EXHIBIT 10.1
SECURITIES PURCHASE
AGREEMENT
NEUROMetrix, Inc.
62 Fourth Avenue
Waltham, Massachusetts
02451
The undersigned (the
“Investor” ) hereby confirms its
agreement with you as follows:
1.
This Securities Purchase Agreement
is made as of the date set forth below between
NEUROMetrix, Inc., a Delaware corporation (the
“Company” ), and the Investor.
2.
The Company has authorized the sale
and issuance of (i) up to 8,816,521 shares (the
“Shares” ) of the common stock of the
Company, $.0001 par value per share (the “Common
Stock” ), and (ii) warrants to purchase up to
8,375,695 shares of Common Stock (the
“Warrants” ), to certain investors in a
private placement (the “Offering”
).
3.
The Company and the Investor agree
that the Investor will purchase from the Company and the Company
will issue and sell to the Investor
Shares at a purchase price of $2.00 per Share (the
“Share Purchase Price” ) and Warrants to
purchase
shares of Common Stock (which Warrant shall be exercisable for 95%
of the number of Shares that are purchased under this Agreement by
the Investor at an exercise price per share equal to $2.20 per
share and at a purchase price of $0.125 per share of Common Stock
underlying the Warrant (the “Warrant Purchase
Price” )), for an aggregate purchase price of
$
(the “Purchase Price” ), subject to the
Terms and Conditions for Purchase of Shares attached hereto as
Annex I and incorporated herein by this reference as if fully set
forth herein. Unless otherwise requested by the Investor in
EXHIBIT A , certificates representing the Shares purchased
by the Investor will be registered in the Investor’s name and
address as set forth below.
4.
The Investor represents that, except
as set forth below, (a) it has had no position, office or
other material relationship, other than as a shareholder of the
Company, within the past three years with the Company or its
affiliates, (b) neither it, nor any group of which it is a
member or to which it is related, beneficially owns (including the
right to acquire or vote) any securities of the Company other than
as set forth below and (c) it has no direct or indirect
affiliation or association with any Financial Industry Regulatory
Authority ( “FINRA” ) member.
Exceptions (if no exceptions, write “none.” If
left blank, response will be deemed to be
“none”):
No. of shares of Common Stock
of the Company held by Investor and its affiliates (please break
out by holder):
Please confirm that the foregoing
correctly sets forth the agreement between us by signing in the
space provided below for that purpose.
|
|
Dated as of:
,
2009
|
|
|
|
|
|
|
|
|
|
[Investor Name]
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
|
Address:
|
|
|
|
|
|
|
|
AGREED AND
ACCEPTED:
NEUROMetrix, Inc.
|
By:
|
/s/ Shai N. Gozani
|
|
|
Name:
|
Shai N. Gozani
|
|
|
Title:
|
President & CEO
|
|
2
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE
OF SHARES
1.
AGREEMENT TO SELL AND PURCHASE THE
SHARES AND WARRANTS; SUBSCRIPTION DATE.
1.1
Purchase and Sale.
At the
Closing (as defined in Section 2), the Company will sell to
the Investor, and the Investor will purchase from the Company, upon
the terms and subject to the conditions set forth herein,
(i) the number of Shares described in paragraph 3 of the
Securities Purchase Agreement to which this Annex I is attached
(collectively with this Annex I and the other exhibits attached
hereto, this “Agreement” ) at the Share Purchase Price
specified in the Agreement (which price shall be the consolidated
closing bid price of the Common Stock as reported on the Nasdaq
Global Market immediately prior to the execution of this
Agreement), and (ii) Warrants, in substantially the form
attached hereto as EXHIBIT E , to acquire up to that number
of additional shares of Common Stock set forth in paragraph 3 of
the Securities Purchase Agreement to which this Annex I is attached
at the Warrant Purchase Price (the shares of Common Stock issuable
upon exercise of or otherwise pursuant to the Warrants issued to
the Investors, collectively, the “Warrant Shares”
). The
Shares and Warrants are sometimes referred to herein collectively
as the “Securities . ”
1.2
Other Investors. As part of the
Offering, the Company proposes to enter into Securities Purchase
Agreements in the same form, and on the same terms and conditions,
as this Agreement and as the Warrant, with certain other investors
(the “Other
Investors” ), and the Company expects to
complete sales of Shares and Warrants to them. The Investor
and the Other Investors are sometimes collectively referred to
herein as the “Investors , ” and this Agreement and the
Securities Purchase Agreements executed by the Other Investors are
sometimes collectively referred to herein as the
“Agreements
.
” The Company may accept
executed Agreements from the Investors for the purchase of
Securities commencing upon the date on which the Company provides
the Investors with a proposed purchase price per Share and
concluding upon the date (the “Subscription Date”
) on which the
Company has notified Canaccord Adams (in its capacity as placement
agent for the Shares, the “Placement Agent”
) in writing that
it will no longer accept Agreements for the purchase of Securities
in the Offering, which shall be no more than one (1) Business
Day (as defined below) following the Business Day on which the
Company has first accepted an Agreement. Each Investor must
complete a Securities Purchase Agreement, a Securities Certificate
Questionnaire (in the form attached as EXHIBIT A hereto) and
an Investor Questionnaire (in the form attached as EXHIBIT B
hereto) in order to purchase Securities in the
Offering.
1.3
Placement Agent Fee; Use of
Proceeds. The Investor
acknowledges that the Company intends to pay to the Placement Agent
a fee set forth in EXHIBIT E-2 attached hereto in respect of
the sale of Securities to the Investor and to issue to the
Placement Agent a warrant to purchase Common Stock in the form
attached hereto as EXHIBIT E-1 and for the number of shares
set forth in EXHIBIT E-2 . The Company has taken no
action, and has not failed to take any action, that would give rise
to any claim by any other person for brokerage commissions,
placement agent’s fees or similar payments relating to this
Agreement or the transactions contemplated hereby. The
Company shall use the proceeds (after payment of the
1
Placement Agent
Fee) from the sale of the Securities hereunder for general working
capital purposes.
2.
DELIVERY OF THE SHARES AT
CLOSING. The completion of the
purchase and sale of the Securities (the “Closing” ) shall occur on a date
specified by the Company and the Placement Agent (the
“Closing
Date” ), but no later than five
(5) Business Days following the date hereof, and of which the
Investors will be notified at least One (1) Business Day in
advance by the Placement Agent. At the Closing, the Company
shall deliver to the Investor (i) a copy of irrevocable
instructions to American Stock Transfer & Trust Company,
the Company’s transfer agent, certified by the corporate
secretary of the Company and instructing the issuance to Investor
in book entry form of the number of Shares set forth in paragraph 3
of the Securities Purchase Agreement (or, upon request by Investor,
a stock certificate for such number of Shares), such entry (or
certificate, as the case may be) to be registered in the name of
the Investor or, if so indicated on the Securities Certificate
Questionnaire, in the name of a nominee designated by the Investor,
and (ii) a Warrant, issued in the name of such Investor or, if
so indicated on the Securities Certificate Questionnaire, in the
name of a nominee designated by the Investor, pursuant to which
such Investor shall have the right to acquire such number of
Warrant Shares set forth in paragraph 3 of the Securities Purchase
Agreement. In exchange for the delivery of the certificates
representing such Securities, the Investor shall deliver the
Purchase Price to the Company by wire transfer of immediately
available funds pursuant to the Company’s written
instructions. On the Closing Date, the Company shall cause
counsel to the Company to deliver to the Investors a legal opinion,
dated the Closing Date, substantially in the form attached hereto
as EXHIBIT D (the “Legal Opinion”
).
