Exhibit 10.3
PLACEMENT AGENCY AGREEMENT
This Placement Agency Agreement (this "Agreement") is made and entered
into as of April 11, 2005 (the "Effective Date"), by and between ProUroCare
Medical, Inc., a Nevada corporation (the "Company"), and Stonegate Securities,
Inc., a Texas corporation ("Stonegate").
WHEREAS, the Company desires to retain Stonegate as its exclusive
placement agent, and Stonegate is willing to act in such capacity, in each case
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and Stonegate (each a "Party" and collectively,
the "Parties") hereby agree as follows:
1. RETENTION OF STONEGATE; SCOPE OF SERVICES.
(a) Subject to the terms and conditions set forth herein, the Company
hereby retains Stonegate to act as the exclusive placement agent to
the Company during the Contract Period (as defined in Section 2
below), and Stonegate hereby agrees to be so retained.
(b) As the exclusive placement agent to the Company, Stonegate will have
the exclusive right during the Contract Period to identify for the
Company prospective purchasers (collectively, the "Purchasers" and
each individually, a "Purchaser") in one or more placement (each, a
"Placement" and collectively, the "Placements") of debt and/or
equity securities to be issued by the Company, the type and dollar
amount being as mutually agreed to by the Parties (the
"Securities").
(c) Terms of the Placements shall be as set forth in subscription
documents, including any stock purchase or subscription agreement,
escrow agreement, registration rights agreement, warrant agreement
and/or other documents to be executed and delivered in connection
with each Placement (collectively, the "Subscription Documents").
The Placements are intended to be exempt from the registration
requirements of the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to Regulation D ("Regulation D") of the
rules and regulations of the Securities and Exchange Commission (the
"SEC") promulgated under the Securities Act.
(d) Stonegate will act on a best efforts basis and will have no
obligation to purchase any of the Securities offered in any
Placement. During the Contract Period, Stonegate shall have the
exclusive right to arrange for all sales of Securities in the
Placements, including without limitation the exclusive right to
identify potential buyers for the Securities. All sales of
Securities in the Placements shall be subject to the approval of the
Company, which approval may be withheld in the Company's sole
discretion.
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2. CONTRACT PERIOD AND TERMINATION.
(a) Stonegate shall act as the Company's exclusive placement agent under
this Agreement for a period commencing on the Effective Date, and
continuing until terminated by either Party upon 10 days notice to
the other Party (the "Contract Period").
(b) Upon termination, neither party will have any further obligation
under this Agreement, except as provided in Sections 5, 6, 7, 8, 9
and 10 hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The representations and warranties of the Company made to the Purchasers
as set forth in the Subscription Documents are hereby incorporated by
reference as of the date of consummation of the sale of the Securities
(the "Closing") and all such representations and warranties are hereby
deemed made by the Company directly to Stonegate as though set forth in
full herein. The company represents and warrants that it has full power
and authority to enter into this Agreement and to perform its obligations
hereunder. This Agreement is enforceable against the Company in accordance
with its terms, subject to applicable laws governing bankruptcy,
insolvency and creditors' rights generally. The Agreement does not
conflict with, violate, cause a default, right of termination, or
acceleration (whether through the passage of time or otherwise) under any
contract, agreement, or understanding binding upon the Company or any
subsidiary of the Company.
4. COVENANTS OF THE COMPANY.
The Company covenants and agrees as follows:
(a) Neither the Company nor any affiliate of the Company (as defined in
Rule 501(b) of Regulation D) will sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) of the Company which will be
integrated with the sale of the Securities in a manner which would
require the registration under the Securities Act of the Securities.
(b) Any and all filings and documents required to be filed in connection
with or as a result of the Placements pursuant to federal and state
securities laws are the responsibility of the Company and will be
filed by the Company.
(c) Any press release to be issued by the Company announcing or
referring to any Placement shall be subject to the prior review of
Stonegate, and each such press release shall, at the request of
Stonegate, identify Stonegate as the placement agent. Stonegate
shall be permitted to publish a tombstone or similar advertisement
upon completion of each Placement identifying itself as the
Company's placement agent with respect thereto. This Agreement shall
not be filed publicly by the Company without the prior written
consent of Stonegate, unless required by applicable law or
regulation.
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5. FURNISHING OF COMPANY INFORMATION; CONFIDENTIALITY.
(a) In connection with Stonegate's activities hereunder on the Company's
behalf, the Company shall furnish Stonegate with all reasonable
information concerning the Company and its operations that Stonegate
deems necessary or appropriate (the "Company Information") and shall
provide Stonegate with reasonable access to the Company's books,
records, officers, directors, employees, accountants and counsel.
The Company acknowledges and agrees that, in rendering its services
hereunder, Stonegate will be using and relying upon the Company
Information without independent verification thereof or independent
appraisal of any of the Company's assets and may, in its sole
discretion, use additional information contained in public reports
or other information furnished by the Company or third parties.
(b) Stonegate agrees that the Company Information will be used solely
for the purpose of performing its services hereunder. Subject to the
limitations set forth in subsection (c) below, Stonegate will keep
the Company Information provided hereunder confidential and will not
disclose such Company Information or any portion thereof, except (i)
to a third party contacted by Stonegate on behalf of, and with the
prior approval of, the Company pursuant hereto who has agreed to be
bound by a confidentiality agreement satisfactory in form and
substance to the Company, or (ii) to any other person for which the
Company's consent to disclose such Company Information has been
obtained.
(c) Stonegate's confidentiality obligations under this Agreement shall
not apply to any portion of the Company Information which (i) at the
time of disclosure to Stonegate or thereafter is generally available
to and known by the public (other than as a result of a disclosure
directly or indirectly by Stonegate in violation of this Agreement);
(ii) was available to Stonegate on a non-confidential basis from a
source other than the Company, provided that such source is not and
was not bound by a confidentiality agreement with the Company; (iii)
has been independently acquired or developed by Stonegate without
violating any of its obligations under this Agreement; or (iv) the
disclosure of which is legally compelled (whether by deposition,
interrogatory, request for documents, subpoena, civil or
administrative investigative demand or other similar process). In
the event that Stonegate becomes legally compelled to disclose any
of the Company Information, Stonegate shall provide the Company with
prompt prior written notice of such requirement so that the Company
may seek a protective order or other appropriate remedy and/or waive
compliance with the terms of this Agreement.
(d) The obligations of the Parties under this Section 5 shall survive
the termination of this Agreement for 12 months.
6. FEES AND EXPENSES.
(a) As compensation for services rendered by Stonegate in connection
with the Placement, the Company agrees to pay Stonegate a fee (the
"Agency Fee") of (i) eight percent (8%) of the gross proceeds from
the sale of Securities for amounts less than Five Million
($5,000,000) Dollars of Securities sold in the Placements (on a
cumulative basis); (ii) seven percent (7%) of the gross proceeds for
amounts raised of $5 million or more and up to and including $10
million (on a cumulative basis); and (ii) six percent (6%) of the
gross proceeds from the sale of Securities for any Securities sold
in the Placements in excess of Ten Million ($10,000,000) Dollars (on
a cumulative basis). The Agency Fee shall be paid immediately upon
the closing of each sale of Securities by the Company.
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(b) In order to compensate Stonegate for its initial due diligence
efforts, the Company shall pay to Stonegate an initial expense
allowance of $5,000, which retainer amount may be increased upon the
mutual consent of the Company and Stonegate (the "Cash Retainer").
In addition, the Company shall also deliver to Stonegate (or
Stonegate's designee) 100,000 shares of fully paid, non-assessable
shares of common stock of the Company (the "Shares"), such shares to
vest as follows: (i) 1/2 of such shares to vest in upon completion
of due diligence by Stonegate and Xxxxxxx Xxxxxxxx having an
opportunity to meet with Stonegate, (ii) 1/2 to vest in 90 days the
Company's sole discretion, but in any event the Shares shall
automatically vest upon the closing of a Placement. The Shares will
be issued pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended. The Shares
will be subject to the registration rights provisions set forth on
Appendix I hereto. The Company will issue the Shares to Stonegate or
Stonegate's designees in such denominations as designated by
Stonegate.
