COMMON STOCK PURCHASE AGREEMENT by and between KINGSBRIDGE CAPITAL LIMITED and LUMERA CORPORATION dated as of February 21, 2008
Exhibit
10.1
Execution
Copy
by
and between
KINGSBRIDGE
CAPITAL LIMITED
and
LUMERA
CORPORATION
dated
as of February 21, 2008
TABLE
OF CONTENTS
|
ARTICLE
I
|
DEFINITIONS
|
1
|
|
|
|
|
|
ARTICLE
II
|
PURCHASE
AND SALE OF COMMON STOCK
|
5
|
|
Section
2.1
|
Purchase
and Sale of Stock
|
5
|
|
Section
2.2
|
Closing
|
5
|
|
Section
2.3
|
Registration
Statement and Prospectus
|
5
|
|
Section
2.4
|
Warrant
|
5
|
|
Section
2.5
|
Blackout
Shares
|
6
|
|
|
|
|
|
ARTICLE
III
|
DRAW
DOWN TERMS
|
6
|
|
Section
3.1
|
Draw
Down Notice
|
6
|
|
Section
3.2
|
Number
of Shares
|
6
|
|
Section
3.3
|
Limitation
on Draw Downs
|
6
|
|
Section
3.4
|
Trading
Cushion
|
6
|
|
Section
3.5
|
Settlement
|
6
|
|
Section
3.6
|
Delivery
of Shares; Payment of Draw Down Amount
|
7
|
|
Section
3.7
|
Failure
to Deliver Shares
|
7
|
|
|
|
|
|
ARTICLE
IV
|
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
|
8
|
|
Section
4.1
|
Organization,
Good Standing and Power
|
8
|
|
Section
4.2
|
Authorization;
Enforcement
|
8
|
|
Section
4.3
|
Capitalization
|
9
|
|
Section
4.4
|
Issuance
of Shares
|
9
|
|
Section
4.5
|
No
Conflicts
|
9
|
|
Section
4.6
|
Commission
Documents, Financial Statements
|
10
|
|
Section
4.7
|
No
Material Adverse Change
|
11
|
|
Section
4.8
|
No
Undisclosed Liabilities
|
12
|
|
Section
4.9
|
No
Undisclosed Events or Circumstances
|
12
|
|
Section
4.10
|
Actions
Pending
|
12
|
|
Section
4.11
|
Compliance
with Law
|
12
|
|
Section
4.12
|
Certain
Fees
|
13
|
|
Section
4.13
|
Disclosure
|
13
|
|
Section
4.14
|
Material
Non-Public Information
|
13
|
|
Section
4.15
|
Exemption
from Registration; Valid Issuances
|
13
|
|
Section
4.16
|
No
General Solicitation or Advertising in Regard to this
Transaction
|
13
|
|
Section
4.17
|
No
Integrated Offering
|
13
|
|
Section
4.18
|
Acknowledgment
Regarding Investor’s Purchase of Shares
|
14
|
|
|
|
|
|
ARTICLE
V
|
REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE INVESTOR
|
14
|
|
Section
5.1
|
Organization
and Standing of the Investor
|
14
|
-i-
|
Section
5.2
|
Authorization
and Power
|
14
|
|
Section
5.3
|
No
Conflicts
|
14
|
|
Section
5.4
|
Financial
Capability
|
15
|
|
Section
5.5
|
Information
|
15
|
|
Section
5.6
|
Trading
Restrictions
|
15
|
|
Section
5.7
|
Statutory
Underwriter Status
|
15
|
|
Section
5.8
|
Not
an Affiliate
|
15
|
|
Section
5.9
|
Manner
of Sale
|
16
|
|
Section
5.10
|
Prospectus
Delivery
|
16
|
|
ARTICLE
VI
|
COVENANTS
OF THE COMPANY
|
16
|
|
Section
6.1
|
Securities
|
16
|
|
Section
6.2
|
Reservation
of Common Stock
|
16
|
|
Section
6.3
|
Registration
and Listing
|
16
|
|
Section
6.4
|
Registration
Statement
|
17
|
|
Section
6.5
|
Compliance
with Laws
|
17
|
|
Section
6.6
|
Other
Financing
|
17
|
|
Section
6.7
|
Prohibited
Transactions
|
18
|
|
Section
6.8
|
Corporate
Existence
|
18
|
|
Section
6.9
|
Non-Disclosure
of Non-Public Information
|
18
|
|
Section
6.10
|
Notice
of Certain Events Affecting Registration; Suspension of Right
to Request a
Draw Down
|
18
|
|
Section
6.11
|
Amendments
to the Registration Statement
|
19
|
|
Section
6.12
|
Prospectus
Delivery
|
19
|
|
ARTICLE
VII
|
CONDITIONS
TO THE OBLIGATION OF THE INVESTOR TO ACCEPT A DRAW DOWN
|
19
|
|
Section
7.1
|
Accuracy
of the Company’s Representations and Warranties
|
20
|
|
Section
7.2
|
Performance
by the Company
|
20
|
|
Section
7.3
|
Compliance
with Law
|
20
|
|
Section
7.4
|
Effective
Registration Statement
|
20
|
|
Section
7.5
|
No
Knowledge
|
20
|
|
Section
7.6
|
No
Suspension
|
20
|
|
Section
7.7
|
No
Injunction
|
20
|
|
Section
7.8
|
No
Proceedings or Litigation
|
20
|
|
Section
7.9
|
Sufficient
Shares Registered for Resale
|
21
|
|
Section
7.10
|
Warrant
|
21
|
|
Section
7.11
|
Opinion
of Counsel
|
21
|
|
Section
7.12
|
Accuracy
of Investor’s Representation and Warranties
|
21
|
|
|
||
|
ARTICLE
VIII
|
TERMINATION
|
21
|
|
Section
8.1
|
Term
|
21
|
|
Section
8.2
|
Other
Termination
|
21
|
|
Section
8.3
|
Effect
of Termination
|
22
|
|
|
|
|
|
ARTICLE
IX
|
INDEMNIFICATION
|
22
|
|
Section
9.1
|
Indemnification
|
22
|
-ii-
|
Section
9.2
|
Notification
of Claims for Indemnification
|
23
|
|
ARTICLE
X
|
MISCELLANEOUS
|
25
|
|
Section
10.1
|
Fees
and Expenses
|
25
|
|
Section
10.2
|
Reporting
Entity for the Common Stock
|
25
|
|
Section
10.3
|
Brokerage
|
25
|
|
Section
10.4
|
Notices
|
26
|
|
Section
10.5
|
Assignment
|
27
|
|
Section
10.6
|
Amendment;
No Waiver
|
27
|
|
Section
10.7
|
Entire
Agreement
|
27
|
|
Section
10.8
|
Severability
|
28
|
|
Section
10.9
|
Title
and Subtitles
|
28
|
|
Section
10.10
|
Counterparts
|
28
|
|
Section
10.11
|
Choice
of Law
|
28
|
|
Section
10.12
|
Specific
Enforcement, Consent to Jurisdiction
|
28
|
|
Section
10.13
|
Survival
|
29
|
|
Section
10.14
|
Publicity
|
29
|
|
Section
10.15
|
Further
Assurances
|
29
|
-iii-
This
COMMON STOCK PURCHASE AGREEMENT (this “Agreement”)
is
entered into as of the 21st day of February, 2008, by and between Kingsbridge
Capital Limited, an entity organized and existing under the laws of the British
Virgin Islands, whose registered address is Palm Grove House, 2nd Floor, Road
Town, Tortola, British Virgin Islands (the “Investor”)
and
Lumera Corporation , a corporation organized and existing under the laws of
the
State of Delaware (the “Company”).
WHEREAS,
the parties desire that, upon the terms and subject to the conditions and
limitations set forth herein, the Company may issue and sell to the Investor,
from time to time as provided herein, and the Investor shall purchase from
the
Company, up to $25 million worth of shares of Common Stock (as defined below);
and
WHEREAS,
such investments will be made in reliance upon the provisions of
Section 4(2) (“Section 4(2)”)
and
Regulation D (“Regulation D”)
of the
United States Securities Act of 1933, as amended and the rules and regulations
promulgated thereunder (the “Securities
Act”),
and/or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the investments
in Common Stock to be made hereunder; and
WHEREAS,
the parties hereto are concurrently entering into a Registration Rights
Agreement in the form of Exhibit A
hereto
(the “Registration
Rights Agreement”)
pursuant to which the Company shall register the Common Stock issued and sold
to
the Investor under this Agreement and issuable under the Warrant (as defined
below), upon the terms and subject to the conditions set forth therein;
and
WHEREAS,
in consideration for the Investor’s execution and delivery of, and its
performance of its obligations under, this Agreement, the Company is
concurrently issuing to the Investor a Warrant in the form of Exhibit B
hereto
(the “Warrant”)
pursuant to which the Investor may purchase from the Company up to 180,000
shares of Common Stock, upon the terms and subject to the conditions set forth
therein;
NOW,
THEREFORE, the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
As
used
in this Agreement, the following terms shall have the meanings set forth
below:
“Alternative
Draw Down Amount”
means
the product of (i) Average Trading Volume, (ii) the VWAP on the Trading Day
preceding the issuance of the Draw Down Notice, (iii) the number of Trading
Days
during the Draw Down Pricing Period, and (iv) the Liquidity Ratio.
“Average
Trading Volume”
means
the average trading volume of the twenty (20) Trading Days during the thirty
(30) Trading Days prior to the issuance of the Draw Down Notice that results
from excluding the five (5) highest and five (5) lowest Trading Days during
such
period.
“Blackout
Amount”
shall
have the meaning assigned to such term in the Registration Rights
Agreement.
“Blackout
Shares”
shall
have the meaning assigned to such term in the Registration Rights
Agreement.
“Certificate”
shall
have the meaning assigned to such term in Section 4.3 hereof.
“Closing
Date”
shall
have the meaning assigned to such term in Section 2.2 hereof.
“Commission”
means
the United States Securities and Exchange Commission.
“Commission
Documents”
shall
have the meaning assigned to such term in Section 4.6 hereof.
“Commitment
Period”
means
the period commencing on the Effective Date and expiring on the earliest to
occur of (i) the date on which the Investor shall have purchased Shares
pursuant to this Agreement for an aggregate purchase price equal to the Maximum
Commitment Amount, (ii) the date this Agreement is terminated pursuant to
Article VIII hereof, and (iii) the date occurring thirty-six (36) months
from the Effective Date.
