SECURITIES PURCHASE AGREEMENT
Exhibit 10.15
This
Securities Purchase Agreement (this “Agreement”) is dated as of April 17,
2007, between Power3 Medical Products, Inc., a New York corporation (the
“Company”), and NeoGenomics, Inc. a Nevada Corporation, (the
“Purchaser”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 promulgated thereunder, the Company desires to issue and
sell to the Purchaser, and the Purchaser desires to purchase from the Company,
securities of the Company as more fully described in this
Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of
which
are hereby acknowledged, the Company and the Purchaser agree as
follows:
ARTICLE
I.
DEFINITIONS
1.1 Definitions. In
addition to the terms defined elsewhere in this Agreement, the following terms
have the meanings set forth in this Section 1.1:
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
a
Person, as such terms are used in and construed under Rule 144. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as the Purchaser will
be
deemed to be an Affiliate of the Purchaser.
“Board”
means the Board of Directors of the Company.
“Business
Day” means any day except any Saturday, any Sunday, any day which shall be a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or
other
governmental action to close.
“Capital
Raising Offer” shall have the meaning ascribed to such term in Section
4.13.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section
2.1.
“Closing
Date” means the Trading Day when all of the Transaction Documents required
to be executed and delivered pursuant to the Purchase Agreement have been
executed and delivered by the applicable parties thereto, and all conditions
precedent to (i) the Purchaser’s obligations to pay the Subscription Amount and
(ii) the Company’s obligations to deliver the Debentures have been satisfied or
waived.
“Commission”
means the Securities and Exchange Commission.
“Common
Stock” means the common stock, par value $0.001 per share, of the Company
and any other class of securities into which such securities may hereafter
be
reclassified or changed into.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Compensation
Committee” means the Compensation Committee of the Board.
“Conversion
Price” shall have the meaning ascribed to such term in the
Debentures.
“Debentures”
means the 6% Convertible Debentures due, subject to the terms therein, 2 years
from their date of issuance, issued by the Company to the Purchaser hereunder,
in the form of Exhibit A attached hereto.
“Disclosure
Schedules” shall have the meaning ascribed to such term in Section
3.1.
“Evaluation
Date” shall have the meaning ascribed to such term in Section
3.1(r).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(aa).
“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section
3.1(o).
“Joint
Venture Agreement” means the proposed Joint Venture Agreement between the
Company and the Purchaser.
“Letter
Agreement” means the letter agreement between the Company and the Purchaser,
dated as of April 2, 2007.
“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section
3.1(b).
“Material
Permits” shall have the meaning ascribed to such term in Section
3.1(m).
“Person”
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.13.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Purchaser
Party” shall have the meaning ascribed to such term in Section
4.11.
“Registration
Statement” means a registration statement meeting the requirements set forth
in Exhibit C and covering the resale of the Shares by the
Purchaser.
“Required
Approvals” shall have the meaning ascribed to such term in Section
3.1(e).
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.
“SEC
Reports” shall have the meaning ascribed to such term in Section
3.1(h).
“Securities”
means the Shares and the Debentures.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated hereunder.
“Shares”
means the shares of Common Stock issued or issuable to the Purchaser pursuant
to
the Debentures.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).
“Subscription
Amount” means, as to the Purchaser, the aggregate amount to be paid for the
Debentures purchased hereunder.
“Subsidiary”
means any subsidiary of the Company which is set forth on Schedule
3.1(a).
“Trading
Day” means a day on which the Common Stock is traded on a Trading
Market.
“Trading
Market” means the following markets or exchanges on which the Common Stock
is listed or quoted for trading on the date in question: the Pink Sheets
Electronic Quotation Service, the American Stock Exchange, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New
York Stock Exchange.
“Transaction
Documents” means this Agreement, the Debentures, the Joint Venture
Agreement, all documents and securities contemplated and agreed to in the Letter
Agreement and any other documents or agreements executed in connection with
the
transactions contemplated hereunder.
“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section
4.15(b).
ARTICLE
II.
PURCHASE
AND SALE
2.1 Closing. On
the Closing Date, upon the terms and subject to the conditions set forth herein,
substantially concurrent with the execution and delivery of this Agreement
by
the parties hereto, the Company agrees to sell, and the Purchaser agrees to
purchase the Debentures. The Purchaser shall deliver to the Company,
via wire transfer, immediately available funds equal to its Subscription Amount
and the Company shall deliver to the Purchaser its Debentures, as determined
pursuant to Section 2.2(a), and the Company and the Purchaser shall deliver
the
other items set forth in Section 2.2 deliverable at the Closing. Upon
satisfaction of the conditions set forth in Sections 2.2 and 2.3, the Closing
shall occur at the offices of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxx Xxxxx Xxxxx LLP
or such other location as the parties shall mutually agree.
2.2 Deliveries.
(a) On
the
Closing Date, the Company shall deliver or cause to be delivered to the
Purchaser the following:
|
(i)
|
this
Agreement duly executed by the Company;
and
|
(ii) the
Debentures.
(b) On
the
Closing Date, the Purchaser shall deliver or cause to be delivered to the
Company the following:
|
(i)
|
this
Agreement duly executed by the Purchaser;
and
|
(ii) the
Subscription Amount by wire transfer to the account as specified in writing
by
the Company.
2.3 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:
(i) the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Purchaser contained herein;
(ii) all
obligations, covenants and agreements of the Purchaser required to be performed
at or prior to the Closing Date shall have been performed; and
(iii) the
delivery by the Purchaser of the items set forth in Section 2.2(b) of this
Agreement.
