b-2 promulgated under the Exchange Act)
of
any other Purchaser, (ii) is not constituted as a partnership, association,
joint venture or any other type of joint entity with any other Purchaser, and
(iii) is not acting as part of a group (as such term is defined under Section
13(d) of the Exchange Act) with any other Purchaser. If at any time after the
Closing Date such Purchaser becomes an affiliate (as defined herein) of any
other Purchaser, such Purchaser will provide prompt written notice to the
Company.
4.9 Ownership.
Such
Purchaser (including any Person controlling, controlled by, or under common
control with such Purchaser, as the term “control” is defined pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and its
implementing regulations (the “HSR Act”)) does not, and upon the consummation of
the transactions contemplated by this Agreement will not, hold voting securities
of the Company exceeding an aggregate fair market value as of the Closing Date
of fifty million dollars ($50,000,000), calculated pursuant to the HSR
Act.
15
4.10 Brokers
or Finders.
No
broker, investment banker, financial advisor or other Person is entitled to
any
broker’s, finder’s, financial advisor’s or other similar fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of such Purchaser.
4.11 Acknowledgement.
Such
Purchaser acknowledges and agrees that the Company does not make and has not
made any representations or warranties with respect to the transactions
contemplated by this Agreement other than those specifically set forth in
Section 3.
4.12 Confidential
Treatment. The Purchasers shall hold in strict confidence all information
concerning this Agreement and the offering of the Securities until such time
as
the Company has made a public announcement concerning this
Agreement.
4.13 Short
Sales. Between the time such Purchaser obtained knowledge of the proposed
sale of the Securities contemplated hereby and the public announcement of the
transaction, such Purchaser has not taken any action that has caused or will
cause such Purchaser to have, directly or indirectly, sold or agreed to sell
any
shares of Common Stock, effected any short sale, whether or not against the
box,
established any “put equivalent position” (as defined in Rule 16a-1(h) under the
Securities Exchange Act of 1934, as amended) with respect to the Common Stock,
granted any other right (including, without limitation, any put or call option)
with respect to the Common Stock or with respect to any security that includes,
relates to or derived any significant part of its value from the Common
Stock.
4.14 Restricted
Securities. Without limiting the registration rights granted to the
Purchasers under Section 6 hereto, such Purchaser understands that the Shares
upon issuance will be “restricted securities” as such term is defined in Rule
144 promulgated under the Securities Act and must be held indefinitely unless
the Shares are subsequently registered or qualified under applicable state
and
federal securities laws or an exemption from such registration or qualification
is available. Such Purchaser understands that it may resell the Shares pursuant
to Rule 144 only after the satisfaction of certain requirements, including
the
requirement that the Shares be held for at least one year prior to
resale.
Section
5. Survival
of Representations and Warranties.
Notwithstanding
any investigation made by any party to this Agreement or by the Placement
Agents, all representations and warranties as to each respective Closing made
by
the Company and the Purchasers herein shall survive for a period of eighteen
(18) months following the Closing Date.
Section
6. Registration
of the Shares and Warrant Shares; Compliance with the Securities
Act.
6.1 Registration
Procedures and Expenses.