(c) The Company shall also promptly reimburse Stonegate for all
reasonable out-of-pocket expenses incurred by Stonegate and its
directors, officers and employees in connection with the performance
of Stonegate's services under this Agreement. For these purposes,
"out-of-pocket expenses" shall include, but not be limited to,
attorney's fees and costs, long distance telephone, facsimile,
courier, mail, supplies, travel and similar expenses.
(d) Upon closing of the Placement, the Company agrees to issue to
Stonegate a Securities Purchase Warrant (the "Representative's
Warrant") entitling the holder(s) thereof to purchase an amount of
Securities equal to ten percent (10%) of the total number of
Securities sold in the Placement for a period of five (5) years at
an exercise price per share equal to the price at which the
Securities are sold to Purchasers. The Representative's Warrant
shall otherwise be substantially in the form of Exhibit A attached
hereto.
(e) The obligations of the Parties under this Section 6 shall survive
the termination of this Agreement for any reason.
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7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold Stonegate harmless from and
against any and all losses, claims, damages or liabilities (or
actions, including securityholder actions, in respect thereof)
related to or arising out of Stonegate's engagement hereunder or its
role in connection herewith, and will reimburse Stonegate for all
reasonable expenses (including reasonable costs, expenses, awards
and counsel fees and/or judgments) as they are incurred by Stonegate
in connection with investigating, preparing for or defending any
such action or claim, whether or not in connection with pending or
threatened litigation in which Stonegate is a party. The Company
will not, however, be responsible for any claims, liabilities,
losses, damages or expenses which are finally judicially determined
to have resulted primarily from the bad faith, gross negligence or
willful misconduct of Stonegate. The Company also agrees that
Stonegate shall not have any liability to the Company for or in
connection with such engagement, except for any such liability for
losses, claims, damages, liabilities or expenses incurred by the
Company that result primarily from the bad faith, gross negligence
or willful misconduct of Stonegate. In the event that the foregoing
indemnity is unavailable (except by reason of the bad faith or gross
negligence of Stonegate), then the Company shall contribute to
amounts paid or payable by Stonegate in respect of its losses,
claims, damages and liabilities in such proportion as appropriately
reflects the relative benefits received by, and fault of, the
Company and Stonegate in connection with the matters as to which
such losses, claims, damages or liabilities relate, and other
equitable considerations. The foregoing shall be in addition to any
rights that Stonegate may have at common law or otherwise and shall
extend upon the same terms to and inure to the benefit of any
director, officer, employee, agent or controlling person of
Stonegate. The Company hereby consents to personal jurisdiction,
service and venue in any court in which any claim which is subject
to this agreement is brought against Stonegate or any other person
entitled to indemnification or contribution under this subsection
(a).
(b) Stonegate agrees to indemnify and hold the Company harmless from and
against any and all losses, claims, damages or liabilities (or
actions, including securityholder actions, in respect thereof) which
are finally judicially determined to have resulted primarily from
the bad faith, gross negligence or willful misconduct of Stonegate,
and will reimburse the Company for all reasonable expenses
(including reasonable costs, expenses, awards and counsel fees
and/or judgments) as they are incurred by the Company in connection
with investigating, preparing for or defending any such action or
claim, whether or not in connection with pending or threatened
litigation in which the Company is a party. In the event that the
foregoing indemnity is unavailable, then Stonegate shall contribute
to amounts paid or payable by the Company in respect of its losses,
claims, damages and liabilities in such proportion as appropriately
reflects the relative benefits received by, and fault of, the
Company and Stonegate in connection with the matters as to which
such losses, claims, damages or liabilities relate, and other
equitable considerations. The foregoing shall be in addition to any
rights that the Company may have at common law or otherwise and
shall extend upon the same terms to and inure to the benefit of any
director, officer, employee, agent or controlling person of the
Company. Stonegate hereby consents to personal jurisdiction, service
and venue in any court in which any claim, which is subject to this
agreement, is brought against the Company or any other person
entitled to indemnification or contribution under this subsection
(b).
(c) The obligations of the Parties under this Section 7 shall survive
the termination of this Agreement.
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8. NON-CIRCUMVENTION.
The Company hereby agrees that, for a period of one year from the end of
the Contract Period or other termination of this Agreement, the Company
will not enter into any agreement, transaction or arrangement with any of
the institutions (including their agents, principals and affiliates and
the accounts and funds which they manage or advise) which Stonegate has
introduced, directly or indirectly, to the Company pursuant to a meeting,
telephone call, any written communication, or by e mail, as prospective
purchasers of the Securities in the Placements (collectively, the
"Stonegate Contacts"), regardless of whether a transaction is consummated
with such prospective purchasers, unless the Company notifies Stonegate in
writing of the agreement, transaction or arrangement, and pays Stonegate a
fee equal to the Agency Fee for securities of the Company sold to
Stonegate Contacts.
9. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS
PROVISIONS THEREOF.
10. ARBITRATION.
Stonegate and the Company will attempt to settle any claim or controversy
arising out of this Agreement through consultation and negotiation in good
faith and a spirit of mutual cooperation. Any dispute which the parties
cannot resolve may then be submitted by either party to binding
arbitration in Dallas, Texas under the rules of the American Arbitration
Association for resolution. Nothing in this paragraph will prevent either
party from resorting to judicial proceedings if (a) good faith efforts to
resolve the dispute under these procedures have been unsuccessful or (b)
interim relief from a court is necessary to prevent serious and
irreparable injury.
11. NO WAIVER.
The failure or neglect of any party hereto to insist, in any one or more
instances, upon the strict performance of any of the terms or conditions
of this Agreement, or waiver by any party of strict performance of any of
the terms or conditions of this Agreement, shall not be construed as a
waiver or relinquishment in the future of such term or condition, but the
same shall continue in full force and effect.
12. SUCCESSORS AND ASSIGNS.
The benefits of this Agreement shall inure to the benefit of the Parties,
their respective successors, assigns and representatives, and the
obligations and liabilities assumed in this Agreement by the Parties shall
be binding upon their respective successors and assigns. This Agreement
may not be assigned by either Party without the express written consent of
the other Party, which consent shall not be unreasonably withheld.
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13. NOTICES.
All notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be delivered personally
or sent by certified mail, return receipt requested, recognized overnight
delivery service, or facsimile as follows:
If to the Company:
ProUroCare Medical, Inc.
Xxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, President, COO
If to Stonegate:
Stonegate Securities, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxx, President
Either Party may change its address or facsimile number set forth above by
giving the other Party notice of such change in accordance with the
provisions of this Section 13. A notice shall be deemed given (a) if by
personal delivery, on the date of such delivery, (b) if by certified mail,
on the date shown on the applicable return receipt, (c) if by overnight
delivery service, on the day after the date delivered to the service, or
(d) if by facsimile, on the date of transmission.
14. NATURE OF RELATIONSHIP.
The Parties intend that Stonegate's relationship to the Company and the
relationship of each director, officer, employee or agent of Stonegate to
the Company shall be that of an independent contractor and not as an
employee of the Company or an affiliate thereof. Nothing contained in this
Agreement shall constitute or be construed to be or create a partnership
or joint venture between Stonegate and the Company or their respective
successors or assigns. Neither Stonegate nor any director, officer,
employee or agent of Stonegate shall be considered to be an employee of
the Company by virtue of the services provided hereunder.
15. MISCELLANEOUS
Stonegate's obligations under this Agreement are subject to the following
general conditions:
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(a) All relevant terms, conditions, and circumstances relating to the
Placements will be reasonably satisfactory to Stonegate and its
counsel.
(b) Stonegate reserves the right to solicit the assistance of outside
dealers ("Dealers") to assist in the offer and sale of the
Placements; provided, however, that any such Dealers agree in
writing to be bound by the terms of the applicable Placement. It is
understood that Stonegate, in its sole discretion, shall be entitled
to pay over to any such Dealers any portion of the compensation
received by Stonegate hereunder. The Company shall have no financial
liability for any fees or expenses of any such Dealers.
16. CAPTIONS.
The Section titles herein are for reference purposes only and do not
control or affect the meaning or interpretation of any term or provision
hereof.
17. AMENDMENTS.
No alteration, amendment, change or addition hereto shall be binding or
effective unless the same is set forth in a writing signed by a duly
authorized representative of each Party.
