SECURITIES PURCHASE AGREEMENT
Exhibit
10.1
THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”)
is
made as of the 12th day of December, 2007 (the “Execution
Date”)
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 in substantially the form
attached hereto as Exhibit A (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 $0.246 per Security, of which $0.01 is allocated as
consideration for the Warrants (the
“Purchase
Price”).
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 a
date and at such time as shall be agreed upon by the Company and the Purchasers
(the “Closing
Date”).
(b) Prior
to
the Closing, the Company shall provide wire transfer instructions for the
payment of the Purchase Price by the Purchasers at the Closing.
(c) At
the
Closing, the Company and each Purchaser, severally and not jointly, shall
satisfy all of the conditions set forth in Sections 2.2 and 2.3,
respectively.
2.2. Stockholder
Approval.
(a) Within
five (5) business days after the Execution Date, the Company will file with
the
Securities and Exchange Commission (the “Commission”)
a
preliminary proxy statement, information statement or consent solicitation
statement (the “Proxy
Statement”)
in
order to solicit approval from the Company’s stockholders of the transactions
contemplated hereby in accordance with Nasdaq Stock Market Rule 4350(i)(1)
and
any other applicable rules of the Nasdaq Global Market. The Company shall use
its reasonable best efforts to respond to any comments of the staff of the
Commission regarding the Proxy Statement, and as soon as practicable thereafter
or after the lapse of any applicable waiting period, shall cause the Proxy
Statement in definitive form to be promptly mailed to the stockholders of the
Company. The Company shall provide Three Arch Partners IV, L.P. and affiliated
funds (collectively, “Three
Arch Partners”)
with a
draft of the Proxy Statement in advance of filing and shall make such changes
thereto as may be reasonably requested by Three Arch Partners and as are
permitted by applicable law.
(b) The
Company’s Board of Directors shall recommend that all of the proposals set forth
in the Proxy Statement be approved, subject to the fiduciary duties of the
Board
of Directors. The
Company shall notify Three Arch Partners promptly of the receipt of any comments
from the Commission and of any request by the Commission or any other government
authority for amendments or supplements to the Proxy Statement for additional
information, and shall promptly supply Three Arch Partners with copies of all
correspondence between the Company or any of its representatives, on the one
hand, and the Commission, its staff or any other government authority, on the
other hand, with respect to the Proxy Statement or the transactions contemplated
hereby.
2.3. Conditions
to Closing.
(a) 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, in accordance with
the wire transfer instructions delivered by the Company pursuant to
Section 2.1(b);
(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 listing on the
Nasdaq Global Market or the Nasdaq Capital Market, or alternatively, that the
Common Stock is eligible for quotation on the OTC Bulletin Board;
(iv) the
aggregate Purchase Price to be paid by the Purchasers for the Securities at
the
Closing shall be greater than or equal to $15,500,000; and
(v) approval
by the stockholders of the Company of the matter contemplated in
Section 2.2(a).
