STOCK PURCHASE AGREEMENT Dated April 28, 2008 by and between MEDIS TECHNOLOGIES LTD. and AZIMUTH OPPORTUNITY LTD.
EXHIBIT 10.1
STOCK
PURCHASE AGREEMENT
Dated
April 28, 2008
by
and between
and
AZIMUTH
OPPORTUNITY LTD.
TABLE OF
CONTENTS
Page
|
Article
I PURCHASE AND SALE OF COMMON STOCK
|
1
|
|
|
Section
1.1
|
Purchase
and Sale of Stock
|
1
|
|
Section
1.2
|
Effective
Date; Settlement Dates
|
1
|
|
Section
1.3
|
The
Shares
|
2
|
|
Section
1.4
|
Current
Report; Prospectus Supplement
|
2
|
|
Article
II FIXED REQUEST TERMS; OPTIONAL AMOUNT
|
2
|
|
|
Section
2.1
|
Fixed
Request Notice
|
2
|
|
Section
2.2
|
Fixed
Requests
|
3
|
|
Section
2.3
|
Share
Calculation
|
4
|
|
Section
2.4
|
Limitation
of Fixed Requests
|
4
|
|
Section
2.5
|
Reduction
of Commitment
|
4
|
|
Section
2.6
|
Below
Threshold Price
|
4
|
|
Section
2.7
|
Settlement
|
5
|
|
Section
2.8
|
Reduction
of Pricing Period
|
5
|
|
Section
2.9
|
Optional
Amount
|
6
|
|
Section
2.10
|
Calculation
of Optional Amount Shares
|
6
|
|
Section
2.11
|
Exercise
of Optional Amount
|
7
|
|
Section
2.12
|
Aggregate
Limit
|
7
|
|
Article
III REPRESENTATIONS AND WARRANTIES OF THE
INVESTOR
|
8
|
|
|
Section
3.1
|
Organization
and Standing of the Investor
|
8
|
|
Section
3.2
|
Authorization
and Power
|
8
|
|
Section
3.3
|
No
Conflicts
|
8
|
|
Section
3.4
|
Information
|
9
|
|
Section
3.5
|
Broker-Dealer
|
9
|
|
Article
IV REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
|
9
|
|
|
Section
4.1
|
Organization,
Good Standing and Power
|
9
|
|
Section
4.2
|
Authorization,
Enforcement
|
10
|
|
Section
4.3
|
Capitalization
|
10
|
|
Section
4.4
|
Issuance
of Shares
|
11
|
|
Section
4.5
|
No
Conflicts
|
11
|
|
Section
4.6
|
Commission
Documents, Financial Statements
|
11
|
|
Section
4.7
|
Subsidiaries
|
13
|
|
Section
4.8
|
No
Material Adverse Effect
|
13
|
|
Section
4.9
|
Indebtedness
|
13
|
|
Section
4.10
|
Title
To Assets
|
13
|
|
Section
4.11
|
Actions
Pending
|
13
|
|
Section
4.12
|
Compliance
With Law
|
14
|
|
Section
4.13
|
Certain
Fees
|
14
|
i
|
Section
4.14
|
Operation
of Business
|
14
|
|
Section
4.15
|
Environmental
Compliance
|
15
|
|
Section
4.16
|
Material
Agreements
|
15
|
|
Section
4.17
|
Transactions
With Affiliates
|
16
|
|
Section
4.18
|
Securities
Act; NASD Conduct Rules
|
16
|
|
Section
4.19
|
Employees
|
18
|
|
Section
4.20
|
Use
of Proceeds
|
18
|
|
Section
4.21
|
Investment
Company Act Status
|
18
|
|
Section
4.22
|
ERISA
|
18
|
|
Section
4.23
|
Taxes
|
19
|
|
Section
4.24
|
Insurance
|
19
|
|
Section
4.25
|
Acknowledgement
Regarding Investor’s Purchase of Shares
|
19
|
|
Article
V COVENANTS
|
19
|
|
|
Section
5.1
|
Securities
Compliance
|
19
|
|
Section
5.2
|
Registration
and Listing
|
19
|
|
Section
5.3
|
Compliance
with Laws.
|
20
|
|
Section
5.4
|
Keeping
of Records and Books of Account; Foreign Corrupt Practices
Act
|
20
|
|
Section
5.5
|
Limitations
on Holdings and Issuances
|
21
|
|
Section
5.6
|
Other
Agreements and Other Financings.
|
21
|
|
Section
5.7
|
Stop
Orders
|
22
|
|
Section
5.8
|
Amendments
to the Registration Statement; Prospectus Supplements; Free Writing
Prospectuses.
|
23
|
|
Section
5.9
|
Prospectus
Delivery
|
23
|
|
Section
5.10
|
Selling
Restrictions.
|
24
|
|
Section
5.11
|
Effective
Registration Statement
|
25
|
|
Section
5.12
|
Non-Public
Information
|
25
|
|
Section
5.13
|
Broker/Dealer
|
25
|
|
Section
5.14
|
Disclosure
Schedule
|
25
|
|
Article
VI OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE
AND PURCHASE OF THE SHARES
|
26
|
|
|
Section
6.1
|
Opinion
of Counsel and Certificate
|
26
|
|
Section
6.2
|
Conditions
Precedent to the Obligation of the Company
|
26
|
|
Section
6.3
|
Conditions
Precedent to the Obligation of the Investor
|
27
|
|
Article
VII TERMINATION
|
30
|
|
|
Section
7.1
|
Term,
Termination by Mutual Consent
|
30
|
|
Section
7.2
|
Other
Termination
|
30
|
|
Section
7.3
|
Effect
of Termination
|
31
|
|
Article
VIII INDEMNIFICATION
|
31
|
|
|
Section
8.1
|
General
Indemnity.
|
31
|
|
Section
8.2
|
Indemnification
Procedures
|
32
|
|
Article
IX MISCELLANEOUS
|
34
|
|
|
Section
9.1
|
Fees
and Expenses.
|
34
|
ii
|
Section
9.2
|
Specific
Enforcement, Consent to Jurisdiction, Waiver of Jury Trial
|
34
|
|
Section
9.3
|
Entire
Agreement; Amendment
|
35
|
|
Section
9.4
|
Notices
|
35
|
|
Section
9.5
|
Waivers
|
36
|
|
Section
9.6
|
Headings
|
36
|
|
Section
9.7
|
Successors
and Assigns
|
36
|
|
Section
9.8
|
Governing
Law
|
37
|
|
Section
9.9
|
Survival
|
37
|
|
Section
9.10
|
Counterparts
|
37
|
|
Section
9.11
|
Publicity
|
37
|
|
Section
9.12
|
Severability
|
37
|
|
Section
9.13
|
Further
Assurances
|
37
|
iii
This
COMMON STOCK PURCHASE
AGREEMENT, made and entered into on this 28th day of
April 2008 (this “Agreement”), by and
between Azimuth Opportunity Ltd., an international business company incorporated
under the laws of the British Virgin Islands (the “Investor”), and Medis
Technologies Ltd., a corporation organized and existing under the laws of the
State of Delaware (the “Company”).
RECITALS
WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
may issue and sell to the Investor and the Investor shall thereupon purchase
from the Company up to $60,000,000 worth of newly issued shares of the Company’s
common stock, $0.01 par value (“Common Stock”),
subject, in all cases, to the Trading Market Limit; and
WHEREAS, the offer and sale of
the shares of Common Stock hereunder have been registered by the Company in the
Registration Statement, which has been declared effective by order of the
Commission under the Securities Act;
NOW, THEREFORE, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE
I
PURCHASE
AND SALE OF COMMON STOCK
Section
1.1 Purchase and Sale of
Stock. Upon
the terms and subject to the conditions of this Agreement, during the Investment
Period the Company in its discretion may issue and sell to the Investor up to
$60,000,000 (the “Total Commitment”)
worth of duly authorized, validly issued, fully paid and non-assessable shares
of Common Stock (subject in all cases to the Trading Market Limit, the “Aggregate Limit”), by
(i) the delivery to the Investor of not more than 24 separate Fixed Request
Notices (unless the Investor and the Company mutually agree that a different
number of Fixed Request Notices may be delivered) as provided in Article II
hereof and (ii) the exercise by the Investor of Optional Amounts, which the
Company may in its discretion grant to the Investor and which may be exercised
by the Investor, in whole or in part, as provided in Article II
hereof. The aggregate of all Fixed Request Amounts and Optional
Amount Dollar Amounts shall not exceed the Aggregate Limit.
Section
1.2 Effective Date; Settlement
Dates. This
Agreement shall become effective and binding upon delivery of counterpart
signature pages of this Agreement executed by each of the parties hereto, and by
delivery of an opinion of counsel and a certificate of the Company as provided
in Section 6.1 hereof, to the offices of Xxxxxxxxx Xxxxxxx, LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York time, on the Effective
Date. In consideration of and in express reliance upon the
representations, warranties and covenants, and otherwise upon the terms and
subject to the conditions, of this Agreement, from and after the Effective Date
and during the Investment Period (i) the Company shall issue and sell to the
Investor, and the Investor agrees to purchase from the Company, the Shares in
respect of each Fixed Request and (ii) the Investor may in its discretion elect
to purchase Shares in respect of
1
each
Optional Amount. The issuance and sale of Shares to the Investor
pursuant to any Fixed Request or Optional Amount shall occur on the applicable
Settlement Date in accordance with Sections 2.7 and 2.9 (or on such Trading Day
in accordance with Section 2.8, as applicable), provided in each case that all
of the conditions precedent thereto set forth in Article VI theretofore shall
have been fulfilled or (to the extent permitted by applicable law)
waived.
Section
1.3 The
Shares. The
Company has or will have duly authorized and reserved for issuance, and
covenants to continue to so reserve once reserved for issuance, free of all
preemptive and other similar rights, at all times during the Investment Period,
the requisite aggregate number of authorized but unissued shares of its Common
Stock to timely effect the issuance, sale and delivery in full to the Investor
of all Shares to be issued in respect of all Fixed Requests and Optional Amounts
under this Agreement, in any case prior to the issuance to the Investor of such
Shares.
Section
1.4 Current Report; Prospectus
Supplement. As
soon as practicable, but in any event not later than 5:30 p.m. (New York time)
on the first Trading Day immediately following the Effective Date, the Company
shall file with the Commission a report on Form 8-K relating to the transactions
contemplated by, and describing the material terms and conditions of, this
Agreement and disclosing all information relating to the transactions
contemplated hereby required to be disclosed in the Registration Statement and
the Base Prospectus (but which permissibly has been omitted therefrom in
accordance with the Securities Act), including, without limitation, information
required to be disclosed in the section captioned “Plan of Distribution” in the
Base Prospectus (the “Current
Report”). The Current Report shall include a copy of this
Agreement as an exhibit. To the extent applicable, the Current Report
shall be incorporated by reference in the Registration Statement in accordance
with the provisions of Rule 430B under the Securities Act. The
Company heretofore has provided the Investor a reasonable opportunity to comment
on a draft of such Current Report and has given due consideration to such
comments. The Company shall file a final Base Prospectus pursuant to
Rule 424(b) under the Securities Act on or prior to the second Trading Day
immediately following the Effective Date. Pursuant to Section 5.9 and
subject to the provisions of Section 5.8, on the first Trading Day immediately
following the last Trading Day of each Pricing Period, the Company shall file
with the Commission a Prospectus Supplement pursuant to Rule 424(b) under the
Securities Act disclosing the number of Shares to be issued and sold to the
Investor thereunder, the total purchase price therefor and the net proceeds to
be received by the Company therefrom and, to the extent required by the
Securities Act, identifying the Current Report.
ARTICLE
II
FIXED
REQUEST TERMS; OPTIONAL AMOUNT
Subject
to the satisfaction of the conditions set forth in this Agreement, the parties
agree (unless otherwise mutually agreed upon by the parties in writing) as
follows:
Section
2.1 Fixed Request
Notice. Upon
two Trading Days’ prior written notice to the Investor, the Company may, from
time to time in its sole discretion, provide a notice to the Investor of a Fixed
Request before 9:30 a.m. (New York time) on the first Trading Day of the Pricing
Period (the “Fixed
Request Notice”), substantially in the form attached hereto as Exhibit
A. The Fixed Request Notice shall specify the Fixed Amount
Requested, establish the Threshold
2
Price for
such Fixed Request, designate the first Trading Day of the Pricing Period and
specify the Optional Amount, if any, that the Company elects to grant to the
Investor during the Pricing Period and the applicable Threshold Price for such
Optional Amount (the “Optional Amount Threshold
Price”). The Threshold Price and the Optional Amount Threshold
Price established by the Company in a Fixed Request Notice may be the same or
different, in the Company’s sole discretion. Upon the terms and
subject to the conditions of this Agreement, the Investor is obligated to accept
each Fixed Request Notice prepared and delivered in accordance with the
provisions of this Agreement.
Section
2.2 Fixed
Requests. From
time to time during the Investment Period, the Company may in its sole
discretion deliver to the Investor a Fixed Request Notice for a specified Fixed
Amount Requested, and the applicable discount price (the “Discount Price”)
shall be determined, in accordance with the price and share amount parameters as
set forth below or such other parameters mutually agreed upon by the Investor
and the Company, and upon the terms and subject to the conditions of this
Agreement, the Investor shall purchase from the Company the Shares subject to
such Fixed Request Notice; provided, however, that (i) if
an ex-dividend date is established by the Trading Market in respect of the
Common Stock on or between the first Trading Day of the applicable Pricing
Period and the applicable Settlement Date, the Discount Price shall be reduced
by the per share dividend amount and (ii) the Company may not deliver any single
Fixed Request Notice for a Fixed Amount Requested in excess of the lesser of (a)
the amount in the applicable Fixed Amount Requested column below and (b) 2.5% of
the Market Capitalization:
|
Threshold
Price
|
Fixed
Amount Requested
|
Discount
Price
|
|
Equal
to or greater than $16.00
|
Not
to exceed $11,750,000
|
95.85%
of the VWAP
|
|
Equal
to or greater than $15.00 and less than $16.00
|
Not
to exceed $11,000,000
|
95.80%
of the VWAP
|
|
Equal
to or greater than $14.00 and less than $15.00
|
Not
to exceed $10,250,000
|
95.75%
of the VWAP
|
|
Equal
to or greater than $13.00 and less than $14.00
|
Not
to exceed $9,500,000
|
95.50%
of the VWAP
|
|
Equal
to or greater than $12.00 and less than $13.00
|
Not
to exceed $8,750,000
|
95.50%
of the VWAP
|
|
Equal
to or greater than $11.00 and less than $12.00
|
Not
to exceed $8,000,000
|
95.25%
of the VWAP
|
|
Equal
to or greater than $10.00 and less than $11.00
|
Not
to exceed $7,250,000
|
95.00%
of the VWAP
|
|
Equal
to or greater than $9.00 and less than $10.00
|
Not
to exceed $6,500,000
|
95.00%
of the VWAP
|
|
Equal
to or greater than $8.00 and less than $9.00
|
Not
to exceed $5,750,000
|
94.75%
of the VWAP
|
|
Equal
to or greater than $7.00 and less than $8.00
|
Not
to exceed $5,000,000
|
94.50%
of the VWAP
|
|
Equal
to or greater than $6.00 and less than $7.00
|
Not
to exceed $4,250,000
|
94.50%
of the VWAP
|
Anything
to the contrary in this Agreement notwithstanding, at no time shall the Investor
be required to purchase more than $11,750,000 worth of Common Stock in respect
of any Pricing Period (not including Common Stock subject to any Optional
Amount). The date on which the Company delivers any Fixed Request
Notice in accordance with this Section 2.2 hereinafter shall be referred to as a
“Fixed Request
Exercise Date”.
