Exhibit 99.2
September 8, 2003
SUBSCRIPTION AGREEMENT
The undersigned Purchaser has (i) carefully read the Stock Purchase
Agreement and Registration Rights Agreement attached hereto as Exhibits A and B,
and (ii) completed this Subscription Agreement in full. The undersigned
Purchaser, by signing below, hereby agrees, subject to the terms and conditions
set forth or incorporated herein, and further subject to the acceptance by
Nanophase Technologies Corporation (the "Company") of this Subscription
Agreement, to purchase the number of shares (the "Shares") of the Company's
common stock, $.01 par value per share, set forth below and a warrant to
purchase the number of shares of the Company's common stock, $.01 par value per
share set forth below (the "Warrant"), for the aggregate purchase price set
forth below.
The undersigned Purchaser hereby provides the following information to
the Company:
General Information
1. Please provide the following information regarding the Purchaser:
Number of Number of Total
Name and Address Shares Warrants Purchase Price
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Ltd. 453,001 453,001 $2,000,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
For Notice Purposes, a copy
shall be sent to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
Information Relating to the Registration Statement
2. If different from the information provided above, please provide
the number of shares of Common Stock beneficially owned (as
determined in accordance with SEC Rule 13d-3 under the Exchange
Act) by the Purchaser immediately after Closing. Explain the
nature
Doc. No. 1260089 Subscription Agreement Page 1
of such beneficial ownership, including shares of Common Stock
not held of record by the Purchaser. Disclose the details of any
rights to acquire shares.
2,079,193 shares of Common Stock
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__________________________________________________________________
3. Describe any position, office or other material relationship
within the past three years that the Purchaser has, or has had,
with the Company or its Affiliates. If none, please state "Not
Applicable."
See the undersigned Purchaser's most recently filed
Schedule 13G
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__________________________________________________________________
4. The undersigned Purchaser hereby represents and warrants to the
Company as follows:
(a) The undersigned Purchaser has no present intention to
engage in short sales or other hedging activity in
relation to the Company's securities.
(b) The undersigned Purchased is acquiring the Shares and
Warrant in the ordinary course of business.
(c) The undersigned Purchaser has no agreements or
understandings, directly or indirectly, with any person or
entity to distribute the Shares or Warrant.
(d) The undersigned Purchaser does not share voting and/or
investment control over the Company's securities with any
person or entity (other than relationships disclosed in
the Company's most recent proxy statement filed with the
SEC or in any Schedule 13D filed with the SEC by the
undersigned Purchaser).
Please note that it is the Purchaser's obligation to advise the Company
promptly if any of the foregoing information changes during the effectiveness of
the Registration Statement (except due to sales of shares of Common Stock
pursuant thereto).
The undersigned, duly authorized and acting on behalf of the Purchaser
named above, intending to be legally bound, hereby confirms the accuracy and
completeness of the foregoing. By signing this Subscription Agreement, the
undersigned, and the Company, shall also become parties to the Stock Purchase
Agreement attached hereto and incorporated herein as Exhibit A and the
Registration Rights Agreement attached hereto and incorporated herein as Exhibit
B, and shall be legally bound hereby and thereby. This Subscription Agreement
may be executed by facsimile in one or more counterparts.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Ltd.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: General Partner
Subscription Agreement Page 2
The Company hereby accepts this Subscription Agreement and agrees to
sell the Shares and Warrant to the Purchaser upon the terms and condition set
forth herein and in the Exhibits hereto that are incorporated herein.
Nanophase Technologies Corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, CEO
Subscription Agreement Page 3
EXHIBIT A
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of
September 8, 2003 by and between NANOPHASE TECHNOLOGIES CORPORATION, a Delaware
corporation located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the
"Company"), and each of the various purchasers (each, a "Purchaser", and
collectively, the "Purchasers") identified on, and a party to, an executed copy
of the Subscription Agreement to which this Agreement is an Exhibit (the
"Subscription Agreement").
SECTION 1
Sale of Common Stock
Subject to the terms and conditions hereof, the Company has offered,
and will issue and sell (the "Offering") to the Purchasers and the Purchasers
will buy from the Company a total of up to 453,001 shares of common stock, $.01
par value per share, of the Company (the "Common Stock") for the purchase price
of $4.415 per share, with each Purchaser purchasing the number of shares of
Common Stock for the aggregate cash purchase price indicated on the Subscription
Agreement. The shares of Common Stock to be issued and sold by the Company and
purchased by the Purchasers pursuant to this Agreement are herein referred to as
the "Shares." This Agreement and each Purchaser's obligation hereunder are not
conditioned on the sale of any minimum number of Shares.