The Company’s obligation to
issue and sell the Securities to the Investor shall be subject to
the following conditions, any one or more of which may be waived by
the Company: (a) prior receipt by the Company of an executed
copy of this Agreement; (b) the accuracy of the
representations and warranties made by the Investor in this
Agreement and the fulfillment of the obligations of the Investor to
be fulfilled by it under this Agreement on or prior to the Closing;
(c) the absence of any order, writ, injunction, judgment or
decree that questions the validity of the Agreements or prohibits
the right of the Company to enter into such Agreements or to
consummate the transactions contemplated hereby and thereby, and
(d) completion of purchases and sales under the Agreements in
the same form as this Agreement with Other Investors for an
aggregate stock price of not less then eleven-million and five
hundred thousand dollars ($11,500,000), provided that the Company
shall have used its best efforts to consummate such purchases and
sales.
Each Investor’s obligation to
purchase the Securities shall be several and not joint, and shall
be subject to the following conditions, any one or more of which
may be waived by the Investor: (a) the delivery of the Legal
Opinion to the Investor by counsel to the Company; (b) the
accuracy in all material respects of the representations and
warranties (except with respect to such representations and
warranties which are qualified by words such as
“material”, “Material Adverse Effect” or
words of similar meaning, which shall be accurate in all respects)
by the Company in this Agreement on the date hereof and on the
Closing Date; (c) the fulfillment of the obligations of the
Company to be fulfilled by it under this Agreement on or prior to
the Closing; (d) the absence of any order, writ, injunction,
judgment or decree that questions the validity of the Agreements or
prohibits the right of the Company to enter into such Agreements or
to
2
consummate the transactions
contemplated hereby and thereby; and (e) the delivery to the
Investor by the Secretary or Assistant Secretary of the Company of
a certificate stating that the conditions specified in subsections
(b) and (c) of this paragraph have been
fulfilled.
For purposes of this Agreement,
“Business Day” s hall mean any day other
than a Saturday, Sunday or other day on which the Nasdaq Global
Market or commercial banks located in Boston, Massachusetts are
permitted or required by law to close.
3.
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE COMPANY. Except (i) as set
forth in the Company disclosure schedules (the
“Disclosure
Schedules” ), which Disclosure Schedules
are being delivered to the Investors at the same time as this
Agreement, and (ii) as otherwise described in the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2008 (and any amendments thereto filed at least
two (2) Business Days prior to the date hereof), the
Company’s Proxy Statement for its 2009 Annual Meeting of
Stockholders, or the Company’s Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2009 and
June 30, 2009 (and any amendments thereto filed at least two
Business Days prior to the date hereof) or any of the
Company’s Current Reports on Form 8-K filed since
August 14, 2009 and at least two (2) Business Days prior
to the date hereof (collectively, the “SEC Reports”
), the Company
hereby represents and warrants to, and covenants with, the Investor
as of the date hereof and the Closing Date, as follows:
3.1
Organization. The Company is duly
incorporated and validly existing in good standing under the laws
of the State of Delaware. The Company has the requisite power
and authority to own, operate and occupy its properties and to
conduct its business as presently conducted and is registered or
qualified to do business and is in good standing in each
jurisdiction in which it owns or leases property or transacts
business and where the failure to be so qualified would have a
material adverse effect upon the Company or the business, financial
condition, properties, operations or assets of the Company or the
Company’s ability to perform its obligations under the
Agreements in all material respects ( “Material Adverse Effect”
). The
Company has no “subsidiaries” (as defined in
Rule 405 under the Securities Act of 1933, as amended
(the “Securities
Act” )). The Company does
not own any real property. To the Company’s knowledge,
the Company is in possession of and operating in material
compliance with all authorizations, licenses, certificates,
consents, orders and permits from state, federal and other
regulatory authorities that are material to the conduct of its
business, all of which are valid and in full force and
effect. The Company has good and marketable title in fee
simple to, or has valid rights to lease or otherwise use, all items
of real and personal property that are material to the business of
the Company free and clear of all liens, encumbrances, claims and
defects and imperfections of title except those that (i) do
not materially interfere with the use of such property by the
Company or (ii) would not reasonably be expected to have a
Material Adverse Effect.
3.2
Due Authorization.
The
Company has the requisite power and authority to execute, deliver
and perform its obligations under the Agreement and the Warrants
(together, the “Transaction Documents”
). The
execution and delivery of the Transaction Documents, and the
consummation by the Company of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action
and no further action on the part of the Company or its Board of
Directors or stockholders is required. The Transaction
Documents have been (or
3
upon delivery
will have been) validly executed and delivered by the Company and
constitute legal, valid and binding agreements of the Company
enforceable against the Company in accordance with their terms,
except to the extent (i) rights to indemnity and contribution
may be limited by state or federal securities laws or the public
policy underlying such laws, (ii) such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and (iii) such
enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3.3
Non-Contravention.
The
execution and delivery of the Transaction Documents, the issuance
and sale of the Securities to be sold by the Company under the
Transaction Documents, and the issuance of the Warrant Shares upon
the exercise of the Warrant, and the fulfillment of the terms of
the Transaction Documents and the consummation of the transactions
contemplated thereby will not (A) result in conflict with or
constitute a violation of, or default (with the passage of time or
otherwise) under, result in the acceleration of, or create in any
party the right to accelerate, terminate, modify or cancel, or
require any notice under (i) any bond, debenture, note or
other evidence of indebtedness, or any lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Company is a party or by which
the Company or its properties are bound, except as would not
reasonably be expected to have a Material Adverse Effect,
(ii) the Certificate of Incorporation, by-laws or other
organizational documents of the Company, as amended, or
(iii) any law, administrative regulation, ordinance or order
of any court or governmental agency, arbitration panel or authority
binding upon the Company or its properties, including without
limitation any self-regulatory authority, except as would not
reasonably be expected to have a Material Adverse Effect or
(B) result in the creation or imposition of any lien,
encumbrance, claim, security interest or restriction whatsoever
upon any of the properties or assets of the Company or an
acceleration of indebtedness pursuant to any obligation, agreement
or condition contained in any bond, debenture, note or any other
evidence of indebtedness or any indenture, mortgage, deed of trust
or any other agreement or instrument to which the Company is a
party or by which it is bound or to which any material property or
assets of the Company is subject, except as would not reasonably be
expected to have a Material Adverse Effect. No consent,
approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative
agency, other governmental body or any self regulatory authority is
required for the execution and delivery of the Transaction
Documents by the Company and the valid issuance or sale of the
Securities by the Company pursuant to the Transaction Documents,
other than such as have been made or obtained, and except for any
filings required to be made under federal or state securities
laws.