3
Section
2.3 Share
Calculation. Subject
to Section 2.6, the number of Shares to be issued by the Company to the Investor
pursuant to a Fixed Request shall equal the aggregate sum of each quotient
(calculated for each Trading Day during the applicable Pricing Period for which
the VWAP equals or exceeds the Threshold Price) determined pursuant to the
following equation (rounded to the nearest whole Share):
| N = | (A x B)/C, where: |
|
N
=
|
the
number of Shares to be issued by the Company to the Investor in respect of
a Trading Day during the applicable Pricing Period for which the VWAP
equals or exceeds the Threshold
Price,
|
|
A
=
|
0.10
(the “Multiplier”);
provided,
however,
that if the number of Trading Days constituting a Pricing Period is
decreased as set forth in Section 2.8 hereof, then the Multiplier
correspondingly shall be increased to equal the decimal equivalent (in
10-millionths) of a fraction, the numerator of which is one and the
denominator of which equals the number of Trading Days in the Pricing
Period as so decreased,
|
|
B
=
|
the
Fixed Amount Requested, and
|
|
C
=
|
the
applicable Discount Price.
|
Section
2.4 Limitation of Fixed
Requests. The
Company shall not make more than one Fixed Request in each Pricing
Period. Not less than five Trading Days shall elapse between the end
of one Pricing Period and the commencement of any other Pricing Period during
the Investment Period. There shall be permitted a maximum of 24 Fixed
Requests during the Investment Period. Each Fixed Request
automatically shall expire immediately following the last Trading Day of each
Pricing Period.
Section
2.5 Reduction of
Commitment. On
the last Trading Day of each Pricing Period, the Investor’s Total Commitment
under this Agreement automatically (and without the need for any amendment to
this Agreement) shall be reduced, on a dollar-for-dollar basis, by the total
amount of the Fixed Request Amount (as it may be reduced in accordance with
Section 2.6 below) and the Optional Amount Dollar Amount, if any, for such
Pricing Period paid to the Company at the Settlement Date.
Section
2.6 Below Threshold
Price. If
the VWAP on any Trading Day in a Pricing Period is lower than the Threshold
Price, then for each such Trading Day the total amount of the Fixed Amount
Requested shall be reduced, on a dollar-for-dollar basis, by an amount equal to
the product of (x) the Multiplier and (y) the original Fixed Amount Requested,
and no Shares shall be purchased or sold with respect to such Trading Day,
except as provided below. If trading in the Common Stock on the
NASDAQ (or any other national securities exchange on which the Common Stock is
then listed) is suspended for any reason for more than three hours on any
Trading Day, the Investor may at its option deem the price of the Common Stock
to be
4
lower
than the Threshold Price for such Trading Day and, for each such Trading Day,
the total amount of the Fixed Amount Requested shall be reduced as provided in
the immediately preceding sentence, and no Shares shall be purchased or sold
with respect to such Trading Day, except as provided below. For each
Trading Day during a Pricing Period on which the VWAP is lower (or is deemed to
be lower as provided in the immediately preceding sentence) than the Threshold
Price, the Investor may in its sole discretion elect to purchase such U.S. dollar amount
of Shares equal to the amount by which the Fixed Amount Requested has been
reduced in accordance with this Section 2.6, at the Threshold Price multiplied
by the applicable percentage determined in accordance with the price and share
amount parameters set forth in Section 2.2. The Investor shall inform
the Company via facsimile transmission not later than 8:00 p.m. (New York time)
on the last Trading Day of such Pricing Period as to the number of Shares, if
any, the Investor elects to purchase as provided in this Section
2.6.
Section
2.7 Settlement. The
payment for, against simultaneous delivery of, Shares in respect of each Fixed
Request shall be settled on the second Trading Day next following the last
Trading Day of each Pricing Period, or on such earlier date as the parties may
mutually agree (the “Settlement
Date”). On each Settlement Date, the Company shall deliver the
Shares purchased by the Investor to the Investor or its designees via DTC’s
Deposit Withdrawal Agent Commission (DWAC) system, against simultaneous payment
therefor to the Company’s designated account by wire transfer of immediately
available funds, provided that if the Shares are received by the Investor later
than 1:00 p.m. (New York time), payment therefor shall be made with next day
funds. As set forth in Section 9.1(ii), a failure by the Company to
deliver such Shares shall result in the payment of liquidated damages by the
Company to the Investor.
Section
2.8 Reduction of Pricing
Period. If
during a Pricing Period the Company elects to reduce the number of Trading Days
in such Pricing Period (and thereby amend its previously delivered Fixed Request
Notice), the Company shall so notify the Investor before 9:00 a.m. (New York
time) on any Trading Day during a Pricing Period (a “Reduction Notice”)
and the last Trading Day of such Pricing Period shall be the Trading Day
immediately preceding the Trading Day on which the Investor received such
Reduction Notice; provided, however, that if the
Company delivers the Reduction Notice later than 9:00 a.m. (New York time) on a
Trading Day during a Pricing Period, then the last Trading Day of such Pricing
Period instead shall be the Trading Day on which the Investor received such
Reduction Notice.
Upon
receipt of a Reduction Notice, the Investor (i) shall purchase the Shares in
respect of each Trading Day in such reduced Pricing Period for which the VWAP
equals or exceeds the Threshold Price in accordance with Section 2.3 hereof;
(ii) may elect to purchase the Shares in respect of any Trading Day in such
reduced Pricing Period for which the VWAP is (or is deemed to be) lower than the
Threshold Price in accordance with Section 2.6 hereof; and (iii) may elect to
exercise all or any portion of an Optional Amount on any Trading Day during such
reduced Pricing Period in accordance with Sections 2.10 and 2.11
hereof.
In
addition, upon receipt of a Reduction Notice, the Investor may elect to purchase
such U.S. dollar amount of additional Shares equal to the quotient determined
pursuant to the following equation:
5
| D = | (A/B) x (B – C), where: |
| D = | the U.S. dollar amount of additional Shares to be purchased, |
| A = | the Fixed Amount Requested, |
|
B
=
|
10
or, for purposes of this Section 2.8, such lesser number of Trading Days
as the parties may mutually agree to, and
|
| C = | the number of Trading Days in the reduced Pricing Period, |
at a per
Share price equal to (x) the Fixed Amount Requested attributable to the reduced
Pricing Period divided by (y) the number of Shares to be purchased during such
reduced Pricing Period pursuant to clauses (i) and (ii) (as applicable) of the
immediately preceding paragraph.
The
Investor may also elect to exercise any portion of the applicable Optional
Amount which was unexercised during the reduced Pricing Period by issuing an
Optional Amount Notice to the Company not later than 10:00 a.m. (New York time)
on the first Trading Day next following the last Trading Day of the reduced
Pricing Period. The number of Shares to be issued upon exercise of such Optional
Amount shall be calculated pursuant to the equation set forth in Section 2.10
hereof, except that “C” shall equal the greater of (i) the VWAP for the Common
Stock on the last Trading Day of the reduced Pricing Period or (ii) the Optional
Amount Threshold Price.
The
payment for, against simultaneous delivery of, Shares to be purchased and sold
in accordance with this Section 2.8 shall be settled on the second Trading Day
next following the Trading Day on which the Investor receives a Reduction
Notice.
Section
2.9 Optional
Amount. With
respect to any Pricing Period, the Company may in its sole discretion grant to
the Investor the right to exercise, from time to time during the Pricing Period
(but not more than once on any Trading Day), all or any portion of an Optional
Amount. The maximum Optional Amount Dollar Amount and the Optional
Amount Threshold Price shall be set forth in the Fixed Request
Notice. If an ex-dividend date is established by the Trading Market
in respect of the Common Stock on or between the first Trading Day of the
applicable Pricing Period and the applicable Settlement Date, the applicable
exercise price in respect of the Optional Amount shall be reduced by the per
share dividend amount. Each daily Optional Amount exercise shall be
aggregated during the Pricing Period and settled on the next Settlement
Date. The Optional Amount Threshold Price designated by the Company
in its Fixed Request Notice shall apply to each Optional Amount during the
applicable Pricing Period.
Section
2.10 Calculation of Optional
Amount Shares. The
number of shares of Common Stock to be issued in connection with the exercise of
an Optional Amount shall be the quotient determined pursuant to the following
equation (rounded to the nearest whole Share):
| O = | A/(B x C), where: |
|
O
=
|
the
number of shares of Common Stock to be issued in connection with such
Optional Amount exercise,
|
6
|
A
=
|
the
Optional Amount Dollar Amount with respect to which the Investor has
delivered an Optional Amount
Notice,
|
|
B
=
|
the
applicable percentage determined in accordance with the price and shares
amount parameters set forth in Section 2.2 (with the Optional Amount
Threshold Price serving as the Threshold Price for such purposes),
and
|
|
C
=
|
the
greater of (i) the VWAP for the Common Stock on the day the Investor
delivers the Optional Amount Notice or (ii) the Optional Amount Threshold
Price.
|
Section
2.11 Exercise of Optional
Amount. If
granted by the Company to the Investor with respect to a Pricing Period, all or
any portion of the Optional Amount may be exercised by the Investor on any
Trading Day during the Pricing Period, subject to the limitations set forth in
Section 2.9. As a condition to each exercise of an Optional Amount
pursuant to this Section 2.11, the Investor shall issue an Optional Amount
Notice to the Company no later than 8:00 p.m. (New York time) on the day of such
Optional Amount exercise. If the Investor does not exercise an
Optional Amount in full by 8:00 p.m. (New York time) on the last Trading Day of
the applicable Pricing Period, such unexercised portion of the Investor’s
Optional Amount with respect to that Pricing Period automatically shall lapse
and terminate.
Section
2.12 Aggregate
Limit. Notwithstanding
anything to the contrary contained in this Agreement, in no event may the
Company issue a Fixed Request Notice or grant an Optional Amount to the extent
that the sale of Shares pursuant thereto and pursuant to all prior Fixed Request
Notices and Optional Amounts issued hereunder, and as liquidated damages
pursuant to Section 9.1(ii), would cause the Company to sell or the Investor to
purchase Shares which in the aggregate are in excess of the Aggregate
Limit. If the Company issues a Fixed Request Notice or Optional
Amount that otherwise would permit the Investor to purchase shares of Common
Stock which would cause the aggregate purchases by Investor hereunder to exceed
the Aggregate Limit, such Fixed Request Notice or Optional Amount shall be void
ab initio to the extent
of the amount by which the dollar value of shares or number of shares, as the
case may be, of Common Stock otherwise issuable pursuant to such Fixed Request
Notice or Optional Amount together with the dollar value of shares or number of
shares, as the case may be, of all other Common Stock purchased by the Investor
pursuant hereto would exceed the Aggregate Limit. The Company hereby
represents, warrants and covenants that neither it nor any of its Subsidiaries
(i) has effected any transaction or series of transactions, (ii) is a party to
any pending transaction or series of transactions or (iii) shall enter into any
contract, agreement, agreement-in-principle, arrangement or understanding with
respect to, or shall effect, any Other Financing which, in any of such cases,
may be integrated with the transactions contemplated by this Agreement for
purposes of determining whether approval of the Company’s stockholders is
required under any bylaw, listed securities maintenance standards or other rules
of the Trading Market; provided, however, that the
Company shall be permitted to take any action referred to in clause (iii) above
if the Company has timely provided the Investor with an Integration Notice as
provided in Section 5.6(ii) hereof.
At the
Company’s sole discretion, and effective automatically upon receipt by the
Investor of notice thereof from the Company, this Agreement may be amended by
the Company from time to time to reduce the Aggregate Limit by a specified
dollar amount of Common Stock
7
which
shall be no greater than is required to enable the Company to utilize the
Registration Statement to consummate an underwritten public offering of Common
Stock or a registered direct public offering of Common Stock during the
Investment Period; provided, however, that any
such amendment of this Agreement (and any such purported amendment) shall be
void and of no force and effect if the effect thereof would restrict, materially
delay, conflict with or impair the ability or right of the Company to perform
its obligations under this Agreement, including, without limitation, the
obligation of the Company to deliver Shares to the Investor in respect of a
Fixed Request or Optional Amount on the applicable Settlement
Date. In the event the Company shall have elected to reduce the
Aggregate Limit as provided in the immediately preceding sentence, at the
Company’s sole discretion, and effective automatically upon receipt by the
Investor of notice thereof from the Company, the Company may subsequently amend
this Agreement to increase the Aggregate Limit up to $60,000,000; provided, however, that in no
event shall the Company be entitled to issue Fixed Requests and grant Optional
Amounts during the remainder of the Investment Period for an aggregate amount
greater than the amount obtained by subtracting (x) the aggregate of all Fixed
Request Amounts and Optional Amount Dollar Amounts (including any amounts paid
as liquidated damages pursuant to Section 9.1(ii) hereunder) covered by all
Fixed Requests and Optional Amounts theretofore issued or granted by the Company
in respect of which a settlement has occurred pursuant to Section 2.7 from (y)
$60,000,000, subject in all cases to the Trading Market Limit.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE INVESTOR
The
Investor hereby makes the following representations and warranties to the
Company:
Section
3.1 Organization and Standing of
the Investor. The
Investor is an international business company duly organized, validly existing
and in good standing under the laws of the British Virgin Islands.