As an inducement for the Purchasers to purchase the Shares, subject to
the terms and conditions hereof, the Company will issue to each Purchaser a
warrant to purchase a number of shares of Common Stock equal to the number of
shares of Common Stock purchased by each Purchaser herein (a "Warrant") at an
exercise price of $4.415 for a term of twelve (12) months. Each Warrant will be
issued in substantially the form attached hereto as Appendix 1.
The Shares, the Warrants and the shares of Common Stock issuable upon
exercise of the Warrants ("Warrant Shares", and collectively with the Shares and
the Warrants, the "Securities") will be offered and sold without registration
under the Securities Act of 1933, as amended (the "Securities Act"), in reliance
upon the exemption from registration provided by Section 4(2) of the Securities
Act and Regulation D thereunder.
The Purchasers (and any subsequent permitted transferees) will be
entitled to the benefits of a Registration Rights Agreement, to be dated as of
the date hereof (attached to the Subscription Agreement as Exhibit B, the
"Registration Rights Agreement"), by and among the Company and the Purchasers.
Pursuant to the Registration Rights Agreement, the Company will file with the
Securities and Exchange Commission (the "SEC" or the "Commission") a shelf
registration statement on Form S-3 pursuant to SEC Rule 415 (the "Registration
Statement") under the Securities Act relating to the resale of the Shares and
the Warrant Shares by the Purchasers. The Company shall use its commercially
reasonable best efforts to cause such Registration Statement to be declared
effective within six months of the Closing and to be maintained effective until
the earlier of (i) the date on which all Securities have been resold under such
Registration Statement and (ii) the date on which all Registrable Securities (as
defined in the Registration Rights Agreement) may be resold without restriction
or limitation.
Doc. No. 1260089 SPA Page 1
SECTION 2
Closing; Delivery
2.1. Closing. The closing of the purchase and sale of the Shares and
Warrants hereunder (the "Closing") shall be held at the Chicago offices of
Wildman, Harrold, ▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Company, or at such other place
upon which the Company and the Purchasers shall agree. The Closing shall occur
simultaneously with or immediately after the execution and delivery of this
Agreement by the Purchasers and the Company, or on such later date as the
Company and the Purchasers may agree.
2.2. Delivery. At the Closing, or within a reasonable period of time
thereafter, the Company will deliver to each Purchaser (i) a certificate,
registered in the name of such Purchaser for the number of Shares to be
purchased by such Purchaser against payment of the purchase price therefor by
wire transfer per the Company's wiring instructions and (ii) a Warrant. If, at
the time of Closing, the Shares are eligible for clearance and settlement
through The Depository Trust Company ("DTC"), then the Company may deliver the
Shares to the Purchasers in book-entry form through DTC.
SECTION 3
Representations and Warranties of the Company
For purposes of this Agreement, a party will be deemed to have
"knowledge" of a particular fact or other matter if any individual who is
serving as an officer of such party is, or at any time was, actually aware of
such fact or other matter; provided, however, that, in the case of the Company,
the Company's knowledge with respect to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Ltd. ("▇▇▇▇▇ ▇▇▇▇▇▇▇▇"),
shall be limited to facts and other matters included in ▇▇▇▇▇ ▇▇▇▇▇▇▇▇' filings
with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), public announcements or notices to the Company.
The Company represents, warrants and covenants to the Purchasers as
follows:
3.1. Organization and Standing; Articles and By-Laws. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of its organization. The Company has the requisite power and
authority to own and operate its properties and assets and to carry on its
business as presently conducted and as now proposed to be conducted. The Company
is qualified to do business as a foreign corporation in all jurisdictions where
the ownership of its properties and assets and the conduct of its business
requires such qualification, except where the failure to be so qualified will
not have a material adverse effect on the business of the Company taken as a
whole, as such business is now conducted or as now proposed to be conducted. The
Company has furnished, or as soon as practicable, and in no event later than the
day immediately prior to Closing, will furnish, to each of the Purchasers true
and correct copies of the Company's Certificate of Incorporation, as amended and
as in effect on the date hereof (the "Certificate of Incorporation") and
certified by the Secretary of State of the State of Delaware within the
preceding 10 business days, and the Company's Bylaws, as in effect on the date
hereof (the "Bylaws") certified by the Company's Secretary.
3.2. Corporate Power. The Company has all requisite legal and
corporate power and authority to execute and deliver this Agreement and to
execute and deliver the agreements set forth as Exhibits hereto (collectively
with this Agreement, the "Agreements"), and at the Closing to sell and issue the
Shares, the Warrants and the Warrant Shares as set forth in the Agreements, and
to carry out and perform its obligations under the Agreements.
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3.3. Subsidiaries. The Company has no subsidiaries, and does not
otherwise own or control, directly or indirectly, any equity interest in any
corporation, association or business entity.