3.4
Capitalization. The outstanding
capital stock of the Company as of June 30, 2009 is set forth
on Schedule 3.4 of the Disclosure Schedules. The Company has
not issued any capital stock since December 31, 2008 other
than the issuance of common stock in lieu of cash bonuses and
pursuant to the terms and conditions of the Company’s
employee stock purchase plan. The Securities to be sold
pursuant to the Transaction Documents have been duly authorized,
and when issued and paid for in accordance with the terms of the
Agreements, will be duly and validly issued, fully paid and
nonassessable, subject to no lien, claim or encumbrance (except for
any such lien, claim or encumbrance created, directly or
indirectly, by the Investor). The Warrant Shares, when issued
and paid for in accordance with the terms of the
4
Warrants, will be
duly and validly issued, fully paid and nonassessable, subject to
no lien, claim or encumbrance (except for any such lien, claim or
encumbrance created, directly or indirectly, by the
Investor). The Warrant Shares have been duly reserved for
issuance pursuant to the exercise of the Warrants. The outstanding
shares of capital stock of the Company have been duly and validly
issued and are fully paid and nonassessable, have been issued in
compliance with the registration requirements of federal and state
securities laws, and were not issued in violation of any preemptive
rights or similar rights to subscribe for or purchase
securities. Except as set forth on Schedule 3.4 of the
Disclosure Schedules and except as disclosed in the SEC Reports,
there are no outstanding rights (including, without limitation,
preemptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any unissued shares of
capital stock or other equity interest in the Company, or any
contract, commitment, agreement, understanding or arrangement of
any kind to which the Company is a party and providing for the
issuance or sale of any capital stock of the Company, any such
convertible or exchangeable securities or any such rights, warrants
or options. Without limiting the foregoing, no preemptive
right, co-sale right, registration right, right of first refusal or
other similar right exists with respect to the issuance and sale of
the Securities, except as provided in the Transaction Documents or
except for such rights as may have been waived prior to the date of
this Agreement. There are no shareholders agreements, voting
agreements or other similar agreements with respect to the Common
Stock to which the Company is a party or, to the knowledge of the
Company, between or among any of the Company’s
stockholders.
3.5
Legal Proceedings.
Except as
set forth in Schedule 3.5 of the Disclosure Schedules, there is no
material legal, regulatory or governmental proceeding pending, or
to the knowledge of the Company, threatened, to which the Company
is a party or of which the business or property of the Company is
subject that is required to be disclosed and that is not so
disclosed in the SEC Reports. The Company is not subject to
any injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other government body. Neither
the Company, 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 any duty relating to the Company that is not disclosed in
the SEC Reports. There has not been, and to the knowledge of
the Company, there is not pending or contemplated, any
investigation by the SEC or state securities commission involving
the Company or any current or former director or officer of the
Company. The Company has not received any stop order or other
order suspending the effectiveness of any registration statement
filed by the Company under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”
), or the
Securities Act and, to the Company’s knowledge, the SEC has
not issued any such order.
3.6
No Violations. The Company is not in
violation of its Certificate of Incorporation, bylaws or other
organizational documents, as amended, or in violation of any law,
administrative regulation, ordinance or order of any court or
governmental agency, arbitration panel or authority applicable to
the Company, which violation, individually or in the aggregate,
would reasonably be likely to have a Material Adverse Effect, and
the Company is not in default (and there exists no condition which,
with the passage of time or otherwise, would constitute a default)
in the performance of any bond, debenture, note or any other
evidence of indebtedness or any indenture, mortgage, deed of trust
or any other material agreement or instrument to which it is a
party or by which it or its property is bound, which default would
reasonably be likely to have a Material Adverse Effect.
5
3.7
Compliance and Governmental Permits,
Etc. The Company has all
necessary franchises, licenses, certificates and other
authorizations from any foreign, federal, state or local government
or governmental agency, department or body that are currently
necessary for the operation of the business of the Company as
currently conducted, except where the failure to currently possess
such franchises, licenses, certificates and other authorizations
would not reasonably be expected to have a Material Adverse
Effect. The Company has not received any notice of any
proceeding relating to revocation or modification of any such
franchise, permit, license, or similar authority except where such
revocation or modification would not reasonably be expected to have
a Material Adverse Effect. The Company is not 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 except in each case as could not
reasonably be expected to have a Material Adverse
Effect.
3.8
Intellectual Property.
The Company owns,
or has valid, binding and enforceable rights to use, all patents,
patent applications, trademarks, trademark applications, service
marks, trade names, know-how, domain names, trade secrets,
inventions, copyrights, licenses and other similar intellectual
property rights, of the nature as generally described in the SEC
Reports and as necessary or material for use in connection with its
business as currently conducted, and which the failure to so have
would not reasonably be expected to have a Material Adverse Effect
(collectively, the “Intellectual Property
Rights” ). In the last 18
months, the Company has not received a notice (written or
otherwise) that any of the Intellectual Property Rights used by the
Company violates or infringes upon the rights of any person.
All such Intellectual Property Rights are enforceable and there is
no existing infringement by another person of any of the
Intellectual Property Rights of others which would reasonably be
expected to have a Material Adverse Effect. The Company has
taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties,
except where failure to do so would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. All patent applications of the Company have been
properly filed and prosecuted in accordance with all applicable
laws, including without limitation all rules regarding the
duty of candor, and, to the Company’s knowledge, no claim of
any patent or patent application (assuming the claims of patent
applications issue as currently pending) included in the Company
Intellectual Property is unenforceable or invalid, except for such
unenforceability or invalidity that would not reasonably be
expected to result, individually or in the aggregate, in a Material
Adverse Effect. The Company is not obligated to pay a
royalty, grant a license or provide other consideration to any
third party in connection with the Company Intellectual Property
other than as disclosed in the SEC Documents. There is no
pending, nor to the knowledge of the Company, threatened action,
suit, proceeding, or other claim that the Company infringes,
misappropriates, or otherwise violates any intellectual property or
proprietary rights of any third party.
3.9
Financial Statements.
The
financial statements of the Company contained in the SEC Reports
have been prepared in accordance with generally accepted accounting
principles in the United States ( “GAAP” ) applied on a
consistent basis at the times and throughout the periods therein
specified, except as may be otherwise specified in such financial
statements or the notes thereto and that unaudited financial
statements may not contain all footnotes required by GAAP.
