Exhibit 10.46
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COMMON STOCK PURCHASE AGREEMENT
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THIS COMMON STOCK PURCHASE AGREEMENT ("Agreement") is made as of the 31
day of January, 2008 by and among INTRAOP MEDICAL CORPORATION, a Nevada
corporation (the "Company"), and the other Persons set forth on the Schedule of
Purchasers attached hereto (each an "Investor" and collectively the
"Investors").
Recitals
A. The Company and the Investors are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated by
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act");
B. The Investors wish to purchase from the Company, and the
Company wishes to sell and issue to the Investors, at the First Closing (as
defined below) and upon the terms and subject to the conditions set forth in
this Agreement, an aggregate of 33,832,463 shares (the "Initial Shares") of the
Company's common stock, par value $0.001 per share (the "Common Stock") for an
aggregate purchase price of $2,368,272.70 (the "Initial Purchase Price");
C. The Investors wish to purchase from the Company, and the
Company wishes to sell and issue to the Investors, at the Second Closing (as
defined below) and upon the terms and subject to the conditions set forth in
this Agreement, an aggregate of up to 9,167,537 shares (the "Additional Shares"
and together with the Initial Shares, the "Shares") of the Company's common
stock, par value $0.001 per share (the "Common Stock") for an aggregate purchase
price of up to $641,727.59 (the "Additional Purchase Price");
D. This Agreement shall be binding upon the Company and the
Investors only upon delivery of the signatures pages hereto by the Company and
the Investors.
Agreement
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. In addition to those terms defined above and elsewhere
in this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Affiliate" means, with respect to any Person, any other
Person which directly or indirectly through one or more intermediaries controls,
is controlled by, or is under common control with, such Person.
"Business Day" means a day, other than a Saturday or Sunday,
on which banks in New York City are open for the general transaction of
business.
"Confidential Information" means trade secrets, confidential
information and know-how (including but not limited to ideas, formulae,
compositions, processes, procedures and techniques, research and development
information, performance specifications, support documentation, drawings,
specifications, designs, business and marketing plans, and supplier lists and
related information).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" means all of the following: (i)
patents, patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; and (iv) registrations, applications
and renewals for any of the foregoing.
"Knowledge" means the actual knowledge of the officers and
directors of the Company, provided that such persons shall have made due and
diligent inquiry of all relevant employees of the Company whom such executive
officers and directors should reasonably believe would have actual knowledge of
the matters represented.
"Material Adverse Effect" means any of (i) a material and
adverse effect on the legality, validity or enforceability of this Agreement,
(ii) a material and adverse effect on the results of operations, assets,
prospects, business or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) an adverse impairment to the Company's
ability to perform on a timely basis its obligations under this Agreement.
"Nasdaq" means The Nasdaq Stock Market, Inc.
"Permitted Liens" means (i) mechanics', carriers', or
workmen's, repairmen's or similar liens arising or incurred in the ordinary
course of business, (ii) liens for taxes, assessments and other governmental
charges that are not due and payable or which may hereafter be paid without
penalty or which are being contested in good faith by appropriate proceedings,
and (iii) other imperfections of title or encumbrances, if any, that do not,
individually or in the aggregate, materially impair the use or value of the
property to which they relate.
"Person" means an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not specifically listed
herein.
"SEC Filings" shall mean (a) the Company's Annual Report on
Form 10-KSB filed with the SEC on December 14, 2007, including all exhibits
thereto and documents incorporated by reference therein, and (b) the Company's
Current Reports on Form 8-K filed with the SEC on October 30, 2007, November 26,
2007 and November 29, 2007, including all exhibits thereto and documents
incorporated by reference therein.
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2. Purchase and Sale of the Shares.
2.1 Initial Shares. Upon the terms and subject to the
conditions set forth in this Agreement, at the First Closing, each of the
Investors shall, severally and not jointly, purchase, and the Company shall sell
and issue to the Investors, the Initial Shares in the respective amounts and at
the respective purchase prices set forth on the Schedule of Purchasers attached
hereto (the "Schedule of Purchasers").
2.2 Additional Shares. Upon the terms and subject to the
conditions set forth in this Agreement, at the Second Closing, each of the
Investors shall, severally and not jointly, purchase, and the Company shall sell
and issue to the Investors, the Additional Shares in the respective amounts and
at the respective purchase prices that will be set forth on the Schedule of
Purchasers at the Second Closing by the Company.
3. Closings.
3.1 First Closing. The purchase and sale of the Initial Shares
pursuant to Section 2.1 (the "First Closing") shall take place at the offices of
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇") on the date hereof, or at such other location and on such
other date as the Company and the Investors shall mutually agree (such date is
hereinafter referred to as the "First Closing Date").
3.2 Second Closing. The purchase and sale of the Additional
Shares pursuant to Section 2.2 (the "Second Closing" and together with the First
Closing, the "Closings") shall take place at the offices of ▇▇▇▇▇▇ at any time
on or before February 13, 2008, or at such other location and on such other date
as the Company and the Investors shall mutually agree (such date is hereinafter
referred to as the "Second Closing Date").
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that, except as set forth in the
schedules delivered herewith (collectively, the "Disclosure Schedules"):
4.1 Organization, Good Standing and Qualification.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
has all requisite corporate power and authority to carry on its business as now
conducted and to own its properties. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
makes such qualification necessary, except where the failure to so qualify,
individually or in the aggregate, would not have a Material Adverse Effect. To
the Company's Knowledge, no proceeding has been instituted in any jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail, such
power and authority or qualification.
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(b) Each subsidiary of the Company (each a
"Subsidiary" and collectively the "Subsidiaries") is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to carry on its business as now conducted and to own its properties.
Each Subsidiary is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property makes such qualification necessary, except
where the failure to so qualify, individually or in the aggregate, would not
have a Material Adverse Effect. To the Company's Knowledge, no proceeding has
been instituted in any jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail, such power and authority or qualification.
4.2 Authorization. The Company has full corporate power and
authority and has taken all requisite action on the part of the Company, its
officers, directors and stockholders necessary for (i) the authorization,
execution and delivery of this Agreement, (ii) the authorization of the
performance of all obligations of the Company hereunder and (iii) the
authorization, issuance, sale and delivery of the Shares. This Agreement
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights generally.
4.3 Capitalization.
(a) Schedule 4.3 sets forth as of the date hereof (a)
the authorized capital stock of the Company; (b) the number of shares of capital
stock issued and outstanding; (c) the number of shares of capital stock
available for issuance pursuant to the Company's stock plans; and (d) the number
of shares of capital stock issuable upon the exercise of warrants. All of the
issued and outstanding shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. Except as provided in the Rights Agreement dated as of August
17, 2007 by and between the Company and the investors named therein, no Person
is entitled to preemptive or similar statutory or contractual rights with
respect to any securities of the Company. Except as contemplated under this
Agreement, there are no contracts, commitments, understandings or arrangements
by which the Company is bound to issue additional shares of capital stock of the
Company or options, securities or rights convertible into shares of capital
stock of the Company. Except as provided in the Rights Agreement dated as of
August 17, 2007 by and between the Company and the investors named therein, no
Person has the right to require the Company to register any securities of the
Company under the Securities Act, whether on a demand basis or in connection
with the registration of securities of the Company for its own account or for
the account of any other Person. The issue and sale of the Shares will not
result in the right of any holder of Company securities to adjust the exercise,
conversion or exchange price under such securities.
(b) The Company owns all of the outstanding capital
stock of each Subsidiary free from liens, encumbrances and defects. All of the
issued and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive rights. No
Person is entitled to preemptive or similar statutory or contractual rights with
respect to any securities of any Subsidiary. There are no outstanding warrants,
options, convertible securities or other rights, agreements or arrangements
under which (i) any Subsidiary is obligated to issue additional shares of its
capital stock or options, securities or rights convertible into shares of
capital stock of such Subsidiary or (ii) the Company is obligated to sell or
otherwise dispose of shares of any Subsidiary's capital stock held by it.