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(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) the
Purchasers shall have received on the Closing Date a certificate, addressed
to
the Placement Agent and the Purchasers and dated the Closing Date, of the chief
executive officer and the chief financial officer or chief accounting officer
of
the Company to the effect that: (i) the representations and warranties of
the Company in this Agreement were true and correct when made and are true
and
correct as of the Closing Date; (ii) the Company has performed all of its
covenants and agreements and satisfied all conditions required to be satisfied
by the Company contained herein; and (iii) they have carefully examined the
Memorandum (defined below) and (A) as of its date and as of the Closing
Date, the Memorandum and the documents incorporated by reference therein did
not
and do not include any untrue statement of a material fact and did not omit
to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, (B) since the date thereof through the Closing Date, no
event has occurred which should have been set forth in a supplement or otherwise
required an amendment to the Memorandum, and (C) there has not occurred any
material adverse change in the condition, financial or otherwise, or in the
earnings, business or operations or prospects of the Company, from that set
forth in the Memorandum;
(iii) confirmation
that the Shares and the Warrant Shares have been approved for listing on the
Nasdaq Global Market or the Nasdaq Capital Market, or alternatively, that the
Common Stock is eligible for quotation on the OTC Bulletin Board;
(iv) 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 B;
(v) 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
C;
(vi) 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, consultant to the Company, in the form attached hereto as Exhibit
D;
(vii) the
Company’s delivery to its transfer agent of irrevocable instructions to issue,
subject to the fulfillment of conditions set forth in Section 2.3(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;
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(viii) approval
by the stockholders of the Company of the matter contemplated in
Section 2.2(a);
(ix) amendment
of the Rights Agreement between the Company and U.S. Stock Transfer Corporation
dated October 16, 1998, as amended on April 28, 2004 and June 5, 2006, to exempt
the issuance and sale of the Securities, and the issuance of the Warrant Shares
upon due exercise of the Warrants, from the provisions of any “poison pill” or
other take-over arrangement thereunder;
(x) execution
by each of the Purchasers and each of the Company’s executive officers and
directors of his, her or its enforceable written lock-up agreement in the form
attached to this Agreement as Exhibit E (“Lock-Up
Agreement”);
and
(xi) the
aggregate Purchase Price to be paid by the Purchasers for the Securities at
the
Closing shall be greater than or equal to $15,500,000.
Section
3. Representations,
Warranties and Covenants of the Company.
Except
as specifically contemplated by this Agreement, the Company hereby represents
and warrants to, and covenants with, each Purchaser on the Execution Date and
as
of the Closing Date (or such other date specified below) as
follows:
3.1. No
Material Misstatement.
The
Confidential Private Placement Memorandum, dated December 11, 2007, 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.
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 and filed on or before the Closing Date, at the time they were filed
with 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 twelve (12) 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.
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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 registered public accounting firms as required by
the
Securities Act of 1933, as amended (the “Securities
Act”)
and
the rules and regulations of the Commission thereunder and the Public Company
Accounting Oversight Board.
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.
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 (including, but not limited to, those
that
may be required by the U.S. Food and Drug Administration (the “FDA”)
and
any state, federal or foreign agencies or bodies engaged in the regulation
of
medical devices) (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.
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3.7. Intellectual
Property.
The
Company and each of its subsidiaries owns or possesses legally enforceable
rights to use all patents, patent applications, patent rights, inventions,
trademarks, trademark applications, trade secrets, 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 or the Memorandum: (A) there are no rights of third parties
to any such Intangibles; (B) the Company is not aware of any material
infringement by third parties of any such Intangibles; (C) there is no
pending or threatened action, suit, proceeding or claim by others challenging
the Company’s rights in or to any such Intangibles, and the Company is unaware
of any facts which would form a reasonable basis for any such claim;
(D) there is no pending or threatened action, suit, proceeding or claim by
others challenging the validity or scope of any such Intangibles, and the
Company is unaware of any facts which would form a reasonable basis for any
such
claim; (E) there is no pending or threatened action, suit, proceeding or
claim by others that the Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any other fact which would form a reasonable basis
for
any such claim; (F) there is no U.S. patent or published U.S. patent
application which contains claims that dominate or may dominate any Intangibles
described in the SEC Documents and the Memorandum as being owned by or licensed
to the Company or that interferes with the issued or pending claims of any
such
Intangibles; and (G) there is no prior art of which the Company is aware
that may render any U.S. patent held by the Company invalid or any U.S. patent
application held by the Company unpatentable which has not been disclosed to
the
U.S. Patent and Trademark Office.
3.8. Clinical,
Pre-clinical Studies and Tests.
The
clinical, pre-clinical and other studies and tests conducted by or on behalf
of
or sponsored by the Company or in which the Company or its products or product
candidates have participated that are described in the SEC Documents or the
Memorandum or the results of which are referred to in the SEC Documents or
the
Memorandum were and, if still pending, are being conducted in material
compliance with all applicable laws, regulations and standard medical and
scientific research procedures. The descriptions in the SEC Documents and the
Memorandum of the results of such studies and tests are accurate and complete
in
all material respects and fairly present the data derived from such studies
and
tests, and the Company has no knowledge of any other studies or tests the
results of which contradict or otherwise call into question the results
described or referred to in the SEC Documents and the Memorandum. Except to
the
extent disclosed in the SEC Documents or the Memorandum, the Company has not
received any notices or other correspondence from the FDA or any other
governmental agency requiring the termination, suspension or modification of
any
clinical or pre-clinical studies or tests that are described in the SEC
Documents or the Memorandum or the results of which are referred to in the
SEC
Documents or the Memorandum.