Such financial statements present fairly and accurately in all
material respects the financial position of the Company as of the
dates indicated, and the results
6
of its
operations, cash flows and the changes in stockholders’
equity for the periods therein specified, subject, in the case of
unaudited financial statements for interim periods, to normal
year-end audit adjustments. There are no financial statements
(historical or pro forma) and/or related schedules and notes that
are required to be included in the SEC Documents that are not
included as required by the Securities Act, the Exchange Act and/or
the Rules and Regulations, except where a failure to so
include would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
3.10
No Material Adverse Change.
Except as
disclosed in the SEC Reports or in any press releases issued by the
Company at least two (2) Business Days prior to the date of
this Agreement, since June 30, 2009, there has not been
(i) any event, circumstance or change that has had or that
would reasonably be expected to have a Material Adverse Effect,
(ii) any obligation incurred by the Company, direct or
contingent, that is material to the Company other than
(A) trade payables, accrued expenses and other liabilities
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
required to be disclosed in filings made with the SEC,
(iii) any dividend or distribution of any kind declared, paid
or made on the capital stock of the Company, (iv) any loss or
damage (whether or not insured) to the physical property of the
Company which has had, or would reasonably be expected to have, a
Material Adverse Effect, (v) any material change in the
Company’s method of accounting, or (vi) any issuance of
equity securities to any officer, director or affiliate, except
pursuant to existing Company stock option plans or
agreements.
3.11
Nasdaq Compliance.
The
Company’s Common Stock is registered pursuant to
Section 12(b) of the Exchange Act, and is listed on The
Nasdaq Global Market (the “Nasdaq Stock Market”
). The
Company has taken no action intended to terminate the registration
of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq Stock Market, nor has the Company received
any notification that the SEC or the Nasdaq Stock Market is
contemplating terminating such registration or listing. The
issuance of the Securities does not require stockholder approval,
including, without limitation, pursuant to FINRA
Rule 5635(b) or (d). The Company is in compliance
with all corporate governance requirements of the Nasdaq Stock
Market. Except as set forth in Section 3.11 of the
Disclosure, the Company has complied with all requirements of the
Nasdaq Stock Market with respect to the issuance of the
Securities.
3.12
Reporting Status.
The
Company has timely made all filings required under the Exchange Act
during the 12 months preceding the date of this Agreement, and all
of those documents complied in all material respects with the
SEC’s requirements as of their respective filing dates, and
the information contained therein as of the respective dates
thereof did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein in light of the
circumstances under which they were made not
misleading.
3.13
Disclosure of Information.
The
Company has not disclosed any material non-public information to
the Investors.
7
3.14
Accountants. Pricewaterhouse
Coopers LLP, who expressed their opinion with respect to the
consolidated financial statements to be incorporated by reference
from the Company’s Annual Report on Form 10-K for the
year ended December 31, 2008 into the registration statement
to be filed under the Securities Act as provided in
Section 6.1 hereof (the “Registration Statement”
) and the
prospectus which forms a part thereof (the “Prospectus”)
, have advised
the Company that they are, and to the knowledge of the Company they
are, independent accountants as required by the Securities Act and
the rules and regulations promulgated thereunder (the
“Rules and
Regulations” ). Except as described
in the SEC Documents and as pre-approved in accordance with the
requirements set forth in Section 10A of the Exchange Act, to
the Company’s knowledge, Pricewaterhouse Coopers LLP has not
engaged in any “prohibited activities” (as defined in
Section 10A of the Exchange Act) on behalf of the
Company.
3.15
Taxes. Except for matters
which would not reasonably be expected to have a Material Adverse
Effect, each of the Company and the Subsidiaries has timely filed
all necessary federal, state and foreign income and franchise tax
returns and has paid or accrued on the books of the Company 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.
3.16
Transfer Taxes. On the Closing Date,
and thereafter with respect to the issuance of the Warrant Shares,
all stock transfer or other taxes (other than income taxes) which
are required to be paid in connection with the sale and transfer of
the Shares hereunder will be, or will have been, fully paid or
provided for by the Company and the Company will have complied with
all laws imposing such taxes.
3.17
Investment Company.
The
Company is not an “investment company” or an
“affiliated person” of, or “promoter” or
“principal underwriter” for an investment company,
within the meaning of the Investment Company Act of 1940, as
amended, and will not be deemed an “investment company”
as a result of the transactions contemplated by this Agreement or
as a result of the conduct of its business.
3.18
Insurance. The Company maintains
insurance of the types and in the amounts that the Company
reasonably believes is adequate for its businesses and consistent
with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real
and personal property owned or leased by the Company against theft,
damage, destruction, acts of vandalism, insurance covering the acts
and omissions of directors and officers, and insurance covering all
other risks customarily insured against by similarly situated
companies, all of which insurance is in full force and
effect. The Company has not received any written notice that
the Company will not be able to renew its existing insurance
coverage as and when such coverage expires.
3.19
Offering Prohibitions.
Neither
the Company nor any person acting on its behalf or at its direction
has in the past or will in the future take any action to sell,
offer for sale or solicit offers to buy any securities of the
Company which would bring the offer or sale of the Shares as
contemplated by this Agreement within the provisions of
Section 5 of the Securities Act. The Company has not
made any offers or sales of any security or solicited any offers to
buy any security, under any circumstances that would require
registration of the Securities under the
8
Securities Act.
Assuming the accuracy of the Investors’ representations and
warranties set forth in this Agreement, no registration under the
Securities Act is required for the offer and sale of the Securities
by the Company to the Investors as contemplated hereby.
Assuming that all of the representations and warranties of the
Investor set forth in Section 4 are true and correct, the
offer and sale of the Securities has been conducted and completed
in compliance with the Securities Act. The issuance and sale
of the Securities hereunder does not contravene the rules and
regulations of the Nasdaq Stock Market.
3.20
Listing. The Company shall
comply with all requirements of FINRA with respect to the issuance
of the Shares and the listing thereof on the Nasdaq Stock
Market. The Company shall use its best efforts to maintain
the listing of the Company’s Common Stock on the Nasdaq Stock
Market.
3.21
Related Party Transactions.
Except as
disclosed 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 (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 $120,000 other than (i) for payment of
salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the
Company and (iii) for other employee benefits, including stock
option agreements under any stock option plan of the
Company.
3.22
Registration Rights.
Other than
each of the Investors, no person or entity has any right to cause
the Company to effect the registration under the Securities Act of
any securities of the Company, other than registration statements
which have already been filed and declared effective or
registration rights which have been waived for all times prior to
the date hereof. No person has the right to prohibit the
Company from filing a registration statement in accordance with
Section 6 hereof. The granting and performance of the
registration rights under this Agreement will not violate or
conflict with, or result in a breach of any provision of, or
constitute a default under, any agreement, indenture, or instrument
to which the Company is a party. The Company covenants that
it shall provide and cause to be maintained a registrar and
transfer agent for all Registrable Securities (as defined in
Section 6.1) covered by any registration statement from and
after a date not later than the initial effective date of such
Registration Statement.
