EXHIBIT 10.8
MIRACOR DIAGNOSTICS, INC.
UNIT PURCHASE AGREEMENT
THIS UNIT PURCHASE AGREEMENT (the "AGREEMENT") is made as of April 30, 2004
between MIRACOR DIAGNOSTICS, INC., a Utah corporation with its principal place
of business at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000 (the
"COMPANY"), and each of those persons, severally and not jointly, whose names
and addresses are set forth on the Counterpart Signature Page attached hereto
(which persons and entities are hereinafter collectively referred to as
"Purchasers" and each individually as a "PURCHASER"). The Company and the
Purchasers are referred to collectively herein as the "PARTIES."
IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and each Purchaser agree as follows:
1. AUTHORIZATION OF SALE OF THE UNITS AND ISSUANCE OF UNDERLYING SECURITIES.
Subject to the terms and conditions of this Agreement, the Company has
authorized the sale of minimum of Fifteen (15) Units (as hereinafter defined)
and a maximum of Twenty (20) Units. A "UNIT" is defined as a security comprising
135,135 shares of the Company's newly authorized 3% Series A Preferred Stock
(the "PREFERRED STOCK") and warrants (the "WARRANTS") to purchase 40,541 shares
of the Company's common stock, $0.15 par value per share ("COMMON STOCK").
References herein to the Units include references to the shares of Preferred
Stock and the Warrants included within each Unit. In connection with the
authorization of the sale of the Units, the Company has authorized the issuance
of (a) up to 2,702,702 shares of Preferred Stock, which will be designated from
the Company's previously authorized preferred shares, (b) up to 2,702,702 shares
of Common Stock issuable upon conversion of all of the shares of the Preferred
Stock, and (c) up to 810,811 shares of Common Stock issuable upon exercise of
all of the Warrants.
2. AGREEMENT TO SELL AND PURCHASE THE UNITS. At the Closing (as defined in
Section 3), the Company will issue and sell to each Purchaser, and each
Purchaser will purchase from the Company, upon the terms and conditions
hereinafter set forth, the number of Units set forth in the Purchaser's
Counterpart Signature Page hereto. The purchase price per Unit (the "UNIT
PRICE") is Fifty Thousand Dollars ($50,000). The Company reserves the right to
accept subscriptions for fractional Units.
3. ESCROW, CLOSING CONDITIONS AND THE CLOSING.
3.1 ESCROW. Until the Company has received Counterpart Signature Pages
representing the purchase of at least Fifteen (15) Units (the "MINIMUM
Offering"), prospective Purchasers shall complete and execute a Counterpart
Signature Page hereto, and deliver to the Escrow Agent (as defined in the
following sentence) the completed and executed Counterpart Signature Page,
together with immediately available funds in an amount (the "AGGREGATE FUNDING
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AMOUNT") equal to the number of Units purchased (inclusive of fractional Units,
if any) multiplied by the Unit Price. The "ESCROW AGENT" is U S Bank National
Association at 0000 Xxxxxxxxx Xxxx, XX, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000. The
Escrow Agent shall hold the Counterpart Signature Pages and deposit the
subscription proceeds into a non-interest bearing escrow account (the
Counterpart Signature pages and the amounts deposited into the escrow account
are referred to herein as, the "ESCROW") pursuant to the terms of an Escrow
Agreement (the "ESCROW AGREEMENT"), the form of which is attached hereto as
EXHIBIT A, it being understood and agreed that until the Closing, the documents
and funds in the Escrow shall remain the sole property of each of the Purchasers
pro rata in proportion to the actual amount funded by each Purchaser.
3.2 CLOSING CONDITIONS
(a) The Company's obligation to complete the purchase and sale of the Units and
deliver such stock certificate(s) and Warrants upon Closing shall be subject to
the following conditions, any one or more of which may be waived in writing by
the Company: (i) receipt by the Company from the Escrow Agent of immediately
available funds, by check or wire transfer, in the full amount of the purchase
price for the Units being purchased hereunder as specified for each Purchaser,
in an aggregate amount of not less than the Minimum Offering; and (ii) the
accuracy of the representations and warranties made by each Purchaser herein as
of the Closing date.
(b) The obligation of each Purchaser to accept delivery of such stock
certificates and Warrants and to release its respective purchase price for the
Units under the Escrow Agreement shall be subject to the following conditions:
(i) the satisfaction of all terms and conditions to the release of the Aggregate
Funding Amount under the Escrow Agreement; (ii) the accuracy of the
representations and warranties made by the Company herein as of the Closing;
(iii) the receipt of legal opinions from counsel for the Company, dated as of
the Closing date, in the form attached hereto as EXHIBIT B; and (iv) the receipt
at the Closing of a certificate, executed by the Company's Chief Executive
Officer, certifying that the Company has complied with the conditions set forth
in items (i) through (ii) above.
(c) The Purchasers' obligation to complete the purchase and sale of the Units
shall be rescinded and funds (without interest thereon) held in Escrow shall be
distributed to the respective Purchasers if the Closing has not occurred on or
before July 15, 2004.
3.3 CLOSING. Upon satisfaction of the conditions set forth in Sections 3.2(a)
and 3.2(b) above, the Aggregate Funding Amount shall be distributed from Escrow
against delivery of certificates representing the Shares and Warrants,
substantially in the form attached as Exhibit D to the Private Placement Term
Sheet with Exhibits (the "PRIVATE PLACEMENT MATERIALS") to which a form of this
Agreement is attached as Exhibit F, pursuant to the terms of the Escrow
Agreement and this Agreement (the "CLOSING").
3.4 PURCHASERS' APPROVALS. From the date of this Agreement until the earlier of
(a) the date the Shares are issued or (b) the date the Purchasers' Escrow
Deposit (as defined in the Escrow Agreement) is returned to the Purchasers, the
Company shall not, without the written consent of more than fifty percent (50%)
in interest (based on the purchase commitments set forth on the executed
counterpart signature pages hereto) of the Purchasers, take any actions that
would require approval of the holders of Preferred Stock in accordance with the
Certificate of Designation (the "CERTIFICATE OF DESIGNATION"), the form of which
is attached as Exhibit C to the Private Placement Materials, other than actions,
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including, but not limited to, the filing of the Certificate of Designation and
the issuance and sale of the Units hereunder, required to consummate the
transactions contemplated by this Agreement. Notwithstanding the foregoing in
this Section 3.4, none of the Purchasers shall have the ability to provide their
consent pursuant to this Section 3.4 to the extent that such consent would be
deemed to be in violation of the rules of the NASD.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company hereby
represents and warrants to, and covenants with, each Purchaser as of the date of
this Agreement as follows:
4.1 ORGANIZATION AND QUALIFICATION.
The Company is a corporation duly organized, validly existing and is authorized
to do business in the corporate form under the laws of the State of Utah and has
all requisite corporate power and authority to conduct its business as currently
conducted and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS AND THE WARRANTS.
