SECURITIES PURCHASE AGREEMENT
Exhibit
99.1
This
Securities Purchase Agreement (this “Agreement”)
is
made and entered into as of November 7, 2006 by and among Lumera Corporation,
a
Delaware corporation (the “Company”),
and
the purchaser(s) identified on the signature pages hereto (each a “Purchaser”
and
collectively, the “Purchasers”).
WHEREAS,
subject
to the terms and conditions set forth in this Agreement and pursuant to Section
4(2) of the Securities Act of 1933, as amended (the “Securities
Act”)
and
Rule 506 of Regulation D promulgated thereunder, the Company desires to offer,
issue and sell to the Purchasers (the “Offering”),
and
the Purchasers, severally and not jointly, desire to purchase from the Company,
in the aggregate, up to 2,825,000 shares (the “Shares”)
of the
Company’s common stock, par value $0.001 per share (the “Common
Stock”)
(which
in no event shall exceed 19.99% of the Common Stock then outstanding), and
five-year warrants to purchase shares of Common Stock (the “Warrants”),
with
an exercise price per share equal to $6.25. The Shares and the Warrants are
collectively referred to herein as the “Securities”.
NOW,
THEREFORE,
in
consideration of the mutual covenants and agreements contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which is hereby acknowledged, the Company and each of the Purchasers
agree as follows:
A.
Purchase
and Sale
(1)
Subject
to the terms and conditions set forth in this Agreement, at the Closing (as
defined below) the Company shall issue and sell to each Purchaser, and each
Purchaser shall, severally and not jointly, purchase from the Company, the
number of Shares and the Warrants set forth on such Purchaser’s signature page
to this Agreement. The Closing shall take place at the offices of Xxxxx &
Xxxxxxx LLP, 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, on the Closing
Date or at such other location or time as the parties may agree (the
“Closing”).
“Closing
Date”
means
the business day on which all of the conditions set forth in Sections G.1 and
G.2 hereof are satisfied or waived, or such other date as the parties may
agree.
(2)
At
the
Closing, each Purchaser shall deliver or cause to be delivered to the Company
the aggregate purchase price for the Securities to be purchased by such
Purchaser as set forth on the signature page of such Purchaser hereto (the
“Investment
Amount”).
(3)
The
Securities to be issued to a Purchaser hereunder shall consist of (i) Shares
in
an amount equal to the quotient of (x) the Investment Amount, divided by (y)
the
Offering Price (as defined below), rounded down to the nearest whole number,
and
(ii) a Warrant to purchase such number of shares of Common Stock to be
determined based on a ratio of fifteen (15) shares of Common Stock for every
one
hundred (100) Shares purchased hereunder, rounded down to the nearest whole
number. The Company shall allocate the Investment Amount between the Shares
and
the Warrants prior to the Closing and provide notice to the Purchasers of such
allocation. For
purposes of this Agreement, the “Offering
Price”
shall
be $[6.00], which shall be
the
price per Share to be paid by the Purchasers.
(4)
At
the
Closing, the Company shall (i) issue to each Purchaser stock certificates
representing the shares of Common Stock purchased at the Closing under this
Agreement, registered in the name of such Purchaser; (ii) issue to each
Purchaser a Warrant to purchase such number of shares of Common Stock calculated
based on the number of shares of Common Stock issued at the Closing and in
accordance with Paragraph (3) above and listed on such Purchaser’s signature
page to this Agreement; (iii) deliver to the Purchasers and to Xxxxxx X. Xxxxx
& Co. Incorporated, the placement agent for the Offering (the “Placement
Agent”),
a
certificate stating that the representations and warranties made by the Company
in Section C of this Agreement were true and correct in all material respects
when made and are true and correct in all material respects on the date of
the
Closing relating to the Securities purchased pursuant to this Agreement as
though made on and as of such Closing Date (provided, however, that
representations and warranties that speak as of a specific date shall continue
to be true and correct as of the Closing with respect to such date); and (iv)
cause to be delivered to the Purchasers an opinion of Ropes & Xxxx LLP
substantially in the form of Exhibit
A
hereto.
The obligations of the Company described in the foregoing clauses (i) through
(iv) shall be conditions precedent to each Purchaser’s obligation to complete
the purchase of the Securities as contemplated by this Agreement.
(5) Each
Purchaser acknowledges and agrees that the purchase of Shares and Warrants
by
such Purchaser pursuant to the Offering is subject to all the terms and
conditions set forth in this Agreement.
B.
Representations
and Warranties of the Purchaser
Each
Purchaser, severally and not jointly, hereby represents and warrants to the
Company as of the date hereof and as of the Closing Date, and agrees with the
Company as follows:
(1)
The
Purchaser has carefully read this Agreement and the form of Warrant attached
hereto as Exhibit
B
(collectively the “Offering
Documents”),
and
is familiar with and understands the terms of the Offering. The Purchaser has
also carefully read and considered the Company’s (a) Annual Report on Form 10-K
for the fiscal year ended December 31, 2005 (the “2005
Form 10-K”),
including, without limitation, the financial statements included therein and
the
sections therein entitled “Item 1. Business,” “Risk Factors” (which immediately
follows “Item 1. Business”), and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” (b) Quarterly Report on Form
10-Q for the quarter ended June 30, 2006, including, without limitation, the
subsections of such Form 10-Q entitled “Item 1. Financial Statements,” and “Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations,” (c) Current Reports on Form 8-K filed on March 8, 2006, July 17,
2006, August 2, 2006, and November 1, 2006, respectively and (d) Definitive
Proxy Statement on Schedule 14A filed on April 10, 2006 (collectively, the
items
identified in subclauses (a) through (d) are referred to herein as the
“2006
SEC Filings”).
In
addition, the Purchaser has read and is familiar with the Company's financial
statements for the quarter ended September 30, 2006 including the notes thereto
(the "Q3 Financials"), along with other information provided by the Company.
The
Purchaser fully understands all of the risks related to the purchase of the
Securities. The Purchaser has carefully considered and has discussed with the
Purchaser’s professional legal, tax, accounting and financial advisors, to the
extent the Purchaser has deemed necessary, the suitability of an investment
in
the Securities for the Purchaser’s particular tax and financial situation and
has determined that the Securities being purchased by the Purchaser are a
suitable investment for the Purchaser. The Purchaser recognizes that an
investment in the Securities involves substantial risks, including the possible
loss of the entire amount of such investment. The Purchaser further recognizes
that the Company has broad discretion concerning the use and application of
the
proceeds from the Offering.
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(2)
The
Purchaser acknowledges that (i) the Purchaser has had the opportunity to request
copies of any documents, records, and books pertaining to this investment and
(ii) any such documents, records and books that the Purchaser requested have
been made available for inspection by the Purchaser, the Purchaser’s attorney,
accountant or other advisor(s). The Purchaser has requested, received, reviewed
and considered all information it deems relevant in making an informed decision
to purchase the Securities.
(3)
The
Purchaser and the Purchaser’s advisor(s) have had a reasonable opportunity to
ask questions of and receive answers from representatives of the Company or
persons acting on behalf of the Company concerning the Company, the Offering
and
the Securities and all such questions have been answered to the full
satisfaction of the Purchaser.
(4)
The
Purchaser is not subscribing for Securities as a result of or subsequent to
any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar, meeting or conference whose attendees have been
invited by any general solicitation or general advertising.
(5)
If
the
Purchaser is a natural person, the Purchaser has reached the age of majority
in
the state in which the Purchaser resides. The Purchaser has adequate means
of
providing for the Purchaser’s current financial needs and contingencies, is able
to bear the substantial economic risks of an investment in the Securities for
an
indefinite period of time, has no need for liquidity in such investment and
can
afford a complete loss of such investment.
(6)
The
Purchaser has sufficient knowledge and experience in financial, tax and business
matters to enable the Purchaser to utilize the information made available to
the
Purchaser in connection with the Offering, to evaluate the merits and risks
of
an investment in the Securities and to make an informed investment decision
with
respect to an investment in the Securities on the terms described in the
Offering Documents. The Purchaser has independently evaluated the merits and
risks of its decision to purchase Securities pursuant to the Offering Documents,
and the Purchaser confirms that it has not relied on the advice of the Company’s
or any other Purchaser’s business and/or legal counsel in making such decision.
Such Purchaser has not relied on the business or legal advice of Xxxxxx X.
Xxxxx
& Co. Incorporated or any of its agents, counsel or affiliates in making its
investment decision hereunder, and confirms that none of such persons has made
any representations or warranties to such Purchaser in connection with the
transactions contemplated by the Transaction Documents.
(7)
The
Purchaser will not sell or otherwise transfer the Securities without
registration under the Securities Act and applicable state securities laws
or an
applicable exemption therefrom. The Purchaser acknowledges that neither the
offer nor sale of the Securities has been registered under the Securities Act
or
under the securities laws of any state. The Purchaser represents and warrants
that the Purchaser is acquiring the Securities for the Purchaser’s own account,
for investment purposes and not with a view toward resale or distribution within
the meaning of the Securities Act, except pursuant to sales registered or
exempted under the Securities Act. The Purchaser is acquiring the Securities
in
the ordinary course of business. The Purchaser has not offered or sold the
Securities being acquired nor does the Purchaser have any present intention
of
selling, distributing or otherwise disposing of such Securities either currently
or after the passage of a fixed or determinable period of time or upon the
occurrence or non-occurrence of any predetermined event or circumstances in
violation of the Securities Act. The Purchaser is aware that (i) the Securities
are not currently eligible for sale in reliance upon Rule 144 promulgated under
the Securities Act and (ii) the Company has no obligation to register the
Securities purchased hereunder, except as provided in Section E hereof. By
making these representations herein, the Purchaser is not making any
representation or agreement to hold the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time
in
accordance with or pursuant to a registration statement or an available
exemption to the registration requirements of the Securities Act.