(b) The
obligations of the Purchaser hereunder in connection with the Closing are
subject to the following conditions being met:
(i) the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Company contained herein;
(ii) all
obligations, covenants and agreements of the Company required to be performed
at
or prior to the Closing Date shall have been performed;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the Company since
the
date hereof; and
(v) from
the
date hereof to the Closing Date, trading in the Common Stock shall not have
been
suspended by the Commission or the Company’s principal Trading Market
(except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to the Closing), and, at
any
time prior to the Closing Date, trading in securities generally as reported
by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices
shall
not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been
declared either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of the Purchaser, makes it impracticable or inadvisable
to
purchase the Debentures at the Closing.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Company.
Except
as
set forth in the Disclosure Schedules, which Disclosure Schedules shall be
deemed a part hereof and shall qualify any representation or otherwise made
herein to the extent of the disclosure contained in the corresponding section
of
the Disclosure Schedules, the Company hereby makes the following representations
and warranties to the Purchaser:
(a) Subsidiaries. All
of the direct and indirect subsidiaries of the Company are set forth on
Schedule 3.1(a). The Company owns, directly or indirectly, all
of the capital stock or other equity interests of each Subsidiary free and
clear
of any Liens, and all of the issued and outstanding shares of capital stock
of
each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights to subscribe for or purchase
securities. If the Company has no subsidiaries, all other references
to the Subsidiaries or any of them in the Transaction Documents shall be
disregarded.
(b) Organization
and Qualification. The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or
default of any of the provisions of its respective certificate or articles
of
incorporation, bylaws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect on
the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse Effect”) and no Proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit
or curtail such power and authority or qualification.
(c) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by
each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required
by
the Company, its board of directors or its stockholders in connection therewith
other than in connection with the Required Approvals. Each
Transaction Document has been (or upon delivery will have been) duly executed
by
the Company and, when delivered in accordance with the terms hereof and thereof,
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be
limited by applicable law.
(d) No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of
the
other transactions contemplated hereby and thereby do not and will not: (i)
conflict with or violate any provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, result
in the creation of any Lien upon any of the properties or assets of the Company
or any Subsidiary, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both)
of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company
or
any Subsidiary is a party or by which any property or asset of the Company
or
any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal
and
state securities laws and regulations), or by which any property or asset of
the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.
(e) Filings,
Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than
(i) filings required pursuant to Section 4.6, (ii) the filing with the
Commission of the Registration Statement and (iii) the notice and/or
application(s) to each applicable Trading Market for the issuance and sale
of
the Securities and the listing of the Underlying Shares for trading thereon
in
the time and manner required thereby and (iv) the filing of Form D with the
Commission and such filings as are required to be made under applicable state
securities laws (collectively, the “Required Approvals”).
(f) Issuance
of the Securities. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear
of
all Liens imposed by the Company other than restrictions on transfer provided
for in the Transaction Documents. The Company has reserved from its
duly authorized capital stock a number of shares of Common Stock for issuance
of
the Shares.
(g) Capitalization. The
capitalization of the Company is as set forth on Schedule 3.1(g), which
Schedule 3.1(g) shall also include the number of shares of Common Stock
owned beneficially, and of record, by Affiliates of the Company as of the date
hereof. The Company has not issued any capital stock since its most recently
filed periodic report under the Exchange Act, other than pursuant to the
exercise of employee stock options under the Company’s stock option plans, the
issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plan and pursuant to the conversion or exercise of
Common Stock Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act. No Person has any right of
first refusal, preemptive right, right of participation, or any similar right
to
participate in the transactions contemplated by the Transaction
Documents. Except as a result of the purchase and sale of the
Securities, there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound
to
issue additional shares of Common Stock or Common Stock Equivalents. The
issuance and sale of the Securities will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the
Purchaser) and will not result in a right of any holder of Company securities
to
adjust the exercise, conversion, exchange or reset price under any of such
securities. All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. No further approval or authorization of
any stockholder, the Board of Directors of the Company or others is required
for
the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s stockholders.
(h) SEC
Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof
(or
such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to
the
expiration of any such extension. As of their respective dates, the
SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be otherwise specified in such financial
statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its consolidated
Subsidiaries as of and for 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, immaterial, year-end audit adjustments.
(i) Material
Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed
in
a subsequent SEC Report filed prior to the date hereof, (i) there has been
no
event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent
with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv)
the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements
to
purchase or redeem any shares of its capital stock and (v) the Company has
not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans. The Company does not have
pending before the Commission any request for confidential treatment of
information. Except for the issuance of the Securities contemplated
by this Agreement or as set forth on Schedule 3.1(i), no event, liability
or development has occurred or exists with respect to the Company or its
Subsidiaries or their respective business, properties, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made that has
not
been publicly disclosed at least one Trading Day prior to the date that this
representation is made.
(j) Litigation. There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting
the
Company, any Subsidiary or any of their respective properties before or by
any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected
to
result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor any director or officer thereof, is or has been the subject
of
any Action involving a claim of violation of or liability under federal or
state
securities laws or a claim of breach of fiduciary duty. There has not
been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or
former director or officer of the Company. The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.
(k) Labor
Relations. No material labor dispute exists or, to the knowledge
of the Company, is imminent with respect to any of the employees of the Company
which could reasonably be expected to result in a Material Adverse
Effect. None of the Company’s or its Subsidiaries’ employees is a
member of a union that relates to such employee’s relationship with the Company,
and neither the Company or any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe that their
relationships with their employees are good. No executive officer, to
the knowledge of the Company, is, or is now expected to be, in violation of
any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each such executive officer does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with all
U.S. federal, state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(l) Compliance. Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is
in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its business
and all such laws that affect the environment, except in each case as could
not
have or reasonably be expected to result in a Material Adverse
Effect.
(m) Regulatory
Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not have or reasonably be expected to result
in a
Material Adverse Effect (“Material Permits”), and neither the Company nor
any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.