18. PARTIAL INVALIDITY.
If it is finally determined that any term or provision hereof is invalid
or unenforceable, (a) the remaining terms and provisions hereof shall be
unimpaired, and (b) the invalid or unenforceable term or provision shall
be replaced by a term or provision that is valid and enforceable and that
comes as close as possible to expressing the intention of the invalid or
unenforceable term or provision.
19. ENTIRE AGREEMENT.
This Agreement embodies the entire agreement and understanding of the
Parties and supersedes any and all prior agreements, arrangements and
understandings relating to the matters provided for herein.
20. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be an original, but all of which together shall be considered one
and the same agreement.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above by duly authorized representatives of the Company and Stonegate.
PROUROCARE MEDICAL, INC.
By: /s/ Xxxxxxx X. Xxxxxx XX
----------------------------
Title: CEO
-------------------------
STONEGATE SECURITIES, INC.
By: /s/ Xxxxx Xxxxxxxx
----------------------------
Title: President
-------------------------
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EXHIBIT A
Form of Representative's Warrant
[See attached]
A-1
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
SECURITIES LAWS, HAVE BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE SOLD OR
TRANSFERRED OR OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO
SUCH SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL (WHICH OPINION
IS REASONABLY SATISFACTORY TO THE ISSUER OF THESE SECURITIES), SUCH REGISTRATION
UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED.
Date: ______________ Warrant to Purchase
***______***
Shares
PROUROCARE MEDICAL, INC.
(Incorporated under the laws of the State of Nevada)
REPRESENTATIVE'S WARRANT FOR THE PURCHASE OF SHARES OF
COMMON STOCK
[the Warrant will be for the same Securities sold in the Placement]
Warrant Price: $__ per share, subject to adjustment as provided below.
THIS IS TO CERTIFY that, for value received, Stonegate Securities, Inc.
("Stonegate") and its assigns (collectively, the "Holder"), is entitled to
purchase, subject to the terms and conditions hereinafter set forth, up to
***______*** shares of the common stock, par value $.00001 per share ("Common
Stock"), of ProUroCare Medical, Inc., a Nevada corporation (the "Company"), and
to receive certificate(s) for the Common Stock so purchased.
1. Exercise Period and Vesting. The exercise period is the period
beginning on the date of this Warrant (the "Issuance Date") and ending at 5:00
p.m., Dallas, Texas time, five years from the Issuance Date (the "Exercise
Period"). This Warrant is vested in full as of the Issuance Date and is
immediately exercisable by Holder. This Warrant will terminate automatically and
immediately upon the expiration of the Exercise Period.
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2. Exercise of Warrant; Cashless Exercise. This Warrant may be exercised,
in whole or in part, at any time and from time to time during the Exercise
Period. Such exercise shall be accomplished by tender to the Company of the
purchase price set forth above as the warrant price (the "Warrant Price"),
either (a) in cash, by wire transfer or by certified check or bank cashier's
check, payable to the order of the Company, or (b) by surrendering such number
of shares of Common Stock received upon exercise of this Warrant with a current
market price equal to the Warrant Price (a "Cashless Exercise"), together with
presentation and surrender to the Company of this Warrant with an executed
subscription in substantially the form attached hereto as Exhibit A (the
"Subscription"). Upon receipt of the foregoing, the Company will deliver to the
Holder, as promptly as possible, a certificate or certificates representing the
shares of Common Stock so purchased, registered in the name of the Holder or its
transferee (as permitted under Section 3 below). With respect to any exercise of
this Warrant, the Holder will for all purposes be deemed to have become the
holder of record of the number of shares of Common Stock purchased hereunder on
the date this Warrant, a properly executed Subscription and payment of the
Warrant Price is received by the Company (the "Exercise Date"), irrespective of
the date of delivery of the certificate evidencing such shares, except that, if
the date of such receipt is a date on which the stock transfer books of the
Company are closed, such person will be deemed to have become the holder of such
shares at the close of business on the next succeeding date on which the stock
transfer books are open. Fractional shares of Common Stock will not be issued
upon the exercise of this Warrant. In lieu of any fractional shares that would
have been issued but for the immediately preceding sentence, the Holder will be
entitled to receive cash equal to the current market price of such fraction of a
share of Common Stock on the trading day immediately preceding the Exercise
Date. In the event this Warrant is exercised in part, the Company shall issue a
new Warrant to the Holder covering the aggregate number of shares of Common
Stock as to which this Warrant remains exercisable for.
If the Holder elects to conduct a Cashless Exercise, the Company shall
cause to be delivered to the Holder a certificate or certificates representing
the number of shares of Common Stock computed using the following formula:
X = Y (A-B)
-----
A
Where: X = the number of shares of Common Stock to be issued to Holder;
Y = the portion of the Warrant (in number of shares of
Common Stock) being exercised by Holder (at the date
of such calculation);
A = the fair market value of one share of Common Stock on
the Exercise Date (as calculated below); and
B = Warrant Price (as adjusted to the date of such
calculation).
For purposes of the foregoing calculation, "fair market value of one share
of Common Stock on the Exercise Date" shall mean: (i) if the principal trading
market for such securities is a national or regional securities exchange, the
closing price on such exchange for day immediately prior to such Exercise Date;
(ii) if sales prices for shares of Common Stock are reported by the Nasdaq
National Market System or Nasdaq Small Cap Market (or a similar system then in
use), the last reported sales price for the day immediately prior to such
Exercise Date; or (iii) if neither (i) nor (ii) above are applicable, and if bid
and ask prices for shares of Common Stock are reported in the over-the-counter
market by Nasdaq (or, if not so reported, by the National Quotation Bureau), the
average of the high bid and low ask prices so reported for the ten (10) trading
days immediately prior to such Exercise Date. Notwithstanding the foregoing, if
there is no reported closing price, last reported sales price, or bid and ask
prices, as the case may be, for the period in question, then the current market
price shall be determined as of the latest ten (10) day period prior to such day
for which such closing price, last reported sales price, or bid and ask prices,
as the case may be, are available, unless such securities have not been traded
on an exchange or in the over-the-counter market for 30 or more days immediately
prior to the day in question, in which case the current market price shall be
determined in good faith by, and reflected in a formal resolution of, the Board
of Directors of the Company. The Company acknowledges and agrees that this
Warrant was issued on the Issuance Date.
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3. Transferability and Exchange.
(a) This Warrant, and the Common Stock issuable upon the exercise
hereof, may not be sold, transferred, pledged or hypothecated unless the Company
shall have been provided with an opinion of counsel, or other evidence
reasonably satisfactory to it, that such transfer is not in violation of the
Securities Act, and any applicable state securities laws. Subject to the
satisfaction of the aforesaid condition, this Warrant and the underlying shares
of Common Stock shall be transferable from time to time by the Holder upon
written notice to the Company. If this Warrant is transferred, in whole or in
part, the Company shall, upon surrender of this Warrant to the Company, deliver
to each transferee a Warrant evidencing the rights of such transferee to
purchase the number of shares of Common Stock that such transferee is entitled
to purchase pursuant to such transfer. The Company may place a legend similar to
the legend at the top of this Warrant on any replacement Warrant and on each
certificate representing shares issuable upon exercise of this Warrant or any
replacement Warrants. Only a registered Holder may enforce the provisions of
this Warrant against the Company. A transferee of the original registered Holder
becomes a registered Holder only upon delivery to the Company of the original
Warrant and an original Assignment, substantially in the form set forth in
Exhibit B attached hereto.
(b) This Warrant is exchangeable upon its surrender by the Holder to
the Company for new Warrants of like tenor and date representing in the
aggregate the right to purchase the number of shares purchasable hereunder, each
of such new Warrants to represent the right to purchase such number of shares as
may be designated by the Holder at the time of such surrender.
4. Adjustments to Warrant Price and Number of Shares Subject to Warrant.
The Warrant Price and the number of shares of Common Stock purchasable upon the
exercise of this Warrant are subject to adjustment from time to time upon the
occurrence of any of the events specified in this Section 4. For the purpose of
this Section 4, "Common Stock" means shares now or hereafter authorized of any
class of common stock of the Company and any other stock of the Company, however
designated, that has the right to participate in any distribution of the assets
or earnings of the Company without limit as to per share amount (excluding, and
subject to any prior rights of, any class or series of preferred stock).