“Common
Stock”
means
the common stock of the Company, par value $0.001 per share.
“Condition
Satisfaction Date”
shall
have the meaning assigned to such term in Article VII hereof.
“Damages”
means
any loss, claim, damage, liability, costs and expenses (including, without
limitation, reasonable attorneys’ fees and expenses and costs and reasonable
expenses of expert witnesses and investigation).
“Draw
Down”
shall
have the meaning assigned to such term in Section 3.1 hereof.
“Draw
Down Amount”
means
the actual dollar amount of a Draw Down paid to the Company.
“Draw
Down Discount Price”
means
(i) 88% of the VWAP on any Trading Day during a Draw Down Pricing Period
when the VWAP equals or exceeds $1.25 but is less than or equal to $2.00,
(ii) 90% of the VWAP on any Trading Day during the Draw Down Pricing Period
when VWAP exceeds $2.00 but is less than or equal to $6.00, (iii) 92% of the
VWAP on any Trading Day during the Draw Down Pricing Period when VWAP exceeds
$6.00 but is less than or equal to $10.00, or (iv) 94% of the VWAP on any
Trading Day during the Draw Down Pricing Period when VWAP exceeds
$10.00.
“Draw
Down Notice”
shall
have the meaning assigned to such term in Section 3.1 hereof.
“Draw
Down Pricing Period”
shall
mean, with respect to each Draw Down, a period of eight (8) consecutive Trading
Days beginning on the first Trading Day specified in a Draw Down
Notice.
“DTC”
shall
mean the Depository Trust Company, or any successor thereto.
-2-
“Effective
Date”
means
the first Trading Day immediately following the date on which the Registration
Statement is declared effective by the Commission.
“Exchange
Act”
means
the United States Securities Exchange Act of 1934, as amended, and the rules
and
regulations promulgated thereunder.
“Excluded
Merger or Sale”
shall
have the meaning assigned to such term in the Warrant.
“FINRA”
means
the Financial Industry
Regulatory Authority.
“Knowledge”
means
the actual knowledge of those officers of the Company required to file
statements pursuant to Section 16 of the Exchange Act.
“Liquidity
Ratio”
means
fifty percent (50%).
“Make
Whole Amount”
shall
have the meaning specified in Section 3.7.
“Market
Capitalization”
means,
as of any Trading Day, the product of (i) the closing sale price of the
Company’s Common Stock as reported by Bloomberg L.P. using the AQR function and
(ii) the number of outstanding shares of Common Stock of the Company as
reported by Bloomberg L.P. using the DES function.
“Material
Adverse Effect”
means
any effect that is not negated, corrected, cured or otherwise remedied within
a
reasonable period of time on the business, operations, properties or financial
condition of the Company and its consolidated subsidiaries that is material
and
adverse to the Company and such subsidiaries, taken as a whole, and/or any
condition, circumstance, or situation that would prohibit or otherwise interfere
with the ability of the Company to perform any of its obligations under this
Agreement, the Registration Rights Agreement or the Warrant in any material
respect; provided, however, that none of the following shall constitute a
“Material Adverse Effect”: (i) the effects of conditions or events that are
generally applicable to the capital, financial, banking or currency markets
or
the biotechnology or pharmaceutical industries; (ii) the effects of conditions
or events that are reasonably expected to occur in the Company’s ordinary course
of business (such as, by way of example only, failed clinical trials, serious
adverse events involving the Company’s product candidates, delays in product
development, unfavorable regulatory determinations, difficulties involving
collaborators or intellectual property disputes), except for purposes of Section
4.9 herein; (iii) any changes or effects resulting from the announcement or
consummation of the transactions contemplated by this Agreement, including,
without limitation, any changes or effects associated with any particular Draw
Down, and (iv) changes in the market price of the Common Stock.
“Maximum
Commitment Amount”
means
the lesser of (i) $25 million in aggregate Draw Down Amounts or
(ii) 10,000,000 shares of Common Stock (as adjusted for stock splits, stock
combinations, stock dividends and recapitalizations that occur on or after
the
date of this Agreement).
“Maximum
Draw Down Amount”
means
the lesser of $10 million or either, at the discretion of the Company, (i)
2.0%
of the Company’s Market Capitalization at the time of the Draw Down, or (ii) the
lesser of (A) 3.0% of the Company’s Market Capitalization at the time of the
Draw Down, and (B) the Alternative Draw Down Amount.
-3-
“Permitted
Transaction”
shall
have the meaning assigned to such term in Section 6.6 hereof.
“Person”
means
any individual, corporation, partnership, limited liability company,
association, trust or other entity or organization, including any government
or
political subdivision or an agency or instrumentality thereof.
“Principal
Market”
means
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market, the American Stock Exchange or the New York Stock Exchange, whichever
is
at the time the principal trading exchange or market for the Common
Stock.
“Prohibited
Transaction”
shall
have the meaning assigned to such term in Section 6.7 hereof.
“Prospectus”
as
used
in this Agreement means the prospectus in the form included in the Registration
Statement, as supplemented from time to time pursuant to Rule 424(b) of the
Securities Act.
“Registrable
Securities”
means
(i) the Shares, (ii) the Warrant Shares, and (iii) any securities
issued or issuable with respect to any of the foregoing by way of exchange,
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise.
As
to any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (w) the Registration Statement has
been
declared effective by the Commission and such Registrable Securities have been
disposed of pursuant to the Registration Statement, (x) such Registrable
Securities have been sold under circumstances under which all of the applicable
conditions of Rule 144 (or any similar provision then in force) under the
Securities Act (“Rule 144”)
are
met, (y) such time as such Registrable Securities have been otherwise
transferred to holders who may trade such shares without restriction under
the
Securities Act, and the Company has delivered a new certificate or other
evidence of ownership for such securities not bearing a restrictive legend
or
(z) in the opinion of counsel to the Company such Registrable Securities may
be
sold without registration and without any time, volume or manner limitations
pursuant to Rule 144(k) (or any similar provision then in effect) under the
Securities Act.
“Registration
Rights Agreement”
shall
have the meaning set forth in the recitals of this Agreement.
“Registration
Statement”
shall
have the meaning assigned to such term in the Registration Rights
Agreement.
“Regulation D”
shall
have the meaning set forth in the recitals of this Agreement. “Section 4(2)”
shall
have the meaning set forth in the recitals of this Agreement.
“Securities
Act”
shall
have the meaning set forth in the recitals of this Agreement.
-4-
“Settlement
Date”
shall
have the meaning assigned to such term in Section 3.5 hereof.
“Shares”
means
the shares of Common Stock of the Company that are and/or may be purchased
hereunder.
“Trading
Day”
means
any day other than a Saturday or a Sunday on which the Principal Market is
open
for trading in equity securities.
“VWAP”
means
the volume weighted average price (the aggregate sales price of all trades
of
Common Stock during each Trading Day divided by the total number of shares
of
Common Stock traded during such Trading Day) of the Common Stock during any
Trading Day as reported by Bloomberg, L.P. using the AQR function.
“Warrant”
shall
have the meaning set forth in the recitals of this Agreement.
“Warrant
Shares”
means
the shares of Common Stock issuable to the Investor upon exercise of the
Warrant.
ARTICLE
II
PURCHASE
AND SALE OF COMMON STOCK
Section
2.1 Purchase
and Sale of Stock.
Upon
the terms and subject to the conditions set forth in this Agreement, the Company
shall to the extent it elects to make Draw Downs in accordance with Article
III
hereof, issue and sell to the Investor and the Investor shall purchase Common
Stock from the Company for an aggregate (in Draw Down Amounts) of up to the
Maximum Commitment Amount, consisting of purchases based on Draw Downs in
accordance with Article III hereof.
Section
2.2 Closing.
In
consideration of and in express reliance upon the representations, warranties,
covenants, terms and conditions of this Agreement, the Company agrees to issue
and sell to the Investor, and the Investor agrees to purchase from the Company,
that number of the Shares to be issued in connection with each Draw Down. The
execution and delivery of this Agreement (the “Closing”)
shall
take place at the offices of Stroock & Stroock & Xxxxx LLP, 000 Xxxxxx
Xxxx, Xxx Xxxx, XX 00000 at 5:00 p.m. local time on February __, 2008, or at
such other time and place or on such date as the Investor and the Company may
agree upon (the “Closing
Date”).
Each
party shall deliver at or prior to the Closing all documents, instruments and
writings required to be delivered at the Closing by such party pursuant to
this
Agreement.
Section
2.3 Registration
Statement and Prospectus.
The
Company shall prepare and file with the Commission the Registration Statement
(including the Prospectus) in accordance with the provisions of the Securities
Act and the Registration Rights Agreement.
Section
2.4 Warrant.
On the
Closing Date, the Company shall issue and deliver the Warrant to the
Investor.
-5-
Section
2.5 Blackout
Shares.
The
Company shall deliver any Blackout Amount or issue and deliver any Blackout
Shares to the Investor in accordance with Section 1.1(e) of the
Registration Rights Agreement.
ARTICLE
III
DRAW
DOWN TERMS
Subject
to the satisfaction of the conditions hereinafter set forth in this Agreement,
the parties agree as follows:
Section
3.1 Draw
Down Notice.
During
the Commitment Period, the Company may, in its sole discretion, issue a Draw
Down Notice (as hereinafter defined) which shall specify the dollar amount
of
Shares the Company elects to sell to the Investor (each such election, a
“Draw
Down”)
up to
a Draw Down Amount equal to the Maximum Draw Down Amount, which Draw Down the
Investor shall be obligated to accept. The Company shall inform the Investor
in
writing by sending a duly completed Draw Down Notice (as hereinafter defined)
in
the form of Exhibit
C
hereto
by e-mail to the addresses set forth in Section 10.4, with a copy to the
Investor’s counsel, as to such Draw Down Amount before commencement of trading
on the first Trading Day of the related Draw Down Pricing Period (the
“Draw
Down Notice”).
In
addition to the Draw Down Amount, each Draw Down Notice shall designate the
first Trading Day of the Draw Down Pricing Period. In no event shall any Draw
Down Amount exceed the Maximum Draw Down Amount. Each Draw Down Notice shall
be
accompanied by a certificate, signed by the Chief Executive Officer or Chief
Financial Officer, dated as of the date of such Draw Down Notice, in the form
of
Exhibit D
hereof.