3.23
Internal Accounting Controls.
The books,
records and accounts of the Company accurately and fairly reflect,
in all material respects, the transactions in, and dispositions of,
the assets of, and the operations of, the Company. The
Company is in material compliance with all provisions of the
Sarbanes-Oxley Act of 2002 which are applicable to it as of the
Closing Date. The Company maintains a system of internal
controls over financial reporting (as such term is defined in
Rule 13a-15(f) of the Exchange Act) in the manner and to
the extent required by the Exchange Act and the
rules promulgated thereunder by the SEC, and in all cases
sufficient to provide reasonable assurance that
(i) transactions are executed in
9
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
material information relating to the Company is made known to the
certifying officers by others within those entities, particularly
during the period in which the Company’s most recently filed
periodic report under the Exchange Act, as the case may be, is
being prepared. The Company’s certifying officers have
evaluated the effectiveness of the Company’s controls and
procedures as of the end of the period prior to the filing date of
the most recently filed quarterly or annual periodic report under
the Exchange Act (such date, the “Evaluation Date”
). The
Company presented in its most recently filed quarterly or annual
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 significant changes in the Company’s internal controls
over financial reporting (as such term is defined in
Rule 13a-15(f) under the Exchange Act) or in other
factors that has materially affected, or is reasonably likely to
materially affect, the Company’s internal controls over
financial reporting.
3.24
Foreign Corrupt Practices.
Neither
the Company nor any director, officer, agent, employee or other
person acting on behalf of the Company has, in the course of its
actions for, or on behalf of, the Company, (i) directly or
indirectly, used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee
from corporate funds; (iii) violated or is in violation of in
any material respect any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.
3.25
No Manipulation of Stock.
Neither
the Company nor, to its knowledge, any of its affiliates has taken,
nor will the Company take, directly or indirectly any action
designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of the Common Stock
or any security of the Company to facilitate the sale or resale of
any of the Shares.
3.36
Company Acknowledgement of Purchaser
Representation. The Company
acknowledges and agrees that the Investor does not make or has not
made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set
forth in paragraph 4 of the Securities Purchase Agreement,
Section 4 of this Agreement, and in the Investor
Questionnaire.
3.27
Acknowledgment Regarding the
Investors’ Purchase of Securities. The Company
acknowledges and agrees that each of the Investors is acting solely
in the capacity of an arm’s length purchaser with respect to
this Agreement and the transactions contemplated hereby. The
Company further acknowledges that no Investor is acting as a
financial advisor or
10
fiduciary of the
Company (or in any similar capacity with respect to the Company)
with respect to this Agreement and the transactions contemplated
hereby and any advice given by any Purchaser or any of their
respective representatives or agents to the Company in connection
with this Agreement and the transactions contemplated hereby is
merely incidental to such Investor’s purchase of the
Securities. The Company further represents to each Investor
that the Company’s decision to enter into this Agreement has
been based on the independent evaluation of the transactions
contemplated hereby by the Company and its
representatives.
3.28
FDA. As to each product
subject to the jurisdiction of the U.S. Food and Drug
Administration ( “FDA” ) under the Federal Food,
Drug and Cosmetic Act, as amended, and the regulations thereunder
( “FDCA” ) that is manufactured,
packaged, labeled, tested, distributed, sold, and/or marketed by
the Company (each a “Product” ), such Product is being
manufactured, packaged, labeled, tested, distributed, sold and/or
marketed by the Company in compliance with all applicable
requirements under FDCA and similar laws, rules and
regulations relating to registration, investigational use,
premarket clearance, licensure, or application approval, good
manufacturing practices, good laboratory practices, good clinical
practices, product listing, quotas, labeling, advertising, record
keeping and filing of reports, and in all other respects, except
where the failure to be in compliance would not have a Material
Adverse Effect. There is no pending, completed or, to the
Company’s knowledge, threatened, action (including any
lawsuit, arbitration, or legal or administrative or regulatory
proceeding, charge, complaint, or investigation) against the
Company and the Company has not received any notice, warning letter
or other communication from the FDA or any other governmental
entity, which (i) contests the premarket clearance, licensure,
registration, or approval of, the uses of, the distribution of, the
manufacturing or packaging of, the testing of, the sale of, or the
labeling and promotion of any Product, (ii) withdraws its
approval of, requests the recall, suspension, or seizure of, or
withdraws or orders the withdrawal of advertising or sales
promotional materials relating to, any Product, (iii) imposes
a clinical hold on any clinical investigation by the Company,
(iv) enjoins production at any facility of the Company,
(v) enters or proposes to enter into a consent decree of
permanent injunction with the Company, or (vi) otherwise
alleges any violation of any laws, rules or regulations by the
Company, and which, either individually or in the aggregate, would
not be reasonably expected to have a Material Adverse Effect.
The properties, business and operations of the Company have been
and are being conducted in all material respects in accordance with
all applicable laws, rules and regulations of the FDA.
The Company has not been informed by the FDA that the FDA will
prohibit the marketing, sale, license or use in the United States
of any product proposed to be developed, produced or marketed by
the Company nor has the FDA expressed any concern as to approving
or clearing for marketing any product being developed or proposed
to be developed by the Company.
3 . 29
SEC Documents
. The Company has filed in a
timely manner all documents that the Company was required to file
under the Exchange Act during the 12 months preceding the date of
this Agreement. As of their respective filing dates, the SEC
Documents complied in all material respects with the requirements
of the Exchange Act or the Securities Act, as applicable, and all
rules and regulations promulgated thereunder, and to the
knowledge of the Company none of the SEC Documents contained or
will contain, and none of the Transaction Documents contain, any
untrue statement of a material fact or omitted or will omit to
state a material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, as of
their
11
respective filing dates or as of the
Closing Date, as the case may be, except to the extent with respect
to the SEC Documents corrected by a SEC Document filed prior to the
date of this Agreement. From and after the date hereof the
Company currently expects to meet each of the eligibility
requirements for the use of Form S-3 in connection with the
resale registration of the Securities and the Warrant Shares as
contemplated under Section 6 of this Agreement.
4.
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE INVESTOR.