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4.4 Valid Issuance. The Shares have been duly and validly
authorized. The Shares, when issued and paid for pursuant to this Agreement will
be validly issued, fully paid and nonassessable, and will be free of
encumbrances and restrictions (other than those created by the Investors),
except for restrictions on transfer set forth in this Agreement or imposed by
applicable securities laws.
4.5 Consents. The execution, delivery and performance by the
Company of this Agreement and the offer, issuance and sale of the Shares
requires no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official other than filings that have been made
pursuant to applicable state securities laws and post-sale filings pursuant to
applicable state and federal securities laws which the Company undertakes to
file within the applicable time periods.
4.6 Delivery of SEC Filings. The Company has made available to
the Investors, through the ▇▇▇▇▇ system, true and complete copies of the SEC
Filings.
4.7 Use of Proceeds. The net proceeds of the sale of the
Shares hereunder shall be used by the Company for general working capital
purposes.
4.8 No Material Adverse Change. Since September 30, 2007, and
except as disclosed in the
SEC Filings, there has not been:
(a) any change in the consolidated assets,
liabilities, financial condition or operating results of the Company or any
Subsidiary from that reflected in the financial statements included in the
Company's Annual Report on Form 10-KSB for the year ended September 30, 2007,
except for changes in the ordinary course of business which would not have,
individually or in the aggregate, a Material Adverse Effect;
(b) any declaration or payment of any dividend, or
any authorization or payment of any distribution, on any of the capital stock of
the Company or any Subsidiary, or any redemption or repurchase of any securities
of the Company or any Subsidiary (other than in connection with a termination of
employment);
(c) any material damage, destruction or loss to any
assets or properties of the Company or any Subsidiary;
(d) any waiver, not in the ordinary course of
business, by the Company or any Subsidiary of a material right or of a material
debt owed to it;
(e) any change or amendment to the Articles of
Incorporation or similar organizational documents, as applicable, or Bylaws of
the Company or any Subsidiary, or change to any material contract or arrangement
by which the Company or any Subsidiary is bound or to which its assets or
properties is subject;
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(f) any material labor difficulties or labor union
organizing activities with respect to employees of the Company or any
Subsidiary;
(g) any transaction entered into by the Company or
any Subsidiary other than in the ordinary course of business;
(h) the loss of the services of any key employee, or
material change in the composition or duties of the senior management of the
Company or any Subsidiary; or
(i) any other event or condition of any character
that has had or would reasonably be expected to have a Material Adverse Effect.
4.9 SEC Filings. At the time of filing thereof, the SEC
Filings complied as to form in all material respects with the requirements of
the Exchange Act and did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
4.10 No Conflict, Breach, Violation or Default. Neither the
execution, delivery and performance by the Company of this Agreement nor the
consummation of any of the transactions contemplated hereby (including, without
limitation, the issuance and sale of the Shares in conformance with this
Agreement) will conflict with or result in violation of any of the terms and
provisions of the Articles of Incorporation or similar organizational documents,
as applicable, or Bylaws of the Company or any Subsidiary, both as in effect on
the date hereof or will give rise to the right to terminate or accelerate the
due date of any payment under or conflict with or result in a breach of any term
or provision of, or constitute a default (or any event which with notice or
lapse of time or both would constitute a default) under, or require any consent
or waiver under or result in the execution or imposition of any lien, charge or
encumbrance upon the properties or assets of the Company or any Subsidiary
pursuant to the terms of any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary is bound or to which any of its assets or
properties is subject or any license, permit, statute, rule, regulation,
judgment, decree or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any Subsidiary or
any of its assets or properties, other than a conflict, breach or default that
would not have a Material Adverse Effect.
4.11 Tax Matters. Each of the Company and each Subsidiary has
timely prepared and filed all tax returns required to have been filed by it with
all appropriate governmental agencies and timely paid all taxes shown thereon or
otherwise owed by it, except as would not have a Material Adverse Effect. The
charges, accruals and reserves on the books of the Company and each Subsidiary
in respect of taxes for all fiscal periods are adequate in all material
respects, and there are no material unpaid assessments against the Company or
any Subsidiary. All taxes and other assessments and levies that the Company or
any Subsidiary are required to withhold or to collect for payment have been duly
withheld and collected and paid to the proper governmental entity or third party
when due. There are no tax liens or claims pending or, to the Company's
Knowledge, threatened against the Company or any Subsidiary or any of their
respective assets or property, other than Permitted Liens. There are no tax
audits or investigations pending, which if adversely determined would result in
a Material Adverse Effect. There are no outstanding tax sharing agreements or
other such arrangements between the Company or any Subsidiary and any other
Person. Neither the Company nor any Subsidiary has any deferred compensation
arrangements or has paid (or is required to pay) any deferred compensation which
would be subject to Section 409A of the Internal Revenue Code.
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4.12 Title to Properties. Except as disclosed in the SEC
Filings, each of the Company and each Subsidiary has good and marketable title
to all properties and assets owned by it, in each case free from liens,
encumbrances and defects, other than Permitted Liens. The Company and each
Subsidiary hold any leased real or personal property under valid and enforceable
leases. Neither the Company nor any Subsidiary owns any real property.
4.13 Certificates, Authorities and Permits. Each of the
Company and each Subsidiary possesses adequate certificates, approvals,
authorities or permits ("Permits") issued by governmental agencies or bodies
necessary to own, lease and license its assets and properties and conduct the
business now operated by it, all of which are valid and in full force and
effect, except where the lack of such Permits, individually or in the aggregate,
would not have a Material Adverse Effect. Each of the Company and each
Subsidiary has performed in all material respects all of its material
obligations with respect to such Permits and no event has occurred that allows,
or after notice or lapse of time, would allow, revocation or termination
thereof. Neither the Company nor any Subsidiary has received any written notice
of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or
such Subsidiary, would, individually or in the aggregate, have a Material
Adverse Effect.
4.14 Labor Matters.
(a) Neither the Company nor any Subsidiary is a party
to or bound by any collective bargaining agreement. Neither the Company nor any
Subsidiary has violated in any material respect any laws, regulations, orders or
contract terms, affecting the collective bargaining rights of employees, labor
organizations or any laws, regulations or orders affecting employment
discrimination, equal opportunity employment or employees' health, safety,
welfare, wages and hours.
(b) (i) There are no labor disputes existing, or to
the Company's Knowledge, threatened, involving strikes, slow-downs, work
stoppages, job actions, disputes, lockouts or any other disruptions of or by the
employees of the Company or any Subsidiary, (ii) there are no unfair labor
practices or petitions for election pending or, to the Company's Knowledge,
threatened before the National Labor Relations Board or any other federal, state
or local labor commission relating to the employees of the Company or any
Subsidiary, (iii) no demand for recognition or certification heretofore made by
any labor organization or group of employees is pending with respect to the
Company or any Subsidiary and (iv) to the Company's Knowledge, each of the
Company and each Subsidiary enjoys good labor and employee relations with its
employees.
(c) Each of the Company and each Subsidiary is in
compliance in all material respects with applicable laws respecting employment
(including laws relating to classification of employees and independent
contractors) and employment practices, terms and conditions of employment, wages
and hours, and immigration and naturalization. No claims are pending against the
Company or any Subsidiary before the Equal Employment Opportunity Commission or
any other administrative body or in any court asserting any violation of Title
VII of the Civil Rights Act of 1964, the Age Discrimination Act of 1967, 42
U.S.C. ▇▇.▇▇. 1981 or 1983 or any other federal, state or local law, statute or
ordinance barring discrimination in employment.
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(d) Except as disclosed in the SEC Filings, neither
the Company nor any Subsidiary is a party to, or bound by, any employment or
other contract or agreement that contains any severance, termination pay or
change of control liability or obligation, including, without limitation, any
"excess parachute payment," as defined in Section 280G(b) of the Internal
Revenue Code of 1986, as amended.
4.15 Intellectual Property. Except as disclosed in the SEC
Filings:
(a) All Intellectual Property of the Company is valid
and enforceable. No Intellectual Property owned or licensed by the Company or
any Subsidiary that is necessary for the conduct of the business of the Company
and the Subsidiaries as currently conducted or as proposed to be conducted as
described in the SEC Filings is involved in any cancellation, dispute or
litigation, and, to the Company's Knowledge, no such action is threatened. No
issued patent owned by the Company or any Subsidiary is involved in any
interference, reissue, re-examination or opposition proceeding.