(n) Title
to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material to
the
business of the Company and the Subsidiaries, in each case free and clear of
all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries and Liens for the payment
of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries
are in compliance.
(o) Patents
and Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights necessary
or
material for use in connection with their respective businesses as described
in
the SEC Reports and which the failure to so have could have a Material Adverse
Effect (collectively, the “Intellectual Property
Rights”). Neither the Company nor any Subsidiary has received a
notice (written or otherwise) that the Intellectual Property Rights used by
the
Company or any Subsidiary violates or infringes upon the rights of any Person.
To the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any
of
the Intellectual Property Rights. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties, except where failure to
do so
could not, individually or in the aggregate, reasonably be expected to have
a
Material Adverse Effect.
(p) Insurance. The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance
coverage at least equal to the aggregate Subscription Amount. Neither
the Company nor any Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.
(q) Transactions
with Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge
of the Company, none of the employees of the Company is presently a party to
any
transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has
a
substantial interest or is an officer, director, trustee or partner, in each
case in excess of $60,000 other than for (i) payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company and (iii) other employee benefits, including stock option
agreements under any stock option plan of the Company.
(r) Xxxxxxxx-Xxxxx;
Internal Accounting Controls. The Company is in material
compliance with all provisions of the Xxxxxxxx-Xxxxx Act of 2002 which are
applicable to it as of the Closing Date. The Company and the
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared
with
the existing assets at reasonable intervals and appropriate action is taken
with
respect to any differences. The Company has established disclosure controls
and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
Company and designed such disclosure controls and procedures to ensure that
information required to be disclosed by the Company in the reports it files
or
submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and
forms. The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the Company’s most recently filed periodic report under
the Exchange Act (such date, the “Evaluation Date”). The
Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no
changes in the Company’s internal control over financial reporting (as such term
is defined in the Exchange Act) that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
(s) Certain
Fees. Other than as has been previously disclosed to the
Purchaser, no brokerage or finder’s fees or commissions are or will be payable
by the Company to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchaser shall have
no obligation with respect to any fees or with respect to any claims made by
or
on behalf of other Persons for fees of a type contemplated in this Section
that
may be due in connection with the transactions contemplated by the Transaction
Documents.
(t) Private
Placement. Assuming the accuracy of the Purchaser’s
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Securities by
the
Company to the Purchaser as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the
Trading Market.
(u) Investment
Company. The Company is not, and is not an Affiliate of, and, immediately
after receipt of payment for the Securities, will not be or be an Affiliate
of,
an “investment company” within the meaning of the Investment Company Act of
1940, as amended. The Company shall conduct its business in a manner
so that it will not become subject to the Investment Company Act of 1940, as
amended.
(v) Registration
Rights. Other than the Purchaser, no Person has any right to
cause the Company to effect the registration under the Securities Act of any
securities of the Company.
(w) Listing
and Maintenance Requirements. The Company’s Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely
to
have the effect of, terminating the registration of the Common Stock under
the
Exchange Act nor has the Company received any notification that the Commission
is contemplating terminating such registration. The Company has not,
in the 12 months preceding the date hereof, received notice from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.
(x) Application
of Anti-Takeover Protections. The Company and its board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or
similar charter documents) or the laws of its state of incorporation that is
or
could become applicable to the Purchaser as a result of the Purchaser and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of the Securities and the Purchaser’s ownership of the
Securities.
(y) Disclosure. Except
with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither
it
nor any other Person acting on its behalf has provided the Purchaser or its
agents or counsel with any information that it believes constitutes or might
constitute material, nonpublic information. The Company understands
and confirms that the Purchaser will rely on the foregoing representation in
effecting transactions in securities of the Company. All disclosure
furnished by or on behalf of the Company to the Purchaser regarding the Company,
its business and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The press releases
disseminated by the Company during the twelve months preceding the date of
this
Agreement taken as a whole do 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, in light of the circumstances under which
they
were made and when made, not misleading. The Company acknowledges and
agrees that the Purchaser does not make and has not made any representations
or
warranties with respect to the transactions contemplated hereby other than
those
specifically set forth in Section 3.2 hereof.
(z) No
Integrated Offering. Assuming the accuracy of the Purchaser’s
representations and warranties set forth in Section 3.2, 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, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of the Securities Act or any applicable shareholder approval
provision of any Trading Market on which any of the securities of the Company
are listed or designated.
(aa) Solvency. Based
on the financial condition of the Company as of the Closing Date after giving
effect to the receipt by the Company of the proceeds from the sale of the
Securities hereunder, (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof; and (iii)
the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account
all
anticipated uses of the cash, would be sufficient to pay all amounts on or
in
respect of its liabilities when such amounts are required to be
paid. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts
of
cash to be payable on or in respect of its debt). The Company has no
knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing
Date. Schedule 3.1(aa) sets forth as of the dates thereof all
outstanding secured and unsecured Indebtedness of the Company or any Subsidiary,
or for which the Company or any Subsidiary has commitments. For the
purposes of this Agreement, “Indebtedness” means (a) any liabilities for
borrowed money or amounts owed in excess of $50,000 (other than trade accounts
payable incurred in the ordinary course of business), (b) all guaranties,
endorsements and other contingent obligations in respect of Indebtedness of
others, whether or not the same are or should be reflected in the Company’s
balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in
the
ordinary course of business and (c) the present value of any lease payments
in
excess of $50,000 due under leases required to be capitalized in accordance
with
GAAP. Neither the Company nor any Subsidiary is in default with
respect to any Indebtedness.
(bb) Tax
Status.