4.1
Investor Knowledge and
Status. The Investor
represents and warrants to, and covenants with, the Company that:
(i) the Investor is an “accredited investor” as
defined in Regulation D under the Securities Act, is knowledgeable,
sophisticated and experienced in making, and is qualified to make
decisions with respect to, investments in securities presenting an
investment decision similar to that involved in the purchase of the
Securities, and has requested, received, reviewed and considered
all information it deemed relevant in making an informed decision
to purchase the Securities; (ii) the Investor understands that
the Securities are “restricted securities” and have not
been registered under the Securities Act and is acquiring the
number of Securities set forth in paragraph 3 of the Securities
Purchase Agreement to which this Annex I is attached in the
ordinary course of its business and for its own account for
investment only, has no present intention of distributing any of
such Securities and has no arrangement or understanding with any
other persons regarding the distribution of such Securities (this
representation and warranty not limiting the Investor’s right
to sell Registrable Securities pursuant to a Registration Statement
or otherwise pursuant to an exemption from registration under the
Securities Act); (iii) the Investor will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or
take a pledge of) any of the Securities except in compliance with
the Securities Act, applicable state securities laws and the
respective rules and regulations promulgated thereunder;
(iv) the Investor has answered all questions in paragraph 4 of
the Securities Purchase Agreement to which this Annex I is attached
and the Investor Questionnaire attached hereto as EXHIBIT B
for use in preparation of the Registration Statement and the
answers thereto are true and correct in all material respects as of
the date hereof and will be true and correct in all material
respects as of the Closing Date; (v) the Investor will notify
the Company promptly of any change in any of such information until
such time as the Investor has sold all of its Securities or until
the Company is no longer required to keep the Registration
Statement effective with respect to the such Investor’s
Registrable Securities; and (vi) the Investor has, in
connection with its decision to purchase the number of Securities
set forth in paragraph 3 of the Securities Purchase Agreement,
relied only upon the representations and warranties of the Company
contained herein and the information contained in the SEC
Reports. The Investor understands that the Securities have
not been registered under the Securities Act or registered or
qualified under any state securities law, and that the Securities
are being issued in reliance on specific exemptions therefrom,
which exemptions may depend upon, among other things, the
representations made by the Investor in this Agreement. No
person is authorized to provide any representation that is
inconsistent or in addition to those contained herein or in the SEC
Reports, and the Investor acknowledges that it has not received or
relied on any such representations.
4.2
Transfer of Securities.
The
Investor agrees that it will not make any sale, transfer or other
disposition of the Securities (a “Disposition”
) other than
Dispositions of Registrable Securities (as defined in
Section 6.1(a)) that are made by the Investors pursuant
to
12
the Registration
Statement or Dispositions by the Investor that are exempt from
registration under the Securities Act and, if made pursuant to the
Registration Statement by the Investor, without complying with any
applicable prospectus delivery requirements.
4.3
Power and Authority.
The
Investor represents and warrants to the Company that (i) the
Investor has the right, power, authority and capacity to enter into
the Transaction Documents and to consummate the transactions
contemplated thereby and has taken all necessary action to
authorize the execution, delivery and performance of the
Transaction Documents, (ii) the Transaction Documents have
been validly executed and delivered by the Investor, and
(iii) the Transaction Documents constitute valid and binding
obligations of the Investor enforceable against the Investor in
accordance with their terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and except as the indemnification
agreements of the Investors herein may be legally
unenforceable.
4.4
Short Position. The Investor has not
established any hedge or other position in the Common Stock that is
outstanding on the Closing Date and is designed to or could
reasonably be expected to lead to or result in a Disposition by the
Investor or any other person or entity. For purposes hereof,
a “hedge or other position” would include, without
limitation, effecting any short sale or having in effect any short
position (whether or not such sale or position is against the box
and regardless of when such position was entered into) or any
purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to the Common
Stock or with respect to any security (other than a broad-based
market basket or index) that includes, relates to or derives any
significant part of its value from the Common Stock. For the
avoidance of doubt, notwithstanding anything else contained herein,
the representations made in this Section 4.4 are made only as
of the date of execution of this Agreement.
4.5
No Investment, Tax or Legal
Advice. The Investor
understands that nothing in the SEC Reports, this Agreement, or any
other materials presented to the Investor in connection with the
purchase and sale of the Securities constitutes legal, tax or
investment advice. The Investor has consulted such legal, tax
and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of
Securities.
4.6
Confidential Information.
The
Investor covenants that from the date hereof it will maintain in
confidence all material non-public information regarding the
Company received by the Investor from the Company (other than
disclosure of such information to its representatives or agents),
including the receipt and content of any Suspension Notice (as
defined in Section 6.2(c)) until such information
(a) becomes generally publicly available other than through a
violation of this provision by the Investor or its agents or
(b) is required to be disclosed in legal proceedings (such as
a request of a regulatory authority, by deposition, interrogatory,
request for documents, subpoena, civil investigation demand, filing
with any governmental authority, regulatory body or similar
process); provided, however, that before making any disclosure in
reliance on this Section 4.6 (other than disclosure of such
information to its representatives or agents), the Investor will
give the Company prior written notice, as soon as
13
reasonably
practicable and if not prohibited under law or regulation,
specifying the circumstances giving rise thereto in order to permit
the Company to seek protective orders or take other action with
respect to such compelled disclosure, and will furnish only that
portion of the non-public information which it is advised by legal
counsel is legally required. The parties acknowledge and
agree that as of the date hereof and as of the Closing Date, the
Company has not disclosed any material non-public information to
the Investor.
4.7
Acknowledgments Regarding Placement
Agent. The Investor
acknowledges that the Placement Agent has acted solely as placement
agent for the Company in connection with the Offering of the
Securities by the Company, that the Placement Agent has made no
representation or warranty whatsoever with respect to the accuracy
or completeness of such information, data or other related
disclosure material, and that the Placement Agent will be
compensated solely by the Company for acting in such
capacity. The Investor further acknowledges that in making
its decision to enter into this Agreement and purchase the
Securities, it has relied on its own examination of the Company and
the terms of, and consequences of holding, the Securities.
The Investor further acknowledges that the provisions of this
Section 4.7 are for the benefit of, and may be enforced by,
the Placement Agent.
4.8
Additional Acknowledgement.
The
Investor acknowledges that it has independently evaluated the
merits of the transactions contemplated by this Agreement, that it
has independently determined to enter into the transactions
contemplated hereby, that it is not relying on any advice from or
evaluation by any other Investor, and that it is not acting in
concert with any other Investor (other than the Investors who may
be directly affiliated with such Investor) in making its purchase
of the Securities hereunder. The Investor and, to its
knowledge, the Company acknowledge that the Investors have not
taken any actions that would deem the Investors to be members of a
“group” for purposes of Section 13(d) of the
Exchange Act (other than with other Investors who may be affiliated
with the Investor). Such Investor 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.
5.
SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND AGREEMENTS. Notwithstanding any
investigation made by any party to this Agreement or by the
Placement Agent, all representations and warranties made by the
Company and the Investors herein shall survive the execution of
this Agreement, the delivery to the Investor of the Securities
being purchased and the payment therefor for a period of two
(2) years following the date of this Agreement (except for
claims made by any party to this Agreement during the two
(2) year period following the date of this Agreement with
respect to a breach of any representation and warranty, which shall
survive indefinitely), and unless otherwise set forth herein, all
covenants and agreements in this Agreement shall survive
indefinitely.
14
6.
REGISTRATION OF REGISTRABLE
SECURITIES; COMPLIANCE WITH THE SECURITIES ACT.