(a) Except
during a Suspension (as defined below), the Company will, subject to receipt
of
necessary information from the Purchasers:
(i) as
soon
as practicable, but in no event later than forty-five (45) days following the
Closing Date (the “Filing Date”), use reasonable best efforts to prepare and
file with the Commission a registration statement on Form S-3 (the “Registration
Statement”) covering the resale of the Shares and the Warrant Shares of each
Purchaser that has complied with Section 6.4, together with any shares of
capital stock issued or issuable, from time to time, upon any reclassification,
share combination, share subdivision, stock split, share dividend or similar
transaction or event or otherwise as a distribution on, in exchange for or
with
respect to any of the foregoing, in each case held at the relevant time by
a
Purchaser (the “Registrable Securities”);
(ii) use
reasonable best efforts to cause the Registration Statement, as amended, to
become effective under the Securities Act as soon as practicable but in any
event no later than 4:00 p.m. Eastern Time on the ninetieth (90) day after
the
Closing Date
(the
“Required Effective Date”);
(iii) use
reasonable best efforts to cause the prospectus to be filed with the Commission
pursuant to Rule 424(b) under the Securities Act as soon as practicable but
in
any event no later than 9:00 a.m. Eastern Time the next business day following
the date such Registration Statement is declared effective by the
Commission;
(iv) use
its
reasonable best efforts to promptly prepare and file with the Commission such
amendments and supplements to the Registration Statement and the prospectus
used
in connection therewith (A) as may be necessary to keep the Registration
Statement continuously effective until the earlier of (i) the second anniversary
of the Closing Date, or (ii) such time as all Shares and Warrant Shares
purchased by the Purchasers have been sold pursuant to the Registration
Statement and (B) as may be reasonably requested by a Purchaser in order to
incorporate information concerning such Purchaser or such Purchaser’s intended
method of distribution;
(v) so
long
as the Registration Statement is effective covering the resale of Registrable
Securities owned by the Purchasers, furnish to each Purchaser with respect
to
the Registrable Securities registered under the Registration Statement (and
to
each underwriter, if any, of such Registrable Securities) such reasonable number
of copies of prospectuses and such other documents as such Purchaser may
reasonably request in order to facilitate the public sale or other disposition
of all or any of the Registrable Securities by such Purchaser;
(vi) use
commercially reasonable efforts to file documents required of the Company for
normal Blue Sky clearance in the States of New York and Wisconsin and any other
states specified in writing by the Purchasers; provided, however, that the
Company shall not be required to qualify to do business generally in any
jurisdiction in which the Company is not now so qualified;
(vii) bear
all
expenses in connection with the procedures in paragraphs (i) through (vi) of
this Section 6.1 and the registration of the Registrable Securities pursuant
to
the Registration Statement, other than fees and expenses, if any, of counsel
or
other advisers to the Purchasers or underwriting discounts, brokerage fees
and
commissions incurred by the Purchasers, if any, in connection with an
underwritten offering of the Registrable Securities;
16
(viii) use
all
commercially reasonable efforts to prevent the issuance of any stop order or
other order suspending the effectiveness of such Registration Statement and,
if
such an order is issued, to obtain the withdrawal thereof at the earliest
possible time and to notify each Purchaser of the issuance of such order and
the
resolution thereof;
(ix) furnish
to each Purchaser, two (2) business days after the date that such Registration
Statement becomes effective, (x) a letter, dated such date, of outside counsel
representing the Company (and reasonably acceptable to such Purchaser) addressed
to such Purchaser, confirming the effectiveness of such Registration Statement
and, to the knowledge of such counsel, the absence of any stop order, and (y)
in
the case of an underwriting, an opinion addressed to such Purchaser, dated
such
date, of such outside counsel, in such form and substance as is required to
be
given to the underwriters;
(x) provide
to each Purchaser and its representatives, if requested, the opportunity to
conduct a reasonable inquiry of the Company’s financial and other records during
normal business hours and make available its officers, directors and employees
for questions regarding information which such Purchaser may reasonably request
in order to fulfill any due diligence obligation on its part, provided,
that in
the case of this clause (x), the Company shall not be required to provide,
and
shall not provide, any Purchaser with material, non-public information unless
such Purchaser agrees to receive such information and enters into a written
confidentiality agreement with the Company; and
(xi) not
less
than three trading days prior to the filing of a Registration Statement and
not
less than two trading days prior to the filing of any related Prospectus or
any
amendment or supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference) or, in the
case
of comments made by the staff of the Commission and the Company’s responses
thereto, within a reasonable period of time following the receipt thereof by
the
Company, furnish to each Purchaser copies of all such documents proposed to
be
filed or copies of such correspondence from and to the Commission relating
to
the Registration Statement, as the case may be, which documents (other than
those incorporated or deemed to be incorporated by reference) will be subject
to
the review of such Purchasers. The Company shall reflect in each such document
when so filed with the Commission such comments relating to such Purchaser
as
such Purchaser may reasonably propose; provided,
however,
that
such comments from such Purchaser must be received by the Company no later
than
one trading day prior to the filing of such document with the Commission.