Except for matters that would not, individually or in the aggregate, have
or
reasonably be expected to result in a Material Adverse Effect, the Company
and
each Subsidiary has filed all necessary federal, state and foreign income and
franchise tax returns and has paid or accrued all taxes shown as due thereon,
and the Company has no knowledge of a tax deficiency which has been asserted
or
threatened against the Company or any Subsidiary.
(cc) No
General Solicitation. Neither the Company nor any person acting on behalf of
the Company has offered or sold any of the Securities by any form of general
solicitation or general advertising. The Company has offered the
Securities for sale only to the Purchaser and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.
(dd) Foreign
Corrupt Practices. Neither the Company, nor to the knowledge of
the Company, any agent or other person acting on behalf of the Company, has
(i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf
of
which the Company is aware) which is in violation of law, or (iv)
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended.
(ee) Accountants. The
Company’s accounting firm is set forth on Schedule 3.1(ee) of the
Disclosure Schedule. To the knowledge and belief of the Company, such
accounting firm (i) is a registered public accounting firm as required by the
Exchange Act and (ii) shall express its opinion with respect to the financial
statements to be included in the Company’s Annual Report on Form 10-KSB for the
year ending December 31, 2006.
(ff) Seniority. As
of the Closing Date, no Indebtedness or other claim against the Company is
senior to the Debentures in right of payment, whether with respect to interest
or upon liquidation or dissolution, or otherwise, other than indebtedness
secured by purchase money security interests (which is senior only as to
underlying assets covered thereby) and capital lease obligations (which is
senior only as to the property covered thereby).
(gg) No
Disagreements with Accountants and Lawyers. Other than as has
been previously disclosed to the Purchaser, there are no disagreements of any
kind presently existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants and lawyers formerly or presently
employed by the Company and the Company is current with respect to any fees
owed
to its accountants and lawyers.
(hh) Acknowledgment
Regarding Purchaser’s Purchase of Securities. The Company
acknowledges and agrees that the Purchaser is acting solely in the capacity
of
an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges
that the Purchaser is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated thereby and any advice given by the Purchaser
or any of its respective representatives or agents in connection with the
Transaction Documents and the transactions contemplated thereby is merely
incidental to the Purchaser’s purchase of the Securities. The Company
further represents to the Purchaser that the Company’s decision to enter into
this Agreement and the other Transaction Documents has been based solely on
the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.
(ii) Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by the
Company that (i) the Purchaser has not been asked to agree, nor has the
Purchaser agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued
by the Company or to hold the Securities for any specified term; (ii) past
or
future open market or other transactions by the Purchaser, including Short
Sales, and specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
placement transactions, may negatively impact the market price of the Company’s
publicly-traded securities; (iii) the Purchaser, and counter-parties in
“derivative” transactions to which the Purchaser is a party, directly or
indirectly, may presently have a “short” position in the Common Stock, and (iv)
the Purchaser shall not be deemed to have any affiliation with or control over
any arm’s length counter-party in any “derivative” transaction. The
Company further understands and acknowledges that (a) the Purchaser may engage
in hedging activities at various times during the period that the Securities
are
outstanding, including, without limitation, during the periods that the value
of
the Shares deliverable with respect to the Securities are being determined
and
(b) such hedging activities (if any) could reduce the value of the existing
stockholders' equity interests in the Company at and after the time that the
hedging activities are being conducted. The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.
(jj) Regulation
M Compliance. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the securities of the Company or (iii) paid
or
agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company, other than, in the case of clauses (ii)
and
(iii), compensation paid to the Company’s placement agent in connection with the
placement of the Securities.
3.2 Representations
and Warranties of the Purchaser. The Purchaser represents and
warrants as of the date hereof and as of the Closing Date to the Company as
follows:
(a) Organization;
Authority. The Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate or partnership power and authority
to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution, delivery and performance by the Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or similar action on the part of the Purchaser. Each
Transaction Document to which it is a party has been duly executed by the
Purchaser, and when delivered by the Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of the
Purchaser, enforceable against it in accordance with its terms, except (i)
as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be
limited by applicable law.
(b) Own
Account. The Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling
such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any
of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings
with
any other persons to distribute or regarding the distribution of such Securities
(this representation and warranty not limiting the Purchaser’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws) in violation of the
Securities Act or any applicable state securities law.
(c) Purchaser
Status. At the time the Purchaser was offered the Securities, it
was, and at the date hereof it is, and on each date on which it converts any
Debentures it will be either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii)
a
“qualified institutional buyer” as defined in Rule 144A(a) under the Securities
Act. The Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.
(d) Experience
of the Purchaser. The Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits
and
risks of the prospective investment in the Securities, and has so evaluated
the
merits and risks of such investment. The Purchaser is able to bear
the economic risk of an investment in the Securities and, at the present time,
is able to afford a complete loss of such investment.
(e) General
Solicitation. The Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
(f) Short
Sales and Confidentiality Prior To The Date Hereof. Other
than the transaction contemplated hereunder, the Purchaser has not directly
or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with the Purchaser, executed any transaction, including Short
Sales, in the securities of the Company during the period commencing from
the time that the Purchaser first received a term sheet (written or oral) from
the Company or any other Person setting forth the material terms of the
transactions contemplated hereunder until the date hereof (“Discussion
Time”).
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other
than pursuant to an effective registration statement or Rule 144, to the Company
or to an Affiliate of the Purchaser or in connection with a pledge as
contemplated in Section 4.1(b), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor
and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under
the
Securities Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and shall have
the
rights of a Purchaser under this Agreement.
(b) The
Purchaser agrees to the imprinting, so long as is required by this Section
4.1,
of a legend on any of the Securities in the following form:
[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE]
HAS
[NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON CONVERSION
OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN SECURED BY SUCH SECURITIES.