The Company's execution, delivery and performance of each of this Agreement, the
Escrow Agreement and the Warrants (a) has been duly authorized by all requisite
corporate action by the Company, and (b) will not violate the Articles of
Incorporation or Bylaws of the Company, each as amended, or violate or result in
a breach of or constitute a default under any provision of any material
indenture, mortgage, agreement, contract or other material instrument to which
the Company or any subsidiary is a party or by which the Company or any
subsidiary or any of their respective properties or assets is bound. Upon
execution and delivery, and assuming the valid execution hereof by each of the
Purchasers, each of this Agreement, the Escrow Agreement and the Warrants will
constitute a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of the Company in Section 7.4
hereof may be legally unenforceable.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES AND WARRANTS.
(a) CAPITALIZATION. As of the date hereof, there were (i) 100,000,000 shares
of Common Stock authorized, (ii) 16,105,112 shares of Common Stock issued and
outstanding, (iii) 2,114,500 shares of Common Stock reserved for issuance upon
exercise of outstanding options to purchase Common Stock, (iv) 1,530,330 shares
of Common Stock reserved for issuance upon exercise of outstanding options to
purchase Common Stock, (v) 5,000,000 shares of Common Stock reserved for
issuance upon the conversion of the June 2003, $1,250,000 promissory note
convertible at any time prior to repayment thereof into Common Stock at a price
of $0.25 per share, and (vi) 10,000,000 shares of $.01 par value preferred stock
that are available for issuance (none of which, prior to the date hereof, have
been designated or reserved for such designation) in one or more classes or
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series with such designations, rights, preferences and restrictions as may be
determined from time to time by the Board of Directors and from which the Shares
are to be so designated upon the filing of the Certificate of Designations.
Except as supplemented in this Section 4.3(a), the authorized capital stock of
the Company conforms as to legal matters to the description thereof contained in
the Public Documents (as defined in Section 4.4 hereof).
(b) DUE AUTHORIZATION AND VALID ISSUANCE. (i) All issued and outstanding shares
of the Company's Common Stock have been duly authorized and validly issued, and
are fully paid and nonassessable. The Company will use its best efforts to
ensure that, at all times, a sufficient number of shares of its Common Stock are
reserved for issuance upon conversion of the Shares (the "CONVERSION SHARES")
and upon exercise of the Warrants (the "WARRANT SHARES"). When issued and
delivered to the respective Purchaser or the respective Purchaser's custodian
banks, as applicable, and paid for by the respective Purchaser in accordance
with the terms and conditions of this Agreement, the Shares to be sold pursuant
to such Units will be validly issued, fully paid and nonassessable and will be
delivered by the Company free and clear of all liens, pledges, claims,
encumbrances, security interests or other restrictions, except for restrictions
on transfer imposed to ensure compliance with the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and the restrictions specified in Section 5.5(a)
hereof. When issued and delivered upon conversion of the Shares in accordance
with the terms and conditions of the Certificate of Designation or upon exercise
of the Warrants, the Conversion Shares and Warrant Shares, respectively, shall
be validly issued, fully paid and nonassessable and will be delivered by the
Company free and clear of all liens, pledges, claims, encumbrances, security
interests or other restrictions, except for restrictions on transfer imposed to
ensure compliance with the Securities Act and the restrictions specified in
Section 5.5(a) hereof. Neither the issuance of the Shares, the Warrants, the
Conversion Shares or the Warrant Shares will be subject to any preemptive or
similar rights.
(ii) In addition to the Conversion Shares and the Warrant Shares, the
Company will use its best efforts to ensure that, at all times, a sufficient
number of shares of its Common Stock are reserved for issuance upon exercise of
the up to 351,352 warrants that, presuming all authorized Units are sold, are
issuable by the Company to 1st BridgeHouse Securities LLC, the Capital City
Partners Southeast Division (the "PLACEMENT AGENT"), a NASD registered
broker-dealer that acted as the placement agent in this private placement (the
"AGENT WARRANT SHARES"). When issued and delivered to the Placement Agent or the
Placement Agent's custodian bank, as applicable, and paid for by the Placement
Agent in accordance with the terms and conditions of the Placement Agent's
warrants, the shares to be sold pursuant to exercise of warrants will be validly
issued, fully paid and nonassessable and will be delivered by the Company free
and clear of all liens, pledges, claims, encumbrances, security interests or
other restrictions, except for restrictions on transfer imposed to ensure
compliance with the Securities Act and the restrictions specified in Section
5.5(a) hereof. Neither the execution of the placement agency agreement, nor the
issuance the warrants to the Placement Agent, nor the issuance of the Agent
Warrant Shares will be subject to any preemptive or similar rights.