(b) All of the in-bound licenses and sublicenses and
consent, royalty or other agreements concerning Intellectual Property that are
necessary for the conduct of the business of the Company and the Subsidiaries as
currently conducted and as proposed to be conducted as described in the SEC
Filings to which the Company or any Subsidiary is a party (other than generally
commercially available, non-custom, off-the-shelf software application programs
having a retail acquisition price of less than $50,000 per license)
(collectively, "In-Bound License Agreements") are valid and binding obligations
on the Company or such Subsidiary, as applicable, and, to the Company's
Knowledge, the other parties thereto, enforceable in accordance with their
terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally, and
neither the Company nor any Subsidiary is in material breach of any of its
obligations under any such In-Bound License Agreements.
(c) Each of the Company and each Subsidiary owns or
has the valid right to use all of the Intellectual Property that is necessary
for the conduct of its business as currently conducted and as proposed to be
conducted as described in the SEC Filings and for the ownership, maintenance and
operation of the Company's properties and assets, free and clear of all liens,
encumbrances, adverse claims (in each case, other than Permitted Liens) or, with
respect to Intellectual Property owned by the Company or any Subsidiary,
obligations to license such Intellectual Property, other than licenses of the
Intellectual Property owned by the Company or such Subsidiary that are entered
into in the ordinary course of its business. To the Company's Knowledge, each of
the Company and each Subsidiary has a valid and enforceable right to use all
third party Intellectual Property and Confidential Information used or held for
use in its business.
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(d) The conduct of the business of the Company and
the Subsidiaries as currently conducted or as proposed to be conducted as
described in the SEC Filings, the use or exploitation of any Intellectual
Property owned by the Company or any Subsidiary, or to the Company's Knowledge,
the use or exploitation of any Intellectual Property licensed by the Company or
any Subsidiary does not infringe, misappropriate or otherwise materially impair
or conflict with (collectively, "Infringe") any Intellectual Property rights of
any third party and the Intellectual Property owned by the Company or any
Subsidiary which is necessary for the conduct of the business of the Company and
the Subsidiaries as currently conducted or as proposed to be conducted as set
forth in the SEC Filings is not being Infringed by any third party. There is no
litigation, court order, claim or assertion pending or outstanding or, to the
Company's Knowledge, threatened, that seeks to limit or challenge the ownership,
use, validity or enforceability of any Intellectual Property owned or licensed
by the Company or any Subsidiary or their respective use of any Intellectual
Property owned by a third party.
(e) The consummation of the transactions contemplated
hereby will not result in the (i) loss, material impairment of or material
restriction on any of the Intellectual Property or Confidential Information
owned by the Company or any Subsidiary which is necessary for the conduct of its
business as currently conducted or as proposed to be conducted as set forth in
the SEC Filings or (ii) material breach of any In-Bound License Agreement.
(f) Each of the Company and each Subsidiary has taken
reasonable steps to protect its respective rights in its Intellectual Property
and Confidential Information. Each employee and consultant who has access to the
Confidential Information of the Company or any Subsidiary necessary for the
conduct of its business as currently conducted has executed an agreement to
maintain the confidentiality of such Confidential Information. To the Company's
Knowledge, and except pursuant to non-disclosure agreements entered into between
the Company or a Subsidiary and third parties in the ordinary course of
business, there has been no disclosure of the Intellectual Property or
Confidential Information of the Company or any Subsidiary to any third party. To
the Company's Knowledge, there have been no misappropriations or infringements
by any Person of any Intellectual Property used in the conduct or operation of
the business of the Company or any Subsidiary.
4.16 Environmental Matters. Neither the Company nor any
Subsidiary is in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court, domestic or foreign, relating
to the use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to hazardous
or toxic substances (collectively, "Environmental Laws"). Neither the Company
nor any Subsidiary owns or operates any real property contaminated with any
substance that is subject to any Environmental Laws, is liable for any off-site
disposal or contamination pursuant to any Environmental Laws, or is subject to
any claim relating to any Environmental Laws, which violation, contamination,
liability or claim would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. There is no pending or, to the Company's
Knowledge, threatened investigation that might lead to such a claim.
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4.17 Litigation. Except as disclosed in the SEC Filings, there
are no pending or, to the Company's Knowledge, threatened actions, suits,
proceedings, inquiries or investigations against or affecting the Company or any
Subsidiary or any of their properties or any of the Company's or any
Subsidiary's officers and directors in their capacities as such.
4.18 Financial Statements. The financial statements included
in each of the SEC Filings present fairly, in all material respects, the
financial position of the Company as of the dates shown and its results of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis ("GAAP") (except as may be
disclosed therein or in the notes thereto, and, in the case of quarterly
financial statements, as permitted by Form 10-QSB under the Exchange Act).
Except as set forth in the financial statements of the Company included in the
SEC Filings filed prior to the date hereof, the Company has not incurred any
liabilities, contingent or otherwise, except those incurred in the ordinary
course of business, consistent with past practices since the date of such
financial statements, none of which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
4.19 Insurance Coverage. Each of the Company and each
Subsidiary maintains in full force and effect insurance coverage that is
customary for comparably situated companies for the business being conducted and
properties owned or leased by the Company and the Subsidiaries.
4.20 Compliance with OTC Bulletin Board Continued Eligibility
Require-ments. The Company is in compliance with applicable OTC Bulletin Board
continued eligibility requirements. The Company has not received any written
notice with respect to the ineligibility of the Common Stock from trading on the
OTC Bulletin Board.
4.21 Brokers and Finders. No Person will have, as a result of
the transactions contemplated by this Agreement, any valid right, interest or
claim for any commission, fee or other compensation pursuant to any agreement,
arrangement or understanding entered into by or on behalf of the Company.
4.22 No Directed Selling Efforts or General Solicitation.
Neither the Company nor any Person acting on its behalf has conducted any
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) in connection with the offer or sale of
the Shares.
4.23 No Integrated Offering. Neither the Company nor any
Person acting on its behalf has, directly or indirectly, made any offers or
sales of any Company security or solicited any offers to buy any security, under
circumstances that would adversely affect reliance by the Company on Section
4(2) of the Securities Act for the exemption from registration for the
transactions contemplated hereby or would require registration of the Shares
under the Securities Act or would be integrated under the Nasdaq Marketplace
Rules.
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4.24 Private Placement. Subject to the accuracy of each
Investor's representations in Section 5 hereof, the offer and sale of the Shares
to the Investors as contemplated hereby is exempt from the registration
requirements of the Securities Act.
4.25 Questionable Payments. Neither the Company nor any
Subsidiary nor, to the Company's Knowledge, any of their directors, officers,
employees, agents or other Persons acting on behalf of the Company or any
Subsidiary, has on behalf of the Company or any Subsidiary or in connection with
its business: (a) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; (b)
made any direct or indirect unlawful payments to any governmental officials or
employees from corporate funds; (c) established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; (d) made any false or
fictitious entries on the books and records of the Company or any Subsidiary; or
(e) made any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment of any nature.
4.26 Transactions with Affiliates. Except as disclosed in the
SEC Filings, none of the officers or directors of the Company or any Subsidiary
and, to the Company's Knowledge, none of the employees of the Company or any
Subsidiary is presently a party to any material transaction with the Company or
any Subsidiary (other than as holders of stock options and/or warrants, and for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
Company's Knowledge, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
4.27 Internal Controls. The Company is in material compliance
with the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 currently applicable to
the Company. Each of the Company and each Subsidiary maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15 and 15d-15) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company and each Subsidiary is made known to the certifying officers by
others within those entities. The Company's certifying officers have evaluated
the effectiveness of the Company's controls and procedures as of the end of the
period covered by the most recently filed periodic report under the Exchange Act
(such date, the "Evaluation Date"). The Company presented in its most recently
filed periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the internal controls (as such term is
defined in Item 307(b) of Regulation S-B) of the Company or any Subsidiary or,
to the Company's Knowledge, in other factors that could significantly affect
such internal controls. The books, records and accounts of the Company and each
Subsidiary accurately and fairly reflect, in all material respects, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and each Subsidiary. Each of the Company and each
Subsidiary maintains and will continue to maintain a standard system of
accounting established and administered in accordance with GAAP and the
applicable requirements of the Exchange Act.