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3.9. FDA
Permits.
The
Company holds and is operating in compliance with such exceptions, permits,
licenses, franchises, authorizations and clearances of the FDA and/or any
committee thereof required, for the conduct of its business as currently
conducted (collectively, the “FDA
Permits”),
and
all such FDA Permits are in full force and effect, subject in each case to
such
exceptions and qualifications as are set forth in the SEC Documents or the
Memorandum or where the lack of such FDA Permits, individually or in the
aggregate, would not have a Material Adverse Effect. The Company has fulfilled
and performed all of its obligations with respect to the FDA Permits, and,
no
event has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other impairment of the
rights of the holder of any FDA Permit, subject in each case to such exceptions
and qualifications as are set forth in the SEC Documents or the
Memorandum.
3.10. FDA
Compliance.
Except
as described in the SEC Documents or the Memorandum, the Company and its
subsidiaries: (A) is and at all times has been in material compliance with
all statutes, rules, regulations, or guidance applicable to the ownership,
testing, development, manufacture, packaging, processing, use, distribution,
marketing, labeling, promotion, sale, offer for sale, storage, import, export
or
disposal of any product under development, manufactured or distributed by the
Company (“Applicable
Laws”);
(B) has not received any FDA Form 483, notice of adverse finding, warning
letter, untitled letter or other correspondence or notice from the FDA or any
other federal, state, local or foreign governmental or regulatory authority
alleging or asserting noncompliance with any Applicable Laws or any licenses,
certificates, approvals, clearances, authorizations, permits and supplements
or
amendments thereto required by any such Applicable Laws (“Authorizations”);
(C) has not received notice of any claim, action, suit, proceeding,
hearing, enforcement, investigation, arbitration or other action from the FDA
or
any other federal, state, local or foreign governmental or regulatory authority
or third party alleging that any product operation or activity is in violation
of any Applicable Laws or Authorizations and has no knowledge that the FDA
or
any other federal, state, local or foreign governmental or regulatory authority
or third party is considering any such claim, litigation, arbitration, action,
suit, investigation or proceeding; (D) has not received notice that the FDA
or any other federal, state, local or foreign governmental or regulatory
authority has taken, is taking or intends to take action to limit, suspend,
modify or revoke any Authorizations and has no knowledge that the FDA or any
other federal, state, local or foreign governmental or regulatory authority
is
considering such action; (E) has filed, obtained, maintained or submitted
all reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments as required by any Applicable Laws
or
Authorizations and that all such reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments were
complete and correct on the date filed (or were corrected or supplemented by
a
subsequent submission); and (F) has not, either voluntarily or
involuntarily, initiated, conducted, or issued or caused to be initiated,
conducted or issued, any recall, market withdrawal or replacement, safety alert,
post sale warning, “dear doctor” letter, or other notice or action relating to
the alleged lack of safety or efficacy of any product or any alleged product
defect or violation and, to the Company’s knowledge, no third party has
initiated, conducted or intends to initiate any such notice or
action.
3.11. 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 corresponding section of the Company’s disclosure
schedules attached hereto as Exhibit F (the “Disclosure
Schedules”).
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.
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3.12. 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 disclosed in the Memorandum
(i) 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) 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.
3.13. 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. Except
as
set forth on the Disclosure Schedule attached hereto, 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.
3.14. 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.
8
3.15. 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.
3.16. Due
Authorization.
Subject
to the approval of the Company’s stockholders contemplated by
Section 2.2(a) of this Agreement, this Agreement has been duly authorized,
executed and delivered by the Company as of the date hereof and assuming proper
execution by each of the parties thereto other than the Company, constitutes
the
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms. As of the Closing Date, the Warrant Agreement between the
Company and the Warrant Agent (the “Warrant
Agreement”)
has
been duly authorized, executed and delivered by the Company and assuming proper
execution by the Warrant Agent, constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its 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.