Section
3.2 Number
of Shares.
Subject
to Section 3.6(b), the number of Shares to be issued in connection with
each Draw Down shall be equal to the sum of the number of shares issuable on
each Trading Day of the Draw Down Pricing Period. The number of shares issuable
on a Trading Day during a Draw Down Pricing Period shall be equal to the
quotient of one eighth (1/8th) of the Draw Down Amount divided by the Draw
Down
Discount Price for such Trading Day.
Section
3.3 Limitation
on Draw Downs.
Only
one Draw Down shall be permitted for each Draw Down Pricing Period.
Section
3.4 Trading
Cushion.
Unless
the parties agree in writing otherwise, there shall be a minimum of three (3)
Trading Days between the expiration of any Draw Down Pricing Period and the
beginning of the next succeeding Draw Down Pricing Period.
Section
3.5 Settlement.
The
number of Shares purchased by the Investor in any Draw Down shall be determined
and settled on two separate dates. Shares purchased by the Investor during
the
first four Trading Days of any Draw Down Pricing Period shall be determined
and
settled no later than the sixth Trading Day of such Draw Down Pricing Period.
Shares purchased by the Investor during the second four Trading Days of any
Draw
Down Pricing Period shall be determined and settled no later than the second
Trading Day after the last Trading Day of such Draw Down Pricing Period. Each
date on which settlement of the purchase and sale of Shares occurs hereunder
being referred to as a “Settlement
Date.”
The
Investor shall provide the Company with delivery instructions for the Shares
to
be issued at each Settlement Date at least two Trading Days in advance of such
Settlement Date. The number of Shares actually issued shall be rounded to the
nearest whole number of Shares.
-6-
Section
3.6 Delivery
of Shares; Payment of Draw Down Amount.
(a) On
each
Settlement Date, the Company shall deliver the Shares purchased by the Investor
to the Investor or its designees exclusively via book-entry through the DTC
to
an account designated by the Investor, and upon receipt of the Shares, the
Investor shall cause payment thereof to be made to the Company’s designated
account by wire transfer of immediately available funds, if the Shares are
received by the Investor no later than 11:00 a.m. (Eastern Time), or next day
available funds, if the Shares are received thereafter.
(b) For
each
Trading Day during a Draw Down Pricing Period where the VWAP is less than the
greater of (i) 90% of the Closing Price of the Company’s Common Stock on
the Trading Day immediately preceding the commencement of such Draw Down Pricing
Period, or (ii) $1.25, such Trading Day shall not be used in calculating
the number of Shares to be issued in connection with such Draw Down, and the
Draw Down Amount in respect of such Draw Down Pricing Period shall be reduced
by
one eighth (1/8th) of the initial Draw Down Amount specified in the Draw Down
Notice. If trading in the Company’s Common Stock is suspended for any reason for
more than three (3) consecutive or non-consecutive hours during any Trading
Day
during a Draw Down Pricing Period, such Trading Day shall not be used in
calculating the number of Shares to be issued in connection with such Draw
Down,
and the Draw Down Amount in respect of such Draw Down Pricing Period shall
be
reduced by one eighth (1/8th) of the initial Draw Down Amount specified in
the
Draw Down Notice.
Section
3.7 Failure
to Deliver Shares.
If on
any Settlement Date, the Company fails to take all actions within the reasonable
control of the Company to cause the delivery of the Shares purchased by the
Investor, and such failure is not cured within two (2) Trading Days following
such Settlement Date, the Company shall pay to the Investor on demand in cash
by
wire transfer of immediately available funds to an account designated by the
Investor the “Make
Whole Amount;”
provided, however, that in the event that the Company is prevented from
delivering Shares in respect of any such Settlement Date in a timely manner
by
any fact or circumstance that is not reasonably within the control of, or
directly attributable to, the Company, or is otherwise reasonably within the
control of, or directly attributable to, the Investor, then such two (2) Trading
Day period shall be automatically extended until such time as such fact or
circumstance is cured. As used herein, the Make Whole Amount shall be an amount
equal to the sum of (i) the Draw Down Amount actually paid by the Investor
in respect of such Shares plus (ii) an amount equal to the actual loss
suffered by the Investor in respect of sales to subsequent purchasers, pursuant
to transactions entered into before the Settlement Date, of the Shares that
were
required to be delivered by the Company, which shall be based upon documentation
reasonably satisfactory to the Company demonstrating the difference (if greater
than zero) between (A) the price per share paid by the Investor to purchase
such number of shares of Common Stock necessary for the Investor to meet its
share delivery obligations to such subsequent purchasers minus (B) the
average Draw Down Discount Price during the applicable Draw Down Pricing Period.
In the event that the Make Whole Amount is not paid within two (2) Trading
Days
following a demand therefor from the Investor, the Make Whole Amount shall
accrue interest compounded daily at a rate equal to the greater of (i) the
prime
rate of interest then in effect as published by the Wall Street Journal plus
three percent (3%) and (ii) ten percent (10%), up to and including the date
on
which the Make Whole Amount is actually paid. For the purposes of this Section
3.7 facts or circumstances that are reasonably within the control of the Company
include such facts and circumstances directly attributable to acts or omissions
of the Company, its officers, directors, employees, agents and representatives,
including, without limitation, any transfer agent(s), accountant(s) and/or
attorney(s) engaged by the Company in connection with the Company’s performance
of its obligations hereunder. Notwithstanding anything to the contrary set
forth
in this Agreement, in the event that the Company pays the Make Whole Amount
(plus interest, if applicable) in respect of any Settlement Date in accordance
with this Section 3.7, such payment shall be the Investor’s sole remedy in
respect of the Company’s failure to deliver Shares in respect of such Settlement
Date, and the Company shall not be obligated to deliver such Shares.
-7-
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby makes the following representations and warranties to the
Investor:
Section
4.1 Organization,
Good Standing and Power.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite power and
authority to own, lease and operate its properties and assets and to carry
on
its business as now being conducted. Except as set forth in the Commission
Documents (as defined below), the Company does not own more than fifty percent
(50%) of the outstanding capital stock of or control any other business entity,
other than any wholly-owned subsidiary that is not “significant”
within
the meaning of Regulation S-X promulgated by the Commission. The Company is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, other than those in which the
failure to be so qualified or be in good standing would not have a Material
Adverse Effect.
Section
4.2 Authorization;
Enforcement.
(i) The Company has the requisite corporate power and authority to enter
into and perform its obligations under this Agreement, the Registration Rights
Agreement and the Warrant and to issue the Shares, the Warrant, the Warrant
Shares and any Blackout Shares (except to the extent that the number of Blackout
Shares required to be issued exceeds the number of authorized shares of Common
Stock under the Certificate); (ii) the execution and delivery of this
Agreement and the Registration Rights Agreement, and the execution, issuance
and
delivery of the Warrant, by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required (other than as contemplated by Section 6.5); and (iii) each
of this Agreement and the Registration Rights Agreement has been duly executed
and delivered, and the Warrant has been duly executed, issued and delivered,
by
the Company and constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, securities, insolvency,
or similar laws relating to, or affecting generally the enforcement of,
creditors’ rights and remedies, or indemnification or by other equitable
principles of general application.
-8-
Section
4.3 Capitalization.
The
authorized capital stock of the Company and the shares thereof issued and
outstanding as of September 30, 2007 are set forth on a schedule (the
“Disclosure
Schedule”)
previously delivered to the Investor. All of the outstanding shares of the
Common Stock have been duly and validly authorized and issued, and are fully
paid and non-assessable. Except as set forth in this Agreement or as previously
disclosed on the Disclosure Schedule, as of September 30, 2007, no shares of
Common Stock were entitled to preemptive rights or registration rights and
there
were no outstanding options, warrants, scrip, rights to subscribe to, call
or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for or giving any right to subscribe for,
any
shares of capital stock of the Company, except for stock options issued by
the
Company to its employees, directors and consultants. Except as set forth in
this
Agreement, the Commission Documents, or as previously disclosed to the Investor
in the Disclosure Schedule, as of September 30, 2007, there were no contracts,
commitments, understandings, or arrangements by which the Company is or may
become bound to issue additional shares of the capital stock of the Company
or
options, securities or rights convertible into or exchangeable for or giving
any
right to subscribe for any shares of capital stock of the Company. Except as
described in the Commission Documents or as previously disclosed to the Investor
in the Disclosure Schedule, as of the date hereof the Company is not a party
to
any agreement granting registration rights to any Person with respect to any
of
its equity or debt securities. Except as set forth in the Commission Documents
or as previously disclosed to the Investor in writing, as of the date hereof
the
Company is not a party to, and it has no Knowledge of, any agreement restricting
the voting or transfer of any shares of the capital stock of the Company. The
offer and sale of all capital stock, convertible securities, rights, warrants,
or options of the Company issued during the twenty-four month period immediately
prior to the Closing complied in all material respects with all applicable
federal and state securities laws, and no stockholder has a right of rescission
or damages with respect thereto that could reasonably be expected to have a
Material Adverse Effect. The Company has furnished or made available to the
Investor true and correct copies of the Company’s Amended and Restated
Certificate of Incorporation, as amended and in effect on the date hereof (the
“Certificate”),
and
the Company’s Amended and Restated Bylaws, as amended and in effect on the date
hereof (the “Bylaws”).
Section
4.4 Issuance
of Shares.
Subject
to Section 6.5, the Shares, the Warrant and the Warrant Shares have been,
and any Blackout Shares will be, duly authorized by all necessary corporate
action (except to the extent that the number of Blackout Shares required to
be
issued exceeds the number of authorized shares of Common Stock under the
Certificate) and, when issued and paid for in accordance with the terms of
this
Agreement, the Registration Rights Agreement and the Warrant, and subject to,
and in reliance on, the representations, warranties and covenants made herein
by
the Investor, the Shares and the Warrant Shares shall be validly issued and
outstanding, fully paid and non-assessable, and the Investor shall be entitled
to all rights accorded to a holder of shares of Common Stock.
-9-
Section
4.5 No
Conflicts.