(a) In case the Company shall (i) pay a dividend or make a
distribution in shares of Common Stock or other securities, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares,
or (iv) issue by reclassification of its shares of Common Stock other securities
of the Company, then the Warrant Price in effect at the time of the record date
for such dividend or on the effective date of such subdivision, combination or
reclassification, and/or the number and kind of securities issuable on such
date, shall be proportionately adjusted so that the Holder of any Warrant
thereafter exercised shall be entitled to receive the aggregate number and kind
of shares of Common Stock (or such other securities other than Common Stock) of
the Company, at the same aggregate Warrant Price, that, if such Warrant had been
exercised immediately prior to such date, the Holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, distribution,
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
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(b) In case the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
surviving corporation) of cash, evidences of indebtedness or assets, or
subscription rights or warrants, the Warrant Price to be in effect after such
record date shall be determined by multiplying the Warrant Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price per share of Common Stock on such record date,
less the amount of cash so to be distributed (or the fair market value (as
determined in good faith by, and reflected in a formal resolution of, the Board
of Directors of the Company) of the portion of the assets or evidences of
indebtedness so to be distributed, or of such subscription rights or warrants,
applicable to one share of Common Stock, and the denominator of which shall be
such current market price per share of Common Stock. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Warrant Price shall again be adjusted to
be the Warrant Price which would then be in effect if such record date had not
been fixed.
(c) For the purpose of any computation under any subsection of this
Section 4, the "current market price" per share of Common Stock on any date
shall be the per share price of the Common Stock on the trading day immediately
prior to the event requiring an adjustment hereunder and shall be: (i) if the
principal trading market for such securities is a national or regional
securities exchange, the closing price on such exchange on such day; or (ii) if
sales prices for shares of Common Stock are reported by the Nasdaq National
Market System or Small Cap Market System (or a similar system then in use), the
last reported sales price so reported on such day; or (iii) if neither (i) nor
(ii) above are applicable, and if bid and ask prices for shares of Common Stock
are reported in the over-the-counter market by Nasdaq (or, if not so reported,
by the National Quotation Bureau), the average of the high bid and low ask
prices so reported on such day. Notwithstanding the foregoing, if there is no
reported closing price, last reported sales price, or bid and ask prices, as the
case may be, for the day in question, then the current market price shall be
determined as of the latest date prior to such day for which such closing price,
last reported sales price, or bid and ask prices, as the case may be, are
available, unless such securities have not been traded on an exchange or in the
over-the-counter market for 30 or more days immediately prior to the day in
question, in which case the current market price shall be determined in good
faith by, and reflected in a formal resolution of, the Board of Directors of the
Company.
(d) Notwithstanding any provision herein to the contrary, no
adjustment in the Warrant Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Warrant Price; provided,
however, that any adjustments which by reason of this subsection (d) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 4 shall be made to
the nearest cent or the nearest one-hundredth of a share, as the case may be.
4
(e) In the event that at any time, as a result of an adjustment made
pursuant to subsection (a) above, the Holder of any Warrant thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Common Stock contained in this Section
4, and the other provisions of this Warrant shall apply on like terms to any
such other shares.
(f) If the Company merges or consolidates into or with another
corporation or entity, or if another corporation or entity merges into or with
the Company (excluding such a merger in which the Company is the surviving or
continuing corporation and which does not result in any reclassification,
conversion, exchange, or cancellation of the outstanding shares of Common
Stock), or if all or substantially all of the assets or business of the Company
are sold or transferred to another corporation, entity, or person, then, as a
condition to such consolidation, merger, or sale (a "Transaction"), lawful and
adequate provision shall be made whereby the Holder shall have the right from
and after the Transaction to receive, upon exercise of this Warrant and upon the
terms and conditions specified herein and in lieu of the shares of the Common
Stock that would have been issuable if this Warrant had been exercised
immediately before the Transaction, such shares of stock, securities, or assets
as the Holder would have owned immediately after the Transaction if the Holder
had exercised this Warrant immediately before the effective date of the
Transaction.
5. Registration Rights. The Company hereby grants to Holder, with respect
to the shares of Common Stock underlying this Warrant, registration rights
identical to those that are granted to Purchasers in the Placement (as such
terms are defined in that certain Placement Agency Agreement, dated as of
__________, by and between the Company and Stonegate); it being specifically
agreed and understood that the shares of Common Stock underlying this Warrant
will be included in any registration statement filed by the Company which
includes shares of Common Stock, or shares of Common Stock underlying any
securities, issued to Purchasers in the Placement.
6. Reservation of Shares. The Company agrees at all times to reserve and
hold available out of its authorized but unissued shares of Common Stock the
number of shares of Common Stock issuable upon the full exercise of this
Warrant. The Company further covenants and agrees that all shares of Common
Stock that may be delivered upon the exercise of this Warrant will, upon
delivery, be fully paid and nonassessable and free from all taxes, liens and
charges with respect to the purchase thereof hereunder.
7. Notices to Holder. Upon any adjustment of the Warrant Price (or number
of shares of Common Stock purchasable upon the exercise of this Warrant)
pursuant to Section 4, the Company shall promptly thereafter cause to be given
to the Holder written notice of such adjustment. Such notice shall include the
Warrant Price (and/or the number of shares of Common Stock purchasable upon the
exercise of this Warrant) after such adjustment, and shall set forth in
reasonable detail the Company's method of calculation and the facts upon which
such calculations were based. Where appropriate, such notice shall be given in
advance and included as a part of any notice required to be given under the
other provisions of this Section 7.
In the event of (a) any fixing by the Company of a record date with
respect to the holders of any class of securities of the Company for the purpose
of determining which of such holders are entitled to dividends or other
distributions, or any rights to subscribe for, purchase or otherwise acquire any
shares of capital stock of any class or any other securities or property, or to
receive any other right, (b) any capital reorganization of the Company, or
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets or business of the Company
to, or consolidation or merger of the Company with or into, any other entity or
person, or (c) any voluntary or involuntary dissolution or winding up of the
Company, then and in each such event the Company will give the Holder a written
notice specifying, as the case may be (i) the record date for the purpose of
such dividend, distribution, or right, and stating the amount and character of
such dividend, distribution, or right; or (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, conveyance, dissolution, liquidation, or winding up is to take place and
the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such capital stock or securities receivable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock securities) for securities or other property deliverable upon such
event. Any such notice shall be given at least 10 days prior to the earliest
date therein specified.
5
8. No Rights as a Stockholder. This Warrant does not entitle the Holder to
any voting rights or other rights as a stockholder of the Company, nor to any
other rights whatsoever except the rights herein set forth.
9. Additional Covenants of the Company. For so long as the Common Stock is
listed for trading on any regional or national securities exchange or Nasdaq
(National Market or Small Cap System), the Company shall, upon issuance of any
shares for which this Warrant is exercisable, at its expense, promptly obtain
and maintain the listing of such shares. The Company shall also comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act for so long
as and to the extent that such requirements apply to the Company.
The Company shall not, by amendment of its Articles of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant. Without limiting the generality of the foregoing, the Company (a) will
at all times reserve and keep available, solely for issuance and delivery upon
exercise of this Warrant, shares of Common Stock issuable from time to time upon
exercise of this Warrant, (b) will not increase the par value of any shares of
capital stock receivable upon exercise of this Warrant above the amount payable
therefor upon such exercise, and (c) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable stock.
10. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company, the Holder and their respective successors and
permitted assigns.
11. Notices. The Company agrees to maintain a ledger of the ownership of
this Warrant (the "Ledger"). Any notice hereunder shall be given by registered
or certified mail if to the Company, at its principal executive office and, if
to the Holder, to its address shown in the Ledger of the Company; provided,
however, that the Holder may at any time on three (3) days written notice to the
Company designate or substitute another address where notice is to be given.
Notice shall be deemed given and received after a certified or registered
letter, properly addressed with postage prepaid, is deposited in the U.S. mail.
6
12. Severability. Every provision of this Warrant is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the remainder of this
Warrant.
13. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Texas without giving effect to the
principles of choice of laws thereof.
14. Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Warrant, the prevailing party shall be entitled to recover
reasonable attorneys' fees in addition to its costs and expenses and any other
available remedy.