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4.28 Independent Accountants. PMB ▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP is the
Company's independent registered public accounting firm as required by the
Exchange Act, and the rules and regulations of the SEC thereunder.
4.29 Investment Company. The Company is not and, after giving
effect to the offering and sale of the Shares, will not be an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
4.30 Regulatory Compliance. Neither the Company nor any
Subsidiary is in violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties, except as would not have a Material Adverse Effect. No governmental
orders, permissions, consents, approvals or authorizations are required to be
obtained and no registrations or declarations are required to be filed in
connection with the execution and delivery of this Agreement or the issuance of
the Shares, except such as have been duly and validly obtained or filed, or with
respect to any filings that must be made after the applicable Closing, as will
be filed in a timely manner.
4.31 Market Stabilization. The Company has not taken, nor will
it take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in, or that has constituted or that might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the Common Stock or any security of the Company to facilitate the sale
or resale of any of the Shares.
4.32 Material Contracts. All material documents, contracts or
other agreements of the Company and any Subsidiary required to be filed with the
SEC have been filed with the SEC and are included in the exhibits to the SEC
Filings. The description of the contracts, documents or other agreements
contained in the SEC Filings (as the case may be) reflect in all material
respects the terms of the underlying contract, document or other agreement. Each
such contract, document or other agreement is in full force and effect and is
valid and enforceable by and against the Company or the applicable Subsidiary,
as applicable, in accordance with its terms. Neither the Company nor any
Subsidiary is in default in the observance or performance of any term or
obligation to be performed by it under any such agreement, and no event has
occurred which with notice or lapse of time or both would constitute such a
default, in any such case which default or event, individually or in the
aggregate, would result in a Material Adverse Effect.
4.33 Application of Takeover Protections. The Company and the
Board have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company's Articles of Incorporation or the laws of the State of Nevada
that are or could become applicable to the Investors as a result of the
Investors and the Company fulfilling their obligations or exercising their
rights under this Agreement, including without limitation as a result of the
Company's issuance of the Shares and the Investors' ownership of the Shares.
12
4.34 FDA. The properties, business and operations of the
Company have been and are being conducted in all material respects in accordance
with all applicable laws, rules and regulations of the FDA. Neither the Company
nor any Subsidiary has been informed by the FDA that the FDA will prohibit the
marketing, sale, license or use in the United States of any product proposed to
be developed, produced or marketed by the Company or any Subsidiary nor has the
FDA expressed any concern as to approving or clearing for marketing any product
being developed or proposed to be developed by the Company or any Subsidiary.
4.35 Press Releases. The press releases disseminated by the
Company during the twelve months preceding the date of this Agreement taken as a
whole do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made and
when made, not misleading.
4.36 Indebtedness; Compliance. Except as disclosed in the SEC
Filings, the Company is not a party to any indenture, debt, capital lease
obligations, mortgage, loan or credit agreement by which it or any of its
properties is bound. The Company (i) is not in default under or in violation of
(and no event has occurred that has not been waived that, with notice or lapse
of time or both, would result in a default by the Company under), nor has the
Company received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect. The Company is in compliance
with all effective requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended,
and the rules and regulations thereunder that are applicable to it, except where
such noncompliance could not have or reasonably be expected to result in a
Material Adverse Effect.
4.37 Solvency. Based on the financial condition of the
Company, as of the First Closing Date (and assuming that the First Closing shall
have occurred), (i) the Company's fair saleable value of their respective assets
exceeds the amount that will be required to be paid on or in respect of the
Company's existing debts and other liabilities (including known contingent
liabilities) as they mature and (ii) the current cash flow of the Company,
together with the proceeds the Company would receive, were they to liquidate all
of their respective assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).
13
4.38 No Additional Agreements. The Company does not have any
agreement or understanding with any Investor with respect to the transactions
contemplated by this Agreement other than as specified in this Agreement.
4.39 Disclosure. Neither the Company nor any person acting on
its behalf has provided any Investor or its respective agents or counsel with
any information that the Company believes constitutes material, non-public
information concerning the Company, the Subsidiaries or their respective
businesses, except insofar as the existence and terms of the proposed
transactions contemplated hereunder may constitute such information. The Company
understands and confirms that the Investors will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. All disclosure provided to the Investors regarding the Company and
their respective businesses and the transactions contemplated hereby, furnished
by or on behalf of the Company (including the representations and warranties set
forth in this Agreement) are true and correct and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
5. Representations and Warranties of the Investors. Each of the
Investors hereby, severally and not jointly, represents and warrants to the
Company that:
5.1 Organization and Existence. Such Investor is a validly
existing corporation, limited partnership or limited liability company and has
all requisite corporate, partnership or limited liability company power and
authority to invest in the Shares pursuant to this Agreement.
5.2 Authorization. The execution, delivery and performance by
such Investor of this Agreement have been duly authorized. This Agreement has
been duly executed by such Investor, and when delivered by such Investor in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Investor, enforceable against such Investor in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors' rights generally.
5.3 Purchase Entirely for Own Account. The Shares to be
received by such Investor hereunder will be acquired for such Investor's own
account, not as nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the Securities Act, and such
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same in violation of the Securities Act.
5.4 Investment Experience. Such Investor acknowledges that it
can bear the economic risk and complete loss of its investment in the Shares and
has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Shares
contemplated hereby.
14
5.5 Disclosure of Information. Such Investor has had an
opportunity to receive all information related to the Company requested by it
and to ask questions of and receive answers from the Company regarding the
Company, its business and the terms and conditions of the offering of the
Shares.
5.6 Restricted Securities. Such Investor understands that the
Shares are characterized as "restricted securities" under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances.
5.7 Legends. It is understood that, except as provided below,
certificates evidencing the Shares may bear the following or any similar legend:
(a) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. THE SECURITIES REPRESENTED HEREBY MAY NOT BE
TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO
THE SECURITIES ACT, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR
(III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS."
(b) If required by the authorities of any state in
connection with the issuance of sale of the Shares, the legend required by such
state authority.
5.8 Accredited Investor. Such Investor is an accredited
investor as defined in Rule 501(a) of Regulation D under the Securities Act.
5.9 No General Solicitation. Such Investor did not learn of
the investment in the Shares as a result of any public advertising or general
solicitation.
5.10 Brokers and Finders. No Person will have, as a result of
the transactions contemplated by this Agreements, any valid right, interest or
claim against or upon the Company or an Investor for any commission, fee or
other compensation pursuant to any agreement, arrangement or understanding
entered into by or on behalf of such Investor.
6. Conditions to the First Closing.
6.1 Conditions to the First Closing.
(a) Conditions to the Investors' Obligations. The
obligation of each Investor to purchase the Initial Shares at the First Closing
is subject to the satisfaction, on or prior to the First Closing Date, of the
following conditions, any of which may be waived by such Investor (as to itself
only):
15
(i) The representations and warranties made
by the Company in Section 4 hereof shall be true and correct on the date hereof
and on the First Closing Date (except to the extent any such representation or
warranty expressly speaks as of a specific date, in which case such
representation or warranty shall be true and correct as of such date). The
Company shall have performed all obligations and covenants herein required to be
performed by it on or prior to the First Closing Date. The Company shall have
delivered a certificate, executed on behalf of the Company by its Chief
Executive Officer or its Chief Financial Officer, dated as of the First Closing
Date, certifying to the fulfillment of the condition specified in this Section
6.1(a)(i).
(ii) The Company shall have obtained any and
all consents, permits, approvals, registrations and waivers necessary or
appropriate for the purchase and sale of the Initial Shares and the consummation
of the transactions contemplated by this Agreement.