Section
3.2 Authorization and
Power. The
Investor has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and to purchase the Shares in
accordance with the terms hereof. The execution, delivery and
performance of this Agreement by the Investor and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Investor, its
Board of Directors or stockholders is required. This Agreement has
been duly executed and delivered by the Investor. This Agreement
constitutes a valid and binding obligation of the Investor enforceable against
it in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership, or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application.
Section
3.3 No
Conflicts. The
execution, delivery and performance by the Investor of this Agreement and the
consummation by the Investor of the transactions contemplated herein do not and
shall not (i) result in a violation of such Investor’s charter documents, bylaws
or other applicable organizational instruments, (ii) conflict with, constitute a
default (or an event which, with notice or lapse of time or both, would become a
default) under, or give rise to any rights of
8
termination,
amendment, acceleration or cancellation of, any material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Investor is a party or is bound, (iii) create or impose
any lien, charge or encumbrance on any property of the Investor under any
agreement or any commitment to which the Investor is party or under which the
Investor is bound or under which any of its properties or assets are bound, or
(iv) result in a violation of any federal, state, local or foreign statute,
rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to the Investor or by which any of its properties
or assets are bound or affected, except, in the case of clauses (ii), (iii) and
(iv), for such conflicts, defaults, terminations, amendments, acceleration,
cancellations and violations as would not, individually or in the aggregate,
prohibit or otherwise interfere with the ability of the Investor to enter into
and perform its obligations under this Agreement in any material
respect. The Investor is not required under federal, state, local or
foreign law, rule or regulation to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement or to purchase the Shares in accordance with the terms
hereof.
Section
3.4 Information. The
Investor and its advisors have been furnished with all materials relating to the
business, financial condition, management and operations of the Company and
materials relating to the offer and sale of the Shares which have been requested
by the Investor. The Investor and its advisors have been afforded the
opportunity to ask questions of representatives of the Company. The
Investor has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Shares. The Investor understands that it (and not
the Company) shall be responsible for its own tax liabilities that may arise as
a result of this investment or the transactions contemplated by this
Agreement.
Section
3.5 Broker-Dealer. The
Broker-Dealer will receive commissions from the Investor which shall not exceed
customary brokerage commissions.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except as
set forth in the disclosure schedule delivered by the Company to the Investor
(which is hereby incorporated by reference in, and constitutes an integral part
of, this Agreement) (the “Disclosure
Schedule”), the Company hereby makes the following representations and
warranties to the Investor:
Section
4.1 Organization, Good Standing
and Power. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power
and authority to own, lease and operate its properties and assets and to conduct
its business as it is now being conducted. The Company and each
Subsidiary is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except for
any jurisdiction in which the failure to be so qualified would not have a
Material Adverse Effect.
9
Section
4.2 Authorization,
Enforcement. The
Company has the requisite corporate power and authority to enter into and
perform this Agreement and to issue and sell the Shares in accordance with the
terms hereof. Except for approvals of the Company’s Board of
Directors or a committee thereof as may be required in connection with any
issuance and sale of Shares to the Investor hereunder (which approvals shall be
obtained prior to the delivery of any Fixed Request Notice), the execution,
delivery and performance by the Company of this Agreement and the consummation
by it of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general
application.
Section
4.3 Capitalization. The
authorized capital stock of the Company and the shares thereof issued and
outstanding are as set forth in the Commission Documents as of the dates
reflected therein. All of the outstanding shares of Common Stock have
been duly authorized and validly issued, and are fully paid and
nonassessable. Except as set forth in the Commission Documents, as of
the Effective Date, (i) no shares of Common Stock were entitled to preemptive
rights or registration rights and (ii) there were no outstanding options,
warrants, scrip, rights to subscribe to, call or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, any shares of capital stock of the Company. Except as set forth
in the Commission Documents, there were no contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to
issue additional shares of the capital stock of the Company or options,
securities or rights convertible into or exchangeable for any shares of capital
stock of the Company. Except for customary transfer restrictions
contained in agreements entered into by the Company to sell restricted
securities or as set forth in the Commission Documents, as of the Effective
Date, the Company was not a party to, and it had no knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of the
Company. Except as set forth in the Commission Documents, the offer
and sale of all capital stock, convertible or exchangeable securities, rights,
warrants or options of the Company issued prior to the Effective Date complied
with all applicable federal and state securities laws, and no stockholder has
any right of rescission or damages or any “put” or similar right with respect
thereto that would have a Material Adverse Effect. The Company has
furnished or made available to the Investor via the Commission’s Electronic Data
Gathering, Analysis and Retrieval System (“XXXXX”) true and
correct copies of the Company’s Certificate of Incorporation as in effect on the
Effective Date (the “Charter”), and the
Company’s Bylaws as in effect on the Effective Date (the “Bylaws”), and true
and correct copies (redacted as appropriate) of all executed resolutions of the
Company’s Board of Directors (and committees thereof) relating to the capital
stock of the Company (and transactions in respect thereof) since December 31,
2005 (except with respect to issuances of shares of capital stock of the Company
to directors or employees of, or other service providers to, the Company as fees
or compensation that were duly approved by the Company’s Board of Directors or a
committee thereof).
10
Section
4.4 Issuance of
Shares. The
Shares to be issued under this Agreement have been or will be duly authorized by
all necessary corporate action and, when paid for or issued in accordance with
the terms hereof, the Shares shall be validly issued and outstanding, fully paid
and nonassessable, and, when the Shares have been issued to the Investor, the
Investor shall be entitled to all rights accorded to a holder and beneficial
owner of Common Stock.
Section
4.5 No
Conflicts. The
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated herein do not and
shall not (i) result in a violation of any provision of the Company’s Charter or
Bylaws, (ii) conflict with, constitute a default (or an event which, with notice
or lapse of time or both, would become a default) under, or give rise to any
rights of termination, amendment, acceleration or cancellation of, any material
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company or any of its
Significant Subsidiaries is a party or is bound (including, without limitation,
any listing agreement with the Trading Market), (iii) create or impose a lien,
charge or encumbrance on any property of the Company or any of its Significant
Subsidiaries under any agreement or any commitment to which the Company or any
of its Significant Subsidiaries is a party or under which the Company or any of
its Significant Subsidiaries is bound or under which any of their respective
properties or assets are bound, or (iv) result in a violation of any federal,
state, local or foreign statute, rule, regulation, order, judgment or decree
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries are bound or affected, except,
in the case of clauses (ii), (iii) and (iv), for such conflicts, defaults,
terminations, amendments, acceleration, cancellations, liens, charges,
encumbrances and violations as would not, individually or in the aggregate, have
a Material Adverse Effect. The Company is not required under federal,
state, local or foreign law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement, or to issue and sell the Shares to the
Investor in accordance with the terms hereof (other than any filings which may
be required to be made by the Company with the Commission or the Trading Market
subsequent to the Effective Date, including but not limited to a Prospectus
Supplement under Sections 1.4 and 5.9 of this Agreement, and any registration
statement, prospectus or prospectus supplement which has been or may be filed
pursuant to this Agreement).
Section
4.6 Commission Documents,
Financial Statements. (a) The
Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act and, except as disclosed in the Commission Documents, as of the Effective
Date the Company had timely filed (giving effect to permissible extensions in
accordance with Rule 12b-25 under the Exchange Act) all Commission
Documents. The Company has delivered or made available to the
Investor via XXXXX or otherwise true and complete copies of the Commission
Documents filed with the Commission prior to the Effective Date (including,
without limitation, the 2007 Form 10-K) and has delivered or made available to
the Investor via XXXXX or otherwise true and complete copies of all of the
Commission Documents heretofore incorporated by reference in the Registration
Statement and the Prospectus. The Company has not provided to the
Investor any information which, according to applicable law, rule or regulation,
should have been disclosed publicly by the Company but which has not been so
disclosed, other than with respect to the transactions contemplated by this
Agreement. As of its filing date, each Commission
Document
11
filed
with the Commission and incorporated by reference in the Registration Statement
and the Prospectus (including, without limitation, the 2007 Form 10-K) complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as applicable, and other federal, state and local laws, rules and
regulations applicable to it, and, as of its filing date (or, if amended or
superseded by a filing prior to the Effective Date, on the date of such amended
or superseded filing), such Commission Document did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each
Commission Document to be filed with the Commission after the Effective Date and
incorporated by reference in the Registration Statement, the Prospectus and any
Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9
hereof during the Investment Period (including, without limitation, the Current
Report), when such document becomes effective or is filed with the Commission,
as the case may be, shall comply in all material respects with the requirements
of the Securities Act or the Exchange Act, as applicable, and other federal,
state and local laws, rules and regulations applicable to it, and shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The
financial statements, together with the related notes and schedules, of the
Company included in the Commission Documents comply as to form in all material
respects with all applicable accounting requirements and the published rules and
regulations of the Commission and all other applicable rules and regulations
with respect thereto. Such financial statements, together with the
related notes and schedules, have been prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present in all
material respects the financial condition of the Company and its consolidated
Subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
(c) The
Company has timely filed with the Commission and made available to the Investor
via XXXXX or otherwise all certifications and statements required by (x) Rule
13a-14 or Rule 15d-14 under the Exchange Act or (y) 18 U.S.C. Section 1350
(Section 906 of the Xxxxxxxx-Xxxxx Act of 2002 (“SOXA”)) with respect
to all relevant Commission Documents. The Company is in compliance in
all material respects with the provisions of SOXA applicable to it as of the
date hereof. The Company maintains disclosure controls and procedures
required by Rule 13a-15 or Rule 15d-15 under the Exchange Act; such controls and
procedures are effective to ensure that all material information concerning the
Company and its Subsidiaries is made known on a timely basis to the individuals
responsible for the timely and accurate preparation of the Company’s Commission
filings and other public disclosure documents. As used in this
Section 4.6(c), the term “file” shall be broadly construed to include any manner
in which a document or information is furnished, supplied or otherwise made
available to the Commission.
12
(d) Xxxx
Xxxxx Xxxxxx & Kasierer, a Member of Ernst & Young Global, who has
expressed its opinions on the audited financial statements and related schedules
included or incorporated by reference in the Registration Statement and the Base
Prospectus are, with respect to the Company, independent public accountants as
required by the Securities Act and is an independent registered public
accounting firm within the meaning of SOXA as required by the rules of the
Public Company Accounting Oversight Board.
Section
4.7 Subsidiaries. The
2007 Form 10-K sets forth each Subsidiary of the Company as of the Effective
Date, showing its jurisdiction of incorporation or organization and the
percentage of the Company’s ownership of the outstanding capital stock or other
ownership interests of such Subsidiary, and the Company does not have any other
Subsidiaries as of the Effective Date.
Section
4.8 No Material Adverse
Effect. Since December
31, 2007, the Company has not experienced or suffered any Material Adverse
Effect, and there exists no current state of facts, condition or event which
would have a Material Adverse Effect, except (i) as disclosed in any Commission
Documents filed since December 31, 2007 or (ii) continued losses from
operations.
Section
4.9 Indebtedness. The
2007 Form 10-K sets forth, as of December 31, 2007, all outstanding secured and
unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments through such date. For the
purposes of this Agreement, “Indebtedness” shall
mean (a) any liabilities for borrowed money or amounts owed in excess of
$10,000,000 (other than trade accounts payable incurred in the ordinary course
of business), (b) all guaranties, endorsements, indemnities and other contingent
obligations in respect of Indebtedness of others in excess of $10,000,000,
whether or not the same are or should be reflected in the Company’s balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; and (c) the present value of any lease payments in excess of
$10,000,000 due under leases required to be capitalized in accordance with
GAAP. There is no existing or continuing default or event of default
in respect of any Indebtedness of the Company or any of its
Subsidiaries.
Section
4.10 Title To
Assets. Each
of the Company and its Subsidiaries has good and marketable title to all of
their respective real and personal property reflected in the Commission
Documents, free of mortgages, pledges, charges, liens, security interests or
other encumbrances, except for those indicated in the Commission Documents or
those that would not have a Material Adverse Effect. All real
property leases of the Company are valid and subsisting and in full force and
effect in all material respects.
Section
4.11 Actions
Pending. There
is no action, suit, claim, investigation or proceeding pending, or to the
knowledge of the Company threatened, against the Company or any Subsidiary which
questions the validity of this Agreement or the transactions contemplated hereby
or any action taken or to be taken pursuant hereto or thereto. Except
as set forth in the Commission Documents, there is no action, suit, claim,
investigation or proceeding pending, or to the knowledge of the Company
threatened, against or involving the Company, any Subsidiary or any of their
respective properties or assets, or involving any officers or directors of the
13
Company
or any of its Subsidiaries, including, without limitation, any securities class
action lawsuit or stockholder derivative lawsuit, in each case which, if
determined adversely to the Company, its Subsidiary or any officer or director
of the Company or its Subsidiaries, would have a Material Adverse
Effect.
Section
4.12 Compliance With
Law. The
business of the Company and the Subsidiaries has been and is presently being
conducted in compliance with all applicable federal, state, local and foreign
governmental laws, rules, regulations and ordinances, except as set forth in the
Commission Documents and except for such non-compliance which, individually or
in the aggregate, would not have a Material Adverse Effect.
Section
4.13 Certain
Fees. Except
for the placement fee payable by the Company to Reedland Capital Partners, an
Institutional Division of the Financial West Group, Member FINRA/SIPC (“Reedland”), which
shall be set forth in a separate placement agency agreement between the Company
and Reedland (a true and complete fully executed copy of which has heretofore
been provided to the Investor), no brokers, finders or financial advisory fees
or commissions shall be payable by the Company or any Subsidiary (or any of
their respective affiliates) with respect to the transactions contemplated by
this Agreement.
Section
4.14 Operation of
Business. (a) The
Company or one or more of its Subsidiaries possesses such permits, licenses,
approvals, consents and other authorizations (including licenses, accreditation
and other similar documentation or approvals of any local health departments)
(collectively, “Governmental
Licenses”) issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct the business now operated by
it, except where the failure to possess such Governmental Licenses, individually
or in the aggregate, would not have a Material Adverse Effect. The
Company and its Subsidiaries are in compliance with the terms and conditions of
all such Governmental Licenses, except where the failure to so comply,
individually or in the aggregate, would not have a Material Adverse
Effect. All of the Governmental Licenses are valid and in full force
and effect, except where the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect,
individually or in the aggregate, would not have a Material Adverse
Effect. Except as set forth in the Commission Documents or the
Registration Statement, neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses. This Section 4.14 does not relate to
environmental matters, such items being the subject of Section
4.15.