The
execution, delivery and performance of this Agreement, the Registration Rights
Agreement, the Warrant and any other document or instrument contemplated hereby
or thereby, by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and shall not in any
material respect: (i) result in the violation of any provision of the
Certificate or Bylaws, (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 rise to any rights of termination, amendment, acceleration or
cancellation of, any material agreement, mortgage, deed of trust, indenture,
note, bond, license, lease agreement, instrument or obligation to which the
Company is a party where such default or conflict would constitute a Material
Adverse Effect, (iii) create or impose a lien, charge or encumbrance on any
property of the Company under any agreement or any commitment to which the
Company is a party or by which the Company is bound or by which any of its
respective properties or assets are bound which would constitute a Material
Adverse Effect, (iv) result in a violation of any federal, state, local or
foreign statute, rule, regulation, order, writ, judgment or decree (including
federal and state securities laws and regulations) applicable to the Company
or
any of its subsidiaries or by which any property or asset of the Company or
any
of its subsidiaries are bound or affected where such violation would constitute
a Material Adverse Effect, or (v) require any consent of any third-party
that has not been obtained pursuant to any material contract to which the
Company is subject or to which any of its assets, operations or management
may
be subject where the failure to obtain any such consent would constitute a
Material Adverse Effect. The Company is not required under federal, state or
local law, rule or regulation to obtain any consent, authorization or order
of,
or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement, the Registration Rights Agreement or the Warrant, or issue and sell
the Shares, the Warrant Shares or the Blackout Shares (except to the extent
that
the number of Blackout Shares required to be issued exceeds the number of
authorized shares of Common Stock under the Certificate) in accordance with
the
terms hereof and thereof (other than any filings that may be required to be
made
by the Company with the Commission, the FINRA/NASDAQ or state securities
commissions subsequent to the Closing, and, any registration statement
(including any amendment or supplement thereto) or any other filing or consent
which may be filed pursuant to this Agreement, the Registration Rights Agreement
or the Warrant); provided that, for purposes of the representation made in
this
sentence, the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Investor herein.
Section
4.6 Commission
Documents, Financial Statements.
(a) The
Common Stock is registered pursuant to Section 12(b) or 12(g) of the
Exchange Act, and since January 1, 2005 the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the Commission pursuant to the reporting requirements of the Exchange
Act, including material filed pursuant to Section 13(a) or 15(d) of the
Exchange Act (all of the foregoing, including filings incorporated by reference
therein, being referred to herein as the “Commission
Documents”).
Except as previously disclosed to the Investor in writing, since January 1,
2005
the Company has maintained all requirements for the continued listing or
quotation of its Common Stock, and such Common Stock is currently listed or
quoted on the NASDAQ Global Market. The Company has made available to the
Investor true and complete copies of the Commission Documents filed with the
Commission since January 1, 2005 and prior to the Closing Date. The Company
has
not provided to the Investor any information which, according to applicable
law,
rule or regulation, should have been disclosed publicly by the Company but
which
has not been so disclosed, other than with respect to the transactions
contemplated by this Agreement. As of its date, the Company’s Annual Report on
Form 10-K for the year ended December 31, 2006 complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the Commission promulgated thereunder applicable to such document, and,
as of
its date, after giving effect to the information disclosed and
-10-
incorporated
by reference therein, to the Company’s Knowledge such Annual Report on Form 10-K
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, to the Company’s Knowledge the
financial statements, together with the related notes and schedules thereto,
of
the Company included in the Commission Documents filed with the Commission
since
January 1, 2005 complied as to form and substance in all material respects
with
all applicable accounting requirements and the published rules and regulations
of the Commission or other applicable rules and regulations with respect
thereto. Such financial statements, together with the related notes and
schedules thereto, have been prepared in accordance with generally accepted
accounting principles (“GAAP”)
applied on a consistent basis during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the notes thereto
or
(ii) in the case of unaudited interim statements, to the extent they may
not include footnotes or may be condensed or summary statements), and fairly
present in all material respects the financial condition of the Company and
its
subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
Each
Commission Document to be filed with the Commission after the Closing Date
and
incorporated by reference in the Registration Statement and Prospectus, when
such document becomes effective or is filed with the Commission, as the case
may
be, shall comply in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and other federal, state
and
local laws, rules and regulations applicable to it, and shall not contain any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary in order to make the statements therein, in
light
of the circumstances under which they were made, not misleading.
(b) The
Company has timely filed with the Commission and made available to the Investor
via XXXXX or otherwise all certifications and statements required by (x) Rule
13a-14 or Rule 15d-14 under the Exchange Act or (y) 18 U.S.C. Section 1350
(Section 906 of the Xxxxxxxx-Xxxxx Act of 2002 (“SOXA”))
with
respect to all relevant Commission Documents. The Company is in compliance
in
all material respects with the provisions of SOXA applicable to it as of the
date hereof. The Company maintains disclosure controls and procedures required
by Rule 13a-15 or Rule 15d-15 under the Exchange Act; such controls and
procedures are effective to ensure that all material information concerning
the
Company and its subsidiaries is made known on a timely basis to the individuals
responsible for the timely and accurate preparation of the Company’s filings
with the Commission and other public disclosure documents. As used in this
Section 4.6(b), the term “file” shall be broadly construed to include any manner
in which a document or information is furnished, supplied or otherwise made
available to the Commission.
Section
4.7 No
Material Adverse Change.
Except
as disclosed in the Commission Documents or a press release of the Company,
since September 30, 2007 no event or series of events has or have occurred
that
would, individually or in the aggregate, have a Material Adverse Effect on
the
Company.
-11-
Section
4.8 No
Undisclosed Liabilities.
To the
Company’s Knowledge, neither the Company nor any of its subsidiaries has any
liabilities, obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise) that would
be
required to be disclosed on a balance sheet of the Company or any subsidiary
(including the notes thereto) in conformity with GAAP and are not disclosed
in
the Commission Documents, other than those incurred in the ordinary course
of
the Company’s or its subsidiaries respective businesses since September 30, 2007
or which, individually or in the aggregate, do not or would not have a Material
Adverse Effect on the Company.
Section
4.9 No
Undisclosed Events or Circumstances.
To the
Company’s Knowledge, no event or circumstance has occurred or exists with
respect to the Company or its subsidiaries or their respective businesses,
properties, operations or financial condition, 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 and which, individually
or
in the aggregate, would have a Material Adverse Effect on the
Company.
Section
4.10 Actions
Pending.
There
is no action, suit, claim, investigation or proceeding pending or, to the
Knowledge of the Company, threatened against the Company or any subsidiary
which
questions the validity of this Agreement or the transactions contemplated hereby
or any action taken or to be taken pursuant hereto or thereto. Except as set
forth in the Commission Documents or in the Disclosure Schedule, there is no
action, suit, claim, investigation or proceeding pending or, to the Knowledge
of
the Company, threatened, against or involving the Company, any subsidiary or
any
of their respective properties or assets, or to the Knowledge of the Company
involving any officers or directors, in their capacity as officers or directors,
of the Company or any of its subsidiaries, including, without limitation, any
securities class action lawsuit or stockholder derivative lawsuit, that could
be
reasonably expected to have a Material Adverse Effect on the Company. Except
as
set forth in the Commission Documents or as previously disclosed to the Investor
in writing, no judgment, order, writ, injunction or decree or award has been
issued by or, to the Knowledge of the Company, requested of any court,
arbitrator or governmental agency which could be reasonably expected to result
in a Material Adverse Effect.
Section
4.11 Compliance
with Law.
The
business of the Company and its subsidiaries have been and are presently being
conducted in accordance with all applicable federal, state, local and foreign
governmental laws, rules, regulations and ordinances, except as set forth in
the
Commission Documents or such that would not reasonably be expected to cause
a
Material Adverse Effect. Except as set forth in the Commission Documents, the
Company and each of its subsidiaries have all franchises, permits, licenses,
consents and other governmental or regulatory authorizations and approvals
necessary for the conduct of its business as now being conducted by it, except
for such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, the failure to possess which,
individually or in the aggregate, could not reasonably be expected to have
a
Material Adverse Effect.
-12-
Section
4.12 Certain
Fees.
Except
as expressly set forth in this Agreement, no brokers, finders or financial
advisory fees or commissions will be payable by the Company or any of its
subsidiaries in respect of the transactions contemplated by this
Agreement.
Section
4.13 Disclosure.
To the
Company’s Knowledge, neither this Agreement nor any other documents,
certificates or instruments furnished to the Investor by or on behalf of the
Company or any subsidiary in connection with the transactions contemplated
by
this Agreement contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made herein or
therein, in the light of the circumstances under which they were made herein
or
therein, not misleading.
Section
4.14 Material
Non-Public Information.
Except
for this Agreement and the transactions contemplated hereby, neither the Company
nor its employees have disclosed to the Investor, any material non-public
information that, according to applicable law, rule or regulation, should have
been disclosed publicly by the Company prior to the date hereof but which has
not been so disclosed.
Section
4.15 Exemption
from Registration; Valid Issuances.
Subject
to, and in reliance on, the representations, warranties and covenants made
herein by the Investor, the issuance and sale of the Shares, the Warrant, the
Warrant Shares and any Blackout Shares in accordance with the terms and on
the
bases of the representations and warranties set forth in this Agreement, may
and
shall be properly issued pursuant to Section 4(2), Regulation D and/or
any other applicable federal and state securities laws. Neither the sales of
the
Shares, the Warrant, the Warrant Shares or any Blackout Shares pursuant to,
nor
the Company’s performance of its obligations under, this Agreement, the
Registration Rights Agreement, or the Warrant shall (i) result in the
creation or imposition of any liens, charges, claims or other encumbrances
upon
the Shares, the Warrant Shares, any Blackout Shares or any of the assets of
the
Company, or (ii) except as previously disclosed to the Investor in writing,
entitle the holders of any outstanding shares of capital stock of the Company
to
preemptive or other rights to subscribe to or acquire the shares of Common
Stock
or other securities of the Company.
Section
4.16 No
General Solicitation or Advertising in Regard to this
Transaction. Neither
the Company nor any of its affiliates or any Person acting on its or their
behalf (i) has conducted any general solicitation (as that term is used in
Rule 502(c) of Regulation D) or general advertising with respect to
any of the Shares, the Warrant, the Warrant Shares or any Blackout Shares or
(ii) has made any offers or sales of any security or solicited any offers
to buy any security under any circumstances that would require registration
of
the Shares under the Securities Act.