Certificates
evidencing Securities shall not be required to contain the legend set forth
in
Section 4.1(b) or any other legend (i) while a Registration Statement covering
the resale of such Securities is effective under the Securities Act, or (ii)
following any sale of such Securities pursuant to Rule 144, or (iii) if such
Securities are eligible for sale under Rule 144(k), or (iv) if such legend
is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the
Commission). The Company shall cause its counsel to issue the legal
opinion included in the transfer agent instructions to the Company’s transfer
agent promptly after the Effective Date to effect the removal of the legend
hereunder. At such time as a legend is no longer required for certain
Securities, the Company will promptly, following the delivery by a Purchaser
to
the Company’s transfer agent of a legended certificate representing such
Securities, deliver or cause to be delivered to such Purchaser a certificate
representing such Securities that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in Section 4.1(b).
4.2 Acknowledgment
of Dilution. The Company acknowledges that the issuance of the
Securities may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial. The Company further acknowledges
that its obligations under the Transaction Documents, including without
limitation its obligation to issue the Shares pursuant to the Transaction
Documents, are unconditional and absolute and not subject to any right of set
off, counterclaim, delay or reduction, regardless of the effect of any such
dilution or any claim the Company may have against the Purchaser and regardless
of the dilutive effect that such issuance may have on the ownership of the
other
stockholders of the Company.
4.3 Furnishing
of Information. As long as the Purchaser owns Securities, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by
the
Company after the date hereof pursuant to the Exchange Act. As long
as the Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchaser
and
make publicly available in accordance with Rule 144(c) such information as
is
required for the Purchaser to sell the Securities under Rule 144. The
Company further covenants that it will take such further action as any holder
of
Securities may reasonably request, to the extent required from time to time
to
enable such Person to sell such Securities without registration under the
Securities Act within the requirements of the exemption provided by Rule
144.
4.4 Integration. The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the
sale
of the Securities to the Purchaser or that would be integrated with the offer
or
sale of the Securities for purposes of the rules and regulations of any Trading
Market.
4.5 Conversion
Procedures. The form of Notice of Conversion included in the
Debentures set forth the totality of the procedures
required of the Purchaser in order to convert the Debentures. No
additional legal opinion or other information or instructions shall be required
of the Purchaser to convert its Debentures. The Company shall honor
conversions of the Debentures and shall deliver Shares in accordance with the
terms, conditions and time periods set forth in the Transaction
Documents.
4.6 Securities
Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New
York City time) on the Trading Day following the date hereof, issue a press
release disclosing all material terms of the transactions contemplated hereby,
and, on or before 8:30 a.m. on the fourth Trading Day following the date hereof,
file a Current Report on Form 8-K disclosing the material terms of the
transactions contemplated hereby and attaching the Transaction Documents as
exhibits thereto. The Company and the Purchaser shall consult with
each other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor the Purchaser shall issue
any
such press release or otherwise make any such public statement without the
prior
consent of the Company, with respect to any press release of the Purchaser,
or
without the prior consent of the Purchaser, with respect to any press release
of
the Company, which consent shall not unreasonably be withheld or delayed, except
if such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement
or
communication.
4.7 Intentionally
Omitted.
4.8 Non-Public
Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it nor any other Person acting on
its
behalf will provide the Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto the Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information. The Company
understands and confirms that the Purchaser shall be relying on the foregoing
representations in effecting transactions in securities of the
Company.
4.9 Use
of
Proceeds. The Company shall use the net proceeds from the sale of
the Securities hereunder for general corporate purposes and shall not otherwise
use such proceeds for (a) the satisfaction of any portion of the Company’s debt
(other than payment of trade payables in the ordinary course of the Company’s
business and prior practices), (b) the redemption of any Common Stock or Common
Stock Equivalents or (c) the settlement of any outstanding
litigation.
4.10 Board
Seat. So long as the Purchaser owns at least 10% of the issued
and outstanding voting securities of the Company (calculated on an as-converted
basis with respect to the Purchaser), from and after the Closing Date, the
Purchaser shall have the right to appoint at least one (1) member to the Board,
upon written notice provided to the Company; provided, however, if
the Purchaser elects not to appoint a director to the Board, the Purchaser
shall
have the right to have a representative act as an observer at all Board meetings
and any other Board proceeding, including without limitation the right to review
proposed transactions that require Board approval. During any time
during which there are not at least two (i) independent directors or (ii)
officers of the Company serving on the Compensation Committee, then the
Purchaser shall have the right to approve all Compensation Committee decisions
prior to such decisions becoming final.
4.11 Indemnification
of Purchaser. Subject to the provisions of this Section
4.11, the Company will indemnify and hold the Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls the Purchaser (within the meaning of Section 15 of the Securities
Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding
a
lack of such title or any other title) of such controlling person (each, a
“Purchaser Party”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including
all
judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation that such Purchaser Party may suffer or incur
as
a result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or
in
the other Transaction Documents or (b) any action instituted against the
Purchaser, or any of them or their respective Affiliates, by any stockholder
of
the Company who is not an Affiliate of the Purchaser, with respect to any of
the
transactions contemplated by the Transaction Documents (unless such action
is
based upon a breach of the Purchaser’s representations, warranties or covenants
under the Transaction Documents or any agreements or understandings the
Purchaser may have with any such stockholder or any violations by the Purchaser
of state or federal securities laws or any conduct by the Purchaser which
constitutes fraud, gross negligence, willful misconduct or
malfeasance). If any action shall be brought against any Purchaser
Party in respect of which indemnity may be sought pursuant to this Agreement,
such Purchaser Party shall promptly notify the Company in writing, and the
Company shall have the right to assume the defense thereof with counsel of
its
own choosing reasonably acceptable to such Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of
such
counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period of time to
assume such defense and to employ counsel or (iii) in such action there is,
in
the reasonable opinion of such separate counsel, a material conflict on any
material issue between the position of the Company and the position of such
Purchaser Party, in which case the Company shall be responsible for the
reasonable fees and expenses of no more than one such separate
counsel. The Company will not be liable to any Purchaser Party under
this Agreement (i) for any settlement by a Purchaser Party effected without
the
Company’s prior written consent, which shall not be unreasonably withheld or
delayed; or (ii) to the extent, but only to the extent that a loss, claim,
damage or liability is attributable to any Purchaser Party’s breach of any of
the representations, warranties, covenants or agreements made by such Purchaser
Party in this Agreement or in the other Transaction Documents.