Notwithstanding any other provision of this Agreement, the Company will have
no
obligation to deliver or make available to any Purchaser any Registration
Statement or Prospectus containing any material, nonpublic information unless
such Purchaser specifically consents in advance to receive such material,
nonpublic information in writing and such Purchaser has executed an agreement
to
keep such material, nonpublic information confidential and refrain from trading
in any Company security for so long as such information remains material,
nonpublic information.
17
(b) The
Company shall be permitted after the Required Effective Date, to suspend for
one
or more periods (each such period, a “Suspension”) the actions required under
Sections 6.1(a)(i) through (iv) to the extent that the Board of Directors of
the
Company concludes in good faith and based on the advice of counsel that the
disclosure of additional information in the prospectus
is
necessary. Notwithstanding the foregoing, the Company agrees that no Suspension
shall be for a period of an aggregate in any 365-day period of longer than
60
days.
(c) With
a
view to making available to the Purchasers the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the Commission that may
at
any time permit the Purchaser to sell Registrable Securities to the public
without registration, the Company covenants and agrees to: (i) make and keep
public information available, as those terms are understood and defined in
Rule
144, until the earlier of (A) six months after such date as all of the
Purchasers’ Registrable Securities may be resold pursuant to Rule 144(k) or any
other rule of similar effect or (B) such date as all of the Purchasers’
Registrable Securities shall have been resold; (ii) file with the Commission
in
a timely manner all reports and other documents required of the Company under
the Exchange Act; and (iii) furnish to the Purchaser upon request, as long
as
the Purchaser owns any Registrable Securities, (A) a written statement by the
Company that it has complied with the reporting requirements of the Exchange
Act, (B) a copy of the Company’s most recent Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, and (C) such other information as may be
reasonably requested in order to avail the Purchaser of any rule or regulation
of the Commission that permits the selling of any such Registrable Securities
without registration.
6.2 Delay
in Filing or Effectiveness of Registration Statement.
If:
(a) a Registration Statement is not filed by the Company with the
Commission on or prior to the Filing Date, or (b) a Registration Statement
is not declared effective by the Commission on or prior to its Required
Effective Date, (any such failure or breach being referred to as an “Event,” and
for purposes of clauses (a) or (b) the date on which such Event occurs,
being referred to as “Event Date”), then, in addition to any other rights
available to the Purchasers, on each such Event Date and on each monthly
anniversary of each such Event Date (if the applicable Event shall not have
been
cured by such date) until the applicable Event is cured, the Company shall
pay
to each Purchaser, as liquidated damages and not as a penalty, a cash payment
equal to one and one-half percent (1.5%) of the aggregate purchase price paid
by
such Purchaser to the Company with respect to the Shares then held by such
Purchaser. The parties agree that the Company will not be liable for liquidated
damages under this Section 6.2 in respect of the Warrants or the Warrant Shares
. The liquidated damages pursuant to the terms hereof shall apply on a pro
rata
basis for any portion of a month prior to the cure of an Event; provided
that the
maximum aggregate liquidated damages payable to a Purchaser under this
Section 6.2 shall not exceed twelve percent (12%) of the aggregate purchase
price of the Securities purchased by such Purchaser pursuant to this Agreement.
The parties agree that such liquidated damages shall not be the exclusive
damages under this Agreement with respect to the occurrence of such
Event.
6.3 Restrictions
on Transferability.
(a) Each
Purchaser agrees that it will not effect any disposition of the Securities
(including the Warrant Shares) or its right to purchase the Securities
(including any Warrant Shares) that would constitute a sale within the meaning
of the Securities Act or pursuant to any applicable state securities or Blue
Sky
laws of any state, except (i) as contemplated in the Registration Statement
referred to in Section 6.1 above, (ii) pursuant to the requirements of Rule
144
(in which case such Purchaser will provide the Company with reasonable evidence
of such Purchaser’s compliance therewith) or (iii) pursuant to a written opinion
of legal counsel reasonably satisfactory to the Company and addressed to the
Company to the effect that registration under Section 5 of the Securities Act
is
not required in connection with the proposed transfer; whereupon the holder
of
such securities shall be entitled to transfer such securities. Each certificate
evidencing the securities transferred as above provided shall bear the
appropriate restrictive legends as may be required by Section 7.