(iii) No judgment, writ, order, injunction,
award or decree of or by any court, or judge, justice or magistrate, including
any bankruptcy court or judge, or any order of or by any governmental authority,
shall have been issued, and no action or proceeding shall have been instituted
by any governmental authority, enjoining or preventing the consummation of the
transactions contemplated by this Agreement.
(iv) The Company shall have delivered a
certificate, executed on behalf of the Company by its Secretary, dated as of the
First Closing Date, certifying the resolutions adopted by the Board approving
the transactions contemplated by this Agreement, certifying the current versions
of the Articles of Incorporation and Bylaws of the Company and certifying as to
the signatures and authority of Persons signing this Agreement and related
documents on behalf of the Company.
(v) The Investors shall have received an
opinion from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, Marcus, ▇▇▇▇▇▇ & ▇▇▇▇, LLP, dated as of the First
Closing Date, in substantially the form attached hereto as Exhibit A.
(vi) No stop order or suspension of trading
shall have been imposed by Nasdaq, the OTC Bulletin Board, the SEC or any other
governmental or regulatory body with respect to public trading in the Common
Stock. The Company shall not have received notice of the ineligibility of the
Common Stock for trading on the OTC Bulletin Board or that it is violation of
any Nasdaq, OTC Bulletin Board or SEC rule, regulation or interpretation which
could lead to such ineligibility.
(vii) The Company shall have delivered to
its transfer agent irrevocable instructions to issue and deliver to each
Investor (or in such nominee name(s) as designated by such Investor in writing)
certificates evidencing such number of Initial Shares as set forth on the
signature pages to this Agreement.
(b) Conditions to Obligations of the Company. The
Company's obligation to sell and issue the Initial Shares at the First Closing
is subject to the satisfaction on or prior to the First Closing Date of the
following conditions, any of which may be waived by the Company:
16
(i) The representations and warranties made
by the Investors in Section 5 hereof shall be true and correct in all material
respects when made and as of the First Closing Date with the same force and
effect as if they had been made on and as of said date (except to the extent any
such representation or warranty expressly speaks as of a specific date, in which
case such representation or warranty shall be true and correct in all material
respects as of such specific date).
(ii) The Company shall have obtained any and
all consents, permits, approvals, registrations and waivers necessary or
appropriate for the purchase and sale of the Initial Shares the consummation of
the other transactions contemplated by this Agreement.
(iii) The Investors shall have executed and
delivered this Agreement.
(iv) No judgment, writ, order, injunction,
award or decree of or by any court, or judge, justice or magistrate, including
any bankruptcy court or judge, or any order of or by any governmental authority,
shall have been issued, and no action or proceeding shall have been instituted
by any governmental authority, enjoining or preventing the consummation of the
transactions contemplated by this Agreement.
(v) The Investors shall have delivered the
Initial Purchase Price to the Company.
6.2 Conditions to the Second Closing.
(a) Conditions to the Investors' Obligations. The
obligation of each Investor to purchase the Additional Shares at the Second
Closing is subject to the satisfaction, on or prior to the Second Closing Date,
of the following conditions, any of which may be waived by such Investor (as to
itself only):
(i) The representations and warranties made
by the Company in Section 4 hereof shall be true and correct on the date hereof
and on the Second Closing Date (except to the extent any such representation or
warranty expressly speaks as of a specific date, in which case such
representation or warranty shall be true and correct as of such date). The
Company shall have performed all obligations and covenants herein required to be
performed by it on or prior to the Second Closing Date. The Company shall have
delivered a certificate, executed on behalf of the Company by its Chief
Executive Officer or its Chief Financial Officer, dated as of the Second Closing
Date, certifying to the fulfillment of the condition specified in this Section
6.2(a)(i).
(ii) The Company shall have obtained any and
all consents, permits, approvals, registrations and waivers necessary or
appropriate for the purchase and sale of the Additional Shares and the
consummation of the transactions contemplated by this Agreement.
(iii) No judgment, writ, order, injunction,
award or decree of or by any court, or judge, justice or magistrate, including
any bankruptcy court or judge, or any order of or by any governmental authority,
shall have been issued, and no action or proceeding shall have been instituted
by any governmental authority, enjoining or preventing the consummation of the
transactions contemplated by this Agreement.
17
(iv) The Company shall have delivered a
certificate, executed on behalf of the Company by its Secretary, dated as of the
Second Closing Date, certifying the resolutions adopted by the Board approving
the transactions contemplated by this Agreement, certifying the current versions
of the Articles of Incorporation and Bylaws of the Company and certifying as to
the signatures and authority of Persons signing this Agreement and related
documents on behalf of the Company.
(v) The Investors shall have received an
opinion from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, Marcus, ▇▇▇▇▇▇ & ▇▇▇▇, LLP, dated as of the
Second Closing Date, in substantially the form attached hereto as Exhibit A.
(vi) No stop order or suspension of trading
shall have been imposed by Nasdaq, the OTC Bulletin Board, the SEC or any other
governmental or regulatory body with respect to public trading in the Common
Stock. The Company shall not have received notice of the ineligibility of the
Common Stock for trading on the OTC Bulletin Board or that it is violation of
any Nasdaq, OTC Bulletin Board or SEC rule, regulation or interpretation which
could lead to such ineligibility.
(vii) The Company shall have delivered to
its transfer agent irrevocable instructions to issue and deliver to each
Investor (or in such nominee name(s) as designated by such Investor in writing)
certificates evidencing such number of Additional Shares as set forth on the
signature pages to this Agreement.
(b) Conditions to Obligations of the Company. The
Company's obligation to sell and issue the Additional Shares at the Second
Closing is subject to the satisfaction on or prior to the Second Closing Date of
the following conditions, any of which may be waived by the Company:
(i) The representations and warranties made
by the Investors in Section 5 hereof shall be true and correct in all material
respects when made and as of the Second Closing Date with the same force and
effect as if they had been made on and as of said date (except to the extent any
such representation or warranty expressly speaks as of a specific date, in which
case such representation or warranty shall be true and correct in all material
respects as of such specific date).
(ii) The Company shall have obtained any and
all consents, permits, approvals, registrations and waivers necessary or
appropriate for the purchase and sale of the Additional Shares the consummation
of the other transactions contemplated by this Agreement.
(iii) The Investors shall have executed and
delivered this Agreement.
(iv) No judgment, writ, order, injunction,
award or decree of or by any court, or judge, justice or magistrate, including
any bankruptcy court or judge, or any order of or by any governmental authority,
shall have been issued, and no action or proceeding shall have been instituted
by any governmental authority, enjoining or preventing the consummation of the
transactions contemplated by this Agreement.
18
(v) The Investors shall have delivered the
Additional Purchase Price to the Company.
7. Covenants and Agreements.
7.1 Removal of Legends.
(a) Any legend referred to in Section 5.7 hereof
stamped on a certificate evidencing the Shares and the stock transfer
instructions and record notations with respect to such Shares shall be removed
and the Company shall cause to be issued a certificate without such legend to
the holder of such Shares upon delivery to the Company's transfer agent (with a
copy to the Company) of (i) a written request for the removal of the legend,
(ii) the original share certificate for which legend removal is requested, and
(iii) either (A) an opinion of counsel reasonably acceptable to the Company and
its transfer agent to the effect that a public sale or transfer of such
securities may be made without registration under the Securities Act or (B)
other reasonable assurances in writing acceptable to the Company and its
transfer agent (which shall not include an opinion of counsel) that such
securities can be sold pursuant to Rule 144 under the Securities Act. Not longer
than three business days following the receipt by the Company's transfer agent
and the Company of the documents required in clauses (i), (ii) and (iii) above,
the Company shall deliver or cause to be delivered to such holder a certificate
representing such securities that is free from all restrictive and other
legends. If the Company is then eligible, certificates for Shares subject to
legend removal hereunder shall be transmitted by the Company's transfer agent to
an Investor by crediting the prime brokerage account of such Investor with the
Depository Trust Company System as directed by such Investor.