Section
4.17 No
Integrated Offering.
Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security
or
solicited any offers to buy any security, other than pursuant to this Agreement
and employee benefit plans, under circumstances that would require registration
under the Securities Act of shares of the Common Stock issuable hereunder with
any other offers or sales of securities of the Company.
-13-
Section
4.18 Acknowledgment
Regarding Investor’s Purchase of Shares.
The
Company acknowledges and agrees that the Investor is acting solely in the
capacity of an arm’s length investor with respect to this Agreement and the
transactions contemplated hereunder. The Company further acknowledges that
the
Investor is not acting as a financial advisor or fiduciary of the Company (or
in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereunder and any advice given by the Investor or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Investor’s purchase of the
Shares.
ARTICLE
V
REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE INVESTOR
The
Investor hereby makes the following representations, warranties and covenants
to
the Company:
Section
5.1 Organization
and Standing of the Investor.
The
Investor is a company duly organized, validly existing and in good standing
under the laws of the British Virgin Islands.
Section
5.2 Authorization
and Power.
The
Investor has the requisite power and authority to enter into and perform its
obligations under this Agreement, the Warrant and the Registration Rights
Agreement and to purchase the Shares, the Warrant and the Warrant Shares in
accordance with the terms hereof and thereof. The execution, delivery and
performance of this Agreement, the Warrant and the Registration Rights Agreement
by Investor and the consummation by it of the transactions contemplated hereby
or thereby have been duly authorized by all necessary corporate action, and
no
further consent or authorization of the Investor, its Board of Directors or
stockholders is required. Each of this Agreement and the Registration Rights
Agreement has been duly executed and delivered by the Investor and constitutes
a
valid and binding obligation of the Investor enforceable against the Investor
in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership, or similar laws relating to, or affecting
generally the enforcement of creditor’s rights and remedies or by other
equitable principles of general application.
Section
5.3 No
Conflicts.
The
execution, delivery and performance of this Agreement, the Registration Rights
Agreement, the Warrant and any other document or instrument contemplated hereby,
by the Investor and the consummation of the transactions contemplated thereby
do
not (i) violate any provision of the Investor’s charter documents or
bylaws, (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
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Investor is a party,
(iii) create or impose a lien, charge or encumbrance on any property of the
Investor under any agreement or any commitment to which the Investor is a party
or by which the Investor is bound or by which any of its respective properties
or assets are bound, (iv) result in a violation of any federal, state,
local or foreign statute, rule, regulation, order, writ, judgment or decree
(including federal and state securities laws and regulations) applicable to
the
Investor or by which any property or asset of the Investor are bound or
affected, or (v) require the consent of any third-party that has not been
obtained pursuant to any material contract to which Investor is subject or
to
which any of its assets, operations or management may be subject. The Investor
is not required under federal, state or local law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or registration
with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement or to purchase the Shares or the
Warrant in accordance with the terms hereof, provided that, for purposes of
the
representation made in this sentence, the Investor is assuming and relying
upon
the accuracy of the relevant representations and agreements of the Company
herein.
-14-
Section
5.4 Financial
Capability.
The
Investor has the financial capability to perform all of its obligations under
this Agreement, including the capability to purchase the Shares, the Warrant
and
the Warrant Shares in accordance with the terms hereof. The Investor has such
knowledge and experience in business and financial matters that it is capable
of
evaluating the merits and risks of an investment in Common Stock. The Investor
is an “accredited
investor”
as
defined in Regulation D. The Investor is a “sophisticated
investor”
as
described in Rule 506(b)(2)(ii) of Regulation D. The Investor
acknowledges that an investment in the Common Stock and the Warrant is
speculative and involves a high degree of risk.
Section
5.5 Information.
The
Investor and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Shares, the Warrant and the Warrant Shares
which have been requested by the Investor. The Investor has reviewed or received
copies of the Commission Documents. The Investor and its advisors, if any,
have
been afforded the opportunity to ask questions of the Company. The Investor
has
sought such accounting, legal and tax advice as it has considered necessary
to
make an informed investment decision with respect to its acquisition of the
Shares, the Warrant and the Warrant Shares. The Investor understands that it
(and not the Company) shall be responsible for its own tax liabilities that
may
arise as a result of this investment or the transactions contemplated by this
Agreement.
Section
5.6 Trading
Restrictions.
The
Investor covenants that neither the Investor nor any of its affiliates nor
any
entity managed or controlled by the Investor will, or cause or assist any Person
to, enter into or execute any “short
sale”
(as
such term is defined in Rule 200 of Regulation SHO, or any successor
regulation, promulgated by the Commission under the Exchange Act) of any
securities of the Company, and that the Investor and its affiliates shall comply
with all other applicable laws.
Section
5.7 Statutory
Underwriter Status.
The
Investor acknowledges that, pursuant to the Commission’s current interpretations
of the Securities Act, the Investor will be disclosed as an “underwriter”
within
the meaning of the Securities Act in the Registration Statement (and amendments
thereto) and in any Prospectus contained therein to the extent required by
applicable law.
Section
5.8 Not
an
Affiliate.
The
Investor is not an officer, director or “affiliate”
(as
defined in Rule 405 of the Securities Act) of the Company.
-15-
Section
5.9 Manner
of Sale.
At no
time was Investor presented with or solicited by or through any leaflet, public
promotional meeting, television advertisement or any other form of general
solicitation or advertising.
Section
5.10 Prospectus
Delivery.
The
Investor agrees that unless the Shares and Warrant Shares are eligible for
resale pursuant to all the conditions of Rule 144, it will resell the Shares
and
Warrant Shares only pursuant to the Registration Statement, in a manner
described under the caption “Plan
of Distribution”
in
the
Registration Statement, and in a manner in compliance with all applicable
securities laws, including, without limitation, any applicable prospectus
delivery requirements of the Securities Act and the xxxxxxx xxxxxxx restrictions
of the Exchange Act.
ARTICLE
VI
COVENANTS
OF THE COMPANY
The
Company covenants with the Investor as follows, which covenants are for the
benefit of the Investor and its permitted assignees (as defined
herein):
Section
6.1 Securities
Compliance.
The
Company shall notify the Commission and the Principal Market, if and as
applicable, in accordance with their respective rules and regulations, of the
transactions contemplated by this Agreement, and shall use commercially
reasonable efforts to take all other necessary action and proceedings as may
be
required and permitted by applicable law, rule and regulation, for the legal
and
valid issuance of the Shares, the Warrant Shares and the Blackout Shares, if
any, to the Investor.
Section
6.2 Reservation
of Common Stock.
As of
the date hereof, the Company has available and the Company shall reserve and
keep available at all times, free of preemptive rights and other similar
contractual rights of stockholders, shares of Common Stock for the purpose
of
enabling the Company to satisfy any obligation to issue the Shares in connection
with all Draw Downs contemplated hereunder and the Warrant Shares. The number
of
shares so reserved from time to time, as theretofore increased or reduced as
hereinafter provided, may be reduced by the number of shares actually delivered
hereunder.
Section
6.3 Registration
and Listing.
During
the Commitment Period, the Company shall use commercially reasonable efforts
to:
(i) take all action necessary to cause its Common Stock to continue to be
registered under Section 12(b) or 12(g) of the Exchange Act, (ii) comply in
all
respects with its reporting and filing obligations under the Exchange Act,
(iii)
prevent the termination or suspension of such registration, or the termination
or suspension of its reporting and filing obligations under the Exchange Act
or
Securities Act (except as expressly permitted herein). The Company shall use
commercially reasonable efforts to maintain the listing and trading of its
Common Stock and the listing of the Shares purchased by Investor hereunder
on
the Principal Market (including, without limitation, maintaining sufficient
net
tangible assets) and will comply in all material respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the FINRA
and the Principal Market. The Company will not be required to carry out any
action pursuant to this Agreement, the Registration Rights Agreement or the
Warrant that would adversely impact the listing of the Company’s securities on
the Principal Market as now in effect, and as may be changed by the Company
in
the future in the Company’s discretion.
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Section
6.4 Registration
Statement.
Without
the prior written consent of the Investor, the Registration Statement shall
be
used solely in connection with the transactions between the Company and the
Investor contemplated hereby.
Section
6.5 Compliance
with Laws.
(a) The
Company shall comply, and cause each subsidiary to comply, with all applicable
laws, rules, regulations and orders, noncompliance with which could reasonably
be expected to have a Material Adverse Effect. Without limiting the generality
of the foregoing, neither the Company nor any of its officers, directors or
affiliates will take, directly or indirectly, any action designed or intended
to
stabilize or manipulate the price of any security of the Company, or which
would
in the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
(b) Without
the consent of its stockholders in accordance with FINRA and The NASDAQ Stock
Market LLC rules, the Company will not be obligated to issue, and the Investor
will not be obligated to purchase, any Shares or Blackout Shares which would
result in the issuance under this Agreement, the Warrant and the Registration
Rights Agreement of Shares and Blackout Shares (collectively) representing
more
than the applicable percentage under the rules of the FINRA and The NASDAQ
Stock
Market LLC , including, without limitation, NASDAQ Marketplace Rule 4350(i),
that would require stockholder approval of the issuance thereof.
Section
6.6 Other
Financing.
Nothing
in this Agreement shall be construed to restrict the right of the Company to
offer, sell and/or issue securities of any kind whatsoever, provided such
transaction is not a Prohibited Transaction (as defined below) (any such
transaction that is not a Prohibited Transaction is referred to in this
Agreement as a “Permitted
Transaction”).
Without limiting the generality of the preceding sentence, the Company may,
without the prior written consent of the Investor, (i) establish stock option
or
award plans or agreements (for directors, employees, consultants and/or
advisors), and issue securities thereunder, and amend such plans or agreements,
including increasing the number of shares available thereunder, (ii) issue
equity securities to finance, or otherwise in connection with, the acquisition
of one or more other companies, equipment, technologies or lines of business,
(iii) issue shares of Common Stock and/or Preferred Stock in connection with
the
Company’s option or award plans, stock purchase plans, rights plans, warrants or
options, (iv) issue shares of Common Stock and/or Preferred Stock in connection
with the acquisition of products, licenses, equipment or other assets and
strategic partnerships or joint ventures; (v) issue shares of Common and/or
Preferred Stock to consultants and/or advisors as consideration for services
rendered or to be rendered, (vi) issue and sell equity or debt securities in
a
public offering, (vii) issue and sell and equity or debt securities in a private
placement (other than in connection with any Prohibited Transaction), (viii)
issue equity securities to equipment lessors, equipment vendors, banks or
similar lending institutions in connection with leases or loans, or in
connection with strategic commercial or licensing transactions, (ix) issue
securities in connection with any stock split, stock dividend, recapitalization,
reclassification or similar event by the Company, and (x) issue shares of Common
Stock to the Investor under any other agreement entered into between the
Investor and the Company.