(b) The
Company or one or more of its Subsidiaries owns or possesses adequate patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade names,
trade dress, logos, copyrights and other intellectual property, including,
without limitation, all of the intellectual property described in the Commission
Documents as being owned or licensed by the Company (collectively, “Intellectual
Property”), necessary to carry on the business now operated by
it. Except as set forth in the Commission Documents, there are no
actions, suits or judicial proceedings pending, or to the Company’s knowledge
threatened, relating to patents or proprietary information to which the Company
or any of its Subsidiaries is a party or of which any property of the Company or
any of its Subsidiaries is subject, and neither the Company nor any of its
14
Subsidiaries
has received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which could render any Intellectual Property invalid
or inadequate to protect the interest of the Company and its Subsidiaries
therein, and which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, individually or in the
aggregate, would have a Material Adverse Effect.
Section
4.15 Environmental
Compliance. Except
as disclosed in the Commission Documents, the Company and each of its
Subsidiaries have obtained all material approvals, authorization, certificates,
consents, licenses, orders and permits or other similar authorizations of all
governmental authorities, or from any other person, that are required under any
Environmental Laws, except for any approvals, authorization, certificates,
consents, licenses, orders and permits or other similar authorizations the
failure of which to obtain does not or would not have a Material Adverse
Effect. “Environmental Laws”
shall mean all applicable laws relating to the protection of the environment
including, without limitation, all requirements pertaining to reporting,
licensing, permitting, controlling, investigating or remediating emissions,
discharges, releases or threatened releases of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in
nature. Except for such instances as would not, individually or in
the aggregate, have a Material Adverse Effect, to the best of the Company’s
knowledge, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the Company
or its Subsidiaries that violate or could reasonably be expected to violate any
Environmental Law after the Effective Date or that could reasonably be expected
to give rise to any environmental liability, or otherwise form the basis of any
claim, action, demand, suit, proceeding, hearing, study or investigation (i)
under any Environmental Law, or (ii) based on or related to the manufacture,
processing, distribution, use, treatment, storage (including without limitation
underground storage tanks), disposal, transport or handling, or the emission,
discharge, release or threatened release of any hazardous
substance.
Section
4.16 Material
Agreements. Except
as set forth in the Commission Documents, neither the Company nor any Subsidiary
of the Company is a party to any written or oral contract, instrument, agreement
commitment, obligation, plan or arrangement, a copy of which would be required
to be filed with the Commission as an exhibit to an annual report on Form 10-K
(collectively, “Material
Agreements”). The Company and each of its Subsidiaries have
performed in all material respects all the obligations required to be performed
by them under the Material Agreements, have received no notice of default or an
event of default by the Company or any of its Subsidiaries thereunder and are
not aware of any basis for the assertion thereof, and neither the Company or any
of its Subsidiaries nor, to the best knowledge of the Company, any other
contracting party thereto are in default under any Material Agreement now in
effect, the result of which would have a Material Adverse
Effect. Each of the Material Agreements is in full force and effect,
and constitutes a legal, valid and binding obligation enforceable in accordance
with its terms against the Company and/or any of its Subsidiaries and, to the
best knowledge of the Company, each other contracting party thereto, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium,
15
liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application.
Section
4.17 Transactions With
Affiliates. Except
as set forth in the Commission Documents, there are no loans, leases,
agreements, contracts, royalty agreements, management contracts, service
arrangements or other continuing transactions exceeding $120,000 between (a) the
Company or any Subsidiary, on the one hand, and (b) any person or entity who
would be covered by Item 404(a) of Regulation S-K, on the other
hand. Except as disclosed in the Commission Documents, there are no
outstanding amounts payable to or receivable from, or advances by the Company or
any of its Subsidiaries to, and neither the Company nor any of its Subsidiaries
is otherwise a creditor of or debtor to, any beneficial owner of more than 5% of
the outstanding shares of Common Stock, or any director, employee or affiliate
of the Company or any of its Subsidiaries, other than (i) reimbursement for
reasonable expenses incurred on behalf of the Company or any of its Subsidiaries
or (ii) as part of the normal and customary terms of such persons’ employment or
service as a director with the Company or any of its Subsidiaries.
Section
4.18 Securities Act; NASD Conduct
Rules. The
Company has complied with all applicable federal and state securities laws in
connection with the offer, issuance and sale of the Shares
hereunder.
(i) The
Company has prepared and filed with the Commission in accordance with the
provisions of the Securities Act the Registration Statement, including a base
prospectus relating to the Shares. The Registration Statement was
declared effective by order of the Commission on April 24, 2008. As of the date
hereof, no stop order suspending the effectiveness of the Registration Statement
has been issued by the Commission or is continuing in effect under the
Securities Act and no proceedings therefor are pending before or, to the
Company’s knowledge, threatened by the Commission. No order
preventing or suspending the use of the Prospectus or any Permitted Free Writing
Prospectus has been issued by the Commission.
(ii) The
Company meets the requirements for the use of Form S-3 under the Securities
Act. The Commission has not notified the Company of any objection to
the use of the form of the Registration Statement. The Registration
Statement complied in all material respects on the date on which it was declared
effective by the Commission and on the Effective Date of this Agreement, and
will comply in all material respects on each applicable Fixed Request Exercise
Date and on each applicable Settlement Date, with the requirements of the
Securities Act and the Registration Statement (including the documents
incorporated by reference therein) did not on the date it was declared effective
by the Commission and on the Effective Date of this Agreement and shall not on
each applicable Fixed Request Exercise Date and on each applicable Settlement
Date 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; provided that this
representation and warranty does not apply to statements in or omissions from
the Registration Statement made in reliance upon and in conformity with
information relating to the Investor furnished to the Company in writing by or
on behalf of the Investor expressly for use therein. The Registration Statement,
as of the Effective Date, meets the requirements set forth in Rule 415(a)(1)(x)
under the Securities Act. The Base Prospectus complied in all
material respects on its date and on the Effective Date, and will comply in all
material respects
16
on each
applicable Fixed Request Exercise Date and, when taken together with the
applicable Prospectus Supplement and any applicable Permitted Free Writing
Prospectus, on each applicable Settlement Date, with the requirements of the
Securities Act and did not on its date and on the Effective Date and shall not
on each applicable Fixed Request Exercise Date and, when taken together with the
applicable Prospectus Supplement and any applicable Permitted Free Writing
Prospectus, on each applicable Settlement Date contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that this
representation and warranty does not apply to statements in or omissions from
the Base Prospectus made in reliance upon and in conformity with information
relating to the Investor furnished to the Company in writing by or on behalf of
the Investor expressly for use therein.
(iii) In
accordance with NASD Conduct Rule 2710(b)(7)(C)(i) of the Financial Industry
Regulatory Authority (the “FINRA”), the offering
of the Shares pursuant to this Agreement has been registered with the Commission
on Form S-3 under the Securities Act pursuant to the standards for Form S-3 in
effect prior to October 21, 1992, and the Shares are being offered pursuant to
Rule 415 promulgated under the Securities Act.
(iv) Each
Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9
hereof, when taken together with the Base Prospectus and any applicable
Permitted Free Writing Prospectus, on its date and on the applicable Settlement
Date, shall comply in all material respects with the provisions of the
Securities Act and shall not on its date and on the applicable Settlement Date
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they are made, not misleading, except
that this representation and warranty does not apply to statements in or
omissions from any Prospectus Supplement made in reliance upon and in conformity
with information relating to the Investor furnished to the Company in writing by
or on behalf of the Investor expressly for use therein.
(v) At the
earliest time after the filing of the Registration Statement that the Company or
another offering participant made a bona fide offer (within the meaning of Rule
164(h)(2) under the Securities Act) relating to the Shares, the Company was not
and is not an Ineligible Issuer (as defined in Rule 405 under the Securities
Act). Each Permitted Free Writing Prospectus (a) shall conform in all
material respects to the requirements of the Securities Act on the date of its
first use, (b) when considered together with the Prospectus on each applicable
Fixed Request Exercise Date and on each applicable Settlement Date, shall not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they are made, not misleading, and
(c) shall not include any information that conflicts with the information
contained in the Registration Statement, including any document incorporated by
reference therein and any Prospectus Supplement deemed to be a part thereof that
has not been superseded or modified. The immediately preceding
sentence does not apply to statements in or omissions from any Permitted Free
Writing Prospectus made in reliance upon and in conformity with information
relating to the Investor furnished to the Company in writing by or on behalf of
the Investor expressly for use therein.
17
(vi) Prior to
the Effective Date, the Company has not distributed any offering material in
connection with the offering and sale of the Shares. From and after
the Effective Date and prior to the completion of the distribution of the
Shares, the Company shall not distribute any offering material in connection
with the offering and sale of the Shares, other than the Registration Statement,
the Base Prospectus as supplemented by any Prospectus Supplement or a Permitted
Free Writing Prospectus.
Section
4.19 Employees. As of the
Effective Date, neither the Company nor any Subsidiary of the Company has any
collective bargaining arrangements or agreements covering any of its employees,
except as set forth in the Commission Documents. As of the Effective
Date, except as disclosed in the Registration Statement or the Commission
Documents, no officer, consultant or key employee of the Company or any
Subsidiary whose termination, either individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect, has terminated or, to
the knowledge of the Company, has any present intention of terminating his or
her employment or engagement with the Company or any Subsidiary.
Section
4.20 Use of
Proceeds. The
proceeds from the sale of the Shares shall be used by the Company and its
Subsidiaries as set forth in the Base Prospectus and any Prospectus Supplement
filed pursuant to Sections 1.4 and 5.9.
Section
4.21 Investment Company Act
Status. The
Company is not, and as a result of the consummation of the transactions
contemplated by this Agreement and the application of the proceeds from the sale
of the Shares as set forth in the Base Prospectus and any Prospectus Supplement
shall not be, an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended.
Section
4.22 ERISA. No
liability to the Pension Benefit Guaranty Corporation has been incurred with
respect to any Plan by the Company or any of its Subsidiaries which has had or
would have a Material Adverse Effect. No “prohibited transaction” (as
defined in Section 406 of ERISA or Section 4975 of the Code) or “accumulated
funding deficiency” (as defined in Section 203 of ERISA) or any of the events
set forth in Section 4043(b) of ERISA has occurred with respect to any Plan
which has had or would have a Material Adverse Effect, and the execution and
delivery of this Agreement and the issuance and sale of the Shares hereunder
shall not result in any of the foregoing events. Each Plan is in
compliance in all material respects with applicable law, including ERISA and the
Code; the Company has not incurred and does not expect to incur any liability
under Title IV of ERISA with respect to the termination of, or withdrawal from,
any Plan; and each Plan for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualifications. As used in this
Section 4.22, the term “Plan” shall mean an
“employee pension
benefit plan” (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or any Subsidiary or by any trade or business, whether or not
incorporated, which, together with the Company or any Subsidiary, is under
common control, as described in Section 414(b) or (c) of the
Code.
18
Section
4.23 Taxes. The
Company (i) has filed all necessary federal, state and foreign income and
franchise tax returns or has duly requested extensions thereof, except for those
the failure of which to file would not have a Material Adverse Effect, (ii) has
paid all federal, state, local and foreign taxes due and payable for which it is
liable, except to the extent that any such taxes are being contested in good
faith and by appropriate proceedings, except for such taxes the failure of which
to pay would not have a Material Adverse Effect, and (iii) does not have any tax
deficiency or claims outstanding or assessed or, to the best of the Company’s
knowledge, proposed against it which would have a Material Adverse
Effect.
Section
4.24 Insurance. The
Company carries, or is covered by, insurance in such amounts and covering such
risks as is adequate for the conduct of its and its Subsidiaries’ businesses and
the value of their respective properties and as is customary for companies
engaged in similar businesses in similar industries.
Section
4.25 Acknowledgement Regarding
Investor’s Purchase of Shares. The
Company acknowledges and agrees that the Investor is acting solely in the
capacity of an arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereunder. The Company further acknowledges that the
Investor is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereunder, and any advice given by the Investor or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Investor’s purchase of the
Shares.
ARTICLE
V
COVENANTS
The
Company covenants with the Investor, and the Investor covenants with the
Company, as follows, which covenants of one party are for the benefit of the
other party, during the Investment Period:
Section
5.1 Securities
Compliance. The
Company shall notify the Commission and the Trading Market, as applicable, in
accordance with their respective rules and regulations, of the transactions
contemplated by this Agreement, and shall take all necessary action, undertake
all proceedings and obtain all registrations, permits, consents and approvals
for the legal and valid issuance of the Shares to the Investor in accordance
with the terms of this Agreement.
Section
5.2 Registration and
Listing. The
Company shall take all action necessary to cause the Common Stock to continue to
be registered as a class of securities under Sections 12(b) or 12(g) of the
Exchange Act, shall comply with its reporting and filing obligations under the
Exchange Act, and shall not take any action or file any document (whether or not
permitted by the Securities Act) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under the Exchange Act
or Securities Act, except as permitted herein. The Company shall take all action
necessary to continue the listing and trading of its Common Stock and the
listing of the Shares purchased by Investor hereunder on the Trading Market, and
shall comply with the Company’s reporting, filing and other obligations under
the bylaws, listed securities maintenance standards and other rules of the
Trading Market.
19
Section
5.3 Compliance with
Laws.
(i) The
Company shall comply, and cause each Subsidiary to comply, (a) with all laws,
rules, regulations and orders applicable to the business and operations of the
Company and its Subsidiaries except as would not have a Material Adverse Effect
and (b) with all applicable provisions of the Securities Act, the Exchange Act,
and the listing standards of the Trading Market. Without limiting the
generality of the foregoing, neither the Company nor any of its officers,
directors or affiliates has taken or will take, directly or indirectly, any
action designed or intended to stabilize or manipulate the price of any security
of the Company, or which caused or resulted in, or which would in the future
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any security of the Company.