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(8)
The
Purchaser understands that except as provided in Section E hereof: (i) The
Securities have not been and are not being registered under the Securities
Act
or any state securities laws, and may not be offered for sale, sold, assigned
or
transferred unless (A) subsequently registered thereunder, (B) the Purchaser
shall have delivered to the Company an opinion of counsel, in a form reasonably
acceptable to the Company, to the effect that such Securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration, or (C) the Purchaser provides the Company
with
reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended,
(or a successor rule thereto) (collectively, "Rule
144");
(ii)
any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require compliance with
some
other exemption under the Securities Act or the rules and regulations of the
SEC
thereunder; and (iii) neither the Company nor any other Person is under any
obligation to register the Securities under the Securities Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder. Notwithstanding the foregoing, the Securities may be pledged in
connection with a bona fide margin account or other loan secured by the
Securities and such pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and no Purchaser effecting
a
pledge of Securities shall be required to provide the Company with any notice
thereof or otherwise make any delivery to the Company pursuant to this Agreement
or any other Offering Document, including, without limitation, this Section
(B)(8); provided, that in order to make any sale, transfer or assignment of
Securities, the Purchaser and its pledgee makes such disposition in accordance
with or pursuant to a registration statement or an exemption under the
Securities Act.
(9)
The
Purchaser acknowledges that the certificates representing the Shares, the
Warrants and, upon the exercise of the Warrants, the shares of Common Stock
issuable upon exercise of the Warrants (the “Warrant
Shares”),
shall
bear any legend required by the securities laws of any state and be stamped
or
otherwise imprinted with a legend substantially in the following form:
4
The
securities represented hereby have not been registered under the Securities
Act
of 1933, as amended, or any state securities laws and neither the securities
nor
any interest therein may be offered, sold, transferred, pledged or otherwise
disposed of except pursuant to an effective registration under such act or
an
exemption from registration, which, in the opinion of counsel reasonably
satisfactory to this corporation, is available. Notwithstanding the foregoing,
the Securities may be pledged in connection with a bona fide margin account
or
other loan or financing arrangement secured by the Securities with a financial
institution that is an “Accredited Investor” as defined in Rule 501(a) under the
Securities Act.
Certificates
evidencing the Shares and the Warrant Shares shall not be required to contain
such legend or any other legend (i) following any sale of such Shares or Warrant
Shares pursuant to Rule 144, or (ii) if such Shares or Warrant Shares have
been
sold under Rule 144(k) or pursuant to the Registration Statement (as hereafter
defined) and in compliance with the obligations set forth in Section E(6),
below, or (iii) such legend is not required under applicable requirements of
the
Securities Act (including judicial interpretations and pronouncements issued
by
the Staff of the Securities and Exchange Commission (“SEC”)),
in
each such case (i) through (iii) to the extent reasonably determined by the
Company’s legal counsel. Subject to the foregoing, at such time and to the
extent a legend is no longer required for the Shares or Warrant Shares, the
Company will use its commercially reasonable efforts to, no later than three
(3)
trading days following the delivery by a Purchaser to the Company or the
Company’s transfer agent of a legended certificate representing such Shares or
Warrant Shares (together with such accompanying documentation or
representations, which shall have been completed and signed by such Purchaser,
as reasonably required by counsel to the Company), (x) deliver or cause to
be
delivered a certificate representing such Shares or Warrant Shares that is
free
from the foregoing legend or (y) issue such Shares or Warrant Shares to the
Purchaser by electronic delivery at the applicable balance account at the
Depository Trust Company (“DTC”).
Each
Purchaser, severally and not jointly with the other Purchasers, agrees that
the
removal of such legend from certificates evidencing the Shares or Warrant Shares
is predicated upon (i) the Company’s reliance that the Purchaser will sell any
Securities pursuant to either the registration requirements of the Securities
Act, including any applicable prospectus delivery requirements, or an exemption
therefrom, and/or (ii) that in the context of a sale under Rule 144, if
requested by the Company’s transfer agent, the Purchaser shall have signed and
delivered a representation letter relating to the Purchaser’s
Shares.
Provided
that the Purchaser has fully complied with its obligations hereunder, including,
without limitation, delivery of all required documentation, if within three
(3)
trading days after the Company's or the Company's transfer agent's receipt
of a
legended certificate representing such Shares or Warrant Shares or an exercise
notice pursuant to a Warrant, the Company’s transfer agent shall fail to issue
and deliver to such Purchaser a certificate representing such Securities
that is
free from all restrictive and other legends, and if on or after such trading
day
the Purchaser purchases (in an open market transaction or otherwise) shares
of
Common Stock to deliver in satisfaction of a sale by the Purchaser of shares
of
Common Stock that the Purchaser anticipated receiving from the Company without
any restrictive legend (a "Buy-In"), then the Company shall, within three
(3)
trading days after the Purchaser's request and in the Purchaser's discretion,
either (i) pay cash to the Purchaser in an amount equal to the Purchaser's
total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased (the "Buy-In Price"), at which point the Company's
obligation to deliver such certificate shall terminate, or (ii) promptly
honor
its obligation to deliver to the Purchaser a certificate or certificates
representing such shares of Common Stock and pay cash to the Purchaser in
an
amount equal to the excess (if any) of the Buy-In Price over the product
of (A)
such number of shares of Common Stock, times (B) the closing bid price on
the
date of delivery of such legended certificate; provided, however, that (i)
this
provision shall be applicable only if counsel for the Company shall also
have
received a copy of any and all documentation submitted to the Company and/or
its
transfer agent by the Registered Holder three (3) trading days prior to the
application of this provision, and (ii) the Company shall have no obligation
under this provision if the Company has delivered to the Company’s transfer
agent the documentation required to meet its obligations hereunder and the
failure of such obligations to be met is the sole responsibility of the
Company’s transfer agent.
(10)
If
this
Agreement is executed and delivered on behalf of a partnership, corporation,
trust, estate or other entity: (i) such partnership, corporation, trust, estate
or other entity is duly organized and validly existing and has the full legal
right and power and all authority and approval required (a) to execute and
deliver this Agreement and all other instruments executed and delivered by
or on
behalf of such partnership, corporation, trust, estate or other entity in
connection with the purchase of its Securities, and (b) to purchase and hold
such Securities; (ii) the signature of the party signing on behalf of such
partnership, corporation, trust, estate or other entity is binding upon such
partnership, corporation, trust, estate or other entity; and (iii) such
partnership, corporation, trust or other entity has not been formed for the
specific purpose of acquiring such Securities, unless each beneficial owner
of
such entity is qualified as an accredited investor within the meaning of Rule
501(a) of Regulation D promulgated under the Securities Act and has submitted
information to the Company substantiating such individual
qualification.
5
(11)
If
the
Purchaser is a retirement plan or is investing on behalf of a retirement plan,
the Purchaser acknowledges that an investment in the Securities poses additional
risks, including the inability to use losses generated by an investment in
the
Securities to offset taxable income.
(12) The
information contained in the purchaser questionnaire in the form of Exhibit
C
attached
hereto (the “Purchaser
Questionnaire”)
delivered by the Purchaser in connection with this Agreement is complete and
accurate in all respects. The Purchaser is an “accredited investor” as defined
in Rule 501(a) of Regulation D under the Securities Act on the basis indicated
therein and is a resident of the jurisdiction set forth therein. The Purchaser
is not required to be a registered broker-dealer under Section 15 of the
Exchange Act. The information contained in the selling stockholder questionnaire
in the form of Exhibit
D
attached
hereto (the “Selling
Stockholder Questionnaire”)
delivered by the Purchaser in connection with this Agreement is complete and
accurate in all respects. The
Purchaser will notify the Company immediately of any changes in any such
information contained in such Purchaser’s Selling Stockholder Questionnaire
until such time as the Purchaser has sold all of its Shares or until the Company
is no longer required to keep the Registration Statement effective, except
to
the extent that such changed information is not required under the Securities
Act to be disclosed in an amendment or supplement to the Registration Statement.
(13)
The
Purchaser acknowledges that the Company will have the authority to issue shares
of Common Stock, in excess of those being issued in connection with the
Offering, and that the Company may issue additional shares of Common Stock
from
time to time. The issuance of additional shares of Common Stock may cause
dilution of the existing shares of Common Stock and a decrease in the market
price of such existing shares.
(14)
The
Purchaser acknowledges that the Company has engaged the Placement Agent in
connection with the Offering and, as consideration for its services, has agreed
to pay the Placement Agent an aggregate cash commission equal to six and
one-half (6.5%) of the gross proceeds resulting from the Offering, to reimburse
the Placement Agent for its expenses incurred in connection with the Offering,
and to issue warrants (the “Placement
Agent Warrants”)
to
purchase an aggregate number of shares of Common Stock equal to five percent
(5%) of the aggregate Shares sold in the Offering. The Placement Agent Warrants
will have a term of five years and will be exercisable at a price equal to
the
exercise price of the Warrant issued to the Purchaser hereunder.