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Section
6.7 Prohibited
Transactions.
Except
as
set forth on Schedule 6.7, during the term of this Agreement, the Company shall
not enter into any Prohibited Transaction without the prior written consent
of
the Investor, which consent may be withheld at the sole discretion of the
Investor. For the purposes of this Agreement, the term “Prohibited
Transaction”
shall
refer to the issuance by the Company of any “future priced securities,” which
shall mean the issuance of shares of Common Stock or securities of any type
whatsoever that are, or may become, convertible or exchangeable into shares
of
Common Stock where the purchase, conversion or exchange price for such Common
Stock is determined using any floating discount or other post-issuance
adjustable discount to the market price of Common Stock, including, without
limitation, pursuant to any equity line or other financing that is substantially
similar to the financing provided for under this Agreement.
Section
6.8 Corporate
Existence.
The
Company shall take all steps necessary to preserve and continue the corporate
existence of the Company; provided, however, that nothing in this Agreement
shall be deemed to prohibit the Company from engaging in any Excluded Merger
or
Sale with another Person provided that in the event of an Excluded Merger or
Sale, if the surviving, successor or purchasing Person does not agree to assume
the obligations under the Warrant, then the Company shall deliver a notice
to
the Investor at least ten (10) days before the consummation of such Excluded
Merger or Sale, the Investor may exercise the Warrant at any time before the
consummation of such Excluded Merger or Sale (and such exercise may be made
contingent upon the consummation of such Excluded Merger or Sale), and any
portion of the Warrant that has not been exercised before consummation of such
Excluded Merger or Sale shall terminate and expire, and shall no longer be
outstanding.
Section
6.9 Non-Disclosure
of Non-Public Information.
Except
as otherwise expressly provided in this Agreement, the Registration Rights
Agreement or the Warrant, none of the Company, its officers, directors,
employees nor agents shall disclose material non-public information to the
Investor, its advisors or representatives.
Section
6.10 Notice
of Certain Events Affecting Registration; Suspension of Right to Request a
Draw
Down.
The
Company shall promptly notify the Investor upon the occurrence of any of the
following events in respect of the Registration Statement or the Prospectus
related to the offer, issuance and sale of the Shares and the Warrant Shares
hereunder: (i) receipt of any request for additional information by the
Commission or any other federal or state governmental authority during the
period of effectiveness of the Registration Statement for amendments or
supplements to the Registration Statement or the Prospectus; (ii) the issuance
by the Commission or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and (iv) the Company becoming aware of the happening of any event,
which makes any statement of a material fact made in the Registration Statement
or Prospectus untrue or which requires the making of any additions to or changes
to the statements then made in the Registration Statement or Prospectus in
order
to state a material fact required by the Securities Act to be stated therein
or
necessary in order to make the statements then made therein, in light of the
circumstances under which they were made, not misleading, or of the necessity
to
amend the Registration Statement or supplement the Prospectus to comply with
the
Securities Act or any other law. If at any time the Commission shall issue
any
stop order suspending the effectiveness of the Registration Statement, the
Company shall use commercially reasonable efforts to obtain the withdrawal
of
such order at the earliest possible time.. The Company shall not be required
to
disclose to the Investor the substance or specific reasons of any of the events
set forth in clauses (i) through (ii) of the previous sentence, only that the
event has occurred. The Company shall not request a Draw Down during the
continuation of any of the foregoing events.
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Section
6.11 Amendments
to the Registration Statement.
When
the Registration Statement is declared effective by the Commission, the Company
shall not (a) file any amendment to the Registration Statement or make any
amendment or supplement to the Prospectus of which the Investor shall not
previously have been advised, and (b) so long as, in the reasonable opinion
of
counsel for the Investor, a Prospectus is required to be delivered in connection
with sales of the Shares by the Investor, if the Company files any information,
documents or reports that are incorporated by reference in the Registration
Statement pursuant to the Exchange Act, the Company shall, if requested in
writing by the Investor, deliver a copy of such information, documents or
reports to the Investor promptly following such filing.
Section
6.12 Prospectus
Delivery.
From
time to time for such period as in the reasonable opinion of counsel for the
Investor a prospectus is required by the Securities Act to be delivered in
connection with sales by the Investor, the Company will expeditiously deliver
to
the Investor, without charge, as many copies of the Prospectus (and of any
amendment or supplement thereto) as the Investor may reasonably request. The
Company consents to the use of the Prospectus (and of any amendment or
supplement thereto) in accordance with the provisions of the Securities Act
and
state securities laws in connection with the offering and sale of the Shares
and
the Warrant Shares and for such period of time thereafter as the Prospectus
is
required by the Securities Act to be delivered in connection with sales of
the
Shares and the Warrant Shares.
ARTICLE
VII
CONDITIONS
TO THE OBLIGATION OF THE INVESTOR
TO
ACCEPT A DRAW DOWN
The
obligation of the Investor hereunder to accept a Draw Down Notice and to acquire
and pay for the Shares in accordance therewith is subject to the satisfaction
or
waiver, at each Condition Satisfaction Date, of each of the conditions set
forth
below. Other than those conditions set forth in Section 7.12 which are for
the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion, the conditions are for the Investor’s sole benefit and may be waived
by the Investor at any time in its sole discretion. As used in this Agreement,
the term “Condition
Satisfaction Date”
shall
mean, with respect to each Draw Down, the date on which the applicable Draw
Down
Notice is delivered to the Investor and each Settlement Date in respect of
the
applicable Draw Down Pricing Period.
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Section
7.1 Accuracy
of the Company’s Representations and Warranties.
Each of
the representations and warranties of the Company shall be true and correct
in
all material respects as of the date when made as though made at that time
except for representations and warranties that are expressly made as of a
particular date.
Section
7.2 Performance
by the Company.
The
Company shall have, in all material respects, performed, satisfied and complied
with all covenants, agreements and conditions required by this Agreement, the
Registration Rights Agreement and the Warrant to be performed, satisfied or
complied with by the Company.
Section
7.3 Compliance
with Law.
The
Company shall have complied in all respects with all applicable federal, state
and local governmental laws, rules, regulations and ordinances in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby except for any failures
to
so comply which could not reasonably be expected to have a Material Adverse
Effect.
Section
7.4 Effective
Registration Statement.
Upon
the terms and subject to the conditions set forth in the Registration Rights
Agreement, the Registration Statement shall have previously become effective
and
shall remain effective and (i) neither the Company nor the Investor shall have
received notice that the Commission has issued or intends to issue a stop order
with respect to the Registration Statement or that the Commission otherwise
has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened to do so (unless the
Commission’s concerns have been addressed and the Investor is reasonably
satisfied that the Commission no longer is considering or intends to take such
action), and (ii) no other suspension of the use or withdrawal of the
effectiveness of the Registration Statement or the Prospectus shall
exist.
Section
7.5 No
Knowledge.
The
Company shall have no Knowledge of any event that could reasonably be expected
to have the effect of causing the Registration Statement with respect to the
resale of the Registrable Securities by the Investor to be suspended or
otherwise ineffective (which event is reasonably likely to occur within eight
Trading Days following the Trading Day on which a Draw Down Notice is delivered)
as of the Settlement Date.
Section
7.6 No
Suspension.
Trading
in the Company’s Common Stock shall not have been suspended by the Commission,
the Principal Market or the FINRA and trading in securities generally as
reported on the Principal Market shall not have been suspended or
limited.
Section
7.7 No
Injunction.
No
statute, rule, regulation, order, decree, writ, ruling or injunction shall
have
been enacted, entered, promulgated, endorsed or, to the Knowledge of the
Company, threatened by any court or governmental authority of competent
jurisdiction which prohibits the consummation of or which would materially
modify or delay any of the transactions contemplated by this
Agreement.
Section
7.8 No
Proceedings or Litigation.
No
action, suit or proceeding before any arbitrator or any court or governmental
authority shall have been commenced or, to the Knowledge of the Company,
threatened, and, to the Knowledge of the Company no inquiry or investigation
by
any governmental authority shall have been threatened, against the Company
or
any subsidiary, or any of the officers, directors or affiliates of the Company
or any subsidiary seeking to enjoin, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.
-20-
Section
7.9 Sufficient
Shares Registered for Resale.
The
Company shall have sufficient Shares, calculated using the closing trade price
of the Common Stock as of the Trading Day immediately preceding such Draw Down
Notice, registered under the Registration Statement to issue and sell such
Shares in accordance with such Draw Down Notice.
Section
7.10 Warrant.
The
Warrant shall have been duly executed, delivered and issued to the Investor,
and
the Company shall not be in default in any material respect under any of the
provisions thereof, provided that any refusal by or failure of the Company
to
issue and deliver Warrant Shares in respect of any exercise (in whole or in
part) thereof shall be deemed to be material for the purposes of this Section
7.10.
Section
7.11 Opinion
of Counsel.
The
Investor shall have received the form of opinion mutually agreed to between
the
parties on the date of this Agreement.
Section
7.12 Accuracy
of Investor’s Representation and Warranties.
The
representations and warranties of the Investor shall be true and correct in
all
material respects as of the date when made as though made at that time except
for representations and warranties that are made as of a particular
date.
ARTICLE
VIII
TERMINATION
Section
8.1 Term.
Unless
otherwise terminated in accordance with Section 8.2 below, this Agreement shall
terminate upon the earlier to occur of (i) the expiration of the Commitment
Period or (ii) the issuance of Shares pursuant to this Agreement in an amount
equal to the Maximum Commitment Amount.
Section
8.2 Other
Termination.
(a) The
Investor may terminate this Agreement upon (x) one (1) business day’s notice if
the Company enters into any Prohibited Transaction as set forth in Section
6.7
without the Investor’s prior written consent, or (y) one (1) business day’s
notice if the Investor provides written notice of a Material Adverse Effect
to
the Company, and such Material Adverse Effect continues for a period of ten
(10)
Trading Days after the receipt by the Company of such notice.