6.1
Registration Procedures and
Expenses. The Company
shall:
(a)
subject to
receipt of necessary information from the Investor and subject to
Section 6.1(d), prepare and file with the Securities and
Exchange Commission ( “SEC” ), within forty-five (45)
days after the Closing Date (the “Required Filing Date”
), a Registration
Statement on Form S-3 to enable the resale of the Registrable
Securities by the Investor from time to time on a continuous basis
pursuant to Rule 415 of the Securities Act or, only if the
Company is not eligible to use Form S-3, on such other form
which is appropriate to register such Registrable Securities for
resale from time to time by the Investors. For purposes of
this Agreement, “Registrable Securities”
means
(i) the Shares issued pursuant to this Agreement;
(ii) the Warrant Shares; (iii) for any Investor which,
immediately following the completion of the Offering, together with
its affiliates and other persons or entities whose beneficial
ownership of Common Stock would be aggregated with the
Investor’s for purposes of Section 13(d) of the
Exchange Act, beneficially owns at least fifteen percent (15%) of
the issued and outstanding shares of Common Stock of the Company
(a “Qualified
Investor” ) all such shares of Common
Stock held by such Qualified Investor and its affiliates, as set
forth in paragraphs 1 and 4 of the Securities Purchase Agreement to
which this Annex I is attached (the “Current Qualified
Shares” ); (iv) any shares of
capital stock issued or issuable as a dividend on or in exchange
for or otherwise with respect to the foregoing, and (v) any
securities issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect
to the foregoing;
(b)
use its best
efforts, subject to receipt of necessary information from the
Investors, to cause the Registration Statement to become effective
as soon as practicable after the Registration Statement is filed by
the Company, but in any event no later than 4:00 p.m. Eastern
Time on the 60th day after the Closing Date, or if the Registration
Statement is reviewed by the SEC, on the 120th day after the
Closing Date (such date, as applicable, the “Required Effective
Date” ). Except as provided
in Section 6.1(d), if the Registration Statement (i) has
not been filed by the Required Filing Date or (ii) has not
been declared effective by the SEC on or before the Required
Effective Date, the Company shall, on the Business Day immediately
following the Required Filing Date or the Required Effective Date,
as the case may be, and each 30th day thereafter, make a payment to
the Investor as partial compensation for such delay and not as a
penalty (the “Late
Registration Payments” ) in cash equal to 1% of the
purchase price paid under this Agreement for the Registrable
Securities that are held by such Investor until the Registration
Statement is filed or declared effective by the SEC, as the case
may be; provided, however, that in no event shall the payments made
pursuant to this paragraph (b), if any, exceed in the aggregate 12%
of such purchase price paid for the Registrable Securities;
provided, further, that in all events such penalties shall cease to
accrue with respect to any Investor on the date on which such
Investor may sell Registrable Securities pursuant to Rule 144
under the Securities Act or any successor rule (
“Rule 144”
) without
limitations on volume or manner of sales. Late Registration
Payments will be prorated on a daily basis during each 30 day
period and will be paid to the Investor by wire transfer or check
within five Business Days after the earlier of (i) the end of
each 30 day period following the Required Effective Date or
(ii) the effective date of the Registration Statement.
Late Registration
15
Payments payable
by the Company pursuant to this Section 6.1(b) shall be
payable on the first (1 st ) business day of each
thirty (30) day period following the Required Effective
Date;
(c)
use its best
efforts to cause any Prospectus used in connection with any
Registration Statement to be filed with the SEC pursuant to
Rule 424(b) under the Securities Act as soon as
practicable but in any event no later than 9:00 a.m. Eastern
Time the next day that is not a weekend or holiday and the Nasdaq
Stock Market is not closed following the date such Registration
Statement is declared effective by the SEC and prepare and file
with the SEC such amendments and supplements to the Registration
Statement and the Prospectus used in connection therewith as may be
necessary to keep the Registration Statement current and effective
for a period ending on the earlier of (i) the date on which
all of the Registrable Securities for such Registration Statement
have been sold by such Investor and (ii) the date on which all
of the Registrable Securities for such Registration Statement (in
the opinion of counsel to such Investor) held by such Investor may
be immediately sold to the public without registration or
restriction (including, without limitation, as to volume by each
holder thereof) under the Securities Act, and to notify each
Investor promptly upon the Registration Statement and each
post-effective amendment thereto, being declared effective by the
SEC;
(d)
notwithstanding
the registration obligations set forth in this Section 6.1, in
the event the SEC informs the Company that all of the Registrable
Securities cannot, as a result of the application of Rule 415,
be registered for resale as a secondary offering on a single
registration statement, the Company agrees to promptly
(i) inform each of the Investors thereof and file amendments
to the initial Registration Statement as required by the SEC and/or
(ii) withdraw the initial Registration Statement and file a
new registration statement, in either case covering the maximum
number of Registrable Securities permitted to be registered by the
SEC, on Form S-3 or such other form available to register for
resale the Registrable Securities as a secondary offering; provided
, however, that prior to filing such amendment or new
Registration Statement, the Company shall be obligated to use its
best efforts to advocate with the SEC for the registration of all
of the Registrable Securities in accordance with the SEC Guidance,
including without limitation, the Manual of Publicly Available
Telephone Interpretations D.29. Notwithstanding any other
provision of this Agreement, if any SEC Guidance imposes a
limitation on the number of Registrable Securities permitted to be
registered on a particular Registration Statement as a secondary
offering (and notwithstanding that the Company used best efforts to
advocate with the SEC for the registration of all or a greater
number of Registrable Securities), the number of Registrable
Securities to be registered on such Registration Statement shall be
reduced in the following order of priority (each, a “
Cut Back ”): (i) all
Warrant Shares held by Investors who are not Qualified Investors on
a pro rata basis; (ii) all Shares issued to Investors who are
not Qualified Investors on a pro rata basis; (iii) the Warrant
Shares held by Qualified Investors on a pro rata basis;
(iv) the Current Qualified Shares on a pro rata basis; and
(v) the Shares issued to Qualified Investors pursuant to this
Agreement (the “Cut
Back Shares” ), provided that the Company
shall have an ongoing obligation to register the remaining
Registrable Securities in one or more additional Registration
Statements to be filed within 30 days of the Company becoming
eligible to do so (the “Springing Date ”), with such
subsequent Registration Statement(s) to be declared effective
within 90 days from the Springing Date, or as otherwise provided in
this Agreement. The Investor acknowledges and agrees that the
payment of Late Registration Payments shall not be triggered by the
occurrence of a Cut Back;
16
(e)
furnish to the
Investor with respect to the Registrable Securities registered
under the Registration Statement such number of copies of the
Prospectus (including preliminary and supplemental prospectuses and
prospectus amendments) as the Investor may reasonably request, in
order to facilitate the public sale or other disposition of all or
any of the Registrable Securities by the Investor;
(f)
file documents
required of the Company for normal blue sky clearance in states as
shall be reasonably appropriate in the opinion of the Company and
its legal counsel; provided, however, that the Company shall not be
required to qualify to do business or consent to general service of
process in any jurisdiction in which it would not otherwise be
required to qualify but for this Section 6(f);