4.4 PUBLIC INFORMATION. The documents filed by the Company with the Securities
and Exchange Commission (the "SEC") are collectively referred to herein as the
"PUBLIC DOCUMENTS". The Public Documents include, without limitation: (a) the
Company's Annual Report on Form 10-K for the year ended December 31, 2003; (b)
the company's Quarterly Report on Form 10-Q for the quarter ended March 31,
2004; (c) the Company's Proxy Statement for its 2004 annual meeting; and (d) the
company's Form 8-K filed with the SEC on March 19, 2004. All of the consolidated
financial statements of the Company (including in each case any related notes
thereto) contained in the Public Documents, including each Public Document filed
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after the date hereof until the Closing, (a) complies or, when filed, will
comply as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, (b) has been or, when filed, will
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto or, in the case of unaudited interim
financial statements, as may be permitted by the SEC under Form 10-Q, 8-K or any
successor form under the Exchange Act (as defined below)) and (c) fairly
presents, or when filed will fairly present, the consolidated financial position
of the Company and its subsidiaries as at the respective dates thereof and the
consolidated results of the Company's operations and cash flows for the periods
indicated, except that the unaudited interim financial statements may not
contain footnotes which are not required in unaudited financial statements, but
do contain all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the Company's consolidated financial
position, results of operations and cash flows. As of the time they were filed
with the SEC, or as subsequently amended or superseded by a filing prior to the
date of this Agreement and expressly referred to in this Section 4.4, none of
the Public Documents contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
4.5 ELIGIBILITY FOR FORM S-3 AND AUDITOR'S CONSENT. The Company represents and
warrants that it meets the requirements for the use of Form S-3 for registration
of the resale by the Purchasers of the Conversion Shares and Warrant Shares. The
Company shall file all reports required to be filed by the Company with the SEC
in a timely manner and take all other necessary action so as to maintain such
eligibility for the use of Form S-3. The Company has no basis to believe that
its past or present independent public auditors will withhold their consent to
the inclusion, or incorporation by reference, of their audit opinion concerning
the Company's financial statements which are included or incorporated by
reference in the Registration Statement required to be filed pursuant to this
Agreement.
4.6 NO MATERIAL CHANGE. There has been no material adverse change and no
material adverse development in the business, properties, operations, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole, since March 31, 2003, other than a material adverse change or material
adverse development which, and to the extent that it, has occurred directly as a
result of the announcement or pendency of this Agreement.
4.7 NON-CONTRAVENTION. The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, the Warrant
and the Escrow Agreement will not contravene the Articles of Incorporation or
Bylaws of the Company, each as amended, or any agreement or other instrument
binding upon the Company or any of its subsidiaries that was filed as an exhibit
to the Company's Annual Report on Form 10-K for the year ended December 31,
2003, as amended, or which was subsequently filed as an exhibit to a Form 10-Q
or Form 8-K, or any law, rule or regulation applicable to the Company or any of
its subsidiaries or by which the Company or any of its subsidiaries or any of
their respective properties is bound or affected or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except such
as may be required by the securities or blue sky laws of the various states in
connection with the offer and sale of the Shares and the Warrants and by federal
and states securities laws with respect to the Company's obligations under
Section 7 of this Agreement.
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4.8 LITIGATION. There are no legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or any of its
subsidiaries is party or to which any of the properties of the Company or any of
its subsidiaries is subject other than proceedings accurately described in all
material respects in the Public Documents and proceedings that would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole,
or on the power or ability of the Company to perform its obligations under this
Agreement or to consummate the transactions contemplated by this Agreement.
4.9 INTELLECTUAL PROPERTY. The Company and its subsidiaries own or possess, or
can acquire on reasonable terms, sufficient legal rights to all material
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 and
trade names currently employed by them in connection with the business now
operated by them, and neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a material adverse affect on the Company and its subsidiaries, taken as a
whole.
4.10 INVESTMENT COMPANY. The Company is not, and after giving effect to the
offer and sale of the Units and the application of the proceeds thereof will not
be, immediately following the transaction, required to register as an
"INVESTMENT COMPANY" as such term is defined in the Investment Company Act of
1940, as amended.
4.11 NO SOLICITATION. Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act) (an "AFFILIATE") of the Company
has, directly, or through any agent, (a) sold, offered for sale, solicited any
offers to buy or otherwise negotiated in respect of, any security (as defined in
the Securities Act) which is or will be integrated with the sales of the Units,
Shares or Warrants in a manner that would require the registration under the
Securities Act of the Units, Shares or Warrants; or (b) offered, solicited
offers to buy or sold the Units, Shares or Warrants in any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act; and the Company will not
engage in any of the actions described in subsections (a) and (b) of this
paragraph.
4.12 NO REGISTRATION. Subject to the accuracy of each of the Purchaser's
representations herein, it is not necessary in connection with the offer, sale
and delivery of the Units, Shares or Warrants to the several Purchasers in the
manner contemplated by this Agreement to register the Units, Shares or Warrants
under the Securities Act.
4.13 NO MANIPULATION. The Company has not taken and will not, in violation of
applicable law, take, any action designed to or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares and Warrants or
Conversion Shares and Warrant Shares, respectively.
4.14 CONFLICTING REGISTRATION RIGHTS. As of the date of this Agreement, other
than the Purchasers, no shareholder of the Company has any right (which has not
been waived) to require the Company to register the sale of any shares owned by
such shareholder under the Securities Act in the Registration Statement (as
defined in Section 7.1 hereto) to be filed by the Company on behalf of the
Purchasers pursuant to Section 7 hereto or in any other Company registration
statement as a result of the Company's filing of the Registration Statement
pursuant to Section 7 hereunder.
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4.15 RELATED PARTY TRANSACTIONS. The Company hereby covenants and agrees that
all related party transactions (including, but not limited to, transactions
between officers or affiliates of the Company) shall require approval of a
majority of the non-interested members of its Board of directors in such
transaction.
4.16 DISCLOSURE. The Company hereby covenants and agrees that on the date hereof
and on the date of the Closing it will require each of its officers and
directors to provide full disclosure for all investments that would impact their
performance as an officer or director of the Company (the "DISCLOSURE"). The
Company covenants and agrees that it will provide any such Disclosure to the
Purchasers hereto, if applicable.
4.17 USE OF PROCEEDS. The Company shall use the proceeds from the sale of the
Units as described in the Private Placement Materials.
4.18 CHANGE OF CONTROL PRIOR TO CLOSING DATE. If, after the date hereof but
prior to the earlier of the date of the Closing or July 15, 2004, a transaction
or series of transactions occur in which a person or group of persons (as
defined in Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT")) other than the Purchasers acquires beneficial ownership
(as determined in accordance with Rule 13d-3 of the Exchange Act) of more than
fifty percent (50%) of the Common Stock or voting power of the Company (a
"CHANGE OF CONTROL"), the Purchasers shall be entitled to receive promptly, in
cash, an amount equal to what the Purchasers would have been entitled to receive
under the liquidation provisions of the Certificate of Designation had they held
the Shares and the Warrants on the date the Change of Control occurred and had
exercised the Warrants on such date less the Aggregate Funding Amount and the
aggregate exercise price of the Warrants.