(ii) The
Investor shall comply with all laws, rules, regulations and orders applicable to
the performance by it of its obligations under this Agreement and its investment
in the Shares, except as would not, individually or in the aggregate, prohibit
or otherwise interfere with the ability of the Investor to enter into and
perform its obligations under this Agreement in any material respect. Without
limiting the foregoing, the Investor shall comply with all applicable provisions
of the Securities Act and the Exchange Act, including, without limitation,
Section 13(d) of the Exchange Act.
Section
5.4 Keeping of Records and Books
of Account; Foreign Corrupt Practices Act.
(i) The
Company shall keep and cause each Subsidiary to keep adequate records and books
of account, in which complete entries shall be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Company and
its Subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made. The Company
shall maintain a system of internal accounting controls that (a) pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets of the Company; (b) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company; and (c) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Company’s
assets that could have a material effect on the Company’s financial
statements.
(ii) Neither
the Company, nor any of its Subsidiaries, nor to the knowledge of the Company,
any of their respective directors, officers, agents, employees or any other
persons acting on their behalf shall, in connection with the operation of the
Company’s and its Subsidiaries’ respective businesses, (a) use any corporate
funds for unlawful contributions, payments, gifts or entertainment or to make
any unlawful expenditures relating to political activity to government
officials, candidates or members of political parties or organizations, (b) pay,
accept or receive any unlawful contributions, payments, expenditures or gifts,
or (c) violate or operate in noncompliance with any export restrictions,
anti-boycott regulations, embargo regulations or other applicable domestic or
foreign laws and regulations.
20
(iii) Subject
to the requirements of Section 5.12 of this Agreement, from time to time from
and after the period beginning with the second Trading Day immediately preceding
each Fixed Request Exercise Date through and including the applicable Settlement
Date, the Company shall make available for inspection and review by the
Investor, customary documentation allowing the Investor and/or its appointed
counsel or advisors to conduct due diligence.
Section
5.5 Limitations on Holdings and
Issuances. At
no time during the term of this Agreement shall the Investor directly or
indirectly own more than 9.9% of the then issued and outstanding shares of
Common Stock. The Company shall not be obligated to issue and the Investor shall
not be obligated to purchase any shares of Common Stock which would result in
the issuance under this Agreement to the Investor at any time of Shares which,
when aggregated with all other shares of Common Stock then owned beneficially by
the Investor, would result in the beneficial ownership by the Investor of more
than 9.9% of the then issued and outstanding shares of the Common
Stock.
Section
5.6 Other Agreements and Other
Financings.
(i) The
Company shall not enter into, announce or recommend to its stockholders any
agreement, plan, arrangement or transaction in or of which the terms thereof
would restrict, materially delay, conflict with or impair the ability or right
of the Company or any Subsidiary to perform its obligations under this
Agreement, including, without limitation, the obligation of the Company to
deliver Shares to the Investor in respect of a Fixed Request or Optional Amount
on the applicable Settlement Date.
(ii) The
Company shall notify the Investor, within 48 hours, if it enters into any
agreement, plan, arrangement or transaction with a third party, the principal
purpose of which is to obtain during a Pricing Period an Other Financing not
constituting an Acceptable Financing (an “Other Financing
Notice”); provided, however, that the
Company shall notify the Investor immediately (an “Integration Notice”)
if it enters into any agreement, plan, arrangement or transaction with a third
party, the principal purpose of which is to obtain at any time during the
Investment Period an Other Financing which may be integrated with the
transactions contemplated by this Agreement for purposes of determining whether
approval of the Company’s stockholders is required under any bylaw, listed
securities maintenance standards or other rules of the Trading Market and, if
required under applicable law, including, without limitation, Regulation FD
promulgated by the Commission, or under the applicable rules and regulations of
the Trading Market, the Company shall simultaneously publicly disclose such
information in accordance with Regulation FD and the applicable rules and
regulations of the Trading Market. For purposes of this Section 5.6(ii), any
press release issued by, or Commission Document filed by, the Company shall
constitute sufficient notice, provided that it is issued or filed, as the case
may be, within the time requirements set forth in the first sentence of this
Section 5.6(ii) for an Other Financing Notice or an Integration Notice, as
applicable. During any Pricing Period in which the Company is
required to provide an Other Financing Notice pursuant to the first sentence of
this Section 5.6(ii), the Investor shall (i) have the option to purchase the
Shares subject to the Fixed Request at (x) the price therefor in accordance with
the terms of this Agreement or (y) the third party’s per share purchase price in
connection with the Other Financing, net of such third party’s discounts,
Warrant Value and fees, or (ii) the Investor may
21
elect to
not purchase any Shares subject to the Fixed Request for that Pricing Period. An
“Other
Financing” shall mean (x) the issuance of Common Stock for a purchase
price less than, or the issuance of securities convertible into or exchangeable
for Common Stock at an exercise or conversion price (as the case may be) less
than, the then Current Market Price of the Common Stock (in each case, after all
fees, discounts, Warrant Value and commissions associated with the transaction)
(a “Below Market
Offering”); (y) the implementation by the Company of any mechanism in
respect of any securities convertible into or exchangeable for Common Stock for
the reset of the purchase price of the Common Stock to below the then Current
Market Price of the Common Stock (including, without limitation, any
antidilution or similar adjustment provisions in respect of any Company
securities, but specifically excluding customary adjustments for stock splits,
stock dividends, stock combinations and similar events); or (z) the issuance of
options, warrants or similar rights of subscription in each case not
constituting an Acceptable Financing. “Acceptable Financing”
shall mean the issuance by the Company of: (1) shares of Common Stock or
securities convertible into or exchangeable for Common Stock other than in
connection with a Below Market Offering; (2) shares of Common Stock or
securities convertible into or exchangeable for Common Stock in connection with
awards under the Company’s benefit and equity plans and arrangements and the
issuance of shares of Common Stock upon the conversion, exercise or exchange
thereof; (3) shares of Common Stock issuable upon the conversion or exchange of
equity awards or convertible or exchangeable securities outstanding as of the
Effective Date; (4) shares of Common Stock or securities convertible into or
exchangeable for Common Stock or similar rights to subscribe for the purchase of
shares of Common Stock in connection with technology sharing, licensing,
research and joint development agreements (or amendments thereto) with third
parties, and the issuance of shares of Common Stock upon the conversion,
exercise or exchange thereof; and (5) shares of Common Stock and/or warrants or
similar rights to subscribe for the purchase of shares of Common Stock issued in
connection with equipment financings and/or real property leases (or amendments
thereto) and the issuance of shares of Common Stock upon the exercise
thereof.
Section
5.7 Stop
Orders. The
Company shall advise the Investor immediately and shall confirm such advice in
writing: (i) of the Company’s receipt of notice of any request by the Commission
for amendment of or a supplement to the Registration Statement, the Prospectus,
any Permitted Free Writing Prospectus or for any additional information; (ii) of
the Company’s receipt of notice of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or prohibiting
or suspending the use of the Prospectus or any Prospectus Supplement, or of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation or contemplated initiation of any proceeding for
such purpose; and (iii) of the Company becoming aware of the happening of any
event, which makes any statement of a material fact made in the Registration
Statement, the Prospectus or any Permitted Free Writing Prospectus untrue or
which requires the making of any additions to or changes to the statements then
made in the Registration Statement, the Prospectus or any Permitted Free Writing
Prospectus in order to state a material fact required by the Securities Act to
be stated therein or necessary in order to make the statements then made therein
(in the case of the Prospectus, in light of the circumstances under which they
were made) not misleading, or of the necessity to amend the Registration
Statement or supplement the Prospectus or any Permitted Free Writing Prospectus
to comply with the Securities Act or any other law. The Company shall not be
required to disclose to the Investor the substance or specific reasons of any of
the events set forth in clauses (i) through (iii) of the immediately preceding
sentence, but rather, shall only
22
be
required to disclose that the event has occurred. The Company shall
not issue any Fixed Request during the continuation of any of the foregoing
events. If at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement or prohibiting or suspending the use
of the Prospectus or any Prospectus Supplement, the Company shall use
commercially reasonable efforts to obtain the withdrawal of such order at the
earliest possible time.
Section
5.8 Amendments to the
Registration Statement; Prospectus Supplements; Free Writing
Prospectuses.
(i) Except
as provided in this Agreement and other than periodic reports required to be
filed pursuant to the Exchange Act, the Company shall not file with the
Commission any amendment to the Registration Statement that relates to the
Investor, the Agreement or the transactions contemplated hereby or file with the
Commission any Prospectus Supplement that relates to the Investor, this
Agreement or the transactions contemplated hereby with respect to which (a) the
Investor shall not previously have been advised, (b) the Company shall not have
given due consideration to any comments thereon received from the Investor or
its counsel, or (c) the Investor shall reasonably object after being so advised,
unless it is necessary to amend the Registration Statement or make any
supplement to the Prospectus to comply with the Securities Act or any other
applicable law or regulation, in which case the Company shall immediately so
inform the Investor, the Investor shall be provided with a reasonable
opportunity to review and comment upon any disclosure relating to the Investor
and the Company shall expeditiously furnish to the Investor an electronic copy
thereof. In addition, for so long as, in the reasonable opinion of
counsel for the Investor, the Prospectus (or in lieu thereof, the notice
referred to in Rule 173(a) under the Securities Act) is required to be delivered
in connection with any purchase of Shares by the Investor, the Company shall not
file any Prospectus Supplement with respect to the Shares without delivering or
making available a copy of such Prospectus Supplement, together with the Base
Prospectus, to the Investor promptly.
(ii) The
Company agrees that, unless it obtains the prior written consent of the
Investor, it has not made and will not make an offer relating to the Shares that
would constitute an Issuer Free Writing Prospectus or that would otherwise
constitute a Free Writing Prospectus required to be filed by the Company or the
Investor with the Commission or retained by the Company or the Investor under
Rule 433 under the Securities Act. The Investor agrees that, unless
it obtains the prior written consent of the Company, it has not made and will
not make an offer relating to the Shares that would constitute a Free Writing
Prospectus required to be filed by the Company with the Commission or retained
by the Company under Rule 433 under the Securities Act. Any such
Issuer Free Writing Prospectus or other Free Writing Prospectus consented to by
the Investor or the Company is referred to in this Agreement as a “Permitted Free Writing
Prospectus.” The Company agrees that (x) it has treated and
will treat, as the case may be, each Permitted Free Writing Prospectus as an
Issuer Free Writing Prospectus and (y) it has complied and will comply, as the
case may be, with the requirements of Rules 164 and 433 under the Securities Act
applicable to any Permitted Free Writing Prospectus, including in respect of
timely filing with the Commission, legending and record keeping.
Section
5.9 Prospectus
Delivery. The
Company shall file with the Commission a Prospectus Supplement pursuant to Rule
424(b) under the Securities Act on the first Trading Day
23
immediately
following the last Trading Day of each Pricing Period. The Company
shall provide the Investor a reasonable opportunity to comment on a draft of
each such Prospectus Supplement and any Issuer Free Writing Prospectus, shall
give due consideration to all such comments and, subject to the provisions of
Section 5.8 hereof, shall deliver or make available to the Investor, without
charge, an electronic copy of each form of Prospectus Supplement, together with
the Base Prospectus, and any Permitted Free Writing Prospectus on each
applicable Settlement Date. The Company consents to the use of the
Prospectus (and of any Prospectus Supplement thereto) in accordance with the
provisions of the Securities Act and with the securities or “blue sky” laws of
the jurisdictions in which the Shares may be sold by the Investor, in connection
with the offering and sale of the Shares and for such period of time thereafter
as the Prospectus (or in lieu thereof, the notice referred to in Rule 173(a)
under the Securities Act) is required by the Securities Act to be delivered in
connection with sales of the Shares. If during such period of time any event
shall occur that in the judgment of the Company and its counsel is required to
be set forth in the Registration Statement or the Prospectus or any Permitted
Free Writing Prospectus or should be set forth therein in order to make the
statements made therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, or if it is necessary
to amend the Registration Statement or supplement or amend the Prospectus or any
Permitted Free Writing Prospectus to comply with the Securities Act or any other
applicable law or regulation, the Company shall forthwith prepare and, subject
to Section 5.8 above, file with the Commission an appropriate amendment to the
Registration Statement or Prospectus Supplement to the Prospectus (or supplement
to the Permitted Free Writing Prospectus) and shall expeditiously furnish or
make available to the Investor an electronic copy thereof.
Section
5.10 Selling
Restrictions.
(i) The
Investor covenants that from and after the date hereof through and including the
90th
day next following the termination of this Agreement (the “Restricted Period”),
neither the Investor nor any of its affiliates (within the meaning of the
Exchange Act) nor any entity managed or controlled by the Investor shall,
directly or indirectly, sell any securities of the Company, except the Shares
that it owns or has the right to purchase as provided in a Fixed Request
Notice. During the Restricted Period, neither the Investor or any of
its affiliates nor any entity managed or controlled by the Investor shall sell
any shares of Common Stock of the Company it does not “own” or have the
unconditional right to receive under the terms of this Agreement (within the
meaning of Rule 200 of Regulation SHO promulgated by the Commission under the
Exchange Act), including Shares in any account of the Investor or in any account
directly or indirectly managed or controlled by the Investor or any of its
affiliates or any entity managed or controlled by the
Investor. Without limiting the generality of the foregoing, prior to
and during the Restricted Period, neither the Investor nor any of its affiliates
nor any entity managed or controlled by the Investor or any of its affiliates
shall enter into a short position with respect to shares of Common Stock of the
Company, including in any account of the Investor’s or in any account directly
or indirectly managed or controlled by the Investor or any of its Affiliates or
any entity managed or controlled by the Investor, except that the Investor may
sell Shares that it is obligated to purchase under a pending Fixed Request
Notice but has not yet taken possession of so long as the Investor (or the
Broker-Dealer, as applicable) covers any such sales with the Shares purchased
pursuant to such Fixed Request Notice; provided, however, that the
Investor (or the Broker-Dealer, as applicable) shall not be required to cover
any such
24
sales
with the Shares purchased pursuant to such Fixed Request Notice if (a) the Fixed
Request is terminated by mutual agreement of the Company and the Investor and,
as a result of such termination, no Shares are delivered to the Investor under
this Agreement or (b) the Company otherwise fails to deliver such Shares to the
Investor on the applicable Settlement Date upon the terms and subject to the
provisions of this Agreement. Prior to and during the Restricted
Period, the Investor shall not grant any option to purchase or acquire any right
to dispose or otherwise dispose for value of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for, or warrants to
purchase, any shares of Common Stock, or enter into any swap, hedge or other
agreement that transfers, in whole or in part, the economic risk of ownership of
the Common Stock, except for such sales expressly permitted by this Section
5.10(i).