3.17. No
Default or Consents.
Neither
the execution, delivery and performance of this Agreement or the Warrant
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 the approval of the Company’s
stockholders contemplated by Section 2.2(a) of this Agreement and such
consents or waivers which have already been obtained and are in full force
and
effect.
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3.18. 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 other than
this Agreement. All of the Company’s options, warrants and other rights to
purchase or exchange any securities for shares of the Company’s capital stock
have been duly authorized and validly issued, conform to the description thereof
contained in the SEC Documents and the Memorandum and were issued in compliance
with federal and state securities laws. There is no and has been no policy
or
practice of the Company to intentionally coordinate the grant of options to
employees with the release or other public announcement of material information
regarding the Company or its results of operations or prospects to minimize
the
exercise price of such options. 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. As of the Closing Date and subject
to
approval of the Company’s stockholders of an increase in the number of
authorized shares of Common Stock, the Company will have reserved from its
duly
authorized capital stock the number of Warrant Shares, required to be reserved
pursuant to the Warrant Agreements. The Warrant Shares, when issued and
delivered against receipt of payment therefor 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 Agreements. 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.
3.19. No
Registration Rights.
Except
as otherwise disclosed in 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 Initial
Registration Statement as defined in Section 6.1(a)(i) below. Each director
and executive officer of the Company has delivered to the Placement Agent his,
her or its enforceable written Lock-Up Agreement.
10
3.20. Legal
Proceedings.
Except
as otherwise disclosed in 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 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.
3.21. 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.
3.22. 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.
3.23. 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.
3.24. Listing
Compliance.
Except
as otherwise disclosed in the Memorandum, 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 listing of the Common Stock
on
the Nasdaq Global Market, nor, except as disclosed in the Memorandum, has the
Company received any notification that the Commission or the Nasdaq Global
Market is contemplating terminating such registration or listing. The
transactions contemplated by this Agreement will not contravene the rules and
regulations of the Nasdaq Global Market. The Company will use commercially
reasonable efforts to continue the listing and trading of its Common Stock
on
the Nasdaq Global Market or the Nasdaq Capital Market and to comply in all
material respects with the Company’s reporting, filing and other obligations
under the rules of the Nasdaq Global Market or the Nasdaq Capital Market, as
applicable. As of the Closing Date, the Shares and the Warrant Shares will
have
been duly authorized for listing on the Nasdaq Global Market or the Nasdaq
Capital Market, or alternatively, the Common Stock will be eligible for
quotation on the OTC Bulletin Board.
11
3.25. 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.
3.26. 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.
3.27. 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.
3.28. 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.
3.29. 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.
3.30. Xxxxxxxx-Xxxxx
Act.
The
Company is in compliance in all material respects 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 in all material respects with such
provisions at the time of effectiveness.
12
3.31. 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.
3.32. 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, except
for
the approval of the Company’s stockholders contemplated by Section 2.2(a)
of this Agreement.
3.33. 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
Laws”)
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.
(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.
13
3.34. Hazardous
Materials.
There
has been no storage, generation, transportation, handling, treatment, disposal,
discharge, emission, or other release of any kind of toxic or other wastes
or
other hazardous substances by, due to, or caused by the Company or any other
entity for whose acts or omissions the Company is or may be liable upon any
of
the property now or previously owned or leased by the Company, or upon any
other
property, in violation of any statute or any ordinance, rule, regulation, order,
judgment, decree or permit or which would, under any statute or any ordinance,
rule (including rule of common law), regulation, order, judgment, decree or
permit (including, without limitation those by the California Department of
Health and, if applicable, the Nuclear Regulatory Commission, pertaining to
radioactive materials) give rise to any liability; there has been no disposal,
discharge, emission or other release of any kind onto such property or into
the
environment surrounding such property of any toxic or other wastes or other
hazardous substances.
3.35. 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.
3.36. 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.