15. Entire Agreement. This Warrant (including the Exhibits attached
hereto) constitutes the entire understanding between the Company and the Holder
with respect to the subject matter hereof, and supersedes all prior
negotiations, discussions, agreements and understandings relating to such
subject matter.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of the date first set forth above.
PROUROCARE MEDICAL, INC.
By: _________________________________
Title:_______________________________
7
Exhibit A
SUBSCRIPTION FORM
(To be Executed by the Holder to Exercise the Rights To Purchase Common Stock
Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for _______ shares (the
"Stock") of the Common Stock of ProUroCare Medical, Inc. (the "Company")
pursuant to and in accordance with the terms and conditions of the attached
Warrant (the "Warrant"), and hereby makes payment of $_______ therefor by
[tendering cash, wire transferring or delivering a certified check or bank
cashier's check, payable to the order of the Company] [surrendering _______
shares of Common Stock received upon exercise of the Warrant, which shares have
a current market price equal to such payment as required in Section 2 of the
Warrant]. The undersigned requests that a certificate for the Stock be issued in
the name of the undersigned and be delivered to the undersigned at the address
stated below. If the Stock is not all of the shares purchasable pursuant to the
Warrant, the undersigned requests that a new Warrant of like tenor for the
balance of the remaining shares purchasable thereunder be delivered to the
undersigned at the address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
I understand that because the Stock has not been registered under the
Securities Act, I must hold such Stock indefinitely unless the Stock is
subsequently registered and qualified under the Securities Act or is exempt from
such registration and qualification. I shall make no transfer or disposition of
the Stock unless (a) such transfer or disposition can be made without
registration under the Securities Act by reason of a specific exemption from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Securities Act and has been declared effective with
respect to such disposition. I agree that each certificate representing the
Stock delivered to me shall bear substantially the same as set forth on the
front page of the Warrant.
I agree that each certificate representing the Stock delivered to me shall
bear substantially the same legend as set forth on the front page of the
Warrant.
I further agree that the Company may place stop orders on the certificates
evidencing the Stock with the transfer agent, if any, to the same effect as the
above legend. The legend and stop transfer notice referred to above shall be
removed only upon my furnishing to the Company of an opinion of counsel
(reasonably satisfactory to the Company) to the effect that such legend may be
removed.
Date:____________________________ Signed:______________________________
Address:_____________________________
_____________________________________
A-1
Exhibit B
ASSIGNMENT
(To be Executed by the Holder to Effect Transfer of the Attached Warrant)
For Value Received __________________________ hereby sells, assigns and
transfers to _________________________ the Warrant attached hereto and the
rights represented thereby to purchase _________ shares of Common Stock in
accordance with the terms and conditions hereof, and does hereby irrevocably
constitute and appoint _________________________ as attorney to transfer such
Warrant on the books of the Company with full power of substitution.
Dated:_________________________ Signed: __________________________
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
assignee: Number of Assignee:
_____________________________________ __________________________________
_____________________________________
_____________________________________
1
APPENDIX I
Registration Rights
1. Definitions.
(a) As used in this Appendix I, the following terms shall have the
meanings:
1. "Affiliate," of any specified Person means any other Person who
directly, or indirectly through one or more intermediaries, is in control of, is
controlled by, or is under common control with, such specified Person. For
purposes of this definition, control of a Person means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether by contract, securities ownership or otherwise; and the
terms "controlling" and "controlled" have the respective meanings correlative to
the foregoing.
2. "Commission" means the Securities and Exchange Commission.
3. "Company" shall mean ProUroCare Medical, Inc.
4. "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder, or any similar
successor statute.
5. "Holder" means Stonegate Securities, Inc. and any permitted transferee
or assignee of Registrable Securities who agrees to become bound by all of the
terms and provisions of this Appendix I.
6. "Person" means any individual, partnership, corporation, limited
liability company, joint stock company, association, trust, unincorporated
organization, or a government agency or political subdivision thereof.
7. "Placement" means any offering of securities of the Company pursuant to
which Holder serves as a placement agent or underwriter, whether on a best
efforts basis or otherwise.
8. "Prospectus" means the prospectus (including any preliminary prospectus
and/or any final prospectus filed pursuant to Rule 424(b) under the Securities
Act and any prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement in reliance on
Rule 430A under the Securities Act) included in the Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement and by all other amendments and supplements to such
prospectus, including all material incorporated by reference in such prospectus
and all documents filed after the date of such prospectus by the Company under
the Exchange Act and incorporated by reference therein.
9. "Public Offering" means an offer registered with the Commission and the
appropriate state securities commissions by the Company of its Common Stock and
made pursuant to the Securities Act.
1
10. "Registrable Securities" means the shares of common stock issued to
Stonegate Securities, Inc. or its designated affiliates pursuant to the terms of
the Placement Agency Agreement; provided, however, a share of common stock shall
cease to be a Registrable Security for purposes of this Appendix I when it no
longer is a Restricted Security.
11. "Registration Statement" means a registration statement of the Company
filed on Form S-3 under the Securities Act providing for the registration of,
and the sale on a continuous or delayed basis by the holders of, all of the
Registrable Securities pursuant to Rule 415 under the Securities Act, including
the Prospectus contained therein and forming a part thereof, any amendments to
such registration statement and supplements to such Prospectus, and all exhibits
and other material incorporated by reference in such registration statement and
Prospectus. In the event that Form S-3 is unavailable for such a registration,
the Company shall use such other form as is available for such a registration.
12. "Restricted Security" means any share of common stock except any that
(i) have been registered pursuant to an effective registration statement under
the Securities Act and sold in a manner contemplated by the prospectus included
in such registration statement, (ii) have been transferred in compliance with
the resale provisions of Rule 144 under the Securities Act (or any successor
provision thereto) or is transferable pursuant to paragraph (k) of Rule 144
under the Securities Act (or any successor provision thereto), or (iii)
otherwise has been transferred and are not subject to transfer restrictions
under the Securities Act.
13. "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, or any similar successor
statute.
2. Registration.
(a) Initial Registration Statement. The Company hereby grants to Holder,
with respect to the Registrable Securities, registration rights
identical to those granted to the purchasers in the Placement and
will include the Registrable Securities in any registration
statement filed for the purchasers in the Placement. The Company
agrees to keep such Registration Statement effective until the
earlier of: (i) the passage of two years from the effective date of
such Registration Statement; or (ii) the date on which all
Registrable Securities may be resold by the Holders by reason of
Rule 144(k) under the Securities Act or any other rule of similar
effect.
(b) [INTENTIONALLY DELETED]
(c) Piggyback Registration Rights.
(i) Whenever the Company proposes to register any of its Common
Shares or any other common shares of the Company under the Securities Act (other
than a registration (A) pursuant to a demand registration under Section 2(a)
herein, (B) on Form S-8 or S-4 or any successor or similar forms, (C) relating
to Common Shares or any other common shares of the Company issuable upon
exercise of employee or consultant share options or in connection with any
employee benefit or similar plan of the Company or (D) in connection with a
direct or indirect acquisition by the Company of another Person or any
transaction with respect to which Rule 145 (or any successor provision) under
the Securities Act applies), whether or not for sale for its own account, it
will each such time, give prompt written notice at least 20 days prior to the
anticipated filing date of the registration statement relating to such
registration to the Holders, which notice shall set forth such Holders' rights
under this Section 2(c) and shall offer the Holders the opportunity to include
in such registration statement such number of Registrable Securities as the
Holders may request. Upon the written request of a Holder made within 10 days
after the receipt of notice from the Company (which request shall specify the
number of Registrable Securities intended to be disposed of by such Holders),
the Company will use its best efforts to effect the registration under the
Securities Act of all Registrable Securities that the Company has been so
requested to register by the Holders, to the extent requisite to permit the
disposition of the Registrable Securities to be so registered; provided,
however, that (A) if such registration involves a Public Offering, the Holders
must sell their Registrable Securities to the underwriters on the same terms and
conditions as apply to the Company and (B) if, at any time after giving written
notice of its intention to register any Registrable Securities pursuant to this
Section 2(c) and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register such Registrable Securities, the Company shall give written
notice to the Holders and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration. The
Company's obligations under this Section 2(c) shall terminate on the date that
the registration statement to be filed in accordance with Section 2(a) is
declared effective by the Commission.