(15)
The
Purchaser understands that the Securities are being offered and sold to it
in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in
part
upon the truth and accuracy of, and the Purchaser's compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of
the Purchaser set forth herein in order to determine the availability of such
exemptions and the eligibility of the Purchaser to acquire the
Securities.
6
(16)
The
Purchaser understands that no United States federal or state agency or any
other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
(17)
This
Agreement has been duly and validly authorized, executed and delivered on behalf
of the Purchaser and shall constitute the legal, valid and binding obligations
of such Purchaser enforceable against the Purchaser in accordance its
terms.
(18)
The
execution, delivery and performance by the Purchaser of this Agreement and
the
consummation by the Purchaser of the transactions contemplated hereby will
not
(i) result in a violation of the organizational documents of the Purchaser
or
(ii) conflict with, or constitute a default (or an event which with notice
or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Purchaser is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to the Purchaser,
except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of the Purchaser to perform its obligations hereunder.
(19)
The
purchase by the Purchaser of the Securities issuable to it at the Closing will
not result in such Purchaser (individually or together with any other Person
with whom such Purchaser has identified, or will have identified, itself as
part
of a “group” in a public filing made with the SEC involving the Company’s
securities) acquiring, or obtaining the right to acquire, in excess of 9.99%
of
the outstanding shares of Common Stock or the voting power of the Company on
a
post transaction basis that assumes that the Closing shall have occurred. Such
Purchaser does not presently intend to, alone or together with others, make
a
public filing with the SEC to disclose that it has (or that it together with
such other Persons have) acquired, or obtained the right to acquire, as a result
of the Closing (when added to any other securities of the Company that it or
they then own or have the right to acquire), in excess of 9.99% of the
outstanding shares of Common Stock or the voting power of the Company on a
post
transaction basis that assumes that the Closing shall have
occurred.
(20)
Other
than fees payable to the Placement Agent by the Company, the Purchaser has
not
entered into any agreement or arrangement that would entitle any broker or
finder to compensation by the Company in connection with the sale of the
Securities to such Purchaser.
(21)
The
Purchaser has, in connection with its purchase of the Securities, complied
with
all applicable provisions of the Securities Act, including the rules and
regulations promulgated by the SEC thereunder, and applicable state securities
laws.
7
(22)
Other
than the transaction contemplated hereunder, the Purchaser has not directly
or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Purchaser, executed any disposition, including Short
Sales, in the securities of the Company since the time that such Purchaser
was
first contacted by the Company or the Placement Agent regarding an investment
in
the Company. Such Purchaser covenants that neither it nor any Person acting
on
its behalf or pursuant to any understanding with it will engage in any
transactions in the securities of the Company (including Short Sales) prior
to
the time that the transactions contemplated by this Agreement are publicly
disclosed. “Short
Sales”
include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act and all types of direct
and indirect stock pledges, forward sale contracts, options, puts, calls, swaps
and similar arrangements (including on a total return basis), and sales and
other transactions through non-US broker dealers or foreign regulated brokers.
Each Purchaser understands and acknowledges, that the SEC currently takes the
position that coverage of Short Sales “against the box” prior to the Effective
Date of the Registration Statement is a violation of Section 5 of the Securities
Act, as set forth in Item 65, Section A, of the Manual of Publicly Available
Telephone Interpretations, dated July 1997, compiled by the Office of Chief
Counsel, Division of Corporation Finance. Notwithstanding the foregoing, in
the
case of a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser's assets, the
representation and covenant set forth above shall only apply with respect to
the
portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement.
C.
Representations
and Warranties of the Company
Except
as
set forth in the SEC Reports (defined below) or the Company Disclosure Schedule
annexed hereto as Schedule
B,
the
Company hereby makes the following representations and warranties to the
Purchasers:
(1)
Organization,
Good Standing and Qualification.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has full corporate power and
authority to conduct its business as currently conducted. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
all
jurisdictions in which the character of the property owned or leased or the
nature of the business transacted by it makes qualification necessary, except
where any failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on (i) the business, properties,
financial condition or results of operations of the Company or (ii) the
transactions contemplated hereby and by the other Offering Documents or by
the
agreements and instruments to be entered into in connection herewith or
therewith or on the ability of the Company to perform its obligations under
the
Offering Documents (a “Material
Adverse Effect”).
The
Company is not a participant in any joint venture, partnership or similar
arrangement material to the business of the Company.
(2)
Capitalization.
The
authorized capital stock of the Company consists of 120,000,000 shares of Common
Stock and 30,000,000 shares of preferred stock, par value $0.001 per share.
As
of
October 31, 2006, there were 16,993,016 shares
of
Common Stock and no shares of preferred stock issued and outstanding. As of
October 31, 2006, the Company had reserved (i) 4,139,117 shares of Common Stock
for issuance to employees, directors and consultants pursuant to the Company’s
2000 Stock Option Plan, as amended, and the Company’s 2004 Equity Incentive
Plan, of which 2,610,156 shares of Common Stock are subject to outstanding,
unexercised options as of such date, and (ii) 885,546 shares of Common Stock
for
issuance pursuant to other outstanding options and warrants to purchase Common
Stock.
Other
than the Placement Agent Warrants and as otherwise set forth above or as
contemplated in this Agreement, (a) there are no other options, warrants, calls,
rights, commitments or agreements of any character to which the Company is
a
party or by which either the Company is bound or obligating the Company to
issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of the capital stock of the Company
or
obligating the Company to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement and (b) the issuance and sale of the
Securities contemplated hereby will not give rise to any preemptive rights,
rights of first refusal or other similar rights on behalf of any person.
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(3)
Issuance;
Reservation of Shares.
The
issuance of the Shares has been duly and validly authorized by all necessary
corporate action and no further action is required by the Company or its
stockholders in connection therewith. The Shares, when issued and paid for
pursuant to this Agreement, will be validly issued, fully paid and
non-assessable shares of Common Stock of the Company. The issuance of the
Warrants and the Warrant Shares have been duly and validly authorized by all
necessary corporate action and no further action is required by the Company
or
its stockholders in connection therewith. The Warrant Shares, when issued and
paid for upon the due exercise of the Warrants, will be validly issued, fully
paid and non-assessable shares of Common Stock of the Company. The issuance
of
the Securities and the Warrant Shares will not result in the right of any holder
of any securities of the Company to adjust the exercise, conversion, exchange
or
reset price under such securities. The Company has reserved, and will reserve,
at all times that the Warrants remain outstanding, such number of shares of
Common Stock sufficient to enable the full exercise of the
Warrants.
(4)
Authorization;
Enforceability.
The
Company has all corporate right, power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. All corporate
action on the part of the Company necessary for the authorization, execution,
delivery and performance of this Agreement by the Company has been taken and
no
further action is required by the Company or its stockholders in connection
therewith. This Agreement has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the terms hereof,
will constitute the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except as limited
by (i) applicable bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting enforcement of creditors' rights
generally, (ii) laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (iii) laws, or public policy
underlying such laws, relating to indemnification and contribution.
(5)
No
Conflict; Governmental and Other Consents.
(a) The
execution and delivery by the Company of this Agreement and the Warrants and
the
consummation of the transactions contemplated hereby and thereby will not result
in the violation of any law, statute, rule, regulation, order, writ, injunction,
judgment or decree of any court or governmental authority to or by which the
Company is bound (including federal and state securities laws and regulations
and the rules and regulations of the Nasdaq Global Market (“Nasdaq”)), or of any
provision of the Certificate of Incorporation or Bylaws of the Company, and
will
not conflict with, or result in a breach or violation of, any of the terms
or
provisions of, or constitute (with due notice or lapse of time or both) a
default under or give to others any rights of termination, amendment,
acceleration or cancellation of, any lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which the Company
is a party or by which it is bound or to which any of its properties or assets
is subject, nor result in the creation or imposition of any lien upon any of
the
properties or assets of the Company, except in each case to the extent that
any
such violation, conflict or breach would not be reasonably likely to have a
Material Adverse Effect. No
holder
of any of the securities of the Company or any subsidiaries has any rights
(“demand,” “piggyback” or otherwise) to have such securities registered by
reason of the intention to file, filing or effectiveness of a Registration
Statement (as defined in Section E hereof), other than (i) those filed by the
Company under the Securities Act on Form S-3 (SEC File Nos. 333-123973 and
333-13164); (ii) the registration rights of the other Purchasers purchasing
Securities in the Offering; and (iii) the registration rights of the Placement
Agent provided in the Placement Agent Warrants. The Company is eligible to
register its Common Stock for resale by the Purchasers on Form S-3 promulgated
under the Securities Act.
9
(b) Assuming
the accuracy of the representations and warranties of each Purchaser party
hereto, no consent, approval, authorization or other order of any governmental
authority or other third-party is required to be obtained by the Company in
connection with the authorization, execution and delivery of this Agreement
or
with the authorization, issue and sale of the Securities, except such
post-Closing filings as may be required to be made with the SEC, and with any
state or foreign blue sky or securities regulatory authority, or as would not
be
reasonably likely to have a Material Adverse Effect on the Company. The Company
is not in violation of the listing requirements of Nasdaq in any material
respect and has no knowledge of any facts that would reasonably lead to
delisting or suspension of the Common Stock in the foreseeable future.
(6)
Litigation.