18
(b) Each
Purchaser acknowledges that there may occasionally be times when the Company
must suspend the use of the prospectus forming a part of the Registration
Statement until such time as an amendment or supplement to the Registration
Statement has been filed by the Company and declared effective, or until such
time as the Company has filed an appropriate report with the Commission pursuant
to the Exchange Act. Each Purchaser hereby covenants that such Purchaser will
not sell any Securities (including the Warrant Shares) pursuant to said
prospectus during the period commencing at the time at which the Company gives
the Purchasers written notice of the suspension of the use of said prospectus
and ending at the time the Company gives the Purchasers written notice that
the
Purchasers may thereafter effect sales pursuant to said prospectus. The Company
agrees to file such amendment, supplement or report as soon as practicable
following such notice of Suspension.
(c) None
of
the Securities (including the Warrant Shares) shall be transferable except
upon
the conditions specified in this Section 6, which are intended to ensure
compliance with the provisions of the Securities Act. Each Purchaser will cause
any proposed transferee of the Securities (including the Warrant Shares) held
by
such Purchaser to agree to take and hold such Securities (including the Warrant
Shares) subject to the provisions and upon the conditions specified in this
Section 6 if and to the extent that such Securities continue to be restricted
securities in the hands of the transferee.
(d) Such
Purchaser covenants that such Purchaser will sell or transfer the Securities
(including the Warrant Shares) in accordance with such Registration Statement,
the Securities Act, applicable state securities laws and, to the extent the
exemption from prospectus delivery requirements in Rule 172 under the
Securities Act is not available, satisfy the requirement of delivering a current
prospectus in connection with any proposed transfer or sale of the Securities
(including the Warrant Shares).
6.4 Furnish
Information. It
shall
be a condition to the Company’s obligations to take any action under this
Agreement with respect to the registration of a Purchaser’s Registrable
Securities that such Purchaser shall promptly furnish to the Company, upon
request, such reasonable and customary information regarding itself, such
Purchaser’s Registrable Securities, and the intended method of disposition of
such Registrable Securities if such intended method of distribution is different
from the Plan of Distribution in form of Appendix II attached hereto. In
connection therewith, each Purchaser shall be required to represent to the
Company that all such information which is given is both complete and accurate
in all material respects when made.
19
6.5 Termination
of Conditions and Obligations.
(a) The
conditions precedent imposed by Section 6.3 above regarding the transferability
of the Securities (including the Warrant Shares) shall cease and terminate
as to
any particular number of Securities (including the Warrant Shares) upon the
passage of two years from the date hereof or at such time as an opinion of
counsel satisfactory in form and substance to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
(b) The
expiration or termination of this Agreement for any reason will have no effect
on the rights of any of the parties under the provisions of this Section
6.
Section
7. Legends.
(a) Such
Purchaser understands and agrees that each certificate or other document
evidencing any of the Securities (including the Warrant Shares) shall be
endorsed with the legend in the form set forth below, and such Purchaser
covenants that such Purchaser will not transfer the Securities (including the
Warrant Shares) represented by any such certificate without complying with
the
restrictions on transfer described in the legend endorsed on such certificate
(unless there is in effect a registration statement under the Securities Act
covering such proposed transfer, such Securities (including the Warrant Shares)
have been sold under Rule 144 promulgated under the Securities Act (“Rule 144”)
or as otherwise permitted by the provisions of Section 6.3 above) and
understands that the Company will refuse to register a transfer of any
Securities (including the Warrant Shares) unless the conditions specified in
the
following legend are satisfied:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. EXCEPT AS
SPECIFIED IN THIS LEGEND, SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH ACT UNLESS
SOLD
PURSUANT TO RULE 144 OF SUCH ACT OR UNLESS SUCH SALE, PLEDGE, HYPOTHECATION
OR
TRANSFER IS OTHERWISE EXEMPT FROM REGISTRATION AND ANY APPLICABLE STATE
SECURITIES LAWS. THE COMPANY MAY REQUEST A WRITTEN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS
NOT
REQUIRED IN CONNECTION WITH SUCH SALE OR OTHER TRANSFER.”