4.12 Reservation
and Listing of Securities.
(a) The
Company shall maintain a reserve from its duly authorized shares of Common
Stock
for issuance pursuant to the Debentures in such amount as may be required to
fulfill its obligations in full under the Transaction Documents.
(b) The
Company shall, if applicable: (i) in the time and manner required by the
principal Trading Market, prepare and file with such Trading Market an
additional shares listing application covering the Shares, (ii) take all steps
necessary to cause such shares of Common Stock to be approved for listing on
such Trading Market as soon as possible thereafter, (iii) provide to the
Purchaser evidence of such listing, and (iv) maintain the listing of such Common
Stock on such Trading Market or another Trading Market.
4.13 Right
of First Refusal. As long as any portion of the Debentures remain
outstanding (including principal or accrued interest), the Company will use
its
reasonable best efforts to keep the Purchaser fully informed regarding its
intentions to raise equity capital and the expected terms and conditions of
such
financing. Further, so long as the Debentures remain outstanding, if
the Company undertakes arrangements to raise additional capital by the issuance
or sale of capital stock of the Company, including without limitation shares
of
any class of Common Stock, any Common Stock Equivalents, any class of preferred
stock, options, warrants or any other equity or debt securities convertible
or
exercisable into shares of Common Stock (whether the offering is conducted
by
the Company, underwriter, placement agent or any third party or the issuance
is
pursuant to an acquisition, joint venture or other arrangement not involving
the
sale of securities) (a “Capital Raising Offer”), the Company shall offer
to the Purchaser such Capital Raising Offer, by providing in writing the
principal amount of capital it intends to raise and outline of the material
terms of such capital raise (such writing, a “Pre-Notice”), prior to
offering the Capital Raising Offer to any third parties, including but not
limited to, current or former officers or directors, current or former
shareholders and/or investors of the Company, underwriters, brokers, agents
or
other third parties. The Purchaser shall have fifteen (15) business
days from receipt of a Pre-Notice to accept or reject all or a portion of the
related Capital Raising Offer.
4.14 Short
Sales and Confidentiality After The Date Hereof. The Purchaser covenants
that neither the Purchaser nor any Affiliate acting on its behalf or pursuant
to
any understanding with it will execute any Short Sales during the period
commencing at the Discussion Time and ending upon the filing of the Form 8-K
required under Section 4.6. The Purchaser covenants that until such
time as the transactions contemplated by this Agreement are publicly disclosed
by the Company as described in Section 4.6, the Purchaser will maintain the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this
transaction). The Purchaser understands and acknowledges that the
Commission currently takes the position that coverage of short sales of shares
of the Common Stock “against the box” prior to the Effective Date of the
Registration Statement with the Securities is a violation of Section 5 of the
Securities Act, as set forth in Item 65, Section A, of the Manual of Publicly
Available Telephone Interpretations, dated July 1997, compiled by the Office
of
Chief Counsel, Division of Corporation Finance.
4.15 Subsequent
Equity Sales. From the date hereof until such time as the
Purchaser holds any of the Securities, the Company shall not effect, or enter
into any agreement that effects, any Subsequent Financing involving a Variable
Rate Transaction. “Variable Rate Transaction” means a transaction in
which the Company issues or sells (i) any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the right to
receive additional shares of Common Stock either (A) at a conversion, exercise
or exchange rate or other price that is based upon and/or varies with the
trading prices of or quotations for the shares of Common Stock at any time
after
the initial issuance of such debt or equity securities, or (B) with a
conversion, exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such debt or equity security or upon
the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Common Stock or (ii) enters
into any agreement, including, but not limited to, an equity line of credit,
whereby the Company may sell its securities at a future determined
price.
4.16 Form
D; Blue Sky Filings. The Company agrees to timely file a Form D
with respect to the Securities as required under Regulation D and to provide
a
copy thereof, promptly upon request of the Purchaser. The Company shall take
such action as the Company shall reasonably determine is necessary in order
to
obtain an exemption for, or to qualify the Securities for, sale to the Purchaser
at the Closing under applicable securities or “Blue Sky” laws of the states of
the United States, and shall provide evidence of such actions promptly upon
request of the Purchaser.
4.17 Capital
Changes. The Company shall not undertake a reverse or forward
stock split or reclassification of the Common Stock without the written consent
of the Purchaser.
4.18 Joint
Venture Agreement. As soon as practicable after Closing (but in
no event more than 30 days), the parties agree to cooperate on the formation
of
a joint venture pursuant to the Joint Venture Agreement on such terms and
conditions as are set forth in the Letter Agreement.
4.19 Additional
Agreements. As soon as practicable after Closing (but in no event
more than 30 days), the parties agree to use their commercially reasonable
best
effort set forth to negotiate, execute and deliver the additional agreements
and
securities contemplated and agreed to in the Letter Agreement.
4.20 Registration
Rights. The Company hereby grants to the Purchaser the
Registration Rights set forth on Exhibit B hereto with respect to the
Shares.
ARTICLE
V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by the Purchaser, by the written notice to
the
other parties, if the Closing has not been consummated on or before April 19,
2007; provided, however, that such termination will not affect the
right of any party to xxx for any breach by the other party (or
parties).