There
are no pending or, to the Company’s knowledge, threatened legal or governmental
proceedings against the Company or any of its subsidiaries or any of their
respective officers or directors, which, if adversely determined, would
individually or in the aggregate be reasonably likely to have a Material Adverse
Effect on the Company. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body (including, without
limitation, the SEC or Nasdaq) pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries or any
of
their respective officers or directors, wherein an unfavorable decision, ruling
or finding could adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under this
Agreement. Neither
the Company nor any subsidiary, nor any director or officer thereof (in his
or
her capacity as such), is or has been the subject of any action involving a
claim or violation of or liability under federal or state securities laws or
a
claim of breach of fiduciary duty, except as specifically disclosed in the
SEC
Reports. The SEC has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
subsidiary under the Exchange Act or the Securities Act.
(7)
Accuracy
of Reports.
All
reports required to be filed by the Company during the two years preceding
the
date hereof (the “SEC
Reports”)
under
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
have
been timely filed with the SEC, complied at the time of filing in all material
respects with the requirements of their respective forms and, except to the
extent any such SEC Report has been updated or superseded prior to the date
of
this Agreement by any subsequently filed report, were complete and correct
in
all material respects as of the dates at which the information was furnished,
and contained (as of such dates) no untrue statements of a material fact nor
omitted to state any material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made,
not
misleading. The Company has delivered to the Purchaser or its representatives
true, correct and complete copies of any SEC Documents requested by Purchaser
not available on the XXXXX system. None of the statements made in any such
SEC
Report is, or has been, required to be amended or updated under applicable
law
(except for such statements as have been amended or updated in subsequent
filings made prior to the date hereof). As of their respective dates, the
financial statements of the Company included in the SEC Reports complied in
all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto in effect as of the time
of filing.
10
(8)
Financial
Information.
The
Company’s financial statements that appear in the SEC Reports have been prepared
in accordance with United States generally accepted accounting principles
(“GAAP”),
except in the case of unaudited statements, as permitted by Form 10-Q of the
SEC
or as may be indicated therein or in the notes thereto, applied on a consistent
basis throughout the periods indicated and such financial statements fairly
present in all material respects the financial condition and results of
operations and cash flows of the Company as of the dates and for the periods
indicated therein (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(9)
Accounting
and Disclosure Controls.
The
Company 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 authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain accountability for assets and liabilities; (iii) access
to
assets or incurrence of liabilities is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded
accountability for assets and liabilities is compared with existing assets
and
liabilities at reasonable intervals and appropriate action is taken with respect
to any differences. The
Company maintains disclosure controls and procedures (as such term is defined
in
Rule 13a-14 under the Exchange Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it
files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the SEC,
including, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it
files
or submits under the Exchange Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and
its principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure.
(10)
Xxxxxxxx-Xxxxx
Act of 2002.
The
Company is in compliance with all applicable provisions of the Xxxxxxxx-Xxxxx
Act of 2002 and all rules and regulations promulgated thereunder or is
implementing the provisions thereof that are in effect and is taking reasonable
steps to ensure that it will be in compliance with other applicable provisions
of the Xxxxxxxx-Xxxxx Act of 2002 not currently in effect upon the effectiveness
of such provisions, except where such noncompliance would not have, individually
or in the aggregate, a Material Adverse Effect.
11
(11)
Absence
of Certain Changes.
Since
the date of the Company’s financial statements in the latest of the SEC Reports,
(i) there has not occurred any undisclosed event that individually or in the
aggregate has caused a Material Adverse Effect or any occurrence, circumstance
or combination thereof that reasonably would be likely to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent
or
otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business and (B) liabilities that would not be required
to be
reflected in the Company's financial statements pursuant to GAAP or that would
not be required to be disclosed in filings made with the Commission,
(iii)
the
Company has not (A) declared or paid any dividends, (B) amended or changed
the
Certificate of Incorporation or Bylaws of the Company or its subsidiaries,
or
(C) altered its method of accounting or the identity of its auditors and (iv)
the Company has not made a material change in officer compensation except in
the
ordinary course of business consistent with past practice,
(12)Investment
Company.
The
Company is not an “investment company” within the meaning of such term under the
Investment Company Act of 1940, as amended, and the rules and regulations of
the
SEC thereunder.
(13)Subsidiaries.
The
Company has no subsidiaries. For the purposes of this Agreement, “subsidiary”
shall mean any company or other entity of which at least 50% of the securities
or other ownership interest having ordinary voting power for the election of
directors or other persons performing similar functions are at the time owned
directly or indirectly by the Company or any of its other subsidiaries.
(14)Certain
Fees.
Other
than fees payable to the Placement Agent (for which the Company shall be
responsible),
no
brokers’, finders’ or financial advisory fees or commissions will be payable by
the Company with respect to the transactions contemplated by this
Agreement.
(15)Material
Agreements.
All
material agreements to which the Company is a party or to which its property
or
assets are subject that are required to be filed as exhibits to the SEC Reports
under Item 601 of Regulation S-K are included as part of, or specifically
identified in, the SEC Reports. The Company has not received any notice of
default by the Company, and, to the Company’s knowledge, the Company is not in
default under, any such material agreement now in effect, the result of which
would individually or in the aggregate be reasonably likely to have a Material
Adverse Effect.
(16)Transactions
with Affiliates.
Except
as set forth in the SEC Reports, none of the officers or directors of the
Company has entered into any transaction with the Company that would be required
to be disclosed pursuant to Item 404(a) of Regulation S-K.
(17)Taxes.
The
Company has filed or has valid extensions of the time to file all necessary
material federal, state, and foreign income and franchise tax returns due prior
to the date hereof and has paid or accrued all taxes shown as due thereon,
and
the Company has no knowledge of any material tax deficiency which has been
or
might be asserted or threatened against it which could reasonably be expected
to
result in a Material Adverse Effect.
12
(18)Insurance.
The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as the Company believes are prudent
and customary in the businesses in which the Company is engaged. The Company
has
no reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without an
increase in cost significantly greater than general increases in cost
experienced for similar companies in similar industries with respect to similar
coverage.
(19)
Intellectual
Property Rights and Licenses.
Except
as disclosed in SEC Reports, the Company owns or possesses adequate licenses
to
use, any and all information, know-how, trade secrets, patents, copyrights,
trademarks, service marks, trade names, domain names, software, formulae,
methods, processes and other intangible properties that are of a such nature
and
significance to the business that the failure to own or have the right to use
such items individually or in the aggregate would have a Material Adverse Effect
(“Intangible
Rights”).
The
Company has not received any notice that it is in conflict with or infringing
upon the asserted intellectual property rights of others in connection with
the
Intangible Rights, and, to the Company’s knowledge, neither the use of the
Intangible Rights nor the operation of the Company’s businesses is infringing or
has infringed upon any intellectual property rights of others. All payments
have
been duly made that are necessary to maintain the Intangible Rights in force.
No
claims have been made, and to the Company’s knowledge, no claims are threatened,
that challenge the validity or scope of any material Intangible Right of the
Company. The Company and each of its subsidiaries have taken reasonable steps
to
obtain and maintain in force all licenses and other permissions under Intangible
Rights of third parties necessary to conduct their businesses as heretofore
conducted by them, and now being conducted by them, and the Company and each
of
its subsidiaries are not or have not been in material breach of any such license
or other permission.
(20)
Compliance
with Law; Foreign Corrupt Practices.
The
Company is in compliance with all applicable laws, except for such noncompliance
that individually or in the aggregate would not reasonably be likely to have
a
Material Adverse Effect. The Company has not received any notice of, nor does
the Company have any knowledge of, any violation (or of any investigation,
inspection, audit or other proceeding by any governmental entity involving
allegations of any violation) of any applicable law involving or related to
the
Company which has not been dismissed or otherwise disposed of that individually
or in the aggregate would be reasonably likely to have a Material Adverse
Effect. The Company has not received notice or otherwise has any knowledge
that
the Company is charged with, threatened with or under investigation with respect
to, any violation of any applicable law that individually or in the aggregate
would reasonably be likely to have a Material Adverse Effect. Neither the
Company nor any of its subsidiaries nor, to the knowledge of the Company, any
employee or agent of the Company or any subsidiary has, in the course of its
actions for, or on behalf of, the Company (i) used any corporate funds for
any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to
any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign
or
domestic government official or employee
13
(21)
Ownership
of Property.
Except
as set forth in the Company’s financial statements included in the SEC Reports,
the Company has (i) good and marketable fee simple title to its owned real
property, if any, free and clear of all liens, except for liens which do not
individually or in the aggregate have a Material Adverse Effect; (ii) a valid
leasehold interest in all leased real property, and each of such leases is
valid
and enforceable in accordance with its terms (subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies, and to limitations of public policy), except as would not
be
reasonably likely to have a Material Adverse Effect, and (iii) good title to,
or
valid leasehold interests in, all of its other material properties and assets
free and clear of all liens, except for liens disclosed in the SEC Reports
or
which otherwise do not individually or in the aggregate have a Material Adverse
Effect.
(22)No
Integrated Offering.
Neither
the Company, nor, to its knowledge, any of its affiliates or other person acting
on the Company’s behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security under circumstances
that would cause the Offering of the Securities to be integrated with prior
offerings by the Company for purposes of the Securities Act, when integration
would cause the Offering not to be exempt from the registration requirements
of
Section 5 of the Securities Act.
(23)
No
General Solicitation.