(b) Such
certificates shall not contain any legend (i) while a Registration Statement
covering the resale of the Securities (including the Warrant Shares) is
effective under the Securities Act, (ii) following any sale of the Securities
(including the Warrant Shares) pursuant to an effective Registration Statement
or Rule 144, or (iii) if the Securities (including the Warrant Shares) are
eligible for sale under Rule 144(k). Following the effective date of the
Registration Statement or at such earlier time as a legend is no longer required
for certain Securities (including the Warrant Shares), the Company will, no
later than three trading days following the delivery by a Purchaser to the
Company of a written request for an unlegended certificate representing such
securities, take such actions as are necessary for the Company’s transfer agent
to deliver or cause to be delivered to such Purchaser a certificate representing
such securities that is free from all restrictive and other
legends.
20
(c) Such
Purchaser covenants that such Purchaser will not transfer the Securities
(including the Warrant Shares) represented by any such certificate without
complying with any applicable requirements under the Securities Act to deliver
the final prospectus included in the effective Registration Statement to any
offeree of the Registrable Securities.
Section
8. Indemnification.
(a) For
purposes of this Section 8 only:
(i) the
term
“Purchaser” shall include the Purchaser and any affiliate (as such term is
defined pursuant to Rule 12b-2 promulgated under the Exchange Act) of such
Purchaser;
(ii) the
term
“Prospectus” shall mean the prospectus and any amendment or supplement thereto
in the form first filed with the Commission pursuant to Rule 424(b) promulgated
under the Securities Act or, if no Rule 424(b) filing is required, filed as
part
of the Registration Statement at the time of effectiveness, as supplemented
or
amended from time to time; and
(iii) the
term
“Registration Statement” shall include any final prospectus, exhibit, supplement
or amendment included in or relating to the Registration Statement.
(b) The
Company agrees to indemnify and hold harmless each of the Purchasers and each
Person, if any, who controls any Purchaser within the meaning of the Securities
Act, against any losses, claims, damages, liabilities or expenses, joint or
several, to which such Purchasers or such controlling Person may become subject,
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages, liabilities
or
expenses (or actions in respect thereof as contemplated below) arise out of
or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or Prospectus, or arise out of
or
are based upon the omission or alleged omission to state therein a material
fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances in which they were made, not misleading, or arise
out
of or are based in whole or in part on any inaccuracy in the representations
and
warranties of the Company contained in this Agreement, or arise out of the
Company’s failure to provide written notice of a Suspension, or any failure of
the Company to perform its obligations hereunder, and will reimburse each
Purchaser and each such controlling Person for any legal and other expenses
reasonably incurred as such expenses are reasonably incurred by such Purchaser
or such controlling Person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that the Company will not be liable in
any
such case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement
or
Prospectus in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Purchaser expressly for use therein,
(ii)
the failure of such Purchaser to comply with the covenants and agreements
contained in Section 6 above respecting sale of the Securities (including the
Warrant Shares), (iii) the inaccuracy of any representations made by such
Purchaser herein.
21
(c) Each
Purchaser will severally, and not jointly, indemnify and hold harmless the
other
Purchasers and the Company, each of its directors, each of its officers who
signed the Registration Statement and each Person, if any, who controls the
Company within the meaning of the Securities Act, against any losses, claims,
damages, liabilities or expenses to which the Company, each of its directors,
each of its officers who signed the Registration Statement or controlling Person
may become subject, under the Securities Act, the Exchange Act, or any other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected
with
the written consent of such Purchaser) insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon (i) any failure by such Purchaser to comply
with
the covenants and agreements contained in Section 6.3 above respecting the
sale
of the Securities (including the Warrant Shares) unless such failure by such
Purchaser is directly caused by the Company’s failure to provide written notice
of a Suspension to such Purchaser, (ii) the inaccuracy of any representation
made by such Purchaser herein or (iii) any untrue or alleged untrue statement
of
any material fact contained in the Registration Statement or the Prospectus,
or
the omission or alleged omission to state therein a material fact required
to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration Statement
or Prospectus in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Purchaser expressly for use
therein, and will reimburse the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling Person for any
legal and other expense reasonably incurred, as such expenses are reasonably
incurred by the Company, each of its directors, each of its officers who signed
the Registration Statement or controlling Person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the aggregate
liability of any Purchaser hereunder shall not exceed the net proceeds received
by such Purchaser upon the sale of the Registrable Securities included in the
Registration Statement or Prospectus giving rise to such indemnification
obligation. No Purchaser shall be liable for the indemnification obligations
of
any other Purchaser.