(b) If an Investor shall make a sale or transfer of
Shares either pursuant to Rule 144 or pursuant to a registration statement and
in each case shall have delivered to the Company's transfer agent (with a copy
to the Company) (i) the original certificate representing the applicable Shares
containing a restrictive legend which are the subject of such sale or transfer,
(ii) a representation letter or letters in customary form, and (iii) in the case
of a sale or transfer pursuant to Rule 144, either (A) an opinion of counsel
reasonably acceptable to the Company and its transfer agent to the effect that a
public sale or transfer of such securities may be made without registration
under the Securities Act or (B) other reasonable assurances in writing
acceptable to the Company and its transfer agent (which shall not include an
opinion of counsel) that such securities can be sold pursuant to Rule 144 under
the Securities Act (the "Share Delivery Date" shall be the date on which both
the Company and its transfer agent have received the documents required in
clauses (i) through (iii)), and (1) the Company shall fail to deliver or cause
to be delivered to such Investor a certificate representing such Shares that is
free from all restrictive or other legends by the third business day following
the Share Delivery Date and (2) following such third business day after the
Share Delivery Date and prior to the time such Shares are received free from
restrictive legends, the Investor, or any third party on behalf of such
Investor, purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Investor of such Shares
(a "Buy-In"), then, in addition to any other rights available to the Investor
under this Agreement and applicable law, the Company shall pay in cash to the
Investor (for costs incurred either directly by such Investor or on behalf of a
third party) the amount by which the total purchase price paid for Common Stock
as a result of the Buy-In (including brokerage commissions, if any) exceeds the
proceeds received by such Investor as a result of the sale to which such Buy-In
relates. The Investor shall provide the Company written notice indicating the
amounts payable to the Investor in respect of the Buy-In.
19
(c) The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section.
7.2 Furnishing of Information. As long as any Investor owns
any Shares, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as any Investor owns Shares, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to
the Investors and make publicly available in accordance with Rule 144(c) such
information as is required for the Investors to sell the Shares under Rule 144.
The Company further covenants that it will take such further action as any
holder of Shares may reasonably request, all to the extent required from time to
time to enable such Person to sell the Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
7.3 Limitation on Issuance of Future Priced Securities. During
the six months following each of the First Closing Date and the Second Closing
Date, the Company shall not issue any "Future Priced Securities" as such term is
described by NASD IM-4350-1.
7.4 Indemnification of Investors. The Company will indemnify
and hold the Investors and their directors, officers, shareholders, partners,
employees and agents (each, an "Investor Party") harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation (collectively, "Losses")
that any such Investor Party may suffer or incur as a result of or relating to
any misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in this Agreement. In addition to the
indemnity contained herein, the Company will reimburse each Investor Party for
its reasonable legal and other expenses (including the cost of any
investigation, preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred.
7.5 Non-Public Information. The Company covenants and agrees
that neither it nor any other person acting on its or their behalf will provide
any Investor or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior thereto such
Investor shall have executed a written agreement regarding the confidentiality
and use of such information. The Company understands and confirms that each
Investor shall be relying on the foregoing representations in effecting
transactions in securities of the Company.
20
7.6 Replacement of Shares. If any certificate or instrument
evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Shares. If a replacement
certificate or instrument evidencing any Shares is requested due to a mutilation
thereof, the Company may require delivery of such mutilated certificate or
instrument as a condition precedent to any issuance of a replacement.
7.7 Remedies. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, each of
the Investors and the Company will be entitled to specific performance under
this Agreement. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agrees to waive in any action for
specific performance of any such obligation the defense that a remedy at law
would be adequate.
7.8 Independent Nature of Investors' Obligations and Rights.
The obligations of each Investor under this Agreement are several and not joint
with the obligations of any other Investor, and no Investor shall be responsible
in any way for the performance of the obligations of any other Investor under
this Agreement. The decision of each Investor to purchase Shares pursuant to
this Agreement has been made by such Investor independently of any other
Investor. Nothing contained herein, and no action taken by any Investor pursuant
thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by this
Agreement. Each Investor acknowledges that no other Investor has acted as agent
for such Investor in connection with making its investment hereunder and that no
Investor will be acting as agent of such Investor in connection with monitoring
its investment in the Shares or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Investor to be joined as
an additional party in any proceeding for such purpose. The Company acknowledges
that each of the Investors has been provided with the same Agreement for the
purpose of closing a transaction with multiple Investors and not because it was
required or requested to do so by any Investor.
7.9 Limitation of Liability. Notwithstanding anything herein
to the contrary, the Company acknowledges and agrees that the liability of an
Investor arising directly or indirectly, under this Agreement of any and every
nature whatsoever shall be satisfied solely out of the assets of such Investor,
and that no trustee, officer, other investment vehicle or any other affiliate of
such Investor or any investor, shareholder or holder of shares of beneficial
interest of such a Investor shall be personally liable for any liabilities of
such Investor.
21
8. Survival of Representations and Warranties.
8.1 Survival. The representations, warranties, covenants and
agreements contained in this Agreement shall survive after the First Closing
Date and Second Closing Date, except as otherwise expressly provided in this
Agreement.
9. Miscellaneous.
9.1 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Investors. Any Investor may
assign any or all of its rights under this Agreement to any Person to whom such
Investor assigns or transfers any Shares, provided such transferee agrees in
writing to be bound, with respect to the transferred Shares, by the provisions
hereof that apply to the "Investors."
9.2 Counterparts; Faxes. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement may
also be executed via facsimile or PDF, which shall be deemed an original.
9.3 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.4 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
facsimile or electronic mail, then such notice shall be deemed given upon
receipt of confirmation of complete transmittal, (iii) if given by mail, then
such notice shall be deemed given upon the earlier of (A) receipt of such notice
by the recipient or (B) three (3) days after such notice is deposited in first
class mail, postage prepaid, and (iv) if given by an internationally recognized
overnight air courier, then such notice shall be deemed given one (1) Business
Day after delivery to such carrier. All notices shall be addressed to the party
to be notified at the address as follows, or at such other address as such party
may designate by ten (10) days' advance written notice to the other party:
If to the Company:
Intraop Medical Corporation
▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
22
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investors, to the addresses set forth on the
Schedule of Purchasers, with a copy to:
Winston & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.5 Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith. In the event that legal proceedings are
commenced by any party to this Agreement against another party to this
Agreement, the party or parties that do not prevail in such proceedings shall
severally, but not jointly, pay their pro rata share of the reasonable
attorneys' fees and other reasonable out-of-pocket costs and expenses incurred
by the prevailing party in such proceedings.
9.6 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and the Investors. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Shares purchased under this Agreement at the time outstanding,
each future holder of all such Shares and the Company.
9.7 Publicity. Except as set forth below, no public release or
announcement concerning the transactions contemplated hereby shall be issued by
the Investors without the prior consent of the Company, except as such release
or announcement may be required by law or the applicable rules or regulations of
Nasdaq, the OTC Bulletin Board or the Securities Act. Notwithstanding the
foregoing, not later than three (3) trading days immediately following the date
hereof, the Company shall issue a press release disclosing the transactions
contemplated by this Agreement. The Company will timely file a Current Report on
Form 8-K describing this Agreement and attaching the press release described in
the foregoing sentence. In addition, the Company will make such other filings
(including filing this Agreement with the SEC) and notices in the manner and
time required by the SEC, Nasdaq or the OTC Bulletin Board. The Company shall
make the foregoing disclosure such that following such disclosure, the Investors
shall no longer be in possession of any material, non-public information with
respect to the Company. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Investor, or include the name of any Investor
in any filing with the SEC or any regulatory agency or trading market, without
the prior written consent of such Investor, except to the extent such disclosure
is required by law or trading market regulations.
23
9.8 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
9.9 Entire Agreement. This Agreement, including the exhibits
and the Disclosure Schedules, constitute the entire agreement among the parties
hereof with respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter hereof and thereof.
9.10 Further Assurances. The parties shall execute and deliver
all such further instruments and documents and take all such other actions as
may reasonably be required to carry out the transactions contemplated hereby and
to evidence the fulfillment of the agreements herein contained.
9.11 Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial. This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of New York without regard to the choice of law
principles thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of California located in Santa
▇▇▇▇▇ County and the United States District Court for the Northern District of
California for the purpose of any suit, action, proceeding or judgment relating
to or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
(Signature pages follow)
24
IN WITNESS WHEREOF, the parties have executed this Common
Stock Purchase Agreement as of the date first above written.