5.2 Fees
and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all
transfer agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchaser.
5.3 Entire
Agreement. This Agreement and the Letter Agreement, together with
the exhibits and schedules thereto, contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits
and
schedules.
5.4 Notices. Any
and all notices or other communications or deliveries required or permitted
to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth
on
the signature pages attached hereto prior to 5:30 p.m. (New York City time)
on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
set
forth on the signature pages attached hereto on a day that is not a Trading
Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom
such
notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.
5.5 Amendments;
Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case
of an
amendment, by the Company and the Purchaser or, in the case of a waiver, by
the
party against whom enforcement of any such waived provision is
sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair
the
exercise of any such right.
5.6 Headings. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
5.7 Successors
and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchaser (other
than by merger). The Purchaser may assign any or all of its rights
under this Agreement to any Person to whom the Purchaser assigns or transfers
any Securities, provided that such transferee agrees in writing to be bound,
with respect to the transferred Securities, by the provisions of the Transaction
Documents that apply to the “Purchaser.”
5.8 No
Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section
4.11.
5.9 Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed
by
and construed and enforced in accordance with the internal laws of the State
of
New York, without regard to the principles of conflicts of law
thereof. The parties hereby waive all rights to a trial by
jury. If either party shall commence an action or proceeding to
enforce any provisions of the Transaction Documents, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or
proceeding.
5.10 Survival. The
representations and warranties shall survive the Closing and the delivery of
the
Securities for the applicable statue of limitations.
5.11 Severability.
If any term, provision, covenant or restriction of this Agreement is held by
a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
5.12 Rescission
and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction Documents, whenever the Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then the
Purchaser may rescind or withdraw, in its sole discretion from time to time
upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights; provided,
however, in the case of a rescission of a conversion of a Debenture,
the
Purchaser shall be required to return any shares of Common Stock delivered
in
connection with any such rescinded conversion notice.
5.13 Replacement
of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or
cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor,
a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.
5.14 Remedies. In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Purchaser and the Company will
be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agrees to waive
and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.
5.15 Payment
Set Aside. To the extent that the Company makes a payment or payments to the
Purchaser pursuant to any Transaction Document or the Purchaser enforces or
exercises its rights thereunder, and such payment or payments or the proceeds
of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation
or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
5.16 Liquidated
Damages. The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing
obligation of the Company and shall not terminate until all unpaid partial
liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been
canceled.
5.17 Construction.
The parties agree that each of them and/or their respective counsel has reviewed
and had an opportunity to revise the Transaction Documents and, therefore,
the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
|
POWER3
MEDICAL PRODUCTS, INC.
|
Address
for Notice:
|
|
By:_____________________________
Name:
Title:
|
Power3
Medical Products, Inc.
0000
Xxxxxxxx Xxxxxx Xxxxx, Xxxxx X0-0
Xxx
Xxxxxxxxx, Xxxxx 00000
Facsimile:
(000) 000 0000
Attention:
Xxxxxx X. Xxxx, President and CEO
|
|
NEOGNOMICS,
INC.
|
Address
for Notice:
|
|
By:_____________________________
Name:
Title:
|
NeoGenomics,
Inc.
00000
Xxxxxxxxxxxx Xxxxx, Xxxxx 0
Xxxx
Xxxxx, Xxxxxxx 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxx X. Xxxxxxxxx, President and Chief Scientific
Officer
|
|
With
a Copy to:
|
|
|
Xxxxxxxxxxx
& Xxxxxxxx Xxxxxxx Xxxxx Xxxxx, LLP
000
Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx,
Xxxxxxx 00000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
X. Xxxxxx, Esq.
|
EXHIBITS
EXHIBIT
A
– FORM OF DEBENTURE
EXHIBIT
B
– REGISTRATION RIGHTS
EXHIBIT
A
FORM
OF DEBENTURE
EXHIBIT
B
REGISTRATION
RIGHTS
1.1 Registration
Rights
. The
Company hereby grants the following registration rights to Purchaser with
respect to the Shares.
(a) On
one occasion after November 16, 2007, upon a written request therefor from
the
Purchaser, the Company shall prepare and file with the Commission a registration
statement under the Securities Act (on Form SB-2 registration statement or
such
other form that it is eligible to use) registering the Shares which are the
subject of such request for unrestricted public resale by the holder
thereof. The Company will register not less than a number of shares
of Common Stock in the aforedescribed registration statement that is equal
to
100% of the Shares for which registration is requested pursuant to this
Exhibit. Except with the written consent of the Purchaser, no
securities of the Company other than the Shares will be included in the
Registration Statement.
(b) If
the Company at any time proposes to register any of its securities under the
Securities Act for sale to the public, whether for its own account or for the
account of other security holders or both, except with respect to registration
statements on Forms X-0, X-0 or another form not available for registering
the
Shares for sale to the public, provided the Shares are not otherwise registered
for resale by the Purchaser pursuant to an effective registration statement,
each such time it will give at least fifteen (15) days’ prior written
notice to the record Purchaser of its intention so to do. Upon the written
request of the Purchaser, received by the Company within ten (10) days
after the giving of any such notice by the Company, to register any of the
Shares not previously registered, the Company will cause such Shares as to
which
registration shall have been so requested to be included with the securities
to
be covered by the registration statement proposed to be filed by the Company,
all to the extent required to permit the sale or other disposition of the Shares
so registered by the Purchaser. In the event that any registration pursuant
to
this Exhibit shall be, in whole or in part, an underwritten public offering
of common stock of the Company, the number of shares of Shares to be included
in
such an underwriting may be reduced by the managing underwriter if and to the
extent that the Company and the underwriter shall reasonably be of the opinion
that such inclusion would adversely affect the marketing of the securities
to be
sold by the Company therein; provided, however, that the Company shall notify
the Purchaser in writing of any such reduction. Notwithstanding the foregoing
provisions, or Section 1.4 hereof, the Company may withdraw or delay or suffer
a
delay of any registration statement referred to in this Section
1.1(b) without thereby incurring any liability to the
Purchaser.