22
(d) Promptly
after receipt by an indemnified party under this Section 8 of notice of the
threat or commencement of any action, such indemnified party will, if a claim
in
respect thereof is to be made against an indemnifying party under this Section
8, promptly notify the indemnifying party in writing thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability
which
it may have to any indemnified party hereunder or otherwise to the extent it
is
not prejudiced as a result of such failure. In case any such action is brought
against any indemnified party and such indemnified party seeks or intends to
seek indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified
party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be a conflict between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action
or
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election to assume the defense of such action and approval by
the
indemnified party of counsel, the indemnifying party will not be liable to
such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
reasonably satisfactory to the indemnifying party, representing the indemnified
parties who are parties to such action) or (ii) the indemnified party shall
not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of action, in each of which cases the reasonable fees and expenses
of counsel shall be at the expense of the indemnifying party.
No
indemnifying party, in the defense of any claim covered by this Section 8,
shall, except with the prior written consent of the indemnified party, which
consent shall not be unreasonably conditioned, withheld or delayed, consent
to
entry of any judgment or enter into any settlement which does not include as
an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim.
An
indemnified party shall not consent to entry of any judgment or enter into
any
settlement without the prior written consent of the indemnifying
party.
Section
9. Notices.
(a)
All
notices, requests, consents and other communications hereunder shall be in
writing, shall be mailed by first-class registered or certified airmail,
confirmed facsimile or nationally recognized overnight express courier postage
prepaid, and shall be as addressed as follows:
if
to the
Company, to:
North
American Scientific, Inc.
00000
Xxxxxxxx Xxxxxx
Xxxxxxxxxx,
Xxxxxxxxxx 00000
Attention:
Xxxxx Xxxx
Telephone
No.: (000) 000-0000
Telecopy
No.: (000) 000-0000
23
with
a
copy to:
Prior
to
September 1, 2006:
Seyfarth
Xxxx LLP
00
Xxxx
Xxxxxx Xxxxxx, Xxx. 0000
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxx Xxxxx
Telephone
No.: (000) 000-0000
Telecopy
No.: (000) 000-0000
After
September 1, 2006:
Seyfarth
Xxxx LLP
000
Xxxxx
Xxxxxxxx Xxxxxx, Xxx. 0000
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxx Xxxxx
Telephone
No.: (000) 000-0000
Telecopy
No.: (000) 000-0000
and
if to
any Purchaser, at its address as set forth in Appendix I hereto, or at such
other address or addresses as may have been previously furnished to the Company
in writing in accordance with this Section 9.
(b) Such
notices or other communications shall be deemed delivered upon receipt, in
the
case of overnight delivery, personal delivery, facsimile transmission (as
evidenced by the confirmation thereof), or mail.
Section
10. Miscellaneous.
10.1 Amendments.
Any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company
and
each Purchaser. Any amendment or waiver effected in accordance with this Section
10.1 shall be binding upon each holder of any securities purchased under this
Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities, and
the
Company.
10.2 Headings.
The
headings of the various sections of this Agreement are for convenience of
reference only and shall not be deemed to be part of this Agreement.
10.3 Severability.
In the
event that any provision in this Agreement is held to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
10.4 Governing
Law and Forum.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York applicable to agreements made and to be fully performed
therein. The parties hereto agree to submit to the exclusive jurisdiction of
the
federal and state courts of the State of New York with respect to the
interpretation of this Agreement or for the purposes of any action arising
out
of or related to this Agreement.
24
10.5 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
constitute an original, and all of which together shall constitute one and
the
same instrument. In the event that any signature is delivered via facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature page were an original
hereof.
10.6 Entire
Agreement.