The Company:
------------
INTRAOP MEDICAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chief Financial Officer
IN WITNESS WHEREOF, the parties have executed this Common Stock
Purchase Agreement as of the date first above written.
The Investors:
The Pinnacle Fund, L.P.
By: Pinnacle Advisors, L.P.
Its General Partner
By: Pinnacle Fund Management, L.L.C.
Its General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------
▇▇▇▇▇ ▇▇▇▇, Sole Member
▇▇. ▇▇▇▇ and ▇▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, JTWROS
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
COMMON STOCK PURCHASE AGREEMENT SIGNATURE PAGE
Ellerphund IOPM, LP
By: Ellerphund Capital III, LLC, Its General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------
▇▇▇▇ ▇▇▇▇▇, Member
E.U. CAPITAL VENTURE, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------
Printed Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Its: Mgt. Director
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ Bailey Lemak
----------------
Bailey Lemak
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. UGMA/TX
▇▇▇▇ ▇. ▇▇▇▇▇ Custodian
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------
▇▇▇▇▇ ▇▇▇▇▇
/s/▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
COMMON STOCK PURCHASE AGREEMENT SIGNATURE PAGE
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Precept Capital Master Fund, G.P.
By: its agent & attorney-in-fact, Precept Capital Management, LP
By: its General Partner, Precept Management, LLC
By: /s/ D. ▇▇▇▇▇ ▇▇▇▇▇
------------------
D. ▇▇▇▇▇ ▇▇▇▇▇
Managing Member
VMG Holdings II, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Principal
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
COMMON STOCK PURCHASE AGREEMENT SIGNATURE PAGE
SCHEDULE OF PURCHASERS
FIRST CLOSING:
Investor Name and Address: Purchase Price: # of Shares Purchased:
------------------------- -------------- ---------------------
▇▇. ▇▇▇▇ and ▇▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $6,656.86 95,098
JTWROS
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ $7,000.00 100,000
c/o Radiation Oncology Dept.
The ▇▇▇▇▇▇▇▇ Hospital
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ellerphund IOPM, LP $1,000,000.00 14,285,714
▇/▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ St
Dallas, TX 75201
E.U. Capital Venture, Inc. $34,615.91 494,513
c/o ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $70,000.00 1,000,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Bailey Lemak $25,000.00 357,142
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 25,000.00 357,142
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., UGMA/TX $25,000.00 357,142
▇▇▇▇ ▇. ▇▇▇▇▇ Custodian
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇ $100,000.00 1,428,571
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
COMMON STOCK PURCHASE AGREEMENT SIGNATURE PAGE
SCHEDULE OF PURCHASERS (Continued)
FIRST CLOSING (Continued):
▇▇▇▇▇ ▇▇▇▇▇ $25,000.00 357,142
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The Pinnacle Fund, L.P. $1,000,000.00 14,285,714
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ $50,000.00 714,285
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SECOND CLOSING:
Investor Name and Address: Purchase Price: # of Shares Purchased
-------------------------- --------------- ---------------------
Ellerphund IOPM, LP $25,000.00 357,142
c/o Ellerphund Capital
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $35,000.00 500,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ $70,000.00 1,000,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Precept Capital Master Fund, G.P. $250,000.00 3,571,428
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
VMG Holdings II, LLC $100,000.00 1,428,571
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $50,000.00 714,285
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ $100,000.00 1,428,571
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
COMMON STOCK PURCHASE AGREEMENT SIGNATURE PAGE
EXHIBIT A
---------
Form of Legal Opinion
_________________, 2008
To the Investors Listed in
the Schedule of Purchasers of the
Common Stock Purchase Agreement
dated as of ______________, 2008
Ladies and Gentlemen:
Reference is made to the Common Stock Purchase Agreement, dated as of
___________, 2008 (the "Purchase Agreement"), complete with all listed exhibits
thereto, by and among Intraop Medical Corporation, a Nevada corporation (the
"Company"), and the investors listed in the Schedule of Purchasers to the
Purchase Agreement (the "Investors"), which provides for, among other things,
the issuance by the Company to the Investors of shares of Common Stock. All
terms used herein have the meanings defined in the Purchase Agreement unless
otherwise defined herein.
We have acted as counsel for the Company in connection with the negotiation,
preparation and execution of the Purchase Agreement and the completion of the
transactions contemplated thereunder.
In rendering this opinion, we have examined the originals, or copies properly
certified or otherwise identified to our satisfaction as being in the form of
the originals, of the following:
(a) the Purchase Agreement;
(b) the Company's Amended and Restated Articles of Incorporation filed with the
Nevada Secretary of State on March 9, 2005 and the Certificate of Amendment
to Articles of Incorporation filed with the Nevada Secretary of State on
October 19, 2007, certified to us by an officer of the Company as being
complete and in full force and effect as of the date of this letter
(together, the "Amended Articles");
(c) the Bylaws of the Company, certified to us by an officer of the Company as
being complete and in full force and effect as of the date of this letter;
(d) documents evidencing the corporate proceedings taken by the Company to
authorize and effect the execution, delivery and performance of the
transactions contemplated by the Purchase Agreement;
(e) a Certificate of Existence With Status in Good Standing for the Company
issued on January 8, 2008 by the Secretary of State of Nevada, a
Certificate of Status of Foreign Corporation for the Company issued on
January 4, 2008 by the Secretary of State of California, and an Entity
Status for the Company issued by the California Franchise Tax Board on
January 4, 2008 stating that the Company is in good standing with the
California Franchise Tax Board; and
(f) an Officer's Certificate of the Company provided to us as of the date of
this letter concerning certain factual matters relevant to this opinion.
1
As to various questions of fact material to our opinion, we have, to
the extent we deemed it appropriate, reviewed and relied upon the
representations and warranties made by the Company in Section 4 of the Purchase
Agreement and statements and certificates of the officers of the Company, and of
public officials and others. With regard to such factual matters relevant to
this opinion as to which we have relied upon said representations, warranties,
statements and certificates of the officers of the Company and others, we have
not sought to verify independently the existence of the facts as represented to
us, but we are aware of no facts which would lead us to believe that the
opinions expressed herein are not appropriate.
In rendering this opinion, we have assumed the following:
(i) All documents submitted to us as originals are complete
and authentic; all copies of documents submitted to us conform in all respects
to the originals thereof, including all amendments or modifications thereto; and
all originals or copies submitted to us have not been amended or modified since
the date they were submitted to us, by written or oral agreement of the parties
thereto, by the conduct of the parties thereto or otherwise;
(ii) The signatures on all original documents examined by us
are genuine and all copies of such documents submitted to us are genuine;
(iii) The due authorization, execution and delivery of all
documents (other than by the Company), where authorization, execution and
delivery are a prerequisite to the effectiveness thereof;
(iv) All individuals executing and delivering documents had
the legal capacity to so execute and deliver;
(v) Each party to the Purchase Agreement, other than the
Company and individuals, is duly organized, validly existing and in good
standing under its jurisdiction of organization and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property currently requires that it qualify to do business in such jurisdiction,
with the corporate or other organizational power to perform its obligations
under the Purchase Agreement; each party to the Purchase Agreement, other than
the Company, has complied with any applicable requirement to file tax returns
and pay taxes in each jurisdiction in which it is required to do so; each party
to the Purchase Agreement, other than the Company, has validly authorized,
executed and delivered the Purchase Agreement; and the Purchase Agreement
constitutes the valid and binding obligation of each such party, enforceable
against each such party in accordance with its terms;
(vi) The factual matters set forth in the Purchase Agreement
are accurate and complete in all material respects and all certificates and all
other written representations as to factual matters delivered or made to us by
officers of the Company are accurate and complete in all material respects; and
(vii) Neither the execution of the Purchase Agreement nor the
consummation of the transactions provided for therein contravenes any applicable
law of any jurisdiction, other than California law or federal law.