(ii) In
addition to the foregoing, in connection with any sale of the Company’s
securities (including any sale permitted by paragraph (i) above), the Investor
shall comply in all respects with all applicable laws, rules, regulations and
orders, including, without limitation, the requirements of the Securities Act
and the Exchange Act.
Section
5.11 Effective Registration
Statement. During
the Investment Period, the Company shall use its best efforts to maintain the
continuous effectiveness of the Registration Statement under the Securities
Act.
Section
5.12 Non-Public
Information. Neither
the Company nor any of its directors, officers or agents shall disclose any
material non-public information about the Company to the Investor, unless a
simultaneous public announcement thereof is made by the Company in the manner
contemplated by Regulation FD.
Section
5.13 Broker/Dealer. The
Investor shall use one or more broker-dealers to effectuate all sales, if any,
of the Shares that it may purchase from the Company pursuant to this Agreement
which (or whom) shall be unaffiliated with the Investor and not then currently
engaged or used by the Company (collectively, the “Broker-Dealer”). The
Investor shall provide the Company with all information regarding the
Broker-Dealer reasonably requested by the Company. The Investor shall
be solely responsible for all fees and commissions of the
Broker-Dealer.
Section
5.14 Disclosure
Schedule.
(i) During
the Investment Period, the Company shall from time to time update the Disclosure
Schedule as may be required to satisfy the condition set forth in Section
6.3(i). For purposes of this Section 5.14, any disclosure made in a
schedule to the Compliance Certificate substantially in the form attached hereto
as Exhibit D
shall be deemed to be an update of the Disclosure
Schedule. Notwithstanding anything in this Agreement to the contrary,
no update to the Disclosure Schedule pursuant to this Section 5.14 shall cure
any breach of a representation or warranty of the Company contained in this
Agreement and shall not affect any of the Investor’s rights or remedies with
respect thereto.
(ii) Notwithstanding
anything to the contrary contained in the Disclosure Schedules or in this
Agreement, the information and disclosure contained in any Schedule of the
Disclosure Schedules shall be deemed to be disclosed and incorporated by
reference in any other Schedule of the
25
Disclosure
Schedules as though fully set forth in such Schedule for which applicability of
such information and disclosure is readily apparent on its face. The
fact that any item of information is disclosed in the Disclosure Schedules shall
not be construed to mean that such information is required to be disclosed by
this Agreement. Except as expressly set forth in this Agreement, such
information and the thresholds (whether based on quantity, qualitative
characterization, dollar amounts or otherwise) set forth herein shall not be
used as a basis for interpreting the terms “material” or “Material Adverse
Effect” or other similar terms in this Agreement.
ARTICLE
VI
OPINION
OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND
PURCHASE
OF THE SHARES
Section
6.1 Opinion of Counsel and
Certificate. Simultaneously
with the execution and delivery of this Agreement, the Investor has received and
relied upon (i) an opinion of outside counsel to the Company, dated the
Effective Date, in the form mutually agreed to by the parties hereto, and (ii) a
certificate from the Company, dated the Effective Date, in the form of Exhibit C
hereto.
Section
6.2 Conditions Precedent to the
Obligation of the Company. The
obligation hereunder of the Company to issue and sell the Shares to the Investor
under any Fixed Request or Optional Amount is subject to the satisfaction or (to
the extent permitted by applicable law) waiver of each of the conditions set
forth below. These conditions are for the Company’s sole benefit and (to the
extent permitted by applicable law) may be waived by the Company at any time in
its sole discretion.
(i) Accuracy
of the Investor’s Representations and Warranties. The
representations and warranties of the Investor contained in this Agreement (i)
that are not qualified by “materiality” shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the applicable Fixed Request Exercise Date and the applicable
Settlement Date with the same force and effect as if made on such dates, except
to the extent such representations and warranties are as of another date, in
which case, such representations and warranties shall be true and correct in all
material respects as of such other date and (ii) that are qualified by
“materiality” shall have been true and correct when made and shall be true and
correct as of the applicable Fixed Request Exercise Date and the applicable
Settlement Date with the same force and effect as if made on such dates, except
to the extent such representations and warranties are as of another date, in
which case, such representations and warranties shall be true and correct as of
such other date.
(ii) Registration
Statement. The Registration Statement is effective and neither
the Company nor the Investor shall have received notice that the Commission has
issued or intends to issue a stop order with respect to the Registration
Statement. The Company shall have a maximum dollar amount certain of
Shares registered under the Registration Statement which are in an amount (A) as
of the Effective Date, not less than the Total Commitment and (B) as of the
applicable Fixed Request Exercise Date, not less than the maximum dollar amount
worth of Shares issuable pursuant to the applicable Fixed Request Notice and
applicable
26
Optional
Amount, if any. The Current Report shall have been filed with the
Commission, as required pursuant to Section 1.4, and all Prospectus Supplements
shall have been filed with the Commission, as required pursuant to Sections 1.4
and 5.9 hereof, to disclose the sale of the Shares prior to each Settlement
Date, as applicable. Any other material required to be filed by the
Company or any other offering participant pursuant to Rule 433(d) under the
Securities Act shall have been filed with the Commission within the applicable
time periods prescribed for such filings by Rule 433 under the Securities
Act.
(iii) Performance
by the Investor. The Investor shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to the applicable Fixed Request Exercise Date
and the applicable Settlement Date.
(iv) No
Injunction. No statute, regulation, order, decree, writ,
ruling or injunction shall have been enacted, entered, promulgated, threatened
or endorsed by any court or governmental authority of competent jurisdiction
which prohibits the consummation of or which would materially modify or delay
any of the transactions contemplated by this Agreement.
(v) No
Suspension, Etc. Trading in the Common Stock shall not have
been suspended by the Commission or the Trading Market (except for any
suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the applicable Fixed Request Exercise
Date and applicable Settlement Date), and, at any time prior to the applicable
Fixed Request Exercise Date and applicable Settlement Date, none of the events
described in clauses (i), (ii) and (iii) of Section 5.7 shall have occurred,
trading in securities generally as reported on the Trading Market shall not have
been suspended or limited, nor shall a banking moratorium have been declared
either by the United States or New York State authorities, nor shall there have
occurred any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of the Company, makes it impracticable or inadvisable to
issue the Shares.
(vi) No
Proceedings or Litigation. No action, suit
or proceeding before any arbitrator or any court or governmental authority shall
have been commenced or threatened, and no inquiry or investigation by any
governmental authority shall have been commenced or threatened, against the
Company or any Subsidiary, or any of the officers, directors or affiliates of
the Company or any Subsidiary, seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
(vii) Aggregate
Limit. The issuance and
sale of the Shares issuable pursuant to such Fixed Request Notice or Optional
Amount shall not violate Sections 2.2, 2.12 and 5.5 hereof.
Section
6.3 Conditions Precedent to the
Obligation of the Investor. The
obligation hereunder of the Investor to accept a Fixed Request Notice or
Optional Amount grant and to acquire and pay for the Shares is subject to the
satisfaction or (to the extent permitted by applicable law) waiver, at or before
each Fixed Request Exercise Date and each Settlement Date, of each of the
conditions set forth below. These conditions are for the Investor’s sole benefit
and
27
(to the
extent permitted by applicable law) may be waived by the Investor at any time in
its sole discretion.
(i) Accuracy
of the Company’s Representations and Warranties. The
representations and warranties of the Company contained in this Agreement (i)
that are not qualified by “materiality” or “Material Adverse Effect” shall have
been true and correct in all material respects when made and shall be true and
correct in all material respects as of the applicable Fixed Request Exercise
Date and the applicable Settlement Date with the same force and effect as if
made on such dates, except to the extent such representations and warranties are
as of another date, in which case, such representations and warranties shall be
true and correct in all material respects as of such other date and
(ii) that are qualified by “materiality” or “Material Adverse Effect” shall
have been true and correct when made and shall be true and correct as of the
applicable Fixed Request Exercise Date and the applicable Settlement Date with
the same force and effect as if made on such dates, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct as of such other
date.
(ii) Registration
Statement. The
Registration Statement is effective and neither the Company nor the Investor
shall have received notice that the Commission has issued or intends to issue a
stop order with respect to the Registration Statement. The Company shall have a
maximum dollar amount certain of Shares registered under the Registration
Statement which are in an amount (A) as of the Effective Date, not less than the
Total Commitment and (B) as of the applicable Fixed Request Exercise Date, not
less than the maximum dollar amount worth of Shares issuable pursuant to the
applicable Fixed Request Notice and applicable Optional Amount, if any. The
Current Report shall have been filed with the Commission, as required pursuant
to Section 1.4, and all Prospectus Supplements shall have been filed with the
Commission, as required pursuant to Sections 1.4 and 5.9 hereof, to disclose the
sale of the Shares prior to each Settlement Date, as applicable, and an
electronic copy of each such Prospectus Supplement together with the Base
Prospectus shall have been delivered or made available to the Investor in
accordance with Section 5.9 hereof. Any other material required to be
filed by the Company or any other offering participant pursuant to Rule 433(d)
under the Securities Act shall have been filed with the Commission within the
applicable time periods prescribed for such filings by Rule 433 under the
Securities Act.
(iii) No
Suspension. Trading in the Common Stock shall not have been
suspended by the Commission or the Trading Market (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to the applicable Fixed Request Exercise Date and applicable
Settlement Date), and, at any time prior to the applicable Fixed Request
Exercise Date and applicable Settlement Date, none of the events described in
clauses (i), (ii) and (iii) of Section 5.7 shall have occurred, trading in
securities generally as reported on the Trading Market shall not have been
suspended or limited, nor shall a banking moratorium have been declared either
by the United States or New York State authorities, nor shall there have
occurred any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of the Investor, makes it impracticable or inadvisable to
purchase the Shares.
28
(iv) Performance
of the Company. The Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the applicable Fixed Request Exercise Date
and the applicable Settlement Date and shall have delivered to the Investor on
the applicable Settlement Date the Compliance Certificate substantially in the
form attached hereto as Exhibit
D.
(v) No
Injunction. No statute, rule, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by this Agreement.
(vi) No
Proceedings or Litigation. No action, suit or proceeding
before any arbitrator or any court or governmental authority shall have been
commenced or threatened, and no inquiry or investigation by any governmental
authority shall have been commenced or threatened, against the Company or any
Subsidiary, or any of the officers, directors or affiliates of the Company or
any Subsidiary, seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.
(vii) Aggregate
Limit. The issuance and sale of the Shares issuable pursuant
to such Fixed Request Notice or Optional Amount shall not violate Sections 2.2,
2.12 and 5.5 hereof.
(viii) Shares
Authorized. The Shares
issuable pursuant to such Fixed Request Notice or Optional Amount shall have
been duly authorized by all necessary corporate action of the
Company.
(ix) Notification
of Listing of Shares. If required, the
Company shall have submitted to the Trading Market a notification form of
listing of additional shares related to the Shares issuable pursuant to such
Fixed Request or Optional Amount in accordance with the bylaws, listed
securities maintenance standards and other rules of the Trading
Market.
(x) Opinions
of Counsel; Bring-Down. Subsequent to the filing of the
Current Report pursuant to Section 1.4 and prior to the first Fixed Request
Exercise Date, the Investor shall have received an opinion from outside counsel
to the Company and, as appropriate, an opinion from in-house counsel to the
Company, in each case in the form mutually agreed to by the parties
hereto. On each Settlement Date, the Investor shall have received an
opinion “bring down” from outside counsel to the Company and, as appropriate,
from in-house counsel to the Company, in each case in the form mutually agreed
to by the parties hereto.
(xi) Payment
of Investor’s Counsel Fees; Due Diligence Expenses. On the Effective
Date, the Company shall have paid by wire transfer of immediately available
funds to an account designated by the Investor’s counsel, the fees and expenses
of the Investor’s counsel in accordance with the proviso to the first sentence
of Section 9.1(i) of this Agreement. On the 30th day of
the third month in each calendar quarter during the Investment Period, the
Company shall have paid by wire transfer of immediately available funds to an
account designated by the Investor, the due diligence expenses incurred by the
Investor in accordance with the provisions of the second sentence of Section
9.1(i) of this Agreement.
29
ARTICLE
VII
TERMINATION
Section
7.1 Term, Termination by Mutual
Consent. Unless
earlier terminated as provided hereunder, this Agreement shall terminate
automatically on the earliest of (i) the first day of the month next following
the 18-month anniversary of the Effective Date (the “Investment Period”),
(ii) the date that the entire dollar amount of Shares registered under the
Registration Statement have been issued and sold and (iii) the date the Investor
shall have purchased the Total Commitment of shares of Common Stock (subject in
all cases to the Trading Market Limit). The Company may terminate this Agreement
effective upon three Trading Days’ prior written notice to the Investor in
accordance with Section 9.4; provided, however, that such
termination shall not occur during a Pricing Period or prior to a Settlement
Date. This Agreement may be terminated at any time by the mutual written consent
of the parties, effective as of the date of such mutual written consent unless
otherwise provided in such written consent, it being hereby acknowledged and
agreed that the Investor may not consent to such termination during a Pricing
Period or prior to a Settlement Date in the event the Investor has instructed
the Broker-Dealer to effect an open-market sale of Shares which are subject to a
pending Fixed Request Notice but which have not yet been physically delivered by
the Company (and/or credited by book-entry) to the Investor in accordance with
the terms and subject to the conditions of this Agreement.