3.37. 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.
3.38. 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.
14
3.39. 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.
3.40. 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.
3.41. Use
of
Proceeds.
The
Company intends to use the net proceeds from the sale of the Securities as
described in the Memorandum.
3.42. Solicitation;
Other Issuances of Securities.
Neither
the Company, its subsidiaries nor 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 or exchange 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 Global Market, nor will the Company nor 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.
3.43. 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.
15
3.44. SEC
Filing and Press Release.
The
Company shall file with the Commission not later than one (1) business day
after
the Execution Date, 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. Not later than one (1) business day after the Closing,
the Company shall issue a press release that publicly discloses, to the extent
the same have not been publicly disclosed previously, the material terms of
the
transactions contemplated hereby.
3.45. Registration
Statement.
The
Company will use reasonable best efforts to meet, as of the Closing Date and
upon filing and effectiveness, the requirements for use of Form S-3 or such
other applicable form available to the Company under the Securities Act for
secondary offerings.
3.46. 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.
3.47. Company
Acknowledgement of Purchaser Representation.
The
Company acknowledges and agrees that Purchaser does not make or has not made
any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 4 of this
Agreement, or in the Registration Statement Questionnaire.
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.
16
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,
exchange 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 any registration statement
that
includes the Registrable Securities (as defined below) (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 such Registration Statement and such
Purchaser will notify the Company immediately of any material change in any
such
information provided in such Registration Statement Questionnaire until such
time as such Purchaser has sold all of the Registrable Securities included
in
such Registration Statement or until the Company is no longer required to keep
such 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 Statements.
17
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 Agent 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 any 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.
18
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 pursuant to
Section 3.44.
4.13. Short
Sales.
Between
the time such Purchaser obtained knowledge of the proposed sale of the
Securities contemplated hereby and 30 days following the public announcement
of
the transaction, such Purchaser has not taken and will not take 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 Securities 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 Securities 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 Securities pursuant
to Rule 144 only after the satisfaction of certain requirements, including
the
requirement that the Securities be held for at least one year prior to resale
or
any other time as may be required under Rule 144.
Section
5. Survival
of Representations and Warranties.
Notwithstanding
any investigation made by any party to this Agreement or by the Placement Agent,
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.
19
Section
6. Registration
of the Shares and Warrant Shares; Compliance with the Securities Act; Other
Agreements.
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 use reasonable best efforts to prepare and file with the
Commission a registration statement on Form S-3 or other applicable form
available to the Company (the “Initial
Registration Statement”)
covering the resale of all 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”);
provided,
however,
that in
the event that publicly-available written guidance, rules of general
applicability of the Commission staff, or written comments, requirements or
request of the Commission staff to the Company in connection with the review
of
any registration statement, in any case, relating to the availability of Form
S-3 under General Instruction I.B.3 to Form S-3 (the “SEC
Guidance”)
does
not permit the Initial Registration Statement to include all Registrable
Securities of each Purchaser (provided
that,
the Company shall use reasonable best efforts to advocate with the Commission
for the registration of all or the maximum number of the Registrable Securities
permitted by SEC Guidance), then the Company will use reasonable best efforts
to
file such additional Registration Statements (the “Subsequent
Registration Statements”)
at the
earliest practicable date on which the Company is permitted by SEC Guidance
to
file such additional Registration Statements related to the Registrable
Securities (the “Subsequent
Filing Dates”).
If
any SEC Guidance sets forth a limitation on the number of Registrable Securities
to be registered on a particular Registration Statement, the number of
Registrable Securities to be registered on such Registration Statement will
first be reduced by the Registrable Securities represented by Warrant Shares
on
a pro rata basis based on the total number of unregistered Warrant Shares held
by such Purchasers, and second by the Registrable Securities represented by
Shares on a pro rata basis based on the total number of unregistered Shares
held
by such Purchasers;
(ii) use
reasonable best efforts to cause (1) the Initial Registration Statement, as
amended, to become effective under the Securities Act no earlier than after
the
filing of the next annual report on Form 10-K and no later than 4:00 p.m.