2
(ii) If a registration pursuant to this Section 2(c) involves a
Public Offering and the managing underwriter thereof advises the Company that,
in its view, the number of Common Shares, if any, or other Common Shares that
the Company and the Holders intend to include in such registration exceeds the
largest number of Common Shares (including any other Common Shares or warrants
of the Company) that can be sold without having an adverse effect on such Public
Offering (the "Maximum Offering Size"), the Company will include in such
registration only that number of Common Shares which does not exceed the Maximum
Offering Size, in the following order of priorities: (1) first, all securities
the Company proposes to sell for its own account, (2) second, up to the full
number of securities proposed to be registered for the account of the holders of
securities entitled to inclusion of their securities in the Registration
Statement by reason of demand registration rights, and (3) third, the securities
requested to be registered by other holders of securities entitled to
participate in the registration, drawn from them pro-rata based on the number of
shares each has requested to be included in such registration and the Holders
pursuant to this Appendix I.
If as a result of the proration provisions of this Section 2(c)(ii), the Holders
are not entitled to include all such Registrable Securities in such
registration, such Holders may elect to withdraw their request to include any
Registrable Securities in such registration.
Notwithstanding the foregoing, the Company shall have no obligations under this
Section 2(c) hereof at any time that such Registrable Securities are the subject
of an effective registration statement.
3. Obligations of the Company. In connection with the registration of the
Registrable Securities, the Company shall use its reasonable best efforts
to:
(a) Subject to the provisions of Section 3(r) hereof, promptly (i)
prepare and file with the Commission such amendments (including
post-effective amendments) to the Registration Statement and
supplements to the Prospectus as may be necessary to keep the
Registration Statement continuously effective and in compliance with
the provisions of the Securities Act applicable thereto so as to
permit the Prospectus forming part thereof to be current and useable
by Holders for resales of the Registrable Securities for a period of
two years from the date the Registration Statement is first declared
effective by the Commission (the "Effective Time") or such shorter
period that will terminate when all the Registrable Securities
covered by the Registration Statement have been sold pursuant
thereto in accordance with the plan of distribution provided in the
Prospectus, transferred pursuant to Rule 144 under the Securities
Act or otherwise transferred in a manner that results in the
delivery of new securities not subject to transfer restrictions
under the Securities Act (the "Registration Period") and (ii) take
all lawful action such that each of (A) the Registration Statement
and any amendment thereto does not, when it becomes effective,
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 (B) the Prospectus forming
part of the Registration Statement, and any amendment or supplement
thereto, does not at any time during the Registration Period include
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. Notwithstanding the foregoing, the
Company's obligations hereunder shall terminate as to any Holder at
such time as that Holder's Registrable Securities can be sold under
Rule 144(k);
3
(b) During the Registration Period, comply with the provisions of the
Securities Act with respect to the Registrable Securities of the
Company covered by the Registration Statement until such time as all
of such Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the Holders as set forth
in the Prospectus forming part of the Registration Statement;
(c) (i) Prior to the filing with the Commission of any Registration
Statement (including any amendments thereto) and the distribution or
delivery of any Prospectus (including any supplements thereto),
provide draft copies thereof (including a copy of the accountant's
consent letter to be included in the filing) to Stonegate
Securities, Inc. ("Stonegate") and reflect in such documents all
such comments as Stonegate reasonably may propose; and (ii) furnish
to each Holder whose Registrable Securities are included in the
Registration Statement, (A) promptly after the same is prepared and
publicly distributed, filed with the Commission, or received by the
Company, one copy of the Registration Statement, each Prospectus,
and each amendment or supplement thereto, and (B) such number of
copies of the Prospectus and all amendments and supplements thereto
and such other documents, as such Holder may reasonably request in
order to facilitate the disposition of the Registrable Securities
owned by such Holder;
(d) (i) Register or qualify the Registrable Securities covered by the
Registration Statement under such securities or "Blue Sky" laws of
all jurisdictions requiring Blue Sky registration or qualification,
(ii) prepare and file in such jurisdictions such amendments
(including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof at all times during the Registration Period,
(iii) take all such other lawful actions as may be necessary to
maintain such registrations and qualifications in effect at all
times during the Registration Period, and (iv) take all such other
lawful actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection
therewith or as a condition thereto to (A) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (B) subject itself to general taxation in
any such jurisdiction or (C) file a general consent to service of
process in any such jurisdiction;
4
(e) As promptly as practicable after becoming aware of such event,
notify each Holder of the occurrence of any event, as a result of
which the Prospectus included in the 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, in light of the circumstances under
which they were made, not misleading, and promptly prepare an
amendment to the Registration Statement and supplement to the
Prospectus to correct such untrue statement or omission, and deliver
a number of copies of such supplement and amendment to each Holder
as such Holder may reasonably request;
(f) Notify each Holder who holds Registrable Securities being sold (or,
in the event of an underwritten offering, the managing underwriters)
of the issuance by the Commission of any stop order or other
suspension of the effectiveness of the Registration Statement on the
date of receipt of any such stop order or other suspension, and take
all lawful action to effect the withdrawal, recession or removal of
such stop order or other suspension;
(g) Cause all the Registrable Securities covered by the Registration
Statement to be listed not later than the date that the Registration
Statement is declared effective by the Commission on the principal
national securities exchange, or included in an inter-dealer
quotation system of a registered national securities association, on
or in which securities of the same class or series issued by the
Company are then listed or included;
(h) Maintain a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective
date of the Registration Statement;
(i) Cooperate with the Holders who hold Registrable Securities being
offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant
to the registration statement and enable such certificates for the
Registrable Securities to be in such denominations or amounts, as
the case may be, as the Holders reasonably may request and
registered in such names as the Holder may request; and, within
three business days after a registration statement which includes
Registrable Securities is declared effective by the Commission,
deliver and cause legal counsel selected by the Company to deliver
to the transfer agent for the Registrable Securities (with copies to
the Holders whose Registrable Securities are included in such
registration statement) an appropriate instruction and, to the
extent necessary, an opinion of such counsel;
5
(j) Take all such other lawful actions reasonably necessary to expedite
and facilitate the disposition by the Holders of their Registrable
Securities in accordance with the intended methods therefor provided
in the Prospectus which are customary under the circumstances;
(k) Make generally available to its security holders as soon as
practicable, but in any event not later than three (3) months after
(i) the effective date (as defined in Rule 158(c) under the
Securities Act) of the Registration Statement, and (ii) the
effective date of each post-effective amendment to the Registration
Statement, as the case may be, an earnings statement of the Company
and its subsidiaries complying with Section 11(a) of the Securities
Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(l) In the event of an underwritten offering, promptly include or
incorporate in a Prospectus supplement or post-effective amendment
to the Registration Statement such information as the managers
reasonably agree should be included therein and to which the Company
does not reasonably object and make all required filings of such
Prospectus supplement or post-effective amendment as soon as
practicable after it is notified of the matters to be included or
incorporated in such Prospectus supplement or post-effective
amendment;
(m) In connection with any underwritten offering, make such
representations and warranties to the Holders participating in such
underwritten offering and to the managers, in form, substance and
scope as are customarily made by the Company to underwriters in
secondary underwritten offerings;
(n) In connection with any underwritten offering, obtain opinions of
counsel to the Company (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the managers)
addressed to the underwriters, covering such matters as are
customarily covered in opinions requested in secondary underwritten
offerings (it being agreed that the matters to be covered by such
opinions shall include, without limitation, as of the date of the
opinion and as of the date the Registration Statement is first
declared effective or most recent post- effective amendment thereto,
as the case may be, the absence from the Registration Statement and
the Prospectus, including any documents incorporated by reference
therein, of an untrue statement of a material fact or the omission
of a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light
of the circumstances under which they were made) not misleading,
subject to customary limitations);
(o) In connection with any underwritten offering, obtain "cold comfort"
letters and updates thereof from the independent public accountants
of the Company (and, if necessary, from the independent public
accountants of any subsidiary of the Company or of any business
acquired by the Company, in each case for which financial statements
and financial data are, or are required to be, included in the
Registration Statement), addressed to each underwriter participating
in such underwritten offering (if such underwriter has provided such
letter, representations or documentation, if any, required for such
cold comfort letter to be so addressed), in customary form and
covering matters of the type customarily covered in "cold comfort"
letters in connection with secondary underwritten offerings;
6
(p) In connection with any underwritten offering, deliver such documents
and certificates as may be reasonably required by the managers, if
any; and
(q) In connection with any underwritten offering, in the event that any
broker-dealer registered under the Exchange Act shall be an
"Affiliate" (as defined in Rule 2729(b)(1) of the rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD Rules") (or any successor provision thereto)) of the
Company or has a "conflict of interest" (as defined in Rule
2720(b)(7) of the NASD Rules (or any successor provision thereto))
and such broker-dealer shall underwrite, participate as a member of
an underwriting syndicate or selling group or assist in the
distribution of any Registrable Securities covered by the
Registration Statement, whether as a holder of such Registrable
Securities or as an underwriter, a placement or sales agent or a
broker or dealer in respect thereof, or otherwise, the Company shall
assist such broker-dealer in complying with the requirements of the
NASD Rules, including, without limitation, by (A) engaging a
"qualified independent underwriter" (as defined in Rule 2720(b)(15)
of the NASD Rules (or any successor provision thereto)) to
participate in the preparation of the Registration Statement
relating to such Registrable Securities, to exercise usual standards
of due diligence in respect thereof and to recommend the public
offering price of such Registrable Securities, (B) indemnifying such
qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 6 hereof, and
(C) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the
requirements of the NASD Rules.