Neither
the Company nor, to its knowledge, any person acting on behalf of the Company,
has offered or sold any of the Securities by any form of “general solicitation”
within the meaning of Rule 502 under the Securities Act. To the knowledge of
the
Company, no person acting on its behalf has offered the Securities for sale
other than to the Purchasers and certain other “accredited investors” within the
meaning of Rule 501 under the Securities Act.
(24)
No
Registration.
Assuming the accuracy of the representations and warranties made by, and
compliance with the covenants of, the Purchasers in Section B hereof, no
registration of the Securities under the Securities Act is required in
connection with the offer and sale of the Securities by the Company to the
Purchasers.
(25)
No
Brokers.
Except
with respect to the Placement Agent,
neither
the Company nor any subsidiary of the Company has taken action that would give
rise to any claim by any person for brokerage commissions, finder’s fees or
similar payments in connection with the transactions contemplated by this
Agreement and neither the Company nor any of the subsidiaries has incurred,
or
shall incur, directly or indirectly, any liability for any claim for brokerage
commissions, finder’s fees or similar payments in connection with this Agreement
or the Offering Documents or any transaction contemplated hereby or
thereby.
(26)
Application
of Takeover Protections; Rights Agreement.
The
Company and its board of directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
or the laws of the State of Delaware which is or could become applicable to
any
Purchaser as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the Securities and
any
Purchaser ownership of the Securities. The Company has not adopted a shareholder
rights plan or similar arrangement relating to accumulations of beneficial
ownership of its common stock or a change in control of the
Company.
14
(27)
Solvency.
Based
on the financial condition of the Company as of the Closing Date (and assuming
the Closing shall have occurred), (i) the Company’s fair saleable value of its
assets exceeds the amount that will be required to be paid on or in respect
of
the Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business for the current fiscal
year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts
are
required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
(28)
Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company and
an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed
or
that otherwise would be reasonably likely to have a Material Adverse
Effect.
(29)
Transfer
Taxes.
On the
Closing Date, all stock transfer or other taxes (other than income or similar
taxes) which are required to be paid in connection with the sale and transfer
of
the Securities to be sold to each Purchaser hereunder will be, or will have
been, fully paid or provided for by the Company, and all laws imposing such
taxes will be or will have been complied with.
(31)
Environmental
Matters.
The
Company has obtained, or has applied for, and is in compliance with and in
good
standing under all permits required under Environmental Laws (except for such
failures that individually or in the aggregate would not be reasonably likely
to
have a Material Adverse Effect) and the Company has no knowledge of any
proceedings to substantially modify or to revoke any such permit. There are
no
investigations, proceedings or litigation pending or, to the Company's
knowledge, threatened against the Company or any of the Company’s facilities
relating to Environmental Laws or Hazardous Substances. “Environmental Laws”
shall mean all federal, national, state, regional and local laws, statutes,
ordinances and regulations, in each case as amended or supplemented from time
to
time, and any judicial or administrative interpretation thereof, including
orders, consent decrees or judgments relating to the regulation and protection
of human health, safety, the environment and natural resources.
(32) Disclosure.
To the
Company’s knowledge, no material event or circumstance has occurred or
information exists with respect to the Company or its business, properties,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed.
15
(33) Acknowledgment
Regarding Purchaser's Purchase of Securities.
The
Company acknowledges and agrees that no Purchaser is (i) an officer or director
of the Company, (ii) an "affiliate" of the Company (as defined in Rule 144)
or
(iii) to the knowledge of the Company, a "beneficial owner" of more than 10%
of
the shares of Common Stock (as defined for purposes of Rule 13d-3 of the
Exchange Act). The Company further acknowledges that no Purchaser is acting
as a
financial advisor or fiduciary of the Company (or in any similar capacity)
with
respect to the Offering Documents and the transactions contemplated hereby
and
thereby.
(32) Dilutive
Effect.
The
Company understands and acknowledges that the number of Warrant Shares issuable
upon exercise of the Warrants will increase in certain circumstances. The
Company further acknowledges that its obligation to issue the Warrant Shares
upon exercise of the Warrants in accordance with this Agreement and the Warrants
is absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other stockholders of the
Company.
(33) Employee
Relations.
(i) The
Company is not a party to any collective bargaining agreement and, to its
knowledge, its employees are not union members. The Company believes that its
relations with its employees are good. No executive officer of the Company
(as
defined in Rule 501(f) of the Securities Act) has notified the Company that
such
officer intends to leave the Company or otherwise terminate such officer's
employment with the Company. No executive officer of the Company, to the
knowledge of the Company, is in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant relating to such executive officer’s employment with the Company, and
the continued employment of each such executive officer does not, to the
knowledge of the Company, subject the Company to any liability with respect
to
any of the foregoing matters.
(ii) The
Company is in compliance with all federal, state, local and foreign laws and
regulations respecting labor, employment and employment practices and benefits,
terms and conditions of employment and wages and hours, except where failure
to
be in compliance would not, either individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
(iii) No
material
labor dispute exists or, to the knowledge of the Company, is imminent with
respect to any employees of the Company.
(34) Manipulation
of Price.
The
Company has not, and to its knowledge no one acting on its behalf has, (i)
taken, directly or indirectly, any action designed to cause or to result in
the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) other than the
Placement Agent, sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) other than the
Placement Agent paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
16
D.
Understandings
Each
of
the Purchasers understands, acknowledges and agrees with the Company as
follows:
(1)
No
federal or state agency or authority has made any finding or determination
as to
the accuracy or adequacy of the Offering Documents or as to the fairness of
the
terms of the Offering nor any recommendation or endorsement of the Securities.
Any representation to the contrary is a criminal offense. In making an
investment decision, Purchasers must rely on their own examination of the
Company and the terms of the Offering, including the merits and risks
involved.
(2)
The
Offering is intended to be exempt from registration under the Securities Act
by
virtue of Section 4(2) of the Securities Act and the provisions of Rule 506
of
Regulation D thereunder, which is in part dependent upon the truth, completeness
and accuracy of the statements made by the Purchaser herein and in the Purchaser
Questionnaire.
(3)
Notwithstanding
the registration obligations provided herein, there can be no assurance that
the
Purchaser will be able to sell or dispose of the Securities. It is understood
that in order not to jeopardize the Offering’s exempt status under Section 4(2)
of the Securities Act and Regulation D, any transferee may, at a minimum, be
required to fulfill the investor suitability requirements
thereunder.
(4)
The
Purchaser acknowledges that the Offering is confidential and non-public and
agrees that all information about the Offering shall be kept in confidence
by
the Purchaser until the public announcement of the Offering by the Company.
The
Purchaser acknowledges that the foregoing restrictions on the Purchaser’s use
and disclosure of any such confidential, non-public information contained in
the
above-described documents restricts the Purchaser from trading in the Company’s
securities to the extent such trading is on the basis of material, non-public
information of which the Purchaser is aware. Except for the terms of the
transaction documents and the fact that the Company is considering consummating
the transactions contemplated therein, and except where the Purchaser or its
agent has executed a Non-Disclosure Agreement with the Company, the Company
confirms that neither the Company nor, to its knowledge, any other person acting
on its behalf, has provided any of the Purchasers or their agents or counsel
with any information that constitutes material, non-public
information.
(5)
The
Purchaser agrees that beginning on the date hereof until the Offering is
publicly announced by the Company (which the Company has agreed to undertake
in
accordance with the provisions of Section F.1. hereof), the Purchaser will
not
enter into any Short Sales. For purposes of determining whether a Purchaser
has
an equivalent offsetting long position in the Common Stock, all Common Stock
that would be issuable upon exercise in full of all options then held by such
Purchaser (assuming that such options were then fully exercisable,
notwithstanding any provisions to the contrary, and giving effect to any
exercise price adjustments scheduled to take effect in the future) shall be
deemed to be held long by such Purchaser.
17
E.
Registration
Rights
(1)
Certain
Definitions.
For
purposes of this Section E, the following terms shall have the meanings ascribed
to them below.
(a) “Prospectus”
means
the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the Offering of any
portion of the Registrable Securities covered by the Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
(b) “Registrable
Securities”
shall
mean any Shares and Warrant Shares issued or issuable pursuant to the Offering
Documents together with any securities issued or issuable upon any stock split,
dividend or other distribution, adjustment, recapitalization or similar event
with respect to the foregoing.
(c) “Registration
Statement”
means
the registration statement required to be filed under this Section E, including
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
(2)
Registration
Statement.
(a) The
Company shall use its commercially reasonable efforts to prepare and file with
the SEC a Registration Statement covering the resale of all Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule
415
under the Securities Act on or prior to the 30th day following the Closing
(such
date of actual filing, the “Filing
Date”).
The
Registration Statement shall be on Form S-3 (or on such other form appropriate
for such purpose) and shall contain (except if otherwise directed by the
Purchasers) a “Plan of Distribution” substantially in the form attached hereto
as Exhibit
E.
Each
Purchaser will furnish to the Company, at the Closing, a completed questionnaire
in the form set forth as Exhibit
D
hereto.
Each Purchaser agrees to promptly update such questionnaire in order to make
the
information previously furnished to the Company by such Purchaser not materially
misleading and deliver such updated questionnaire to the Company. By 9:30 am
on
the business day following the date on which the Registration Statement is
declared effective by the SEC, the Company shall file with the SEC in accordance
with Rule 424 under the Securities Act the final prospectus to be used in
connection with sales pursuant to such Registration Statement.