Eastern Time on the one hundred eightieth (180th)
day
after the Closing Date and (2) any Subsequent Registration Statements, as
amended, which may be required to be filed hereunder pursuant to
Section 6.1(a)(i) 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
forty-fifth (45th)
day
after such Subsequent Filing Date, or if such Subsequent Registration Statement
is reviewed by the Commission, on the ninetieth (90th)
day
after such Subsequent Filing Date (each, its “Required
Effective Date”);
20
(iii) use
reasonable best efforts to cause any prospectus used in connection with any
Registration Statement (a “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 Statements and any Prospectus
used in connection therewith (A) as may be necessary to keep such
Registration Statements continuously effective until the earlier of (i) the
second anniversary of the Closing Date, (ii) such time as all Registrable
Securities have been sold pursuant to such Registration Statements or
(iii) the date on which all of the Securities (including the Warrant
Shares) may be resold by each of the Purchasers without registration pursuant
to
Rule 144(k) 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 any 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 such 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 any 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(a) and the registration of the Registrable Securities
pursuant to the Registration Statements, other than fees and expenses, if any,
of counsel or other advisors 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;
(viii) use
all
commercially reasonable efforts to prevent the issuance of any stop order or
other order suspending the effectiveness of the Registration Statements 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 any 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;
21
(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
such 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.
(b) The
Company shall be permitted after the Initial Registration Statement has become
effective under the Securities Act 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 longer than 45 days, and the aggregate
of
all Suspensions in any 365-day period shall not exceed 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.
22
6.2. Delay
in Effectiveness of Registration Statement.
If 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
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 percent (1%) 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 or penalties or other remedies 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 in accordance with the Lock-Up Agreement between
the
Company and such Purchaser and (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.
23
(b) Each
Purchaser acknowledges that there may occasionally be times when the Company
must suspend the use of a Prospectus forming a part of a Registration Statement
until such time as an amendment or supplement to such 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).
6.5. 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.
24
6.6. Board
of Directors.
At or
by the time of the next annual stockholders meeting of the Company, the Company
shall decrease the number of members of its Board of Directors from nine (9)
members to seven (7) members and the Board of Directors shall include at least
one (1) representative from Three Arch Partners (the “Three
Arch Partners Board Member”)
and
two (2) new independent members (the “New
Independent Board Members”)
with
relevant industry experience. The Three Arch Partners Board Member shall be
reimbursed for all out-of-pocket expenses related to attending meetings of
the
Board of Directors. In addition if the Company’s Board members receive any
additional fees or compensation, Three Arch Partners shall be entitled to
equivalent payment. The Company further covenants and agrees to use commercially
reasonable efforts to place the Three Arch Partners Board Member on the slate
of
directors presented to its stockholders at each annual meeting at which
directors are elected and to place the New Independent Board Members on the
slate of directors presented to its stockholders at the next annual meeting
at
which directors are elected, in all cases 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 of Directors. If
the
nominating and corporate governance committee of the Board of Directors does
not
approve any proposed Three Arch Partners Board Member, 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 6.6. The Company’s obligations
under this Section 6.6 with respect to the Three Arch Partners Board Member
shall terminate in their entirety if at any time Three Arch Partners
beneficially owns less than 5,000,000 shares of Common Stock (including shares
of Common Stock issuable upon exercise of warrants, and as appropriately
adjusted for stock splits, stock dividends and recapitalizations), in such
case,
the Three Arch Partners Board Member shall resign from the Board effective
immediately.
6.7. Pre-Emptive
Rights.
From
the Closing Date until the earlier of (a) the third anniversary of the Closing
Date or (b) the date on which none of the Purchasers beneficially own at least
10.0% pursuant to Section 13(d) of the Exchange Act of the shares of voting
stock of the Company then outstanding, the Company shall not directly or
indirectly, offer, sell or grant any option to purchase (or announce any offer,
sale, grant or any option to purchase or other disposition of) any Common Stock
or securities convertible into Common Stock (any such offer, sale, grant,
disposition or announcement being referred to as a “Subsequent
Placement”)
unless
the Company shall have first complied with this Section 6.7.