(r) Notwithstanding anything to the contrary in Section 3, at any time
after the Registration Statement has been declared effective, the
Company may delay the disclosure of material non-public information
concerning the Company, the disclosure of which at the time is not,
in the good faith opinion of the Company and its counsel, in the
best interest of the Company (a "Grace Period"); provided, that the
Company shall promptly (i) notify the Holders in writing of the
existence of material non-public information giving rise to a Grace
Period and the date on which the Grace Period will begin, and (ii)
notify the Holders in writing in advance of, or on the same date on
which, the Grace Period ends; and, provided further, that during any
consecutive 365 day period, there shall be only two Grace Periods,
such Grace Periods in total not to exceed 45 days. For purposes of
determining the length of a Grace Period above, the Grace Period
shall begin on and include the date the Holders receive the notice
referred to in clause (i) and shall end on and include the date
specified as the Grace Period ending date in the notice referred to
in clause (ii). Notwithstanding the foregoing, the Company shall
have no obligations under Section 3(l) through (q) unless it is
effecting an underwritten offering pursuant to Section 2(c).
7
4. Obligations of the Holders. In connection with the registration of the
Registrable Securities, the Holders shall have the following obligations,
which obligations shall be several and not joint:
(a) Prior to the first anticipated filing date of the Registration
Statement under Section 2(a) hereof, the Company shall provide the
Holders with a draft of the Registration Statement, including such
information about the Holder as has been provided to the Company in
writing by the Holder specifically for inclusion in the Registration
Statement, together with whatever confirmations, certificates or
consents as may be reasonably requested by the Company. In
connection with any other Registration Statement including the
Holders, it shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Appendix I
with respect to the Registrable Securities of a particular Holder
that such Holder shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by
it as shall be reasonably required to effect the registration of
such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably
request. At least ten business days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify
each Holder and its counsel, whether in-house or otherwise
("Counsel") of the information the Company requires from each such
Holder (the "Requested Information") if such Holder elects to have
any of its Registrable Securities included in the Registration
Statement. If at least four business days prior to the anticipated
filing date the Company has not received the Requested Information
from a Holder (a "Non-Responsive Holder") or its Counsel, then the
Company shall send such Non-Responsive Holder and its Counsel a
reminder of such information request. If at least two business days
prior to the anticipated filing date the Company still has not
received the Requested Information from such Non-Responsive Holder
or its Counsel, then the Company may file the Registration Statement
without including Registrable Securities of such Non-Responsive
Holder. However, promptly upon receipt of the Requested Information,
and at the expense of the Non-Responsive Holder, the Company shall
file such amendment(s) to the Registration Statement as may be
necessary to include therein the Registrable Securities of the
Non-Responsive Holder.
(b) Each Holder by its acceptance of the Registrable Securities agrees
to cooperate with the Company in connection with the preparation and
filing of the Registration Statement hereunder, unless such Holder
has notified the Company in writing of its election to exclude all
of its Registrable Securities from the Registration Statement; the
Company shall, on its part, ensure that Item 507 of Regulation S-K
of the Securities Act (regarding information on the selling security
holders) be complied with in connection with its preparation and
filing of the Registration Statement hereunder;
8
(c) As promptly as practicable after becoming aware of such event,
notify the Company of the occurrence of any event, as a result of
which the Prospectus included in the 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, in light of the circumstances under
which they were made, not misleading; and
(d) Each Holder agrees that, upon receipt of any notice from the Company
of the occurrence of any event of the kind described in Section 3(e)
or 3(f), it shall immediately discontinue its disposition of
Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by
Section 3(e) and, if so directed by the Company, such Holder shall
deliver to the Company (at the expense of the Company) or destroy
(and deliver to the Company a certificate of destruction) all copies
in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such
notice.
5. Expenses of Registration. All expenses, other than underwriting discounts
and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Section 3, but including, without limitation,
all registration, listing, and qualifications fees, printing and engraving
fees, accounting fees, and the fees and disbursements of counsel for the
Company, and the reasonable fees, not to exceed $5,000.00, of one firm of
counsel to the holders of a majority in interest of the Registrable
Securities shall be borne by the Company.
6. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Holder and each
underwriter, if any, which facilitates the disposition of
Registrable Securities, and each of their respective officers and
directors and each person who controls such Holder or underwriter
within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act (a "Company Indemnified Person") from and
against any losses, claims, damages or liabilities, joint or
several, to which such Company Indemnified 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 an untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement
or an omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, not misleading, or arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained
in any Prospectus or an omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company hereby
agrees to reimburse such Company Indemnified Person for all
reasonable legal and other expenses incurred by them in connection
with investigating or defending any such action or claim as and when
such expenses are incurred; provided, however, that the Company
shall not be liable to any such Company Indemnified Person in any
such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon (i) an untrue statement or
alleged untrue statement made in, or an omission or alleged omission
from, such Registration Statement or Prospectus in reliance upon and
in conformity with written information furnished to the Company by
such Company Indemnified Person expressly for use therein or (ii) in
the case of the occurrence of an event of the type specified in
Section 3(e), the use by the Company Indemnified Person of an
outdated or defective Prospectus after the Company has provided to
such Company Indemnified Person written notice that such Prospectus
is outdated or defective.
9
(b) Indemnification by the Holders. Each Holder agrees, as a consequence
of the inclusion of any of its Registrable Securities in a
Registration Statement, severally and not jointly, to (i) indemnify
and hold harmless the Company, its directors (including any person
who, with his or her consent, is named in the Registration Statement
as a director nominee of the Company), its officers and each person,
if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act
("Holder Indemnified Person"), against any losses, claims, damages
or liabilities to which the Holder Indemnified 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 an untrue statement or
alleged untrue statement of a material fact contained in such
Registration Statement or Prospectus or arise out of or are based
upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein (in light of the circumstances under which they
were made, in the case of the Prospectus), not misleading, in each
case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged
omission was made by such Holder in reliance upon and in conformity
with written information furnished to the Company by such holder
expressly for use therein; provided, however, that no Holder shall
be liable under this Section 6(b) for any amount in excess of the
gross proceeds paid to such Holder in respect of shares sold by it,
and (ii) reimburse the Holder Indemnified Person for any legal or
other expenses incurred in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Indemnification by the Underwriters. Each underwriter, if any, which
facilitates the disposition of Registrable Securities shall agree,
as a consequence of facilitating such disposition of Registrable
Securities, severally and not jointly, to (i) indemnify and hold
harmless the Company, its directors (including any person who, with
his or her consent, is named in the Registration Statement as a
director nominee of the Company), its officers and each person, if
any, who controls the Company within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, against
any losses, claims, damages or liabilities to which the Company or
such other persons 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 an
untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement or Prospectus or arise out
of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein (in light of the circumstances under
which they were made, in the case of the Prospectus), not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such holder or
underwriter expressly for use therein; provided, however, that no
underwriter shall be liable under this Section 6(b) for any amount
in excess of the gross proceeds paid to such underwriter in respect
of shares sold by it, and (ii) reimburse the Company for any legal
or other expenses incurred by the Company in connection with
investigating or defending any such action or claim as such expenses
are incurred.