(b) The
Company shall use its commercially reasonable efforts to cause the Registration
Statement to be declared effective by the SEC on or prior to the 90th day
following the Closing or on the 120th day following the Closing in the event
that the SEC has reviewed the Registration Statement, and shall use its
commercially reasonable efforts to keep the Registration Statement continuously
effective under the Securities Act until the earliest of (i) the second
anniversary of the effective date of the Registration Statement, (ii) the date
when all Registrable Securities are eligible for resale under Rule 144(k) of
the
Securities Act or (iii) the date when all Registrable Securities covered by
such
Registration Statement have been sold (the “Effectiveness
Period”).
18
(c) The
Company shall request effectiveness of the Registration Statement (and any
post-effective amendments thereto) within five (5) business days following
the
Company’s receipt of notice from the SEC that the Registration Statement will
not be reviewed by the SEC or that the SEC has completed its review of such
Registration Statement and has no further comments.
(d) Upon
the
occurrence of any Event (as defined below), as relief for the damages suffered
therefrom by the Purchasers (the parties hereto agree that the liquidated
damages provided for in this Paragraph (2)(d) constitute a reasonable estimate
of the damages that may be incurred by the purchasers by reason of an Event),
the Company shall pay to each Purchaser, as liquidated damages and not as a
penalty (it being agreed that it would not be feasible to ascertain the extent
of such damages with precision), such amounts and at such times as shall be
determined pursuant to this Paragraph (2)(d). For such purposes, each of
the following shall constitute an “Event”:
(i) the
Filing Date does not occur on or prior to the 30th day following the Closing
Date (such date is defined herein as the “Filing
Default Date”),
in
which case the Company shall pay to each Purchaser an amount in cash equal
to:
(A) one percent (1.0%) of the aggregate purchase price paid by such Purchaser,
on a pro-rata basis over a 30-day period; and (B) for each successive 30-day
period thereafter or any portion thereof until the Filing Date, two percent
(2.0%) of the aggregate purchase price paid by such Purchaser, on a pro-rata
basis over a 30-day period, to be paid within ten days of the end of each 30-day
period; or
(ii) the
Registration Statement is not declared effective on or prior to the date that
is
90 days after the Closing Date or 120 days after the Closing Date in the event
that the SEC has reviewed the Registration Statement (the “Required
Effectiveness Date”),
in
which case the Company shall pay to each Purchaser an amount in cash equal
to:
(A) for the first 30 days after such 90th day or 120th, as applicable, one
percent (1.0%) of the aggregate purchase price paid by such Purchaser, on a
pro-rata basis over a 30-day period; and (B) for each successive 30-day period
thereafter until the Registration Statement is deemed effective, two percent
(2.0%) of the aggregate purchase price paid by such Purchaser, on a pro rata
basis over a 30-day period, no later than ten days following the end of each
30-day period.
The
payment obligations of the Company under this Section E(2)(d) shall be
cumulative. Notwithstanding anything to the contrary contained herein, in no
event shall the amount of liquidated damages payable by the Company pursuant
to
this Paragraph 2(d) exceed ten percent (10%) of the aggregate purchase price
paid by each Purchaser.
19
(3)
Registration
Procedures.
In
connection with the Company’s registration obligations hereunder, the Company
shall:
(a) (i)
prepare and file with the SEC such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the Registrable Securities
for the Effectiveness Period; (ii) cause the related Prospectus to be amended
or
supplemented by any required Prospectus supplement, and as so supplemented
or
amended to be filed pursuant to Rule 424; and (iii) respond as promptly as
reasonably practicable to any comments received from the SEC with respect to
the
Registration Statement or any amendment thereto.
(b) Notify
the Placement Agent and the Purchasers as promptly as reasonably possible,
and
(if reasonably requested by the Placement Agent) confirm such notice in writing,
of any of the following events: (i) the SEC notifies the Company whether there
will be a “review” of the Registration Statement; (ii) if the SEC issues any
stop order suspending the effectiveness of the Registration Statement or
initiates any action, claim, suit, investigation or proceeding (a “Proceeding”)
for
that purpose; (iii) the Company receives notice of any suspension of the
qualification or exemption from qualification of any Registrable Securities
for
sale in any jurisdiction, or the initiation or threat of any Proceeding for
such
purpose; or (iv) the financial statements included in the Registration Statement
become ineligible for inclusion therein or any statement made in the
Registration Statement or Prospectus or any document incorporated or deemed
to
be incorporated therein by reference is untrue in any material respect or any
revision to the Registration Statement, Prospectus or other document is required
so that it will not contain any untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary to make
the
statements therein, in light of the circumstances under which they were made,
not misleading. Notwithstanding the foregoing, the Company shall not
intentionally include any material non-public information in any notice provided
to any Purchaser under this Section E(3)(b).
(c) Use
its
commercially reasonable efforts to avoid the issuance of or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of the Registration
Statement or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment; provided,
however,
that
the Company may suspend sales pursuant to the Registration Statement for a
period of up to thirty (30) days (unless the holders of at least 60 percent
of
the then-eligible Registrable Securities consisting of outstanding shares of
Common Stock consent in writing to a longer delay of up to an additional thirty
(30) days) no more than once in any twelve-month period if the Company furnishes
to the holders of the Registrable Securities a certificate signed by the
Company’s Chief Executive Officer stating that in the good faith judgment of the
Company’s Board of Directors, (i) the offering could reasonably be expected to
interfere in any material respect with any acquisition, corporate reorganization
or other material transaction under consideration by the Company or (ii) there
is some other material development relating to the operations or condition
(financial or other) of the Company that has not been disclosed to the general
public and as to which it is in the Company’s best interests not to disclose
such development; provided further, however, that the Company may not so suspend
sales more than once in any calendar year without the written consent of the
holders of at least a majority of the then-eligible Registrable Securities
consisting of outstanding shares of Common Stock. Each violation of the
Company’s obligation not to suspend sales pursuant to the Registration Statement
longer than permitted pursuant to the proviso
of this
Paragraph 3(c) shall be deemed an “Event” and for each such default, Purchaser
shall be entitled to the payment provisions set forth in Paragraph
2(d)(i).
20
(d) Deliver
to each Purchaser, which delivery may be made electronically, by the business
day after the date first available, without charge, such reasonable number
of
copies of the Prospectus or Prospectuses (including each form of prospectus)
and
each amendment or supplement thereto as such Purchasers may reasonably request.
(e) To
the
extent required by law, prior to any public offering of Registrable Securities,
use its commercially reasonable efforts to register or qualify or cooperate
with
the selling Purchasers in connection with the registration or qualification
(or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or “blue sky” laws of such
jurisdictions within the United States as any Purchaser requests in writing,
to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided,
however,
that
the Company shall not be required for any such purpose to (i) qualify generally
to do business as a foreign corporation in any jurisdiction wherein it would
not
be otherwise required to qualify but for the requirements of this Paragraph
(3)(e), or (ii) subject itself to taxation.
(f) Comply
in
all material respects with all applicable rules and regulations of the SEC
and
the principal stock exchange or market on which the Common Stock is then listed
or eligible for trading.
(4)
Registration
Expenses.
The
Company shall pay (or reimburse the Purchasers for) all fees and expenses
incident to the performance of or compliance with this Agreement by the Company,
including without limitation (a) all registration and filing fees and expenses,
including without limitation those related to filings with the SEC, in
connection with applicable state securities or “Blue Sky” laws and to Nasdaq,
(b) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing copies of Prospectuses
reasonably requested by the Purchasers), (c) messenger, telephone and delivery
expenses, (d) fees and disbursements of counsel for the Company and fees and
disbursements and (e) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated
by
this Agreement. Notwithstanding the foregoing, each Purchaser shall pay any
and
all costs, fees, discounts or commissions attributable to the sale of its
respective Registrable Securities.
21
(5)
Indemnification.
(a) Indemnification
by the Company.
The
Company agrees to indemnify and hold harmless each Purchaser, the partners,
members, officers and directors of each Purchaser and each person or entity,
if
any, who controls such Purchaser or any of the foregoing within the meaning
of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any losses, claims, damages or liabilities (collectively, “Losses”)
to
which they may become subject (under the Securities Act or otherwise) insofar
as
such Losses (or actions or proceedings in respect thereof) arise out of, or
are
based upon, any material breach of this Agreement by the Company or other
Offering Document or any
untrue statement or alleged untrue statement of a material fact contained in
the
Registration Statement or any 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 under which they were made, not
misleading or arise out of any failure by the Company to fulfill any undertaking
included in the Registration Statement and the Company will, as incurred,
reimburse such Purchaser, partner, member, officer, director or controlling
person for any legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided,
however, that the Company shall not be liable in any such case to the extent
that such Loss arises out of, or is based upon, an untrue statement or omission
or alleged untrue statement or omission made in such Registration Statement
in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Purchaser, partner, member, officer, director
or
controlling person specifically for use in preparation of the Registration
Statement or any breach of this Agreement by such Purchaser; provided further,
however, that the Company shall not be liable to any Purchaser of Registrable
Securities (or any partner, member, officer, director or controlling person
of
such Purchaser) to the extent that any such Loss is caused by an untrue
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus if either (i) (A) such Purchaser failed to send or
deliver a copy of the final prospectus with or prior to, or, if Rule 172 is
then
in effect, such Purchaser failed to confirm that a final prospectus was deemed
to be delivered prior to, the delivery of written confirmation of the sale
by
such Purchaser to the person asserting the claim from which such Loss resulted
and (B) the final prospectus corrected such untrue statement or omission, (ii)
(X) such untrue statement or omission is corrected in an amendment or supplement
to the prospectus and (Y) having previously been furnished by or on behalf
of
the Company with copies of the prospectus as so amended or supplemented or,
if
Rule 172 is then in effect, notified by the Company that such amended or
supplemented prospectus has been filed with the SEC, such Purchaser thereafter
fails to deliver such prospectus as so amended or supplemented, with or prior
to, or, if Rule 172 is then in effect, such Purchaser fails to confirm that
the
prospectus as so amended or supplemented was deemed to be delivered prior to,
the delivery of written confirmation of the sale of a Registrable Security
to
the person asserting the claim from which such Loss resulted or (iii) such
Purchaser sold Registrable Securities in violation of such Purchaser’s covenant
contained in Paragraph (6) below.