4.19 DILUTIVE EVENT. The issuance of the Units, the underlying Shares,
Conversion Shares, Warrants, Warrant Shares, the Placement Agents warrants and
the Agent Warrant Shares, neither individually nor in the aggregate, constitute
an anti-dilution event for any existing securityholders of the Company, pursuant
to which such shareholders would be entitled to additional securities or a
reduction in the applicable conversion price or exercise price of any securities
due to any issuance proposed to be conducted hereunder.
4.20 CORPORATE EXISTENCE. So long as a Purchaser beneficially owns any Shares or
Warrants, the Company shall maintain its corporate existence, and in the event
of a merger, consolidation or sale of all or substantially all of the Company's
assets, the Company shall ensure that the surviving or successor entity in such
transaction assumes the Company's obligations hereunder and under the
Certificate of Designation, the Warrants and the agreements and instruments
entered into in connection herewith regardless of whether or not the Company
would have had a sufficient number of shares of Common Stock authorized and
available for issuance in order to effect the conversion of all the Shares and
the exercise in full of all Warrants outstanding as of the date of such
transaction.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASERS. Each Purchaser,
severally but not jointly, hereby represents and warrants to, and covenants
with, the Company as of the date of this Agreement and as of the Closing date as
follows (such representations and warranties do not lessen or obviate the
representations and warranties of the Company as set forth in this Agreement):
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5.1 INVESTMENT REPRESENTATIONS. Purchaser represents and warrants to, and
covenants with, the Company that: (a) Purchaser, taking into account the
personnel and resources it can practically bring to bear on the purchase of the
Units contemplated hereby, is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
securities presenting an investment decision like that involved in the purchase
of the Units, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Units and the underlying Shares,
Conversion Shares, Warrants and Warrant Shares (collectively, the "Securities"),
including all of the Company's Public Documents (which were not delivered to
Purchaser but which are available to the Purchaser on the SEC's web site at
xxx.xxx.xxx); (b) Purchaser is acquiring the number of Units referred to in the
Purchaser's Counterpart Signature Page hereto for its own account for investment
only and with no present intention of distributing any of such Securities, or
any arrangement or understanding with any other persons regarding the
distribution of such Securities; (c) Purchaser has indicated on its Counterpart
Signature page the reason the Purchaser is an accredited investor, and the
information provided therein by Purchaser is true and correct to the best
knowledge of Purchaser as of the date hereof; and (d) Purchaser has, in
connection with its decision to purchase the number of Units set forth in its
Counterpart Signature Page hereto, relied solely upon the information delivered
to Purchaser as described in clause (a) above and the representations and
warranties of the Company contained herein.
5.2 REQUISITE POWER AND AUTHORITY. Purchaser further represents and warrants to,
and covenants with, the Company that (a) Purchaser has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and (b) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of Purchaser in Section 7.4 hereof may be legally
unenforceable.
5.3 RULE 144. Purchaser acknowledges and agrees that the Securities acquired by
Purchaser hereunder must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Purchaser has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act, which permits unregistered limited resales
of securities subject to the satisfaction of certain conditions, including,
among other things: the availability of certain current public information about
the Company, the resale occurring not less than one year after a party has
purchased and paid for the security to be sold, the sale being made through an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Exchange Act and the number of shares
being sold during any three-month period not exceeding specified limitations.
5.4 NO MANIPULATION. Purchaser has not taken and will not, in violation of
applicable law, take, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares and Warrants or
Conversion Shares and Warrant Shares, respectively.
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5.5 COVENANTS. Purchaser hereby covenants with the Company that:
(a) prior to the Closing contemplated herein such Purchaser shall not enter into
any Sale or Hedging Transaction (as defined below) with respect to any of the
Company's securities held by such Purchaser whether or not (i) owned by the
Purchaser prior the date hereof, (ii) purchased by the Purchaser in an open
market transaction after the date hereof, or (iii) acquired or to be acquired in
connection with the transactions contemplated by this Agreement (the "LOCK-UP
AGREEMENT");
(b) upon the earliest occurrence of either (i) the date the Escrow Agent becomes
obligated to return to the Purchasers the Aggregate Funding Amount or (ii) the
Closing, the foregoing Lock-Up Agreement shall be released solely with regard to
the following securities (the "RELEASED SHARES"):
(i) shares or rights to acquire shares of Common Stock owned by the
Purchasers prior to the date hereof; and
(ii) any shares or rights to acquire shares of Common Stock acquired by
the Purchasers on the open market after the date hereof;
(c) other than the Released Shares, each Purchaser's respective obligation to
hold the Securities acquired by such Purchaser under the terms of this Agreement
shall be released as follows: (i) twenty-five percent (25%) (calculated based on
the aggregate amount of Securities on a Common Stock equivalent basis issued to
the respective Purchaser as of the Closing date) of each Purchaser's respective
Securities shall be released from the foregoing restriction six (6) months from
the Closing date; (ii) twenty-five percent (25%) (calculated based on the
aggregate amount of Securities on a Common Stock equivalent basis issued to the
respective Purchaser as of the Closing date) of each Purchaser's respective
Securities shall be released from the foregoing restriction nine (9) months from
the Closing date; (iii) twenty-five percent (25%) (calculated based on the
aggregate amount of Securities on a Common Stock equivalent basis issued to the
respective Purchaser as of the Closing date) of each Purchaser's respective
Securities shall be released from the foregoing restriction twelve (12) months
from the Closing date; and (iv) twenty-five percent (25%) (calculated based on
the aggregate amount of Securities on a Common Stock equivalent basis issued to
the respective Purchaser as of the Closing date) of each Purchaser's respective
Securities shall be released from the foregoing restriction fifteen (15) months
from the Closing date. For purposes herein, a "SALE OR HEDGING TRANSACTION" with
respect to a security shall mean (A) any pledge (except a pledge relating to a
bona fide cash loan and not for collateralizing a Sale or Hedging Transaction),
sale, contract to sell, sale of any option or contract to purchase, purchase of
any option or contract to sell, grant of any option, right or warrant to
purchase, loan or other transfer or disposition of, directly or indirectly, any
such security, or any other actions designed to achieve similar effects, (B) any
swap or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of such security, or any other actions
designed to achieve similar effects, or (C) any transaction that would be deemed
the establishment of or increase in a put equivalent position (as defined in
Rule 16a-1(h) under the Exchange Act), whether any such transaction described in
9
clause (A), (B) or (C) above is settled by delivery of such security, in cash or
otherwise, or any other actions designed to achieve similar effects. Any Sale or
Hedging Transaction shall be deemed to have been made with respect to the
greater of (I) the notional amount of the security subject to such transaction
and (II) the maximum amount of the security (or the cash value thereof)
deliverable in respect of such transaction.