(b) The
Investor may terminate this Agreement upon one (1) business day’s notice to the
Company at any time in the event that the Registration Statement is not
initially declared effective in accordance with the Registration Rights
Agreement, provided, however, that in the event the Registration Statement
is
declared effective prior to the delivery of such notice, the Investor shall
thereafter have no right to terminate this Agreement pursuant to this Section
8.2(b).
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(c) The
Company may terminate this Agreement upon one (1) business day’s notice;
provided, however, that the Company shall not terminate this Agreement pursuant
to this Section 8.2(c) during any Draw Down Pricing Period; provided further,
that, in the event of any termination of this Agreement by the Company
hereunder, so long as the Investor owns Shares purchased hereunder and/or
Warrant Shares, unless all of such shares of Common Stock may be resold by
the
Investor without registration and without any time, volume or manner limitations
pursuant to Rule 144(k) (or any similar provision then in effect) under the
Securities Act, the Company shall not suspend or withdraw the Registration
Statement or otherwise cause the Registration Statement to become ineffective,
or voluntarily delist the Common Stock from, the Principal Market without
listing the Common Stock on another Principal Market.
(d) Each
of
the parties hereto may terminate this Agreement upon one (1) day’s notice if the
other party has breached a material representation, warranty or covenant to
this
Agreement and such breach is not remedied within ten (10) Trading Days after
notice of such breach is delivered to the breaching party.
Section
8.3 Effect
of Termination.
In the
event of termination by the Company or the Investor, written notice thereof
shall forthwith be given to the other party and the transactions contemplated
by
this Agreement shall be terminated without further action by either party.
If
this Agreement is terminated as provided in Section 8.1 or 8.2 herein, this
Agreement shall become void and of no further force and effect, except as
provided in Section 10.13. Nothing in this Section 8.3 shall be deemed to
release the Company or the Investor from any liability for any breach under
this
Agreement occurring prior to such termination, or to impair the rights of the
Company and the Investor to compel specific performance by the other party
of
its obligations under this Agreement arising prior to such
termination.
ARTICLE
IX
INDEMNIFICATION
Section
9.1 Indemnification.
(a) Except
as
otherwise provided in this Article IX, unless disputed as set forth in Section
9.2, the Company agrees to indemnify, defend and hold harmless the Investor
and
its affiliates and their respective officers, directors, agents, employees,
subsidiaries, partners, members and controlling persons (each, an “Investor
Indemnified Party”),
to
the fullest extent permitted by law from and against any and all Damages
directly resulting from or directly arising out of any breach of any
representation or warranty, covenant or agreement (except as otherwise
specifically provided) by the Company in this Agreement, the Registration Rights
Agreement or the Warrant; provided, however, that the Company shall not be
liable under this Article IX to an Investor Indemnified Party to the extent
that
such Damages resulted or arose from the breach by an Investor Indemnified Party
of any representation, warranty, covenant or agreement of an Investor
Indemnified Party contained in this Agreement, the Registration Rights Agreement
or the Warrant or the negligence, recklessness, willful misconduct or bad faith
of an Investor Indemnified Party. The parties intend that any Damages subject
to
indemnification pursuant to this Article IX will be net of insurance proceeds
(which the Investor Indemnified Party agrees to use commercially reasonable
efforts to recover). Accordingly, the amount which the Company is required
to
pay to any Investor Indemnified Party hereunder (a “Company
Indemnity Payment”)
will
be reduced by any insurance proceeds actually recovered by or on behalf of
any
Investor Indemnified Party in reduction of the related Damages. In addition,
if
an Investor Indemnified Party receives a Company Indemnity Payment required
by
this Article IX in respect of any Damages and subsequently receives any such
insurance proceeds, then the Investor Indemnified Party will pay to the Company
an amount equal to the Company Indemnity Payment received less the amount of
the
Company Indemnity Payment that would have been due if the insurance proceeds
had
been received, realized or recovered before the Company Indemnity Payment was
made.
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(b) Except
as
otherwise provided in this Article IX, unless disputed as set forth in Section
9.2, the Investor agrees to indemnify, defend and hold harmless the Company
and
its affiliates and their respective officers, directors, agents, employees,
subsidiaries, partners, members and controlling persons (each, a “Company
Indemnified Party”),
to
the fullest extent permitted by law from and against any and all Damages
directly resulting from or directly arising out of any breach of any
representation or warranty, covenant or agreement by the Investor in this
Agreement, the Registration Rights Agreement or the Warrant; provided, however,
that the Investor shall not be liable under this Article IX to a Company
Indemnified Party to the extent that such Damages resulted or arose from the
breach by a Company Indemnified Party of any representation, warranty, covenant
or agreement of a Company Indemnified Party contained in this Agreement, the
Registration Rights Agreement or the Warrant or negligence, recklessness,
willful misconduct or bad faith of a Company Indemnified Party. The parties
intend that any Damages subject to indemnification pursuant to this Article
IX
will be net of insurance proceeds (which the Company agrees to use commercially
reasonable efforts to recover). Accordingly, the amount which the Investor
is
required to pay to any Company Indemnified Party hereunder (an “Investor
Indemnity Payment”)
will
be reduced by any insurance proceeds theretofore actually recovered by or on
behalf of any Company Indemnified Party in reduction of the related Damages.
In
addition, if a Company Indemnified Party receives an Investor Indemnity Payment
required by this Article IX in respect of any Damages and subsequently receives
any such insurance proceeds, then the Company Indemnified Party will pay to
the
Investor an amount equal to the Investor Indemnity Payment received less the
amount of the Investor Indemnity Payment that would have been due if the
insurance proceeds had been received, realized or recovered before the Investor
Indemnity Payment was made.
Section
9.2 Notification
of Claims for Indemnification.
Each
party entitled to indemnification under this Article IX (an “Indemnified
Party”)
shall,
promptly after the receipt of notice of the commencement of any claim against
such Indemnified Party in respect of which indemnity may be sought from the
party obligated to indemnify such Indemnified Party under this Article IX (the
“Indemnifying
Party”),
notify the Indemnifying Party in writing of the commencement thereof. Any such
notice shall describe the claim in reasonable detail. The failure of any
Indemnified Party to so notify the Indemnifying Party of any such action shall
not relieve the Indemnifying Party from any liability which it may have to
such
Indemnified Party (a) other than pursuant to this Article IX or (b) under this
Article IX unless, and only to the extent that, such failure results in the
Indemnifying Party’s forfeiture of substantive rights or defenses or the
Indemnifying Party is prejudiced by such delay. The procedures listed below
shall govern the procedures for the handling of indemnification
claims.
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(a) Any
claim
for indemnification for Damages that do not result from a Third Party Claim
as
defined in the following paragraph, shall be asserted by written notice given
by
the Indemnified Party to the Indemnifying Party. Such Indemnifying Party shall
have a period of thirty (30) days after the receipt of such notice within which
to respond thereto. If such Indemnifying Party does not respond within such
thirty (30) day period, such Indemnifying Party shall be deemed to have refused
to accept responsibility to make payment as set forth in Section 9.1. If such
Indemnifying Party does not respond within such thirty (30) day period or
rejects such claim in whole or in part, the Indemnified Party shall be free
to
pursue such remedies as specified in this Agreement.
(b) If
an
Indemnified Party shall receive notice or otherwise learn of the assertion
by a
person or entity not a party to this Agreement of any threatened legal action
or
claim (collectively a “Third
Party Claim”),
with
respect to which an Indemnifying Party may be obligated to provide
indemnification, the Indemnified Party shall give such Indemnifying Party
written notice thereof within twenty (20) days after becoming aware of such
Third Party Claim.
(c) An
Indemnifying Party may elect to defend (and, unless the Indemnifying Party
has
specified any reservations or exceptions, to seek to settle or compromise)
at
such Indemnifying Party’s own expense and by such Indemnifying Party’s own
counsel, any Third Party Claim. Within thirty (30) days after the receipt of
notice from an Indemnified Party (or sooner if the nature of such Third Party
Claim so requires), the Indemnifying Party shall notify the Indemnified Party
whether the Indemnifying Party will assume responsibility for defending such
Third Party Claim, which election shall specify any reservations or exceptions.
If such Indemnifying Party does not respond within such thirty (30) day period
or rejects such claim in whole or in part, the Indemnified Party shall be free
to pursue such remedies as specified in this Agreement. In case any such Third
Party Claim shall be brought against any Indemnified Party, and it shall notify
the Indemnifying Party of the commencement thereof, the Indemnifying Party
shall
be entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment; provided,
however, that any Indemnified Party may, at its own expense, retain separate
counsel to participate in such defense at its own expense. Notwithstanding
the
foregoing, in any Third Party Claim in which both the Indemnifying Party, on
the
one hand, and an Indemnified Party, on the other hand, are, or are reasonably
likely to become, a party, such Indemnified Party shall have the right to employ
separate counsel and to control its own defense of such claim if, in the
reasonable opinion of counsel to such Indemnified Party, either (x) one or
more
significant defenses are available to the Indemnified Party that are not
available to the Indemnifying Party or (y) a conflict or potential conflict
exists between the Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, that would make such separate representation
advisable; provided, however, that in such circumstances the Indemnifying Party
(i) shall not be liable for the fees and expenses of more than one counsel
to
all Indemnified Parties and (ii) shall reimburse the Indemnified Parties for
such reasonable fees and expenses of such counsel incurred in any such Third
Party Claim, as such expenses are incurred, provided that the Indemnified
Parties agree to repay such amounts if it is ultimately determined that the
Indemnifying Party was not obligated to provide indemnification under this
Article IX. The Indemnifying Party agrees that it will not compromise or consent
to the entry of any judgment in any pending or threatened claim relating to
the
matters contemplated hereby (if any Indemnified Party is a party thereto or
has
been actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of such Indemnified
Party from all liability arising or that may arise out of such claim. The rights
accorded to an Indemnified Party hereunder shall be in addition to any rights
that any Indemnified Party may have at common law, by separate agreement or
otherwise; provided, however, that notwithstanding the foregoing or anything
to
the contrary contained in this Agreement, nothing in this Article IX shall
restrict or limit any rights that any Indemnified Party may have to seek
equitable relief.