Section
7.2 Other
Termination. If
the Company provides the Investor with an Other Financing Notice (other than in
respect of an underwritten public offering of equity securities of the Company
or a registered direct public offering of equity securities of the Company) or
an Integration Notice, in each case pursuant to Section 5.6(ii) of this
Agreement, or if the Company otherwise enters into any agreement, plan,
arrangement or transaction with a third party, the principal purpose of which is
to obtain outside a Pricing Period, but otherwise during the Investment Period,
an Other Financing not constituting an Acceptable Financing (other than in
respect of an underwritten public offering of equity securities of the Company
or a registered direct public offering of equity securities of the Company), in
which latter case the Company shall so notify the Investor within 48 hours
thereof, then in all such cases the Investor shall have the right to terminate
this Agreement within the subsequent 30-day period (the “Event Period”),
effective upon one Trading Day’s prior written notice delivered to the Company
in accordance with Section 9.4 at any time during the Event
Period. The Company shall immediately notify the Investor (and, if
required under applicable law, including, without limitation, Regulation FD
promulgated by the Commission, or under the applicable rules and regulations of
the Trading Market, the Company shall simultaneously publicly disclose such
information in accordance with Regulation FD and the applicable rules and
regulations of the Trading Market), and the Investor shall have the right to
terminate this Agreement at any time after receipt of such notification, if: (i)
any condition, occurrence, state of facts or event constituting a Material
Adverse Effect has occurred; (ii) a Material Change in Ownership has occurred or
the Company enters into a definitive agreement providing for a Material Change
in Ownership; or (iii) a default or event of default has occurred and is
continuing under the terms of any agreement, contract, note or other instrument
to which the Company or any of its Subsidiaries is a party with respect to any
indebtedness for borrowed money representing more than 10% of the Company’s
consolidated assets, in any such case, upon one Trading Day’s prior written
notice delivered to the Company in accordance with Section 9.4
hereof.
30
Section
7.3 Effect of
Termination. In
the event of termination by the Company or the Investor, written notice thereof
shall forthwith be given to the other party as provided in Section 9.4 and the
transactions contemplated by this Agreement shall be terminated without further
action by either party. If this Agreement is terminated as provided in Section
7.1 or 7.2 herein, this Agreement shall become void and of no further force and
effect, except as provided in Section 9.9 hereof. Nothing in this Section 7.3
shall be deemed to release the Company or the Investor from any liability for
any breach under this Agreement, or to impair the rights of the Company and the
Investor to compel specific performance by the other party of its obligations
under this Agreement.
ARTICLE
VIII
INDEMNIFICATION
Section
8.1 General
Indemnity.
(i) Indemnification
by the Company. The Company shall
indemnify and hold harmless the Investor, the Broker-Dealer, each affiliate,
employee, representative and advisor of and to the Investor and the
Broker-Dealer, and each
person, if any, who controls the Investor or the Broker-Dealer within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
from and against all losses, claims, damages, liabilities and expenses
(including reasonable costs of defense and investigation and all attorneys’
fees) to which the Investor, the Broker-Dealer and each such other person may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities and expenses (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue statement of
a material fact contained, or incorporated by reference, in the Registration
Statement or any amendment thereto or any omission or alleged omission to state
therein, or in any document incorporated by reference therein, a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (ii) any untrue statement or alleged untrue statement of a
material fact contained, or incorporated by reference, in the Prospectus, any
Issuer Free Writing Prospectus, or in any amendment thereof or supplement
thereto, or in any “issuer information” (as defined in Rule 433 under the
Securities Act) of the Company, which “issuer information” is required to be, or
is, filed with the Commission or otherwise contained in any Free Writing
Prospectus, or any amendment or supplement thereto, or any omission or alleged
omission to state therein, or in any document incorporated by reference therein,
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that (A) the
Company shall not be liable under this Section 8.1(i) to the extent that a court
of competent jurisdiction shall have determined by a final judgment (from which
no further appeals are available) that such loss, claim, damage, liability or
expense resulting directly and solely from any such acts or failures to act,
undertaken or omitted to be taken by the Investor, any Broker-Dealer or such
person through its bad faith or willful misconduct, (B) the foregoing indemnity
shall not apply to any loss, claim, damage, liability or expense to the extent,
but only to the extent, arising out of or based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished
31
to the
Company by the Investor or any Broker-Dealer expressly for use in the Current
Report or any Prospectus Supplement or Permitted Free Writing Prospectus, or any
amendment thereof or supplement thereto, and (C) with respect to the Prospectus,
the foregoing indemnity shall not inure to the benefit of the Investor or any
such person from whom the person asserting any loss, claim, damage, liability or
expense purchased Common Stock, if copies of all Prospectus Supplements required
to be filed pursuant to Section 1.4 and 5.9, together with the Base Prospectus,
were timely delivered or made available to the Investor pursuant hereto and a
copy of the Base Prospectus, together with a Prospectus Supplement (as
applicable), was not sent or given by or on behalf of the Investor or any such
person to such person, if required by law to have been delivered, at or prior to
the written confirmation of the sale of the Common Stock to such person, and if
delivery of the Base Prospectus, together with a Prospectus Supplement (as
applicable), would have cured the defect giving rise to such loss, claim,
damage, liability or expense.
The
Company shall reimburse the Investor, the Broker-Dealer and each such
controlling person promptly upon demand (with accompanying presentation of
documentary evidence) for all legal and other costs and expenses reasonably
incurred by the Investor, the Broker-Dealer or such indemnified persons in
investigating, defending against, or preparing to defend against any such claim,
action, suit or proceeding with respect to which it is entitled to
indemnification.
(ii) Indemnification
by the Investor. The Investor shall indemnify and hold harmless the
Company, each of its directors and officers, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act from and against all losses, claims, damages,
liabilities and expenses (including reasonable costs of defense and
investigation and all attorneys fees) to which the Company and each such other
person may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities and expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Current Report or any Prospectus
Supplement or Permitted Free Writing Prospectus, or in any amendment thereof or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, in each case, to the extent, but only to the extent, the untrue
statement, alleged untrue statement, omission or alleged omission was made in
reliance upon, and in conformity with, written information furnished by the
Investor to the Company expressly for inclusion in the Current Report or such
Prospectus Supplement or Permitted Free Writing Prospectus, or any amendment
thereof or supplement thereto.
The
Investor shall reimburse the Company and each such director, officer or
controlling person promptly upon demand for all legal and other costs and
expenses reasonably incurred by the Company or such indemnified persons in
investigating, defending against, or preparing to defend against any such claim,
action, suit or proceeding with respect to which it is entitled to
indemnification.
Section
8.2 Indemnification
Procedures. Promptly
after a person receives notice of a claim or the commencement of an action for
which the person intends to seek indemnification under Section 8.1, the person
will notify the indemnifying party in writing of the claim or
32
commencement
of the action, suit or proceeding; provided, however, that failure
to notify the indemnifying party will not relieve the indemnifying party from
liability under Section 8.1, except to the extent it has been materially
prejudiced by the failure to give notice. The indemnifying party will
be entitled to participate in the defense of any claim, action, suit or
proceeding as to which indemnification is being sought, and if the indemnifying
party acknowledges in writing the obligation to indemnify the party against whom
the claim or action is brought, the indemnifying party may (but will not be
required to) assume the defense against the claim, action, suit or proceeding
with counsel satisfactory to it. After an indemnifying party notifies
an indemnified party that the indemnifying party wishes to assume the defense of
a claim, action, suit or proceeding, the indemnifying party will not be liable
for any legal or other expenses incurred by the indemnified party in connection
with the defense against the claim, action, suit or proceeding except that if,
in the opinion of counsel to the indemnifying party, one or more of the
indemnified parties should be separately represented in connection with a claim,
action, suit or proceeding, the indemnifying party will pay the reasonable fees
and expenses of one separate counsel for the indemnified
parties. Each indemnified party, as a condition to receiving
indemnification as provided in Section 8.1, will cooperate in all reasonable
respects with the indemnifying party in the defense of any action or claim as to
which indemnification is sought. No indemnifying party will be liable
for any settlement of any action effected without its prior written
consent. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested (by written notice provided in accordance
with Section 9.4) an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated hereby effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received written notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such
settlement. No indemnifying party will, without the prior written
consent of the indemnified party, effect any settlement of a pending or
threatened action with respect to which an indemnified party is, or is informed
that it may be, made a party and for which it would be entitled to
indemnification, unless the settlement includes an unconditional release of the
indemnified party from all liability and claims which are the subject matter of
the pending or threatened action.
If for
any reason the indemnification provided for in this Agreement is not available
to, or is not sufficient to hold harmless, an indemnified party in respect of
any loss or liability referred to in Section 8.1 as to which such indemnified
party is entitled to indemnification thereunder, each indemnifying party shall,
in lieu of indemnifying the indemnified party, contribute to the amount paid or
payable by the indemnified party as a result of such loss or liability, (i) in
the proportion which is appropriate to reflect the relative benefits received by
the indemnifying party, on the one hand, and by the indemnified party, on the
other hand, from the sale of Shares which is the subject of the claim, action,
suit or proceeding which resulted in the loss or liability or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above, but also the relative fault of the indemnifying party,
on the one hand, and the indemnified party, on the other hand, with respect to
the statements or omissions which are the subject of the claim, action, suit or
proceeding that resulted in the loss or liability, as well as any other relevant
equitable considerations.
The
remedies provided for in Section 8.1 and this Section 8.2 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
Indemnified Person at law or in equity.
33
ARTICLE
IX
MISCELLANEOUS
Section
9.1 Fees and
Expenses.
(i) Each
party shall bear its own fees and expenses related to the transactions
contemplated by this Agreement; provided, however, that the
Company shall pay, on the Effective Date, by wire transfer of immediately
available funds to an account designated by the Investor’s counsel, promptly
following the receipt of an invoice therefor, all reasonable attorneys’ fees and
expenses (exclusive of disbursements and out-of-pocket expenses) incurred by the
Investor, up to $35,000, in connection with the preparation, negotiation,
execution and delivery of this Agreement, legal due diligence of the Company and
review of the Registration Statement, the Base Prospectus, the Current Report,
any Permitted Free Writing Prospectus and all other related transaction
documentation. In addition, the Company shall pay, on the 30th day of
the third month in each calendar quarter during the Investment Period, promptly
following the receipt of an invoice therefor, up to $12,500, representing the
due diligence expenses incurred by the Investor during the Investment Period.
The Company shall pay all U.S. federal, state and local stamp and other similar
transfer and other taxes and duties levied in connection with issuance of the
Shares pursuant hereto.
(ii) If the
Company issues a Fixed Request Notice and fails to deliver the Shares to the
Investor on the applicable Settlement Date and such failure continues for 10
Trading Days, the Company shall pay the Investor, in cash (or, at the option of
the Investor, in shares of Common Stock which have not been registered under the
Securities Act valued at the applicable Discount Price of the Shares failed to
be delivered; provided that the issuance thereof by the Company would not
violate the Securities Act or any applicable U.S. state securities laws), as
liquidated damages for such failure and not as a penalty, an amount equal to
2.0% of the payment required to be paid by the Investor on such Settlement Date
(i.e., the sum of the Fixed Amount Requested and the Optional Amount Dollar
Amount) for the initial 30 days following such Settlement Date until the Shares
have been delivered, and an additional 2.0% for each additional 30-day period
thereafter until the Shares have been delivered, which amount shall be prorated
for such periods less than 30 days (subject in all cases to the Trading Market
Limit).
Section
9.2 Specific Enforcement,
Consent to Jurisdiction, Waiver of Jury Trial.
(i) The
Company and the Investor acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that either party shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement by
the other party and to enforce specifically the terms and provisions hereof this
being in addition to any other remedy to which either party may be entitled by
law or equity.
34
(ii) Each
of the Company and the Investor (a) hereby irrevocably submits to the
jurisdiction of the United States District Court and other courts of the United
States sitting in the State of New York for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement, and (b) hereby waives,
and agrees not to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the Investor
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this Section 9.2
shall affect or limit any right to serve process in any other manner permitted
by law.
(i) (iii) Each
of the Company and the Investor hereby waives to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect to any
litigation directly or indirectly arising out of, under or in connection with
this Agreement or the transactions contemplated hereby or disputes relating
hereto. Each of the Company and the Investor (a) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce the foregoing waiver and (b) acknowledges that it and the other
parties hereto have been induced to enter into this Agreement by, among other
things, the mutual waivers and certifications in this Section 9.2.
Section
9.3 Entire Agreement;
Amendment. This
Agreement, together with the exhibits referred to herein and the Disclosure
Schedule, represents the entire agreement of the parties with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by either party relative to subject matter hereof not expressly
set forth herein. No provision of this Agreement may be amended other than by a
written instrument signed by both parties hereto. The Disclosure
Schedule and all exhibits to this Agreement are hereby incorporated by reference
in, and made a part of, this Agreement as if set forth in full
herein.
Section
9.4 Notices. Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or facsimile (with facsimile machine confirmation of delivery received)
at the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received) or (b) on the
second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The address for such communications shall
be:
|
If
to the Company:
|
|
|
000
Xxxxx Xxxxxx
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|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Telephone
Number: (000) 000-0000
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|
|
Fax:
(000) 000-0000
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|
|
Attention:
Xxxxxx Xxxxxxxx
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35
|
With
copies to:
|
Xxxxxxxxxxxx
Xxxx & Xxxxxxxxx LLP
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|
|
0000
Xxxxxx xx xxx Xxxxxxxx
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
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|
|
Telephone
Number: (000) 000-0000
|
|
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Fax:
(000) 000-0000
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|
|
Attention: Xxx
X. Xxxxxxx, Esq.
|
|
If
to the Investor:
|
Azimuth
Opportunity Ltd.
|
|
|
c/o
Fortis Prime Fund Solutions (BVI)
Limited
|
|
|
X.X.
Xxx 000, 0xx
Xxxxx
|
Xxxxx
Xxxxx Building
Road
Town, Tortola
British
Virgin Islands
Telephone
Number: (000) 000-0000
Fax: (000)
000-0000
Attention:
Xxxxx XxXxxxxx
|
With
copies to:
|
Xxxxxxxxx
Xxxxxxx, LLP
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|
|
The
MetLife Building
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|
|
000
Xxxx Xxxxxx
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|
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Xxx
Xxxx, XX 00000
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|
|
Telephone
Number: (000) 000-0000
|
|
|
Fax: (000)
000-0000
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|
|
Attention:
Xxxxxxxx X. Xxxxxxx, Esq.
|
|
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Xxxxxxx
X. Xxxxxxx, Esq.
|
Either
party hereto may from time to time change its address for notices by giving at
least 10 days advance written notice of such changed address to the other party
hereto.
Section
9.5 Waivers. No
waiver by either party of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provisions, condition or requirement hereof
nor shall any delay or omission of any party to exercise any right hereunder in
any manner impair the exercise of any such right accruing to it thereafter. No
provision of this Agreement may be waived other than in a written instrument
signed by the party against whom enforcement of such waiver is
sought.
Section
9.6 Headings. The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose and
shall not be deemed to limit or affect any of the provisions
hereof.