(d) Subject to the Lock-Up Agreement provided for in Section 5.5(a) above, (i)
prior to the effective date of the Registration Statement referenced in Section
7.1(a) below (the "EFFECTIVE DATE"), Purchaser shall not transfer any Securities
except in compliance with the Securities Act and the rules and regulations
promulgated thereunder, and any transferee of Securities prior to the Effective
Date shall agree in advance in a writing acceptable to the Company to be subject
to all of the provisions of this Agreement with respect to the Securities; and
(ii) commencing as of the Effective Date, Purchaser shall not make any sale of
the Securities under the Registration Statement without effectively causing the
prospectus delivery requirement under the Securities Act to be satisfied, and
Purchaser acknowledges and agrees that on and after the Effective Date, such
Securities are not transferable on the books of the Company unless the
certificate submitted to the transfer agent evidencing Securities is accompanied
by a separate Purchaser's certificate: executed by Purchaser or by an officer
of, or other authorized person designated by, Purchaser to the effect that (I)
if the Securities have been sold in accordance with the Registration Statement,
the requirement of delivering a current prospectus has been satisfied and (II) a
representation that Section 5.5(d)(ii) of this Agreement has been complied with.
(e) The restrictions contained in Section 5.5(a), (b) and (c) are limited to the
extent necessary to prevent such restrictions from causing the Purchasers to be
considered a "GROUP" for purposes of Section 13d of the Exchange Act.
(f) Notwithstanding anything to the contrary in Sections 5.5(a), (b) and (c)
above, each Purchaser's respective obligation to hold any of the Company's
securities shall be released if there has occurred, at or prior to Closing, a
material breach in the Company's obligations or representations hereunder which
renders the Company incapable of satisfying the conditions to Closing contained
in Section 3.2(b) prior to the latest possible Closing date under Section 3.2
hereof and such breach, if curable, is not cured within fifteen (15) days after
receipt by the Company of written notice from a majority in interest (based on
the purchase commitments set forth in the Counterpart Signature Pages then held
by the Escrow Agent) of the Purchasers specifying in reasonable detail the
nature of such breach.
5.6 LEGEND. Purchaser understands and agrees that all certificates evidencing
the Shares, Warrants, Conversion Shares and Warrant Shares to be issued to such
Purchaser will bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
5.7 LIMITATIONS ON USE OF PURCHASER REPRESENTATIONS. The Purchasers' several
representations and warranties made in Sections 5.1, 5.3 and 5.6 are made solely
for the purpose of permitting the Company to make a determination that the offer
and sale of the Units pursuant to this Agreement comply with applicable U.S.
federal and state securities laws and not for any other purpose. Accordingly,
the Company should not rely on such representations and warranties for any other
purpose.
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5.8 PURCHASERS NOT ACTING AS A GROUP. Purchaser acknowledges and agrees that it
is acting independently with respect to this Agreement and the transactions
contemplated hereunder and not as a "group" with respect thereto for purposes of
Section 13d of the Exchange Act and, accordingly, nothing herein is intended to
give any Purchaser any rights with respect to any other Purchaser or cause it to
be a third party beneficiary of any covenants or agreements made by any other
Purchaser.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Notwithstanding any
investigation made by any party to this Agreement, all covenants, agreements,
representations and warranties made by the Company and the Purchasers herein and
in the certificates delivered pursuant hereto shall survive the execution of
this Agreement, the delivery to the Purchasers of the Units and the underlying
Shares and Warrants being purchased and the payment therefor.
7. REGISTRATION OF THE COMMON STOCK; COMPLIANCE WITH THE SECURITIES ACT.
7.1 REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
(a) Prior to the later to occur of December 31, 2004 and the date six months
after the initial Closing hereof, (the "FILING DEADLINE DATE"), prepare and file
with the SEC a registration statement on Form S-3 (the "REGISTRATION STATEMENT")
in order to register with the SEC the resale of all the Conversion Shares,
Warrant Shares and Agent Warrant Shares (collectively, the "REGISTRABLE
SECURITIES") by the Purchasers from time to time through underwriters, agents or
otherwise, in negotiated or market transactions or through the automated
quotation system of Nasdaq or the facilities of any national securities exchange
on which the Company's Common Stock is then traded or in privately negotiated
transactions or pursuant to such other method or methods of distribution as any
of the Purchasers may require. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 7.1 with
respect to any particular Purchaser that such Purchaser shall furnish to the
Company such information regarding itself, the Registrable Securities to be sold
by such Purchaser, and the intended method of disposition of such securities as
shall be required to effect the registration of the Registrable Securities and
to determine that the Company's filing of such Registration Statement does not
cause the Company to be in violation of any of its existing obligations to
current shareholders;
(b) use reasonable efforts, subject to the receipt of necessary information from
such Purchasers, to cause the Registration Statement to become effective as soon
as commercially practicable following the filing thereof with the SEC, but in
any event by the date (the "EFFECTIVENESS DEADLINE DATE") that is one hundred
eighty (180) days after the Filing Deadline Date;
(c) prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith and take
such other actions as may be necessary to keep the Registration Statement
continually effective and available for use for a period of five (5) years from
the effective date of the Registration Statement (the "REGISTRATION PERIOD") or,
11
if earlier, until all of the Registrable Securities have been sold pursuant
thereto; and use reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction in which they have been
qualified for sale, in either case at the earliest possible moment, and provide
prompt notice to the Purchaser of the withdrawal of any such order;
(d) furnish to each Purchaser and to the Placement Agent with respect to the
Registrable Securities registered under the Registration Statement such number
of copies of prospectuses and preliminary prospectuses in conformity with the
requirements of the Securities Act, in order to facilitate the public sale or
other disposition of all or any of the Registrable Securities by such
Purchasers; PROVIDED, HOWEVER, that the obligation of the Company to deliver
copies of prospectuses or preliminary prospectuses to the respective Purchasers
shall be subject to the receipt by the Company of reasonable assurances from the
respective Purchasers that the respective Purchasers will comply with the
applicable provisions of the Securities Act and of such other securities or blue
sky laws as may be applicable in connection with any use of such prospectuses or
preliminary prospectuses;
(e) file documents required of the Company for normal blue sky clearance in
states specified in writing by each of the respective Purchasers; PROVIDED,
HOWEVER, that the Company shall not be required to qualify to do business or
consent to service of process in any jurisdiction in which it is not now so
qualified or has not so consented; and
(f) bear all expenses incurred by the Company in connection with the procedures
in paragraphs (a) through (e) of this Section 7.1 and the registration of the
Registrable Securities pursuant to the Registration Statement (including
reasonable legal fees and expenses of one counsel to the Purchasers), exclusive
of underwriting discounts and commissions, which shall be the responsibility of
the Purchasers.