-24-
ARTICLE
X
MISCELLANEOUS
Section
10.1 Fees
and Expenses.
(a) Each
of
the Company and the Investor agrees to pay its own expenses incident to the
performance of its obligations hereunder, except that the Company shall be
solely responsible for (i) all reasonable attorneys fees and expenses incurred
by the Investor in connection with the preparation, negotiation, execution
and
delivery of this Agreement, the Registration Rights Agreement and the Warrant,
and review of the Registration Statement, and in connection with any amendments,
modifications or waivers of this Agreement, including, without limitation,
all
reasonable attorneys fees and expenses, (ii) subject in all cases to Section
10.1(b) hereof, all reasonable fees and expenses incurred in connection with
the
Investor’s enforcement of this Agreement, including, without limitation, all
reasonable attorneys fees and expenses, (iii) due diligence expenses incurred
by
the Investor during the term of this Agreement equal to $12,500 per calendar
quarter, and (iv) all stamp or other similar taxes and duties, if any, levied
in
connection with issuance of the Shares pursuant hereto; provided, however,
that
in each of the above instances the Investor shall provide customary supporting
invoices or similar documentation in reasonable detail describing such expenses
(however, the Investor shall not be obligated to provide detailed time sheets
for legal fees and disbursements); provided further, that the maximum aggregate
amount payable by the Company pursuant to clause (i) above shall be $70,000
and
the Investor shall bear all fees and expenses in excess thereof incurred in
connection with the events described under clause (i) above.
(b) If
any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the Registration Rights Agreement or the Warrant, the prevailing
party shall be entitled to reasonable fees, costs and necessary disbursements
in
addition to any other relief to which such party may be entitled.
Section
10.2 Reporting
Entity for the Common Stock.
The
reporting entity relied upon for the determination of the trading price or
trading volume of the Common Stock on any given Trading Day for the purposes
of
this Agreement shall be Bloomberg, L.P. or any successor thereto. The written
mutual consent of the Investor and the Company shall be required to employ
any
other reporting entity.
Section
10.3 Brokerage.
Each of
the parties hereto represents that it has had no dealings in connection with
this transaction with any finder or broker who will demand payment of any fee
or
commission from the other party. The Company on the one hand, and the Investor,
on the other hand, agree to indemnify the other against and hold the other
harmless from any and all liabilities to any Persons claiming brokerage
commissions or finder’s fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with this Agreement
or the transactions contemplated hereby.
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Section
10.4 Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice given in accordance herewith, in each case with a copy to
the
e-mail address set forth beside the facsimile number for the addressee below.
Any notice or other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by facsimile,
with
accurate confirmation generated by the transmitting facsimile machine, at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business
day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall
be:
|
If
to the Company:
|
|
Lumera
Corporation
|
|
00000
Xxxxx Xxxxx Xxxxxxx
|
|
Xxxxx
000
|
|
Xxxxxxx,
Xxxxxxxxxx 00000
|
|
Facsimile:
000-000-0000
|
|
Attention:
Xxxxx Xxxxx
E-mail:
xxxxxx@xxxxxx.xxx
|
|
with
a copy (which shall not constitute notice) to:
|
|
Ropes
& Xxxx LLP
|
|
Xxx
Xxxxxxxxxxxxx Xxxxx
|
|
Xxxxxx,
XX 00000-0000
|
|
Facsimile:
000-000-0000
|
|
Attention:
Xxxxxxxxxxx Xxxxxx, Esq.
E-mail:
Xxxxxxxxxxx.Xxxxxx@xxxxxxxxx.xxx
|
|
if
to the Investor:
|
|
Kingsbridge
Capital Limited
|
|
Attention:
Xx. Xxxx Xxxxxxx
|
|
X.X.
Xxx 0000
|
|
Xxxxxxxxx
House
|
|
0
Xxxxxx Xxxxxx
|
|
Xx.
Xxxxxx
|
|
Xxxxxx
|
|
XX00XX
|
|
Channel
Islands
|
|
Telephone:
000-00-0000-000-000
|
|
Facsimile:
011-44-1534-636-042
|
|
Email:
xxxxx@xxxxxxxxxxxxxx.xxx; and
xxxxxxxxxx@xxxxxxxxxxxxxx.xxx
|
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|
with
a copy (which shall not constitute notice) to:
|
|
Kingsbridge
Corporate Services Limited
|
|
Xxxxxxxxxxx
Xxxxx
|
|
Xxx
Xxxxx
|
|
Xxxxxxxxx,
Xxxxxx Xxxxxxx
|
|
Xxxxxxxx
of Ireland
|
|
Telephone:
000-000-00-000-000
|
|
Facsimile:
011-353-45-482-003
|
|
Email:
xxxxxxxxxx@xxxxxxxxxxx.xx; xxxxxxxxxx@xxxxxxxxxxx.xx; and
xxxxxxx@xxxxxxxxxxx.xx
|
|
and
another copy (which shall not constitute notice) to:
|
|
Stroock
& Stroock & Xxxxx LLP
|
|
000
Xxxxxx Xxxx
|
|
Xxx
Xxxx, XX 00000
|
|
Facsimile:
(000) 000-0000
|
|
Attention:
Xxxxx X. Xxxxxxxxxx, Esq. -
xxxxxxxxxxx@xxxxxxx.xxx
|
Either
party hereto may from time to time change its address for notices under this
Section by giving at least ten (10) days’ prior written notice of such changed
address to the other party hereto.
Section
10.5 Assignment.
Neither
this Agreement nor any rights of the Investor or the Company hereunder may
be
assigned by either party to any other Person.
Section
10.6 Amendment;
No Waiver.
No
party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth in
this Agreement, the Warrant and the Registration Rights Agreement. Except as
expressly provided in this Agreement, neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by both parties hereto. The failure of the either party to
insist on strict compliance with this Agreement, or to exercise any right or
remedy under this Agreement, shall not constitute a waiver of any rights
provided under this Agreement, nor estop the parties from thereafter demanding
full and complete compliance nor prevent the parties from exercising such a
right or remedy in the future.
Section
10.7 Entire
Agreement.
This
Agreement, the Registration Rights Agreement and the Warrant set forth the
entire agreement and understanding of the parties relating to the subject matter
hereof and supersedes all prior and contemporaneous agreements, negotiations
and
understandings between the parties, both oral and written, relating to the
subject matter hereof.
-27-
Section
10.8 Severability.
If any
provision of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said provision; provided that, if the severance
of such provision materially changes the economic benefits of this Agreement
to
either party as such benefits are anticipated as of the date hereof, then such
party may terminate this Agreement on five (5) business days prior written
notice to the other party. In such event, the Registration Rights Agreement
will
terminate simultaneously with the termination of this Agreement; provided that
in the event that this Agreement is terminated by the Company in accordance
with
this Section 10.8 and the Warrant Shares either have not been registered for
resale by the Investor in accordance with the Registration Rights Agreement
or
are otherwise not freely tradable (if and when issued) in accordance with
applicable law, then the Registration Rights Agreement in respect of the
registration of the Warrant Shares shall remain in full force and
effect.
Section
10.9 Title
and Subtitles.
The
titles and subtitles used in this Agreement are used for the convenience of
reference and are not to be considered in construing or interpreting this
Agreement.
Section
10.10 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which may be
executed by less than all of the parties and shall be deemed to be an original
instrument which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one and the same
instrument.
Section
10.11 Choice
of Law.
This
Agreement shall be construed under the laws of the State of New
York.
Section
10.12 Specific
Enforcement, Consent to Jurisdiction.
(a) The
Company and the Investor acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It
is accordingly agreed that either party shall be entitled to an injunction
or
injunctions to prevent or cure breaches of the provisions of this Agreement
by
the other party and to enforce specifically the terms and provisions hereof
or
thereof, this being in addition to any other remedy to which either party may
be
entitled by law or equity.
(b) Each
of
the Company and the Investor (i) hereby irrevocably submits to the jurisdiction
of the United States District Court and other courts of the United States
sitting in the State of New York for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement and (ii) hereby waives,
and agrees not to assert in any such suit, action or proceeding, any claim
that
it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue
of
the suit, action or proceeding is improper. Each of the Company and the Investor
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to
it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this Section 10.12
shall affect or limit any right to serve process in any other manner permitted
by law.
-28-
Section
10.13 Survival.
The
representations and warranties of the Company and the Investor contained in
Articles IV and V and the covenants contained in Article V and Article VI shall
survive the execution and delivery hereof and the Closing until the termination
of this Agreement, and the agreements and covenants set forth in Article VIII
and Article IX of this Agreement shall survive the execution and delivery hereof
and the Closing hereunder.
Section
10.14 Publicity.
Except
as otherwise required by applicable law or regulation, or NASDAQ rule or
judicial process, prior to the Closing, neither the Company nor the Investor
shall issue any press release or otherwise make any public statement or
announcement with respect to this Agreement or the transactions contemplated
hereby or the existence of this Agreement. In the event the Company is required
by law, regulation, NASDAQ rule or judicial process, based upon reasonable
advice of the Company’s counsel, to issue a press release or otherwise make a
public statement or announcement with respect to this Agreement prior to the
Closing, the Company shall consult with the Investor on the form and substance
of such press release, statement or announcement. Promptly after the Closing,
each party may issue a press release or otherwise make a public statement or
announcement with respect to this Agreement or the transactions contemplated
hereby or the existence of this Agreement; provided that, prior to issuing
any
such press release, making any such public statement or announcement, the party
wishing to make such release, statement or announcement consults and cooperates
in good faith with the other party in order to formulate such press release,
public statement or announcement in form and substance reasonably acceptable
to
both parties.
Section
10.15 Further
Assurances.
From
and after the date of this Agreement, upon the request of the Investor or the
Company, each of the Company and the Investor shall execute and deliver such
instruments, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
[Remainder
of this page intentionally left blank.]
-29-
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officer as of the date first written.
|
KINGSBRIDGE
CAPITAL LIMITED
|
||
| |
|
|
| By: | /s/ Xxxx Xxxxxx | |
|
Xxxx
Xxxxxx
|
||
|
Managing
Director
|
||
|
LUMERA
CORPORATION
|
||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxx | |
|
Name:
Xxxxx X. Xxxxx
|
||
|
Title:
Chief Financial Officer
|
||
-30-