(a) The
Company shall deliver, at least ten (10) business days prior to the closing
of a
Subsequent Placement, to each Purchaser then beneficially owning at least 10.0%
pursuant to Section 13(d) of the Exchange Act of the shares of voting stock
of
the Company then outstanding (an “Eligible
Purchaser”),
a
written notice (the “Offer
Notice”)
of any
proposed or intended issuance or sale or exchange (the “Subsequent
Offer”)
of the
securities being offered (the “Offered
Securities”)
in a
Subsequent Placement, which Offer Notice shall (A) identify and describe the
Offered Securities, (B) describe the price or pricing mechanism and other terms
upon which they are to be issued, sold or exchanged, and the number or amount
of
the Offered Securities to be issued, sold or exchanged, and (C) offer to issue
and sell to or exchange with each Eligible Purchaser that portion of the Offered
Securities that represents such Eligible Purchaser’s percentage of beneficial
ownership pursuant to Section 13(d) of the Exchange Act of the aggregate number
of shares of voting stock then outstanding (the “Pro
Rata Amount”),
provided that in no event shall the Company be required to offer to issue or
sell, or to issue or sell, to the Eligible Purchasers more than 50% of the
aggregate amount of the Offered Securities in any Subsequent
Placement.
25
(b) To
accept
a Subsequent Offer, in whole or in part, such Eligible Purchaser must deliver
a
written notice to the Company prior to the end of the 10th business day after
such Eligible Purchaser’s receipt of the Offer Notice (the “Offer
Period”),
setting forth the portion of such Eligible Purchaser’s Pro Rata Amount that such
Eligible Purchaser elects to purchase (in either case, the “Notice
of Acceptance”).
(c) In
connection with any Subsequent Placement, the Company shall distribute to the
Eligible Purchasers, other than any Eligible Purchaser that has indicated to
the
Company it is not interested in participating in the Subsequent Offer or that
has not prior to the end of the Offer Period delivered a Notice of Acceptance
pursuant to subsection (b) above, all agreements and other documents to be
executed by the purchasers in the Subsequent Placement, at substantially the
same time such items are distributed to the purchasers in the Subsequent
Placement other than the Eligible Purchasers. If any Eligible Purchaser shall
have failed to execute and deliver any such agreement or other document in
the
form so distributed by the such time as may be reasonably requested by the
Company in connection with the Subsequent Placement, then such Eligible
Purchaser shall not have a right to participate in such Subsequent Placement
and
all securities which such Eligible Purchaser would have been eligible to
purchase in the Subsequent Placement shall be treated as Refused Securities
with
respect thereto.
(d) The
Company shall have ninety (90) days from the expiration of the Offer Period
above to offer, issue, sell or exchange all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by the Eligible
Purchasers (the “Refused
Securities”),
but
only upon terms and conditions (including, without limitation, the total amount
of the financing, unit prices and interest rates) that are not materially more
favorable to the acquiring person or persons or materially less favorable to
the
Company than those set forth in the Offer Notice, except for such changes which
may, in the reasonable judgment of the Company, be necessary or appropriate
on
account of changes in market conditions , provided that if the Company makes
such changes, it will use reasonable commercial efforts to consult with the
Eligible Purchasers and to provide them the opportunity to participate in the
financing as modified by such changes.
(e) Upon
the
closing of the issuance, sale or exchange of all or less than all of the Refused
Securities, the Eligible Purchasers shall acquire from the Company, and the
Company shall issue to the Eligible Purchasers, the number or amount of Offered
Securities specified in the Notices of Acceptance, upon the terms and conditions
specified in the Subsequent Offer, subject to the terms and conditions contained
in this Section 6.7.