10
(d) Notice of Claims, etc. Promptly after receipt by a party seeking
indemnification pursuant to this Section 6 (an "Indemnified Party")
of written notice of any investigation, claim, proceeding or other
action in respect of which indemnification is being sought (each, a
"Claim"), the Indemnified Party promptly shall notify the party
against whom indemnification pursuant to this Section 6 is being
sought (the "Indemnifying Party") of the commencement thereof; but
the omission to so notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified
Party, except to the extent that the Indemnifying Party is
materially prejudiced and forfeits substantive rights and defenses
by reason of such failure. In connection with any Claim as to which
both the Indemnifying Party and the Indemnified Party are parties,
the Indemnifying Party shall be entitled to assume the defense
thereof. Notwithstanding the assumption of the defense of any Claim
by the Indemnifying Party, the Indemnified Party shall have the
right to employ separate legal counsel and to participate in the
defense of such Claim, and the Indemnifying Party shall bear the
reasonable fees, out-of-pocket costs and expenses of such separate
legal counsel to the Indemnified Party if (and only if): (x) the
Indemnifying Party shall have agreed to pay such fees, costs and
expenses, (y) the Indemnified Party and the Indemnifying Party shall
reasonably have concluded that representation of the Indemnified
Party by the Indemnifying Party by the same legal counsel would not
be appropriate due to actual or, as reasonably determined by legal
counsel to the Indemnified Party, potentially differing interests
between such parties in the conduct of the defense of such Claim, or
if there may be legal defenses available to the Indemnified Party
that are in addition to or disparate from those available to the
Indemnifying Party, or (z) the Indemnifying Party shall have failed
to employ legal counsel reasonably satisfactory to the Indemnified
Party within a reasonable period of time after notice of the
commencement of such Claim. If the Indemnified Party employs
separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such
legal counsel shall be borne exclusively by the Indemnified Party.
Except as provided above, the Indemnifying Party shall not, in
connection with any Claim in the same jurisdiction, be liable for
the fees and expenses of more than one firm of counsel for the
Indemnified Party (together with appropriate local counsel). The
Indemnified Party shall not, without the prior written consent of
the Indemnifying Party (which consent shall not unreasonably be
withheld), settle or compromise any Claim or consent to the entry of
any judgment that does not include an unconditional release of the
Indemnifying Party from all liabilities with respect to such Claim
or judgment.
11
(e) Contribution. If the indemnification provided for in this Section 6
is unavailable to or insufficient to hold harmless an Indemnified
Person under subsection (a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each Indemnifying Party shall contribute
to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party
in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information
supplied by such Indemnifying Party or by such Indemnified Party,
and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro
rata allocation (even if the Holders or any underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable
considerations referred to in this Section 6(d). The amount paid or
payable by an Indemnified Party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to
above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Holders and any
underwriters in this Section 6(d) to contribute shall be several in
proportion to the percentage of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.
(f) Notwithstanding any other provision of this Section 6, in no event
shall any (i) Holder be required to undertake liability to any
person under this Section 6 for any amounts in excess of the dollar
amount of the gross proceeds to be received by such Holder from the
sale of such Holder's Registrable Securities pursuant to any
Registration Statement under which such Registrable Securities are
to be registered under the Securities Act.
(g) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have to
any Indemnified Person and the obligations of any Indemnified Person
under this Section 6 shall be in addition to any liability which
such Indemnified Person may otherwise have to the Company. The
remedies provided in this Section 6 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to an
indemnified party at law or in equity.
12
7. Rule 144. With a view to making available to the Holders the benefits of
Rule 144 under the Securities Act or any other similar rule or regulation
of the Commission that may at any time permit the Holders to sell
securities of the Company to the public without registration ("Rule 144"),
the Company agrees to:
(a) comply with the provisions of paragraph (c) (1) of Rule 144; and
(b) file with the Commission in a timely manner all reports and other
documents required to be filed by the Company pursuant to Section 13
or 15(d) under the Exchange Act; and, if at any time it is not
required to file such reports but in the past had been required to
or did file such reports, it will, upon the request of any Holder,
make available other information as required by, and so long as
necessary to permit sales of, its Registrable Securities pursuant to
Rule 144.
8. Assignment. The rights to have the Company register Registrable Securities
pursuant to this Appendix I may be assigned or transferred only with the
prior written consent of the Company, and any such assignment or transfer
without such consent shall be void and of no effect, which consent shall
not be unreasonably withheld. Notwithstanding the foregoing, such consent
of the Company shall not be required with respect to any assignment or
transfer of Registrable Securities to an affiliate of Subscriber,
including for this purpose if Subscriber is an investment company, any
fund or account advised by Subscriber's investment adviser or any
affiliate thereof. In the event of any such permitted assignment or
transfer by the Holders to any permitted transferee of all or any portion
of such Registrable Securities such transfer will be allowed only if: (a)
the Holder agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (b) the Company is, within
a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee
and (ii) the securities with respect to which such registration rights are
being transferred or assigned, (c) immediately following such transfer or
assignment, the securities so transferred or assigned to the transferee or
assignee constitute Restricted Securities, and (d) at or before the time
the Company received the written notice contemplated by clause (b) of this
sentence the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions contained herein.
9. Amendment and Waiver. Any provision of this Appendix I may be amended and
the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and Holders who hold a majority interest of the
Registrable Securities. Any amendment or waiver effected in accordance
with this Section 9 shall be binding upon each Holder and the Company.
13
10. Miscellaneous.
(a) A person or entity shall be deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election
received from the registered owner of such Registrable Securities.
(b) If after the date hereof and prior to the Commission declaring the
Registration Statement to be filed pursuant to Section 2(a)
effective under the Securities Act, the Company grants to any Person
any registration rights with respect to any Company securities which
are more favorable to such other Person than those provided in this
Appendix I, then the Company forthwith shall grant (by means of an
amendment to this Appendix I or otherwise) identical registration
rights to all Holders hereunder.
(c) Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be
in writing and shall be delivered personally or sent by certified
mail, postage prepaid, or by a nationally recognized overnight
courier service as follows, and shall be deemed given when actually
received.
if to the Company, to: ProUroCare Medical, Inc.
Xxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx, President, COO
if to the Holders, to: Stonegate Securities, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx Xxxxxxxx, President
The Company or any Holder may change the foregoing address by notice given
pursuant to this Section 10(c).
(d) Failure of any party to exercise any right or remedy under this
Appendix I or otherwise, or delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.
(e) This Appendix I shall be governed by and interpreted in accordance
with the laws of the State of Texas.
(f) The remedies provided in this Appendix I are cumulative and not
exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Appendix I 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 best 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.
14
(g) The Company shall not enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the
holders of Registrable Securities in this Appendix I or otherwise
conflicts with the provisions hereof. The Company is not currently a
party to any agreement granting any registration rights with respect
to any of its securities to any person which conflicts with the
Company's obligations hereunder or gives any other party the right
to include any securities in any Registration Statement filed
pursuant hereto, except for such rights and conflicts as have been
irrevocably waived. Without limiting the generality of the
foregoing, without the written consent of the holders of a 66 2/3%
interest of the Registrable Securities, the Company shall not grant
to any person the right to request it to register any of its
securities under the Securities Act unless the rights so granted are
pari pasu to the prior rights of the holders of Registrable
Securities set forth herein, and are not otherwise in conflict or
inconsistent with the provisions of this Appendix I. The
restrictions on the Company's rights to grant registration rights
under this paragraph shall terminate on the date all Registrable
Securities have been registered pursuant to a Registration Statement
that has been declared effective by the Commission
(h) This Appendix I and the Placement Agency Agreement constitute the
entire agreement among the parties hereto with respect to the
subject matter hereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred
to herein. This Appendix I and the Placement Agency Agreement
supersede all prior agreements and undertakings among the parties
hereto with respect to the subject matter hereof.
(i) Subject to the requirements of Section 8 hereof, this Appendix I
shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
(j) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(k) The headings in this Appendix I are for convenience of reference
only and shall not limit or otherwise affect the meaning thereof.
15