22
(b) Indemnification
by Investors.
Each
Purchaser, severally and not jointly, agrees to indemnify and hold harmless
the
Company (and each person, if any, who controls the Company within the meaning
of
Section 15 of the Securities Act or Section 20 of the Exchange Act, each officer
of the Company who signs the Registration Statement and each director of the
Company), from and against any losses, claims, damages or liabilities to which
the Company (or any such officer, director or controlling person) may become
subject (under the Securities Act or otherwise), insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise
out
of, or are based upon, any material breach of this Agreement by such Purchaser
or any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any 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 under which they were made,
not misleading in each case, on the effective date thereof, if, and to the
extent, such untrue statement or omission or alleged untrue statement or
omission was made in reliance upon and in conformity with written information
furnished by or on behalf of such Purchaser specifically for use in preparation
of the Registration Statement, and such Purchaser will reimburse the Company
(and each of its officers, directors or controlling persons) for any legal
or
other expenses reasonably incurred in investigating, defending or preparing
to
defend any such action, proceeding or claim; provided, however, that in no
event
shall any indemnity under this Paragraph 5(b) be greater in amount than the
dollar amount of the proceeds (net of (i) the purchase price of the Registrable
Securities included in the Registration Statement giving rise to such
indemnification obligation and (ii) the amount of any damages such Purchaser
has
otherwise been required to pay by reason of such untrue statement or omission
or
alleged untrue statement or omission) received by such Purchaser upon the sale
of such Registrable Securities.
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall be entitled to participate therein,
and to the extent that it shall wish, assume the defense thereof, including
the
employment of counsel reasonably satisfactory to the Indemnified Party and
the
payment of all fees and expenses incurred in connection with defense thereof.
After notice from the Indemnifying Party to such Indemnified Party of its
election to assume the defense thereof, such Indemnifying Party shall not be
liable to such Indemnifying Party for any legal expenses subsequently incurred
by Indemnified Party in connection with the defense thereof. An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding and
to participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties. If
there
exists or shall exist a conflict of interest that would make it inappropriate
in
the reasonable judgment of the Indemnified Party for the same counsel to
represent both the Indemnified Party and such Indemnifying Party or any
affiliate or associate thereof, the Indemnified Party shall be entitled to
retain its own counsel at the expense of such Indemnifying Party; provided,
further, that no Indemnifying Party be responsible for the fees and expense
of
more than one separate counsel for all Indemnified Parties. The Indemnifying
Party shall not settle an action without the consent of the Indemnified Party,
which consent shall not be unreasonably withheld,
unless
such settlement includes an unconditional release of such Indemnified Party
from
all liability on claims that are the subject matter of such Proceeding. All
reasonable fees and expenses of the Indemnified Party (including reasonable
fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten trading
days of written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses
to
the extent it is finally judicially determined that such Indemnified Party
is
not entitled to indemnification hereunder).
23
(d) Contribution.
If a
claim for indemnification under Paragraph (5)(a) or (b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact,
has been taken or made by, or related to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Paragraph (5)(c), any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Paragraph 5(d) was available to such party
in accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Paragraph (5)(d) were determined by pro rata allocation or
by
any other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Paragraph (5)(d), no Purchaser or holder
of Placement Agent Warrants shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the net proceeds actually received
by such Purchaser or holder from the sale of the Registrable Securities subject
to the Proceeding exceeds the amount of any damages that such Purchaser or
holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(6)
Dispositions.
Each
Purchaser agrees that it will comply with the prospectus delivery requirements
of the Securities Act as applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement. Each Purchaser
further agrees that, upon receipt of a notice from the Company of the occurrence
of any event of the kind described in Paragraphs (3)(b), such Purchaser or
holder will discontinue disposition of such Registrable Securities under the
Registration Statement until such Purchaser’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated
by
Paragraph (3)(g), or until it is advised in writing (the “Advice”)
by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.
(7)
Piggy-Back
Registrations.
If at
any time during the Effectiveness Period, other than any suspension period
referred to in Paragraph (3)(f), there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the SEC a registration statement relating
to
an offering for its own account or the account of others under the Securities
Act of any of its equity securities, other than on Form S-4 or Form S-8 (each
as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of
any
entity or business or equity securities issuable in connection with stock option
or other employee benefit plans, then the Company shall send to each Purchaser
written notice of such determination and if, within fifteen (15) days after
receipt of such notice, any such Purchaser shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities not already covered by an effective Registration
Statement such Purchaser requests to be registered.
24
(9)
Rule
144.
Until
such time as the Registrable Securities are eligible for resale pursuant to
Rule
144(k) under the Securities Act, the Company agrees with each holder of
Registrable Securities to:
(a) comply
with the requirements of Rule 144(c) under the Securities Act with respect
to
current public information about the Company;
(b) to
file
with the SEC in a timely manner all reports and other documents required of
the
Company under the Securities Act and the Exchange Act (at any time it is subject
to such reporting requirements); and
(c) furnish
to any holder of Registrable Securities upon request (i) a written statement
by
the Company as to its compliance with the requirements of said Rule 144(c)
and
the reporting requirements of the Securities Act and the Exchange Act (at any
time it is subject to such reporting requirements), (ii) a copy of the most
recent annual or quarterly report of the Company, and (iii) such other reports
and documents of the Company as such holder may reasonably request to avail
itself of any similar rule or regulation of the SEC allowing it to sell any
such
securities without registration.
F. Covenants
of the Company
(1)
Not
later
than 8:30 a.m. Eastern time on the business day following the date this
Agreement is entered into, the Company shall make a public announcement of
the
execution of this Agreement by filing with the SEC a Current Report on Form
8-K
and issuing a press release, with such public announcement complying with the
safe harbor provisions of Rule 135c of the Securities Act.
(2)
Not
later
than 8:30 a.m. Eastern time on the business day following the Closing, the
Company shall make a public announcement of the Closing of the Offering by
filing with the SEC a Current Report on Form 8-K and issuing a press
release.
(3)
The
Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any filing or press release without the prior written
consent of such Purchaser, unless otherwise required by law. The Company shall
not, and shall cause each of its officers, directors, employees and agents
not
to, knowingly provide any Purchaser with any material nonpublic information
regarding the Company from and after the issuance of the above referenced
filings and press release without the express written consent of such Purchaser.
(4)
The
Company agrees to file one or more Forms D with respect to the Securities on
a
timely basis as required under Regulation D under the Securities Act to claim
the exemption provided by Rule 506 of Regulation D and to provide a copy thereof
to the Placement Agent and its counsel promptly after such filing. The Company,
on or before the Closing Date, shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for or to
qualify the Securities for sale to the Purchasers at the Closing pursuant to
this Agreement under applicable securities or "Blue Sky" laws of the states
of
the United States (or to obtain an exemption from such qualification), and
shall
provide evidence of any such action so taken to the Purchasers on or prior
to
the Closing Date. The Company shall make all filings and reports relating to
the
offer and sale of the Securities required under applicable securities or "Blue
Sky" laws of the states of the United States following the Closing
Date.
25
(5)
The
Company shall (i) file with Nasdaq a Listing of Additional Shares Notification
with respect to the Shares and the Warrant Shares as promptly as practicable
after execution of this Agreement (ii) take all commercially reasonable
steps necessary to cause such Registrable Securities to be approved for listing
on Nasdaq as soon as possible thereafter; and (iii) use its commercially
reasonable efforts to maintain the listing of the Company's Common Stock on
Nasdaq.
(6)
Other
than pursuant to the Registration Statement, prior to the Effective Date, the
Company may not file any registration statement (other than on Form S-8) with
the SEC with respect to any securities of the Company. Until 90 days after
the
Effective Date, the Company will not, directly or indirectly, offer, sell grant
any option to purchase, or otherwise dispose of (or announce any of the
foregoing) any of its or its subsidiaries equity or equity equivalent
securities, including, without limitation, any debt, preferred stock or other
instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for Common Stock
or Common Stock equivalents.
(7)
The
Company will not sell, offer to sell, solicit offers to buy or otherwise
negotiate in respect of any “security” (as defined in the Securities Act) that
is or could be integrated with the sale of the Securities in a manner that
would
require the registration of the Securities under the Securities Act. During
the
six months following the Closing Date, the Company shall not issue any “Future
Priced Securities” as such term is described by NASD IM-4350-1.
(8)
As
long
as any Purchaser owns the Securities, the Company covenants (i) to timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act (ii) maintain
compliance with all applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002
and
all rules and regulations promulgated thereunder, except where noncompliance
would not have, individually or in the aggregate, a Material Adverse
Effect.