(f) The
restrictions and other provisions contained in this Section 6.7 shall not apply
to the issuance of any Common Stock issued or issuable: (i) to any employee,
officer, director or consultant in connection with any plan or other
compensatory arrangement approved by the Board of Directors or the Compensation
Committee of the Board of Directors of the Company; (ii) upon the exercise
of
the Warrants and any warrants outstanding as of the Closing Date; (iii) to
financial institutions, equipment lessors, brokers or similar persons in
connection with commercial credit arrangements, equipment financings, commercial
property lease transactions or similar non-equity transactions; (iv) in
connection with bona fide acquisition, merger or similar transaction; (v) in
any
underwritten public offering; or (vi) to an entity as a component of any
business relationship with such entity primarily for the purpose of (A) joint
venture, technology licensing or development activities, (B) distribution,
supply or manufacture of the Company’s products or services or (C) any other
arrangements that are primarily for purposes other than raising equity
capital.
26
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 such 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
a 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.
27
(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
a
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 a 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 (each, an “Indemnified
Party”),
against any losses, claims, damages, liabilities or expenses, joint or several,
to which such Indemnified Party 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 a 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 Indemnified Party for any legal
and other expenses reasonably incurred as such expenses are reasonably incurred
by such Indemnified Party 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 a Registration Statement or Prospectus
in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Indemnified Party expressly for use therein,
(ii) the failure of such Indemnified Party 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 Indemnified Party herein.
28
(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 a 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 a 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 a 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 a
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 a 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 a 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.
(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.
29
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 X. Xxxxxxxx
Telephone
No.: (000) 000-0000
Telecopy
No.: (000) 000-0000
with
a
copy to:
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.
30
(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.
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.
31
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. No
Fiduciary Duty.
Each
Purchaser hereby acknowledges that (a) the price of the Securities set
forth in this Agreement was established by the Company following discussions
and
arms-length negotiations with the Purchasers, and each Purchaser is capable
of
evaluating and understanding, and understands and accepts, the terms, risks
and
conditions of the transactions contemplated by this Agreement; (b) the
Placement Agent is not acting as a fiduciary of the Company or any Purchasers;
and (c) the Company’s engagement of the Placement Agent in connection with
the offering and the process leading up to the offering is as an independent
contractor and not in any other capacity. Each Purchaser agrees that it will
not
claim that the Placement Agent has rendered advisory services of any nature
or
respect, or owe any fiduciary or similar duty to any Purchaser, in connection
with such transaction or the process leading thereto.
10.9. 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, except that the Company
shall reimburse Three Arch Partners for all reasonable fees and expenses
incurred by Three Arch Partners in connection with the transactions contemplated
hereby, including the reasonable fees of Xxxxxx Xxxxxx LLP, legal counsel to
Three Arch Partners.
10.10. Disclosure.
Three
Arch Partners shall have an opportunity to review any statement made in any
public disclosure or government filing in connection with the transactions
contemplated by this Agreement that mentions the Purchasers or any of their
affiliates prior to its release to the public or any third party, and the
Company shall make the changes to such statements as may be reasonably requested
by Three Arch Partners and are permitted by applicable law.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
32
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/ Xxxx X. Xxxx | |
| Name: |
Xxxx X. Xxxx |
|
| Title: | President and Chief Executive Officer | |
33
[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 Issued
|
Price
Per Security in Dollars
|
Aggregate
Price
|
|||
SECURITIES
CERTIFICATE QUESTIONNAIRE
Pursuant
to Section 2.3(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:
|
Appendix
I
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
I-1
If
yes,
please indicate the nature of any such relationships below:
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:
I-2
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)
I-3
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
Commission;
|
|
•
|
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.
II-1
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.
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.
II-2
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) the
passage of two years from [the Closing Date], (2) 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 (3) the date on which the shares may be
sold pursuant to Rule 144(k) of the Securities Act.
II-3
EXHIBIT
A
FORM
OF
WARRANT AGREEMENT
A-1
EXHIBIT
B
FORM
OF
COMPANY COUNSEL OPINION
B-1
EXHIBIT
C
FORM
OF
XXXXXXXXX, WILL & XXXXX IP OPINION
C-1
EXHIBIT
D
FORM
OF
CONSULTANT TO THE COMPANY IP, REGULATORY AND LITIGATION OPINION
D-1
EXHIBIT
E
FORM
OF
LOCK-UP AGREEMENT
E-1
EXHIBIT
F
DISCLOSURE
SCHEDULES
F-1