1.2 Registration
Procedures
. If
and whenever the Company is required by the provisions of Section 1.1(a) or
1.1(b) to effect the registration of any Shares under the Securities Act, the
Company will, as expeditiously as possible.
(a) subject
to the timelines provided in this Agreement, prepare and file with the
Commission a registration statement required by Section 1, with respect to
such
Shares and use its best efforts to cause such registration statement to become
and remain effective for the period of the distribution contemplated thereby
(determined as herein provided), promptly provide to the holders of the Shares
copies of all filings and Commission letters of comment and notify Purchaser
(by
telecopier and by e-mail addresses provided by Purchaser) on or before
6:00 PM EST on the same business day that the Company receives notice that
(i) the Commission has no comments or no further comments on the
Registration Statement, and (ii) the registration statement has been
declared effective;
(b) prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be
necessary to keep such registration statement effective until such registration
statement has been effective for a period of two (2) years, and comply with
the provisions of the Securities Act with respect to the disposition of all
of
the Shares covered by such registration statement in accordance with the
Purchaser’s intended method of disposition set forth in such registration
statement for such period;
(c) furnish
to the Purchaser, at the Company’s expense, such number of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or their disposition of the securities covered by
such registration statement or make them electronically available;
(d) use
its commercially reasonable best efforts to register or qualify the Shares
covered by such registration statement under the securities or “blue sky” laws
of Florida and such jurisdictions as the Purchaser shall request in writing,
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service
of
process in any such jurisdiction;
(e) if
applicable, list the Shares covered by such registration statement with any
securities exchange on which the Common Stock is then listed;
(f) notify
the Purchaser within one (1) business day of the Company’s becoming aware that a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration statement, as
then
in effect, includes an untrue statement of a material fact or omits to state
a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing or which
becomes subject to a Commission, state or other governmental order suspending
the effectiveness of the registration statement covering any of the Shares;
and
(g) provided
same would not be in violation of the provision of Regulation FD under the
Exchange Act, make available for inspection by the Purchasers, and any attorney,
accountant or other agent retained by the Purchaser or underwriter, all publicly
available, non-confidential financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company’s officers,
directors and employees to supply all publicly available, non-confidential
information reasonably requested by the Purchaser, attorney, accountant or
agent
in connection with such registration statement.
1.3 Expenses
. All
expenses incurred by the Company in complying with Section 1, including, without
limitation, all registration and filing fees, printing expenses (if required),
fees and disbursements of counsel and independent public accountants for the
Company, fees and expenses (including reasonable counsel fees) incurred in
connection with complying with state securities or “blue sky” laws, fees of the
National Association of Securities Dealers, Inc., transfer taxes, and fees
of
transfer agents and registrars, are called “Registration Expenses.” All
underwriting discounts and selling commissions applicable to the sale of Shares
are called “Selling Expenses.” The Company will pay all
Registration Expenses in connection with the registration statement under
Section 1.
1.4 Indemnification
and
Contribution.
(a) In
the event of a registration of any Shares under the Securities Act pursuant
to
Section 1, the Company will, to the extent permitted by law, indemnify and
hold
harmless the Purchaser, each officer of the Purchaser, each director of the
Purchaser, each underwriter of such Shares thereunder and each other person,
if
any, who controls such Purchaser or underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which the Purchaser, or such underwriter or controlling person
may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such Shares
was registered under the Securities Act pursuant to Section 1, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission
to
state therein a material fact required to be stated therein or necessary to
make
the statements therein not misleading in light of the circumstances when made,
and will subject to the provisions of Section 1.4(c) reimburse the
Purchaser, each such underwriter and each such controlling person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable to the Purchaser to the extent
that any such damages arise out of or are based upon an untrue statement or
omission (A) made in any preliminary prospectus if (i) the Purchaser failed
to send or deliver a copy of the final prospectus delivered by the Company
to
the Purchaser with or prior to the delivery of written confirmation of the
sale
by the Purchaser to the person asserting the claim from which such damages
arise
and (ii) the final prospectus would have corrected such untrue statement or
alleged untrue statement or such omission or alleged omission, or (B) to
the extent that any such loss, claim, damage or liability arises out of or
is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by any such
Purchaser, or any such controlling person in writing specifically for use in
such registration statement or prospectus.
(b) In
the event of a registration of any of the Shares under the Securities Act
pursuant to Section 1, the Purchaser will, to the extent permitted by law,
indemnify and hold harmless the Company, and each person, if any, who controls
the Company within the meaning of the Securities Act, each officer of the
Company who signs the registration statement, each director of the Company,
each
underwriter and each person who controls any underwriter within the meaning
of
the Securities Act, against all losses, claims, damages or liabilities, joint
or
several, to which the Company or such officer, director, underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Shares were registered under the Securities Act pursuant to
Section 1, any preliminary prospectus or final prospectus contained therein,
or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and
will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Purchaser will be liable
hereunder in any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such Purchaser, as such,
furnished in writing to the Company by such Purchaser specifically for use
in
such registration statement or prospectus, and provided, further, however,
that
the liability of the Purchaser hereunder shall be limited to the net proceeds
actually received by the Purchaser from the sale of Shares covered by such
registration statement.
All
references to “Section 1” in this Exhibit D shall only mean this Section 1 of
this Exhibit and shall not refer to any other section of this Purchase
Agreement.