7.2 LIQUIDATED DAMAGES AND OTHER MATTERS.
(a) If (i) the Registration Statement is not filed by the Company with the SEC
on or prior to the twentieth (20th) day following the Closing (the "FILING
DEADLINE DATE"), then the automatic conversion feature pursuant to which the
Preferred Stock converts to Common Stock on the second (2nd) anniversary of the
Closing shall be adjusted, without any action on the part of the Company or the
Purchasers, such that the automatic conversion will be delayed by one (1) year,
such that the Preferred Stock will convert to Common Stock on the third (3rd)
anniversary of the Closing. The parties hereto agree that the liquidated damages
provided for in this Section 7.2(a) constitute a reasonable estimate of the
damages that may be incurred by the Purchasers by reason of the failure of the
Registration Statement to be filed or declared effective in accordance with the
provisions hereof.
(b) The Company shall, upon (i) the issuance by the SEC of a stop order
suspending the effectiveness of the Registration Statement or the initiation of
proceedings with respect to the Registration Statement under Section 8(d) or
8(e) of the Securities Act, (ii) the occurrence of any event or the existence of
any fact as a result of which the Registration Statement shall contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
or the related prospectus shall contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
12
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or (iii) the occurrence or existence of any pending
corporate development that, in the reasonable discretion of the Company makes it
appropriate to suspend the availability of the Registration Statement and the
related prospectus, (A) in the case of clause (ii) above, subject to the next
sentence, as promptly as practicable prepare and file, if necessary, pursuant to
applicable law, a post-effective amendment to such Registration Statement or a
supplement to the related prospectus or any document incorporated therein by
reference or file any other required document that would be incorporated by
reference to such Registration Statement and prospectus so that such
Registration Statement does not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and such prospectus does not contain
any untrue statement of a material fact or omit to state any 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, as
thereafter delivered to the purchasers of the Shares being sold thereunder, and,
in the case of a post-effective amendment to the Registration Statement, subject
to the next sentence, use its reasonable efforts to cause it to be declared
effective as promptly as is practicable, and (B) give notice to the Purchasers
that the availability of the Registration Statement is suspended (a "DEFERRAL
NOTICE") and, upon receipt of any Deferral Notice, each Purchaser agrees not to
sell any Conversion Shares or Warrant Shares pursuant to the Registration
Statement until such Purchaser's receipt of copies of the supplemented or
amended prospectus provided for in clause (A) above, or until it is advised in
writing by the Company that the prospectus may be used, and has received copies
of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such prospectus. The Company will use all
reasonable efforts to ensure that the use of the prospectus may be resumed (I)
in case of clause (i) and (ii) above, as promptly as is practicable, and (II) in
the case of clause (iii) above, as soon as, in the sole judgment of the Company,
public disclosure of such material event would not be prejudicial to or contrary
to the interests of the Company or, if necessary to avoid unreasonable burden or
expense, as soon as practicable thereafter. The Company shall be entitled to
exercise its rights under this Section 7.2(b) to suspend availability of the
Registration Statement or any prospectus no more than two (2) times in any
twelve (12) month period, and any such period during which the availability of
the Registration Statement and any prospectus is suspended (a "DEFERRAL PERIOD")
shall not exceed thirty (30) days. The Company shall use all commercially
reasonable efforts to limit the duration and the number of any Deferral Periods.
Each Purchaser hereby agrees that upon receipt of any Deferral Notice from the
Company, such Purchaser shall, and shall cause each of its officers, directors,
employees, affiliates, advisors, agents and representatives to, keep
confidential all nonpublic information set forth in such notice including the
existence and terms of such Deferral Notice.
7.3 TRANSFER OF SHARES AFTER REGISTRATION. Each Purchaser agrees that it will
promptly notify the Company of any changes in the material information set forth
in the Registration Statement regarding such Purchaser or its plan of
distribution with respect to the Registrable Securities, as applicable.
7.4 INDEMNIFICATION.
(a) as used herein, the term "SELLING SHAREHOLDER" shall mean a Purchaser and,
if a Purchaser is an institution, such Purchaser's directors or trustees,
officers and employees and each person who controls Purchaser within the meaning
of the Securities Act, and it shall also refer to the Placement Agent, to the
extent reference thereto applies to the Placement Agent's sale of Agent Warrant
Shares;
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(b) as used herein, the term "REGISTRATION STATEMENT" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 7.1; and
(c) as used herein, the term "UNTRUE STATEMENT" shall include any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement 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.
(d) The Company agrees to indemnify and hold harmless each Selling Shareholder,
each underwriter through which sales are made pursuant to the Registration
Statement, and each person, if any, who controls an underwriter or Selling
Shareholder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively, the "INDEMNITEES") from and
against any losses, claims, damages or liabilities to which an Indemnitee may
become subject (under the Securities Act or otherwise) insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon, any untrue statement of a material fact
contained in the Registration Statement on the Effective Date thereof, or arise
out of any failure by the Company to fulfill any undertaking included in the
Registration Statement, and the Company will reimburse such Indemnitee for any
reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; PROVIDED,
HOWEVER, that the Company shall not be liable in any such case to the extent
that such loss, claim, damage or liability arises out of, or is based upon, an
untrue statement made in such Registration Statement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Indemnitee specifically for use in preparation of the Registration
Statement, or any statement or omission in any prospectus on and after, and to
the extent that, it is corrected in any subsequent prospectus that was delivered
to such Indemnitee prior to the pertinent sale or sales by such Selling
Shareholder.