Section
9.7 Successors and
Assigns. The
Investor may not assign this Agreement to any person without the prior consent
of the Company, in the Company’s sole discretion. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
assigns. The assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this
Agreement.
36
Section
9.8 Governing
Law. This
Agreement shall be governed by and construed in accordance with the internal
procedural and substantive laws of the State of New York, without giving effect
to the choice of law provisions of such state.
Section
9.9 Survival. The
representations and warranties of the Company and the Investor contained in
Articles III and IV and the covenants contained in Article V shall survive the
execution and delivery hereof until the termination of this Agreement, and the
agreements and covenants set forth in Article VIII of this Agreement shall
survive the execution and delivery hereof.
Section
9.10 Counterparts. This
Agreement may be executed in counterparts, all of which taken together shall
constitute one and the same original and binding instrument and shall become
effective when all counterparts have been signed by each party and delivered to
the other parties hereto, it being understood that all parties hereto need not
sign the same counterpart. In the event any signature is delivered by facsimile
transmission, the party using such means of delivery shall cause four additional
executed signature pages to be physically delivered to the other parties within
five days of the execution and delivery hereof.
Section
9.11 Publicity. On
or after the Effective Date, the Company may issue a press release or otherwise
make a public statement or announcement with respect to this Agreement or the
transactions contemplated hereby or the existence of this Agreement (including,
without limitation, by filing a copy of this Agreement with the Commission);
provided, however, that prior
to issuing any such press release, or making any such public statement or
announcement, the Company shall consult with the Investor on the form and
substance of such press release or other disclosure.
Section
9.12 Severability. The
provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement, and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible, provided that the
Agreement, as so amended, (a) reflects the intent of the parties hereto and (b)
does not change the bargained for consideration or benefits to be received by
each party hereto.
Section
9.13 Further
Assurances. From
and after the date of this Agreement, upon the request of the Investor or the
Company, each of the Company and the Investor shall execute and deliver such
instrument, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
[Signature
Page Follows]
37
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their
respective authorized officer as of the date first above written.
| MEDIS TECHNOLOGIES LTD.: | |||
|
|
By:
|
/s/ Xxxxxx Xxxxxxxx | |
| Name: Xxxxxx Xxxxxxxx | |||
| Title: Deputy Chairman and Chief Operating Officer | |||
| AZIMUTH OPPORTUNITY LTD.: | |||
|
|
By:
|
/s/ Xxxxxx X. XxXxx | |
| Name: Xxxxxx X. XxXxx | |||
| Title: Corporate Secretary | |||
38
ANNEX
A TO THE
DEFINITIONS
(a) “Acceptable Financing”
shall have the meaning assigned to such term in Section 5.6(ii)
hereof.
(b) “Aggregate Limit”
shall have the meaning assigned to such term in Section 1.1 hereof.
(c) “Base Prospectus”
shall mean the Company’s prospectus, dated April 25, 2008, a preliminary form of
which is included in the Registration Statement, including the documents
incorporated by reference therein.
(d) “Below Market
Offering” shall have the meaning assigned to such term in Section 5.6(ii)
hereof.
(e) “Broker-Dealer” shall
have the meaning assigned to such term in Section 5.13 hereof.
(f) “Bylaws” shall have
the meaning assigned to such term in Section 4.3 hereof.
(g) “Charter” shall have
the meaning assigned to such term in Section 4.3 hereof.
(h) “Code” shall mean the
Internal Revenue Code of 1986, as amended.
(i) “Commission” shall
mean the Securities and Exchange Commission or any successor
entity.
(j) “Commission Documents”
shall mean (1) all reports, schedules, registrations, forms, statements,
information and other documents filed by the Company with the Commission
pursuant to the reporting requirements of the Exchange Act, including all
material filed pursuant to Section 13(a) or 15(d) of the Exchange Act, which
have been filed by the Company since December 31, 2007, and which hereafter
shall be filed by the Company during the Investment Period, including, without
limitation, the Form 10-K filed by the Company for its fiscal year ended
December 31, 2007 (the “2007 Form 10-K”) and
the Current Report, (2) the Registration Statement, as the same may be amended
from time to time, the Prospectus and each Prospectus Supplement, and each
Permitted Free Writing Prospectus and (3) all information contained in such
filings and all documents and disclosures that have been and heretofore shall be
incorporated by reference therein.
(k) “Common Stock” shall
have the meaning assigned to such term in the Recitals.
(l) “Current Market Price”
means, with respect to any particular measurement date, the closing price of a
share of Common Stock as reported on the Trading Market for the Trading Day
immediately preceding such measurement date.
(m) “Current Report” shall
have the meaning assigned to such term in Section 1.4 hereof.
(n) “Discount Price” shall
have the meaning assigned to such term in Section 2.2 hereof.
(o) “XXXXX” shall have the
meaning assigned to such term in Section 4.3 hereof.
(p) “Effective Date” shall
mean the date of this Agreement.
(q) “Environmental Laws”
shall have the meaning assigned to such term in Section 4.15
hereof.
(r) “ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended.
(s) “Event Period” shall
have the meaning assigned to such term in Section 7.2 hereof.
(t) “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder.
(u) “FINRA” shall have the
meaning assigned to such term in Section 4.18(iii) hereof.
(v) “Fixed Amount
Requested” shall mean the amount of a Fixed Request requested by the
Company in a Fixed Request Notice delivered pursuant to Section 2.1
hereof.
(w) “Fixed Request” means
the transactions contemplated under Sections 2.1 through 2.8 of this
Agreement.
(x) “Fixed Request Amount”
means the actual amount of proceeds received by the Company pursuant to a Fixed
Request under this Agreement.
(y) “Fixed Request Exercise
Date” shall have the meaning assigned to such term in Section 2.2
hereof.
(z) “Fixed Request Notice”
shall have the meaning assigned to such term in Section 2.1 hereof.
(aa) “Free Writing
Prospectus” shall mean a “free writing prospectus” as defined in Rule 405
promulgated under the Securities Act.
(bb) “GAAP” shall mean
generally accepted accounting principles in the United States of America as
applied by the Company.
(cc) “Governmental
Licenses” shall have the meaning assigned to such term in Section 4.14(a)
hereof.
(dd) “Indebtedness” shall
have the meaning assigned to such term in Section 4.9 hereof.
(ee) “Integration Notice”
shall have the meaning assigned to such term in Section 5.6(ii)
hereof.
(ff) “Intellectual
Property” shall have the meaning assigned to such term in Section 4.14(b)
hereof.
(gg) “Investment Period”
shall have the meaning assigned to such term in Section 7.1 hereof.
(hh) “Issuer Free Writing
Prospectus” shall mean an “issuer free writing prospectus” as defined in
Rule 433 promulgated under the Securities Act.
(ii) “Market
Capitalization” shall be calculated on the Trading Day preceding the
applicable Pricing Period and shall be the product of (x) the number of shares
of Common Stock outstanding and (y) the closing bid price of the Common Stock,
both as determined by Bloomberg Financial LP using the DES and HP
functions.
(jj) “Material Adverse
Effect” shall mean any condition, occurrence, state of facts or event
having, or insofar as reasonably can be foreseen would likely have, any effect
on the business, operations, properties or condition (financial or otherwise) of
the Company that is material and adverse to the Company and its Subsidiaries,
taken as a whole, and/or any condition, occurrence, state of facts or event that
would prohibit or otherwise materially interfere with or delay the ability of
the Company to perform any of its obligations under this Agreement.
(kk) “Material Agreements”
shall have the meaning assigned to such term in Section 4.16
hereof.
(ll) “Material Change in
Ownership” shall mean the occurrence of any one or more of the following:
(i) the acquisition by any person, including any syndicate or group deemed to be
a “person” under Section 13(d)(3) of the Exchange Act, of beneficial ownership,
directly or indirectly, through a purchase, merger or other acquisition
transaction or series of transactions, of shares of capital stock or other
securities of the Company entitling such person to exercise, upon an event of
default or default or otherwise, 50% or more of the total voting power of all
series and classes of capital stock and other securities of the Company entitled
to vote generally in the election of directors, other than any such acquisition
by the Company, any Subsidiary of the Company or any employee benefit plan of
the Company; (ii) any consolidation or merger of the Company with or into any
other person, any merger of another person into the Company, or any conveyance,
transfer, sale, lease or other disposition of all or substantially all of the
properties and assets of the Company to another person, other than (a) any such
transaction (x) that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of capital stock of the Company
and (y) pursuant to which holders of capital stock of the Company immediately
prior to such transaction have the entitlement to exercise, directly or
indirectly, 50% or more of the total voting power of all shares of capital stock
of the Company entitled to vote generally in the election of directors of the
continuing or surviving person immediately after such transaction or (b) any
merger which is effected solely to change the jurisdiction of incorporation
of the
Company and results in a reclassification, conversion or exchange of outstanding
shares of Common Stock solely into shares of common stock of the surviving
entity; (iii) during any consecutive two-year period, individuals who at the
beginning of that two-year period constituted the Board of Directors (together
with any new directors whose election to the Board of Directors, or whose
nomination for election by the stockholders of the Company, was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose elections or nominations for
election were previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office; or (iv) the Company is
liquidated or dissolved or a resolution is passed by the Company’s stockholders
approving a plan of liquidation or dissolution of the Company. Beneficial
ownership shall be determined in accordance with Rule 13d-3 promulgated by the
SEC under the Exchange Act. The term “person” shall include any syndicate or
group which would be deemed to be a “person” under Section 13(d)(3) of the
Exchange Act.
(mm) “Multiplier” shall
have the meaning assigned to such term in Section 2.3 hereof.
(nn) “NASDAQ” means The
NASDAQ Stock Market LLC or any successor thereto.
(oo) “Optional Amount”
means the transactions contemplated under Sections 2.9 through 2.11 of this
Agreement.
(pp) “Optional Amount Dollar
Amount” shall mean the actual amount of proceeds received by the Company
pursuant to the exercise of an Optional Amount under this
Agreement.
(qq) “Optional Amount
Notice” shall mean a notice sent to the Company with regard to the
Investor’s election to exercise all or any portion of an Optional Amount, as
provided in Section 2.11 hereof and substantially in the form attached hereto as
Exhibit
B.
(rr) “Optional Amount Threshold
Price” shall have the meaning assigned to such term in Section 2.1
hereof.
(ss) “Other Financing”
shall have the meaning assigned to such term in Section 5.6(ii)
hereof.
(tt) “Other Financing
Notice” shall have the meaning assigned to such term in Section 5.6(ii)
hereof.
(uu) “Permitted Free Writing
Prospectus” shall have the meaning assigned to such term in Section
5.8(ii) hereof.
(vv) “Plan” shall have the
meaning assigned to such term in Section 4.22 hereof.
(ww) “Pricing Period shall
mean a period of 10 consecutive Trading Days commencing on the day of delivery
of a Fixed Request Notice (or, if the Fixed Request Notice is delivered after
9:30 a.m. (New York time), on the next Trading Day), or such other period
mutually agreed upon by the Investor and the Company.
(xx) “Prospectus” shall
mean the Base Prospectus, together with any final prospectus filed with the
Commission pursuant to Rule 424(b), as supplemented by any Prospectus
Supplement, including the documents incorporated by reference
therein.
(yy) “Prospectus
Supplement” shall mean any prospectus supplement to the Base Prospectus
filed with the Commission pursuant to Rule 424(b) under the Securities Act,
including the documents incorporated by reference therein.
(zz) “Reduction Notice”
shall have the meaning assigned to such term in Section 2.8 hereof.
(aaa) “Registration
Statement” shall mean the registration statement on Form S-3, Commission
File Number 333-149874, filed by the Company with the Commission under the
Securities Act for the registration of the Shares, as such Registration
Statement may be amended and supplemented from time to time, including the
documents incorporated by reference therein and the information deemed to be a
part thereof at the time of effectiveness pursuant to Rule 430A or Rule 430B
under the Securities Act.
(bbb) “Restricted Period”
shall have the meaning assigned to such term in Section 5.10
hereof.
(ccc) “Securities Act” shall
mean the Securities Act of 1933, as amended, and the rules and regulations of
the Commission thereunder.
(ddd) “Settlement Date”
shall have the meaning assigned to such term in Section 2.7
hereof.
(eee) “Shares” shall mean
shares of Common Stock issuable to the Investor upon exercise of a Fixed Request
and shares of Common Stock issuable to the Investor upon exercise of an Optional
Amount.
(fff) “Significant
Subsidiary” means any Subsidiary of the Company that would constitute a
Significant Subsidiary of the Company within the meaning of Rule 1-02 of
Regulation S-X of the Commission.
(ggg) “SOXA” shall have the
meaning assigned to such term in Section 4.6(c) hereof.
(hhh) “Subsidiary” shall
mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries.
(iii) “Threshold Price” is
the lowest price (except to the extent otherwise provided in Section 2.6) at
which the Company may sell Shares during the applicable Pricing Period as set
forth in a Fixed Request Notice (not taking into account the applicable
percentage discount during such Pricing Period determined in accordance with
Section 2.2); provided, however, that at no
time shall the Threshold Price be lower than $6.00 per share unless the Company
and the Investor mutually shall agree.
(jjj) “Total Commitment”
shall have the meaning assigned to such term in Section 1.1 hereof.
(kkk) “Trading Day” shall
mean a full trading day (beginning at 9:30 a.m., New York City time, and ending
at 4:00 p.m., New York City time) on the NASDAQ.
(lll) “Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the American Stock Exchange, the New York
Stock Exchange or the NASDAQ.
(mmm) “Trading Market Limit”
means that number of shares which is one less than 20.0% of the issued and
outstanding shares of the Company’s Common Stock as of the Effective
Date.
(nnn) “VWAP” shall mean the
daily volume weighted average price (based on a Trading Day from 9:30 a.m. to
4:00 p.m. (New York time)) of the Company on the NASDAQ as reported by Bloomberg
Financial L.P. using the AQR function.
(ooo) “Warrant Value” shall
mean the fair value of all warrants, options and other similar rights issued to
a third party in connection with an Other Financing, determined by using a
standard Black-Scholes option-pricing model using an expected volatility
percentage as shall be mutually agreed by the Investor and the
Company. In the case of a dispute relating to such expected
volatility assumption, the Investor shall obtain applicable volatility data from
three investment banking firms of nationally recognized reputation, and the
parties hereto shall use the average thereof for purposes of determining the
expected volatility percentage in connection with the Black-Scholes calculation
referred to in the immediately preceding sentence.