(g)
bear all expenses
(other than underwriting discounts and commissions, if any) in
connection with the procedures in this Section 6.1 and the
registration of the Registrable Securities pursuant to the
Registration Statement, and otherwise with respect to any action
required of the Company pursuant to this
Section 6;
(h)
advise the
Investor, promptly after it shall receive notice of the issuance of
any stop order by the SEC or any other federal or state
governmental authority delaying or suspending the effectiveness of
the Registration Statement or of the initiation of any proceeding
for that purpose; and it will promptly use its reasonable best
efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order
should be issued;
(i)
with a view to
making available to the Investor the benefits of Rule 144 and
any other rule or regulation of the SEC that may at any time
permit the Investor to sell Shares or Warrant Shares to the public
without registration, the Company covenants and agrees to use its
reasonable best efforts to: (i) make and keep public
information available, as those terms are understood and defined in
Rule 144, until the earlier of (A) such date as all of
the Investor’s Securities (including Common Stock issuable
upon exercise thereof) may be resold pursuant to Rule 144
without volume or manner of sales limitations, or any other
rule of similar effect and (B) such date as all of the
Investor’s Shares shall have been resold; (ii) file with
the SEC in a timely manner all reports and other documents required
of the Company under the Securities Act and under the Exchange Act;
(iii) furnish to the Investor upon request, as long as the
Investor owns any Securities, (A) a written statement by the
Company that it has complied with the reporting requirements of
Rule 144 and of the Securities Act and the Exchange Act,
(B) a copy of the Company’s most recent Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, and
(C) such other information as may be reasonably requested in
order to avail the Investor of any rule or regulation of the
SEC that permits the selling of any such Securities (including
common stock issuable upon exercise thereof) without registration,
and (iv) undertake any additional actions reasonably necessary
to maintain the availability of the Registration Statement or the
use of Rule 144;
(j)
if (i) there
is material non-public information regarding the Company which the
Company’s Board of Directors (the “Board” ) determines not to be in the
Company’s best interest to disclose and which the Company is
not otherwise required to disclose, (ii) there is a
significant business opportunity (including, but not limited to,
the
17
acquisition or
disposition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or other
similar transaction) available to the Company which the Board
determines not to be in the Company’s best interest to
disclose, or (iii) the Company is required to file a
post-effective amendment to a Registration Statement to incorporate
the Company’s quarterly and annual reports and audited
financial statements on Forms 10-Q and 10-K, then the Company may
(x) postpone or suspend filing of a Registration Statement for
a period not to exceed thirty (30) consecutive days or
(y) postpone or suspend effectiveness of a Registration
Statement for a period not to exceed thirty (30) consecutive days
(each, an “Allowed
Delay” ); provided that the Company
may not postpone or suspend effectiveness of a Registration
Statement under this Section 6.1(j) for more than 60 days
in the aggregate during any 360 day period; provided, however, that
no such postponement or suspension shall be permitted for
consecutive thirty (30) day periods arising out of the same set of
facts, circumstances or transactions, and provided further that in
all events the Company shall use its best efforts to terminate any
suspension period as promptly as possible;
(k)
permit counsel
designated by the Investor to review such Registration Statement
and all amendments and supplements thereto (as well as all requests
for acceleration or effectiveness thereof) a reasonable period of
time prior to their filing with the SEC (not less than five
(5) Business Days) and use reasonable best efforts to reflect
in such documents any comments as such counsel may reasonably
propose (so long as such comments are provided to the Company at
least two (2) business days prior to the expected filing date)
and will not request acceleration of a Registration Statement
without prior notice to such counsel;
(l)
at the reasonable
request of the Investor, prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to
a Registration Statement and any prospectus used in connection with
the Registration Statement as may be necessary in order to make
reasonable changes to the plan of distribution set forth in such
Registration Statement;
(m)
use reasonable
best efforts to cause all the Registrable Securities covered by
each Registration Statement to be listed on each securities
exchange on which securities of the same class or series issued by
the Company are then listed, if the listing of such Registrable
Securities is then permitted under the rules of such
exchange;
(n)
if required by
FINRA, the Company shall promptly effect a filing with FINRA
pursuant to FINRA Rule 5110 with respect to the public
offering contemplated by resales of securities under the
Registration Statement(s) (an “ Issuer Filing ”), and pay the filing
fee required by such Issuer Filing. The company shall use
reasonable best efforts to pursue the Issuer Filing until FINRA
issues a letter confirming that it does not object to the terms of
the offering contemplated by the Registration Statement(s);
and
(o)
notify the Investor, at any time
during which a prospectus relating to such registration statement
is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included
in or relating to the registration statement contains an untrue
statement of a material fact or omits any fact necessary to make
the statements therein not misleading; and, thereafter, the Company
will promptly prepare (and, when completed, give notice and provide
a copy thereof to Investor) a supplement
18
or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable
Shares, such prospectus will not contain an untrue statement of a
material fact or omit to state any fact necessary to make the
statements therein not misleading.
It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this
Section 6.1 that the Investor shall furnish to the Company
such information regarding itself, the Registrable Securities to be
sold by Investor, and the intended method of disposition of such
securities as shall reasonably be required to effect the
registration of the Registrable Securities.
The Company understands that the
Investor disclaims being an underwriter, but acknowledges that a
determination by the SEC that the Investor is deemed an underwriter
shall not relieve the Company of any obligations it has
hereunder.
6.2
Transfer of Shares After
Registration; Suspension.
(a)
Each Investor
agrees that it will not effect any Disposition of the Securities or
Warrant Shares or its right to purchase the Securities or Warrant
Shares that would constitute a sale within the meaning of the
Securities Act other than transactions exempt from the registration
requirements of the Securities Act (including, without limitation,
a so-called “4(1) and a half” transaction) or as
contemplated by a Registration Statement and that it will promptly
notify the Company of any material changes in the information set
forth in the Registration Statement regarding the Investor or its
plan of distribution.
(b)
Except in the
event that paragraph (c) below applies, the Company shall:
(i) if deemed necessary by the Company, prepare and file from
time to time with the SEC a post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or
a supplement or amendment to any document incorporated therein by
reference or file any other required document so that such
Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and so that, as thereafter delivered to purchasers of
the Registrable Securities being sold thereunder, such Prospectus
will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading; (ii) provide the
Investor copies of any documents filed pursuant to
Section 6.2(b)(i); and (iii) upon request, inform each
Investor who so requests that the Company has complied with its
obligations in Section 6.2(b)(i) (or that, if the Company
has filed a post-effective amendment to the Registration Statement
which has not yet been declared effe
|