(e) Except as otherwise prohibited under the Investment Act of 1940 and the
rules and regulations promulgated thereunder, each Purchaser, severally and not
jointly, agrees to indemnify and hold harmless the Company, each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act,
each officer of the Company who signs the Registration Statement, each director
of the Company, each underwriter through which sales are made pursuant to the
Registration Statement and each person, if any, who controls such underwriter
(collectively, the "COMPANY INDEMNITEES") and any other shareholder selling
securities under such Registration Statement or any of such other shareholder's
partners, directors or officers or any person who controls such shareholder (the
"SHAREHOLDER INDEMNITEES"), from and against any losses, claims, damages or
liabilities (joint or several), but in any event not in excess of the net
proceeds received by such Purchaser in the sale of Registrable Securities giving
rise to such claim, to which the Company Indemnitees or such Shareholder
Indemnitees may become subject (under the Securities Act, the Exchange Act or
other federal or state law), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon any untrue statement of a material fact contained in the Registration
Statement on the Effective Date if such untrue statement was made in reliance
14
upon and in conformity with written information furnished by or on behalf of
such Purchaser specifically for use in preparation of the Registration
Statement, and the Purchaser will reimburse the Company Indemnitees or other
Shareholder Indemnitees, for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim.
(f) Promptly after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 7.4, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof; PROVIDED, HOWEVER, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; PROVIDED, HOWEVER, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel for all indemnified parties.
(g) If the indemnification provided for in this Section 7.4 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the act or omission that resulted in such loss, claim, damage
or liability, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(h) The obligations of the Company, Purchaser and Placement Agent under this
Section 7.4 shall survive completion of any offering of Registrable Securities
in a Registration Statement and the termination of this Agreement. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
(i) To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under this
Section 7.4 to the fullest extent permitted by law; PROVIDED, HOWEVER, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
15
7.5 TERMINATION OF CONDITIONS AND OBLIGATIONS. Except as is provided in Section
5.5(a) hereof, the conditions precedent imposed by Section 5 or this Section 7
upon the transferability of the Securities shall cease and terminate as to any
particular Securities, when such Conversion Shares and/or Warrant Shares, as
applicable, shall have been effectively registered under the Securities Act and
sold or otherwise disposed of in accordance with the intended method of
disposition set forth in the Registration Statement covering such or at such
time as an opinion of counsel satisfactory to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
8. COMPANY COVENANTS.
8.1 FINANCIAL INFORMATION. The Company will maintain true books and records of
account in which full and correct entries will be made of all its business
transactions pursuant to a system of accounting established and administered in
accordance with generally accepted accounting principles consistently applied,
and will set aside on its books all such proper accruals and reserves as shall
be required under generally accepted accounting principles consistently applied.
8.2 INDEMNITY. The Company will indemnify each Purchaser and each of the
Purchasers' representatives on the Board of Directors of the Company (and their
respective officers, directors, partners, shareholders, heirs, assigns, etc.)
(collectively, the "PURCHASER INDEMNITEES") to the fullest extent permitted by
law if such Purchaser Indemnitee becomes a party to an actual or threatened
action, suit or proceeding by reason of the fact that such Purchaser Indemnitee
is or was a director, officer or shareholder of the Company, or by reason of any
action or inaction on the part of such Purchaser Indemnitee while acting in such
capacity. Such indemnification shall extend both to third party proceedings and
to proceedings brought by or in the name of the Company. Indemnification shall
not be available if the Purchaser Indemnitee did not act in good faith and in a
manner the Purchaser Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company and its shareholders.
9. BROKER'S FEE. Each of the parties hereto hereby represents that on the basis
of any actions and agreements by it, there are no brokers or finders entitled to
compensation in connection with the sale of Units to the Purchasers, except for
a fee paid by the Company to the Placement Agent in connection with this
transaction equal to the sum of: (a) $10,000 paid upon the initiation of the
transaction, (b) 8% of the gross proceeds received by the Company in connection
with the Closing, less the $10,000 paid pursuant to subsection (a), (c) the
issuance of warrants to purchase that number of shares of Common Stock equal to
ten percent (10%) of the number of shares of Preferred Stock issued to
Purchasers, exercisable at a price per share equal to (i) the Unit Price,
divided by (ii) the number of shares of Preferred Stock contained in a Unit, (d)
the issuance of warrants to purchase that number of shares of Common Stock equal
to ten percent (10%) of the number of shares of Common Stock that may be issued
to Purchasers upon the Purchasers' exercise of the Warrants, exercisable at a
price per share equal to one hundred and fifty percent (150%) of (i) the Unit
Price, divided by (ii) the number of shares of Preferred Stock contained in a
Unit, (e) the reimbursement of the Placement Agent's ordinary and necessary out
of pocket expenses, including fees and expenses of Placement Agent's legal
counsel, subject to the Company's reasonable approval, and (f) monthly advisory
services fees equal to $5,000 per month, commencing 30 days after Closing and
continuing monthly thereafter for eleven (11) months.
16
10. NOTICES. All notices, requests, consents and other communications hereunder
shall be in writing, shall be sent by facsimile or mailed by first class
registered or certified airmail, or nationally recognized overnight express
courier postage prepaid, and shall be deemed given when so sent by facsimile or
mailed and shall be delivered (A) if to the Company, to its address as set forth
in the Public Documents, or (b) if to the Purchaser, to the Purchaser's address
set forth on its Counterpart Signature Page hereto, or at such other address or
addresses as may have been furnished to the Company in writing.
11. AMENDMENT AND WAIVER. This Agreement may be amended or modified only with
the written consent of the Company and the unanimous consent of the Purchasers.
12. HEADINGS. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
13. SEVERABILITY. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby, provided that no parties' rights hereunder are
materially adversely affected thereby.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA AS APPLIED TO CONTRACTS ENTERED
INTO AND PERFORMED ENTIRELY IN FLORIDA BY FLORIDA RESIDENTS.
15. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument.