On the basis of the foregoing examinations and assumptions and in
reliance thereon, upon the representations of the Investors and the other
parties to the Purchase Agreement, and upon all such other matters of fact as we
deemed relevant under the circumstances, and subject to the limitations and
qualifications set forth below, it is our opinion that as of the date hereof:
2
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Nevada. The Company has
qualified to do business and is in good standing in the State of California.
2. The Company has the requisite corporate power to own its property
and assets, and to conduct its business as it is currently being conducted.
3. The Company has the requisite corporate power to execute, deliver
and perform its obligations under the Purchase Agreement. The Purchase 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.
4. The Company's authorized capital stock consists of 500,000,000
shares of Common Stock, par value $0.001, of which 324,570,524 shares are issued
and outstanding immediately prior to the First Closing. The outstanding shares
of Common Stock have been duly authorized and validly issued and are fully paid
and nonassessable. The Shares have been duly authorized, and upon issuance and
delivery against payment therefor in accordance with the terms of the Purchase
Agreement, the Shares will be validly issued, fully paid and nonassessable. To
our knowledge, there are no options, warrants, conversion privileges, preemptive
rights or other rights outstanding prior to the First Closing to purchase any of
the authorized but unissued capital stock of the Company, other than the
participation rights provided in the Rights Agreement dated as of August 17,
2007 by and between the Company and the investors named therein, rights created
in connection with the transactions contemplated by the Purchase Agreement,
warrants to purchase 16,336,433 shares of Common Stock, outstanding options
granted under the Company's 2005 Equity Incentive Plan to purchase 27,068,327
shares of Common Stock, and 18,291,337 shares of Common Stock reserved for
issuance under the Company's 2005 Equity Incentive Plan.
5. The execution and delivery of the Purchase Agreement by the Company
and the issuance of the Shares pursuant thereto do not violate any provision of
the Company's Amended Articles or Bylaws, and do not constitute a default under
or a material breach of any material agreement that is listed as an exhibit to
the SEC Filings, and do not violate (a) any United States federal or California
governmental statute, rule or regulation which in our experience is typically
applicable to transactions of the nature contemplated by the Purchase Agreement
or (b) any order, writ, judgment, injunction, decree, determination or award
which has been entered against the Company and of which we have knowledge, in
each case to the extent the violation of which would materially and adversely
affect the Company and its subsidiaries, taken as a whole.
6. To our knowledge, there is no action, proceeding or investigation
pending or overtly threatened against the Company before any court or
administrative agency that questions the validity of the Purchase Agreement or
that could reasonably be expected to result, either individually or in the
aggregate, in a material adverse effect on the Company and its subsidiaries,
taken as a whole.
7. Based in part on the representations of the Investors in the
Purchase Agreement, all consents, approvals, authorizations, or orders of, and
filings, registrations and qualifications with any United States federal or
California regulatory authority or governmental body on the part of the Company
required for the issuance of the Shares have been made, obtained or effected as
of the Closing, except for filings pursuant to (a) Regulation D of the
Securities Act of 1933, as amended (the "1933 Act") and (b) any required filings
pursuant to state "blue sky" laws.
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8. Based in part upon the representations made by the Company and the
Investors in the Purchase Agreement, the offer and sale of the Shares in
conformity with the terms of the Purchase Agreement do not require registration
under Section 5 of the 1933 Act.
9. The Company is not, and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof, will not be,
an "investment company" as defined in the Investment Company Act of 1940, as
amended.
The opinions expressed above are subject to the following:
(a) The application and effect of bankruptcy, insolvency,
reorganization, moratorium, anti-deficiency, or similar laws or court decisions
relating to or affecting the rights of creditors generally;
(b) We express no opinion as to whether specific performance of any of
the remedies, covenants or other provisions of the Purchase Agreement is
available;
(c) We express no opinion as to the compliance or noncompliance with
applicable federal and state anti-fraud statutes concerning the issuance of
securities;
(d) We express no opinion on (i) the effect of judicial decisions which
may permit the introduction of extrinsic evidence to modify the terms or the
interpretation of the Purchase Agreement; (ii) any requirement that provisions
of the Purchase Agreement may only be waived in writing as to its enforceability
to the extent an oral agreement has been executed modifying provisions of the
Purchase Agreement; (iii) the enforceability of indemnification or contribution
provisions, which may be unenforceable in certain circumstances; (iv) the
enforceability of any provision waiving the right to a jury trial; (v) the
enforceability of broadly or vaguely stated rights; (vi) the right to damages;
or (vii) the limitations imposed by general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether considered in a proceeding equity or law;
(e) In rendering the opinions set forth in paragraph (1) above
regarding the due incorporation, valid existence and good standing of the
Company in Nevada and in paragraphs (2) and (3) regarding the Company's
corporate powers, we inform you that we are not licensed to practice law in
Nevada and have relied without further investigation on our review of (i) the
Company's Amended Articles and Bylaws; (ii) the Company's minute book; (iii) a
Certificate of Existence with Status in Good Standing issued by the Secretary of
State of the State of Nevada with respect to the Company; (iv) relevant portions
of the Nevada Revised Statutes and (v) a certificate of an officer of the
Company as to certain factual matters;
(f) In rendering the opinion set forth in paragraph 4 above relating to
the status of the capitalization of the Company, we have relied without further
investigation on our review of the Company's Amended Articles and a summary of
outstanding securities of the Company certified to us by an officer of the
Company;
(g) We have acted as counsel to the Company only with respect to
certain corporate matters, the negotiation of the Purchase Agreement and the
rendering of these opinions. Accordingly, we may not have knowledge of all
matters of fact or law relating to the Company that may be relevant in
connection with the opinions herein. Any alteration of those facts may adversely
affect our opinions. Whenever a statement herein is qualified by "known to us,"
"to our knowledge," "to our current actual knowledge," or similar phrase, it is
intended to indicate that during the course of our representation of the
Company, no information that would give us current actual knowledge of the
inaccuracy of such statement has come to the attention of those attorneys in
this firm who have rendered legal services to the Company in connection with the
negotiation, execution and delivery of the Purchase Agreement. However, except
as otherwise expressly indicated, we have not undertaken any independent
investigation to determine the accuracy of any such statement (including,
without limitation, any search of litigation filings in any court), and any
limited inquiry undertaken by us during the preparation of this letter should
not be regarded as such an investigation. No inference as to our current actual
knowledge of any matters bearing on the accuracy of any such statement should be
drawn from the fact of our representation of the Company.
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We have not been requested to opine, and we have not opined, as to any
issues other than those expressly set forth herein, and no opinion is implied or
may be inferred beyond the matters expressly stated herein. Our opinion is
limited to the current federal laws of the United States of America and the
current laws of the State of California, present judicial interpretations
thereof and to facts as they presently exist. We also refer you to the
qualification in paragraph (e) above with respect to Nevada law. We note that
the Purchase Agreement is governed by New York law and, with your permission, we
are rendering the opinions in paragraph (3) above regarding the validity,
binding effect and enforceability of the Purchase Agreement as though the
Purchase Agreement was governed by the internal law of the State of California
and for purposes hereof have assumed that New York and California law are
identical in all respects. We express no opinion as to whether the laws of any
particular jurisdiction apply, and no opinion to the extent that the laws of any
jurisdiction other than those identified above are applicable to the subject
matter hereof. In rendering this opinion, we have no obligation to revise or
supplement it should the current federal laws of the United States of America or
of the State of California be changed by legislative action, judicial decision
or otherwise. With reference to matters of fact, this opinion is limited to
information that has come to our attention solely in connection with matters
involving this firm's engagement as counsel to the Company.
Further, the opinions contained in this letter are given as of the date
of this letter and are rendered exclusively for your benefit in accordance with
the provisions of Section 6.1(a)(v) of the Purchase Agreement and may not be
relied upon to state directly or indirectly any general proposition or for any
other purpose. We hereby disclaim any obligation to notify any person or entity
after the date hereof if any change in fact or law should change our opinions
with respect to any matter set forth in this letter.
This opinion has been rendered to you at the request of the Company and
may be relied upon by you only in connection with the transactions contemplated
under the Purchase Agreement. No other use or distribution of this opinion may
be made, and no other person or party may rely on this opinion, without our
express prior written consent in each instance.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇, LLP
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