During
the Effectiveness Period, as long as any Purchaser owns Securities, if the
Company is not required to file reports pursuant to such laws, it will prepare
and furnish to the Purchasers and make publicly available in accordance with
Rule 144(c) such information as is required for the Purchasers to sell the
Shares and Warrant Shares under Rule 144. The Company further covenants that
it
will take such further action during the Effectiveness Period as any holder
of
Securities may reasonably request, all to the extent required from time to
time
to enable such Person to sell the Shares and Warrant Shares without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144.
26
G.
Conditions
to Closing; Termination
(1) Conditions
Precedent to the Obligations of the Purchasers to Purchase
Securities.
The
obligation of each Purchaser to acquire Securities at the Closing is subject
to
the satisfaction or waiver by such Purchaser, at or before the Closing, of
each
of the following conditions:
(a) The
representations and warranties of the Company contained herein shall be true
and
correct in all material respects (other than those representations and
warranties that are qualified by "materiality" or Material Adverse Effect
qualifiers shall be true and correct in all respects) as of the date when made
and as of the Closing as though made on and as of such date (except to the
extent that such representation or warranty speaks of an earlier date, in which
case such representation and warranty shall be true and correct in all material
respects as though made on and as of the Closing Date);
(b) The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Offering Documents
to be performed, satisfied or complied with by it at or prior to the
Closing;
(c) No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Offering Documents;
(d) Since
the
date of execution of this Agreement, no event or series of events shall have
occurred that reasonably could have or result in a Material Adverse
Effect;
(e) Trading
in the Common Stock shall not have been suspended by the SEC or Nasdaq (except
for any suspensions of trading of limited duration agreed to by the Company)
at
any time since the date of execution of this Agreement, and the Common Stock
shall have been at all times since such date listed for trading on
Nasdaq;
(f) The
Company shall have delivered the items required to be delivered by the Company
in accordance with Section A.4;
(g) This
Agreement shall not have been terminated as to such Purchaser in accordance
with
Section G.3.
(2) Conditions
Precedent to the Obligations of the Company to sell Securities.
The
obligation of the Company to sell Securities at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of the
following conditions:
(a) The
representations and warranties of each Purchaser contained herein shall be
true
and correct in all material respects (other than those representations and
warranties that are qualified by "materiality" or Material Adverse Effect
qualifiers shall be true and correct in all respects) as of the date when made
and as of the Closing Date as though made on and as of such date;
27
(b) Each
Purchaser shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Offering Documents
to be performed, satisfied or complied with by such Purchaser at or prior to
the
Closing;
(c) No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Offering Documents;
(d) Each
Purchaser shall have delivered its Investment Amount in accordance with Section
A.2;
(e) This
Agreement shall not have been terminated as to such Purchaser in accordance
with
Section G.3.
(3) This
Agreement may be terminated prior to Closing:
(a) by
written agreement of the Purchasers and the Company; and
(b) by
the
Company or a Purchaser (as to itself but no other Purchaser) upon written notice
to the other, if the Closing shall not have taken place by 6:30 p.m. Eastern
time on or before November 14, 2006; provided, that the right to terminate
this
Agreement under this Section G.3 shall not be available to any Person whose
failure to comply with its obligations under this Agreement has been the cause
of or resulted in the failure of the Closing to occur on or before such
time.
In
the
event of a termination pursuant to Section G.3(a), the Company shall promptly
notify all non-terminating Purchasers. Upon a termination in accordance with
this Section G.3, the Company and the terminating Purchaser(s) shall not have
any further obligation or liability (including as arising from such termination)
to the other and no Purchaser will have any liability to any other Purchaser
under the Offering Documents as a result thereof.
H.
Miscellaneous
(1)
All
pronouns and any variations thereof used herein shall be deemed to refer to
the
masculine, feminine, singular or plural, as identity of the person or persons
may require.
(2)
Any
notice or other communication required or permitted to be given or delivered
under this Agreement shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered by fax prior to 6:30 p.m. Eastern Time on a business day, (b)
the
next business day after the date of transmission, if such notice or
communication is delivered by fax on a day that is not a business day or later
than 6:30 p.m. Eastern Time on a business day, (c) upon receipt, if sent by
an
internationally recognized overnight delivery service (with charges prepaid),
or
(d) upon actual receipt by the party to whom such notice or other communication
is required to be given:
28
(i) if
to the
Company, to it at:
Lumera
Corporation
00000
Xxxxx Xxxxx Xxxxxxx
Xxxxxxx,
Xxxxxxxxxx 00000-0000
Fax
No.:
000-000-0000
Attention:
Xxxxx Xxxxx, Chief Financial Officer
or
such
other
address as it shall have specified to the Purchaser in writing, with a
copy
(which shall not constitute notice) to:
Ropes
& Xxxx, LLP
Xxx
Xxxxxxxxxxx Xxxxxx
Xxxxx
0000
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile:
000-000-0000
Attention:
Xxxxxxxxxxx X. Xxxxxx, Esq.
(ii) if
to a
Purchaser, to it at its address set forth on the signature page to this
Agreement, or such other address as it shall have specified to the Company
in
writing.
(3)
Failure
of the Company to exercise any right or remedy under this Agreement or any
other
agreement between the Company and the Purchaser, or otherwise, or delay by
the
Company in exercising such right or remedy, will not operate as a waiver
thereof. No waiver by the Company will be effective unless and until it is
in
writing and signed by the Company.
(4)
This
Agreement shall be enforced, governed and construed in all respects in
accordance with the laws of the State of New York, as such laws are applied
by
the New York courts to agreements entered into and to be performed in New York
by and between residents of New York, and shall be binding upon the Purchaser,
the Purchaser’s heirs, estate, legal representatives, successors and assigns and
shall inure to the benefit of the Company, its successors and assigns. The
Company and each Purchaser hereby agree to submit to the jurisdiction of the
courts of the State of New York with respect to any proceeding arising out
of or
relating to this Agreement, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
29
(5)
If
any
provision of this Agreement is held to be invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed modified
to conform with such statute or rule of law. Any provision hereof that may
prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provisions hereof.
(6)
The
parties understand and agree that, unless provided otherwise herein, money
damages would not be a sufficient remedy for any breach of the Agreement by
the
Company or the Purchaser and that the party against which such breach is
committed shall be entitled to equitable relief, including injunction and
specific performance, as a remedy for any such breach. Such remedies shall
not,
unless provided otherwise herein, be deemed to be the exclusive remedies for
a
breach by either party of the Agreement but shall be in addition to all other
remedies available at law or equity to the party against which such breach
is
committed.
(7)
The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder, except as may result from the actions of any such Purchaser
other than through the execution hereof. Nothing contained herein solely by
virtue of being contained herein shall be deemed to constitute the Purchasers
as
a partnership, an association, a joint venture or any similar entity, or create
a presumption that the Purchasers are in any way acting in concert or as a
group
with respect to such obligations or the transactions contemplated
hereby.
(8)
This
Agreement, together with the agreements and documents executed and delivered
in
connection with this Agreement, constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof.
(9)
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
(10)
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(11)
This
Agreement and the other Offering Documents (including any schedules and exhibits
hereto and thereto) supersede all other prior oral or written agreements between
the Purchaser, the Company, their affiliates and persons acting on their behalf
with respect to the matters discussed herein, and this Agreement and other
Offering Documents (including any schedules and exhibits hereto and thereto)
and
the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except
as
specifically set forth herein or therein, neither the Company nor any Purchaser
makes any representation, warranty, covenant or undertaking with respect to
such
matters.
(12)
No
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and Purchasers holding or being obligated to
purchase at least a majority of the Shares. No consideration shall be offered
or
paid to any Purchaser to amend or consent to a waiver or modification of any
provision of any Offering Document unless the same consideration is also offered
to all Purchasers who then hold Shares. No provision hereof may be waived other
than by an instrument in writing signed by the party against whom enforcement
is
sought.
30
(13)
Any
Purchaser may assign any or all of its rights under this Agreement to any
person, provided that such transferee agrees in writing to be bound by the
terms
and provisions of this Agreement and, to the extent applicable, the other
Offering Documents, and such transfer is in compliance with the terms and
provisions of this Agreement and permitted by federal and state securities
laws
(14)
The
representations and warranties of the parties contained herein or in any other
agreements or documents executed in connection herewith shall survive the
Closing.
(15)
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
*
* * * *
* *
31
SIGNATURE
PAGE
The
Purchaser hereby agrees to purchase the number of Shares and Warrants, in
exchange for the Investment Amount, as set forth below, and agrees to be bound
by the terms and conditions of this Agreement.
PURCHASER
1. Investment
Amount: $__________
2. Number
of
Shares Purchased: ________
3. Number
of
Shares Included in Warrant: __________
|
____________________________
|
______________________________
|
|
Signature
of Purchaser
|
Signature
of Joint Purchaser
|
|
(and
title, if applicable)
|
(if
any)
|
|
______________________________
|
______________________________
|
|
Taxpayer
Identification or Social
|
Taxpayer
Identification or Social
|
|
Security
Number
|
Security
Number of Joint Purchaser (if any)
|
|
______________________________
|
|
|
Name
(please print as name will appear
|
|
|
on
stock certificate)
|
|
|
______________________________
|
|
|
Number
and Street
|
|
|
______________________________
|
|
|
City,
State
Zip
Code
|
|
ACCEPTED
BY:
LUMERA
CORPORATION
By:
_________________________
Name:
Title:
Schedule
B
Company
Disclosure Schedule