This
Agreement contains the entire understanding of the parties with respect to
the
matters covered herein, supersede all prior agreements and understandings with
respect to such matters and executed by and among the Company and any of the
Purchasers, and, except as specifically set forth herein or therein, neither
the
Company nor the Purchasers make any representation, warranty, covenant or
undertaking with respect to such matters.
10.7 Independent
Nature of Purchasers’ Obligations and Rights.
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 under this Agreement. Nothing contained herein and no action taken
by
any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers
as
a partnership, an association, a joint venture or any other kind of entity,
or
create a presumption that the Purchasers are in any way acting in concert or
as
a group, or are deemed affiliates (as such term is defined under the Exchange
Act) with respect to such obligations or the transactions contemplated by this
Agreement. Each Purchaser shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined
as
an additional party in any proceeding for such purpose.
10.8 Expenses.
Each
party hereto shall pay all costs and expenses incurred by it in connection
with
the execution and delivery of this Agreement, and all the transactions
contemplated thereby, including fees of legal counsel.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
25
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their duly authorized representatives as of the day and year
first above written.
|
NORTH
AMERICAN SCIENTIFIC, INC.
By:
/s/ L.Xxxxxxx
Xxxxxx
Name:
L. Xxxxxxx Xxxxxx
Title:
President and Chief Executive
Officer
|
26
[Investor Signature Page]
PURCHASER:
Print
or
Type:
Name
of
Purchaser (Individual or Institution):
_________________________________________
Name
of
Individual representing Purchaser (if an Institution):
_________________________________________
Title
of
Individual representing Purchaser (if an Institution):
_________________________________________
Signature
by Individual Purchaser or Individual Representing Purchaser:
_________________________________________
Address:
_______________________________________
_______________________________________
Telephone:
______________________________________
Telecopier:
______________________________________
e-mail:
__________________________________________
|
Shares
to be Purchased
|
Warrants
to be Purchased
|
Price
Per Share in Dollars
|
Aggregate
Price
|
27
Appendix
I
(Page
1
of 4)
SECURITIES
CERTIFICATE QUESTIONNAIRE
Pursuant
to Section 2.2(b) of the Agreement, please provide us with the following
information:
|
1.
|
The
exact name that your Shares
and Warrant Shares are to be registered in (this is the name that
will
appear on your stock certificate(s) and warrant
certificate).
|
You
may
use a nominee name if appropriate:
___________________________________
|
2.
|
The
relationship between the Purchaser
|
of
the
Securities and the Registered Holder listed
in
response to item 1 above:
___________________________________
|
3.
|
The
mailing address of the Registered
Holder
|
listed
in
response to item 1 above:
___________________________________
|
4.
|
The
Social Security Number or Tax
|
Identification
Number of the Registered
Holder
listed in response to item 1 above:
___________________________________
28
Appendix
I
(Page
2
of 4)
NORTH
AMERICAN SCIENTIFIC, INC.
REGISTRATION
STATEMENT QUESTIONNAIRE
In
connection with the preparation of the Registration Statement, please provide
us
with the following information:
Plan
of Distribution
Attached
as Appendix II hereto is a draft of the "Plan of Distribution" section of the
Registration Statement. Do you propose to offer or sell any shares of Common
Stock to be registered on the Registration Statement by means other than those
described in Appendix II?
o
Yes o
No
If
"yes",
please describe the manner in which you propose to offer or sell such Shares
of
Common Stock:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
Selling
Stockholders
Pursuant
to the “Selling Stockholder” section of the Registration Statement, please state
your or your organization’s name exactly as it should appear in the Registration
Statement:
___________________________________
Please
provide the number of shares that you or your organization will own immediately
after Closing, including those Securities purchased by you or your organization
pursuant to this Purchase Agreement and those shares purchased by you or your
organization through other transactions:
___________________________________
Have
you
or your organization had any position, office or other material relationship
within the past three years with the Company or its affiliates?
Yes No
If
yes,
please indicate the nature of any such relationships below:
____________________________________________________
____________________________________________________
____________________________________________________
29
Appendix
I
(Page 3
of 4)
Are
you
(i) an NASD Member (see definition), (ii) a Controlling (see definition)
shareholder of an NASD Member, (iii) a Person Associated with a Member of the
NASD (see definition), (iv) an Underwriter or a Related Person (see definition)
with respect to the proposed offering; (v) do you own any shares or other
securities of any NASD Member not purchased in the open market; or (vi) have
you
made any outstanding subordinated loans to any NASD Member?