16. REMEDIES. In addition to being entitled to exercise all rights and remedies
provided herein or granted by law for any breach by the Company hereunder, each
Purchaser shall be entitled to specific performance of its respective rights
under this Agreement. In that regard, the Company acknowledges and agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate.
17. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto.
18. FURTHER ACTIONS. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in transactions of this nature in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
[SIGNATURE PAGES FOLLOW]
17
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer as of April 30, 2004.
MIRACOR DIAGNOSTICS, INC.
By: ___________________________
Name: _________________________
Title: __________________________
PURCHASERS
SEE COUNTERPART SIGNATURE PAGES THAT FOLLOW THIS PAGE
18
COUNTERPART SIGNATURE PAGE TO UNIT PURCHASE AGREEMENT
WHEREAS, the undersigned has on the date specified on page 21 agreed, subject to
the terms and conditions of the Agreement (as such term is defined in the
following paragraph), to purchase the number of Units specified on page 21 of
MIRACOR DIAGNOSTICS, INC., a Utah corporation (the "COMPANY"); and
WHEREAS, the undersigned has read and fully understands (and/or the undersigned
has engaged such experts as the undersigned deems necessary or desirable to
assist the undersigned in reading and understanding) the undersigned's rights,
liabilities and obligations set forth in the Unit Purchase Agreement to which
this Counterpart Signature Page is attached (the "Agreement"); and
WHEREAS, the undersigned has read and fully understands the information and
materials set forth in the Company's Private Placement Term Sheet with Exhibits,
dated April 30, 2004 (the "Private Placement Materials"); and
WHEREAS, the undersigned is an accredited investor within the meaning of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), because the undersigned is (check one):
o A natural person whose individual net worth, or joint net
worth with spouse, exceeds $1 million at the time of purchase
(in this instance, the term "net worth" means the excess of
assets at fair market value, including home and personal
property, above total liabilities, including mortgages and
income taxes on unrealized appreciation of assets).
o A natural person who has individual income of more than
$200,000 in each of the two most recent years (2003 and 2002),
or joint income with that person's spouse of more than
$300,000 in each of those years, and reasonably expects to
reach the same income level in the current year (2004).
o An XXX or revocable grantor trust whose grantor is a person
that is:
i) A natural person whose individual net worth, or joint
net worth with spouse, exceeds $1 million at the time
of purchase. (In this instance, the term "net worth"
means the excess of assets at fair market value,
including home and personal property, above total
liabilities, including mortgages and income taxes on
unrealized appreciation of assets.)
ii) A natural person who has individual income of more
than $200,000 in each of the two most recent years
(2003 and 2002), or joint income with that person's
spouse of more than $300,000, and reasonably expects
to reach the same income level in the current year
(2004).
(IF YOU ARE THE GRANTOR OF A REVOCABLE GRANTOR TRUST, YOU MUST
INCLUDE A COPY OF YOUR TRUST AGREEMENT.)
19
o A trust (other than an XXX or a revocable grantor trust)
having total assets of more than $5 million, not formed for
the specific purpose of acquiring the Shares offered hereby,
whose purchase is directed by a person who has such knowledge
and experience in financial and business matters that he is
capable of evaluating the merits and risks of an investment in
the Shares. (YOU MUST INCLUDE A COPY OF YOUR TRUST AGREEMENT.)
o A bank (as defined in Section 3(a)(2) of the Securities Act),
a savings and loan association, or other institution (as
defined in Section 3(a)(5)(A) of the Securities Act), acting
in an individual or fiduciary capacity, including as a credit
union or other institution whose account is insured by the
National Credit Union Administration.
o A broker and/or dealer registered under Section 15 of the
Securities Exchange Act of 1934, as amended.
o A business development company (as defined in Section 2(a)(48)
of the Investment Company Act of 1940).
o A private business development company (as defined in Section
202(a)(22) of the Investment Advisers Act of 1940).
o A corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring
the Shares offered hereby, with total assets of more than $5
million. (YOU MUST INCLUDE A COPY OF YOUR ARTICLES OF
INCORPORATION OR CERTIFICATE OF FORMATION FILED WITH THE STATE
IN WHICH YOU ARE ORGANIZED OR INCORPORATED, AND/OR A
FICTITIOUS NAME AFFIDAVIT, AS MAY BE PERTINENT TO YOUR TYPE OF
ENTITY.)
o An insurance company (as defined in Section 2(13) of the
Securities Act).
o An investment company registered under the Investment Company
Act of 1940.
o A tax-exempt organization described in Section 501(c) of the
Code with total assets of more than $5 million.
o A Small Business Investment Company (licensed by the United
States Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Company Act of 1958).
THEREFORE, by executing this counterpart signature page, the undersigned agrees
to and accepts the Agreement and hereby authorizes this additional signature
page to be attached to the Agreement.
[DETAILS AND SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the undersigned has executed this counterpart signature page
to the Unit Purchase Agreement as of the day and year set forth below.
Date.................................... _________________________________
Number of Units Purchased............... _________________________________
Name of Purchaser....................... _________________________________
Name of Signatory....................... _________________________________
Capacity of Signatory (Purchaser,
President, Trustee, Member, etc.)....... _________________________________
Signature............................... _________________________________
Purchaser's Taxpayer Identification
Number.................................. _________________________________
Purchaser's Principal Street Address.... _________________________________
Purchaser's City, State and Zip Code.... _________________________________
Purchaser's Telephone Number............ _________________________________
Purchaser's Fax Number.................. _________________________________
Purchaser's E-Mail Address.............. _________________________________
NOTE: EACH PURCHASER MUST CHECK THE APPROPRIATE BOX ON PAGE 20 OR 21 INDICATING
THE REASON THE PURCHASER IS AN ACCREDITED INVESTOR.
NEITHER THE UNITS NOR THE SECURITIES CONTAINED THEREIN HAVE BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE UNITS AND SUCH SECURITIES ARE
BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, PURSUANT TO SECTION 4(2) THEREOF AND
REGULATION D, RULE 506 PROMULGATED THEREUNDER, AND SUCH OTHER STATE SECURITIES
LAWS. NEITHER THE UNITS NOR SUCH SECURITIES HAVE BEEN APPROVED OR DISAPPROVED BY
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER STATE
SECURITIES COMMISSION. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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