Answer:
o Yes o
No If “yes”, please describe
below:
________________________________________
________________________________________
________________________________________
30
Appendix
I
(Page 4
of 4)
NASD
Member. The term “NASD member” means either any broker or dealer admitted to
membership in the National Association of Securities Dealers, Inc. (“NASD”).
(NASD Manual, By-laws Article I, Definitions)
Control.
The term “control” (including the terms “controlling,” “controlled by” and
“under common control with”) means the possession, direct or indirect, of the
power, either individually or with others, to direct or cause the direction
of
the management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise. (Rule 405 under the Securities Act of
1933, as amended)
Person
Associated with a member of the NASD. The term “person associated with a member
of the NASD” means every sole proprietor, partner, officer, director, branch
manager or executive representative of any NASD Member, or any natural person
occupying a similar status or performing similar functions, or any natural
person engaged in the investment banking or securities business who is directly
or indirectly controlling or controlled by a NASD Member, whether or not such
person is registered or exempt from registration with the NASD pursuant to
its
by-laws. (NASD Manual, By-laws Article I, Definitions)
Underwriter
or a Related Person. The term “underwriter or a related person” means, with
respect to a proposed offering, underwriters, underwriters’ counsel, financial
consultants and advisors, finders, members of the selling or distribution group,
and any and all other persons associated with or related to any of such persons.
(NASD Interpretation)
31
Appendix
II
FORM
OF
PLAN OF DISTRIBUTION
The
selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares 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 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.
The
selling stockholders may use any one or more of the following methods when
disposing of shares:
|
•
|
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 effected after the date the registration statement of which
this
Prospectus is a part is declared effective by the
SEC;
|
|
•
|
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;
or
|
| • |
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus. The selling stockholders
are not obligated to, and there is no assurance that the selling stockholders
will, sell all or any of the shares we are registering. The selling stockholders
may transfer, devise or gift such shares by other means not described in this
prospectus.
32
In
connection with the sale of our shares, 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.
Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
selling stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved. Any profits on the
resale of shares by a broker-dealer acting as principal might be deemed to
be
underwriting discounts or commissions under the Securities Act. Discounts,
concessions, commissions and similar selling expenses, if any, attributable
to
the sale of shares will be borne by a selling stockholder. The selling
stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act.
The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares. The Company has agreed to
indemnify the selling stockholders against certain losses, claims, damages
and
liabilities, including liabilities under the Securities Act.
The
selling stockholders, broker-dealers or agents that participate in the sale
of
the common stock may be “underwriters” within the meaning of Section 2(11) of
the Securities Act. Any discounts, commissions, concessions or profit they
earn
on any resale of the shares may be underwriting discounts and commissions under
the Securities Act. Selling stockholders who are “underwriters” within the
meaning of Section 2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act. There is no underwriter or
coordinating broker acting in connection with the proposed sale of the resale
shares by the selling stockholders.
33
The
selling stockholders may from time to time pledge or grant a security interest
in some or all of the shares owned by them and, if they default in the
performance of any of their secured obligations, the pledgees or secured parties
may offer and sell the shares from time to time under this prospectus as it
may
be supplemented from time to time, 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.
To
the
extent required, the shares 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.
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.
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 with the selling stockholders to keep the registration statement of
which
this prospectus constitutes a part effective until the earlier 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 or (2) the date on which
the shares may be sold pursuant to Rule 144(k) of the Securities
Act.
34
EXHIBIT
A
FORM
OF
COMPANY COUNSEL OPINION
35
EXHIBIT
B
FORM
OF
XXXXXXXXX, WILL & XXXXX IP OPINION
36
EXHIBIT
C
FORM
OF
GENERAL COUNSEL OF THE COMPANY IP. REGULATORY AND LITIGATION
OPINION
37
EXHIBIT
D
FORM
OF
LOCK-UP AGREEMENT
38
EXHIBIT
E
DISCLOSURE
SCHEDULES
39