3.4. Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 25,000,000 shares of Common Stock and 24,088
shares of Preferred Stock (the "Preferred Stock"). As of September 5, 2003,
there were 15,254,943 shares of Common Stock issued and outstanding, and no
shares of Preferred Stock issued and outstanding. No other shares of capital
stock are issued and outstanding. As of September 5, 2003, there were options
and warrants outstanding issued by the Company to purchase an aggregate of
2,113,349 shares of Common Stock. All of the outstanding shares of Common Stock
are duly authorized, validly issued, fully paid and nonassessable, and all such
shares were issued in material compliance with all applicable federal and state
securities laws, including available exemptions therefrom, and none of such
issuances were made in violation of any pre-emptive or other rights. The Company
has reserved (i) 1,582,849 shares of Common Stock for issuance pursuant to its
Amended and Restated 1992 Stock Option Plan, (ii) 900,000 shares of Common Stock
for issuance pursuant to its 2001 Equity Compensation Plan, (iii) zero shares of
Common Stock for issuance upon exercise of existing outstanding warrants (other
than the Warrants), and (iv) up to 453,001 shares of Common Stock for issuance
upon exercise of the Warrants. Except as set forth above, there are no options,
warrants or other rights (including conversion, pre-emptive or other rights) or
agreements outstanding to purchase any of the Company's authorized and unissued
capital stock.
3.5. Authorization. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution, delivery and performance of the Agreements by the Company, and for
the authorization, the sale, issuance and delivery of the Shares, the
authorization, sale, issuance and delivery of the Warrants and the Warrant
Shares and the performance of all of the Company's obligations under the
Agreements has been taken or will be taken prior to the Closing. The Agreements
and Warrants have been duly executed and delivered by the Company, and
constitute valid and binding obligations of the Company, enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and to
general principles of equity and to limitations on the rights to indemnity and
contribution that exist by virtue of public policy (the "Bankruptcy and Equity
Exception"). The Shares and Warrant Shares, when issued pursuant to this
Agreement or the Warrant, as applicable, will be validly issued, fully paid and
nonassessable.
3.6. Reports and Financial Statements. (a) The Company made available
to the Purchasers prior to the execution of this Agreement a copy of the
Company's Annual Report for the year ended December 31, 2002, the Company's
Quarterly Reports on Form 10-Q that have been filed for all quarters ended since
December 31, 2002, if any, the definitive proxy statement for the Company's 2003
annual meeting of stockholders, if filed with the Commission as of the date
hereof, and any Current Reports on Form 8-K filed since December 31, 2002 (as
such documents have since the time of their filing been amended or supplemented)
together with all reports, documents and information hereafter filed with the
SEC, including all information incorporated therein by reference, (collectively,
the "SEC Reports"). The SEC Reports (a) complied and will comply as to form in
all material respects with the requirements of the Securities Act and Exchange
Act, and (b) did not contain and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited consolidated financial
statements and unaudited interim consolidated financial statements (including,
in each case, the notes, if any, thereto), if any, included in the SEC Reports
complied and will comply as to form in all material respects with the SEC's
rules and regulations with respect thereto), were prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated therein or in the notes
thereto) and fairly present (subject, in the case of the unaudited interim
financial statements, to normal, recurring year-end audit
SPA Page 3
adjustments not material and to the absence of footnotes) the financial position
and shareholders' equity of the Company as of the respective dates thereof and
the consolidated earnings and cash flows for the respective periods then ended.
(b) The Company has a duly constituted audit committee of its Board
of Directors (the "Audit Committee"), all of whose members are "independent" as
defined in Rule 4200(a)(14) of the National Association of Securities Dealers,
Inc. and such committee has operated in accordance with applicable law and
regulations, the requirements of the Nasdaq National Market ("Nasdaq"). The
Company's independent public accountants have reviewed each interim financial
statement in accordance with the requirements of applicable federal securities
laws, the Audit Committee's charter, the Commission's rules and regulations and
the applicable rules of Nasdaq. The Company has received no communications from
its independent public accountants that the independent public accountants are
considering or are likely to consider issuing any report other than a clean,
unqualified opinion as to the Company's audited financial statements or have
raised any unresolved issues with respect to any of the Company's interim
financial statements.
3.7. RESERVED
3.8. No Integration. Neither the Company nor, to the Company's
knowledge, its affiliates (as defined in Rule 501(b) under the Securities Act)
("Affiliates") has, directly or through any agent, during the six month period
ending on the date of this Agreement, sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) in a manner that would cause the offer and sale of the
Securities to fail to be entitled to the exemption afforded by Rule 506 of
Regulation D, or under Section 4(2) of the Securities Act.
3.9. No Public Offering. Neither the Company nor, to the Company's
knowledge, its Affiliates has engaged, in connection with the offering of the
Shares, the Warrants or the Warrant Shares, (i) in any form of general
solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act, (ii) in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act, (iii) in any action which would
violate applicable state securities, or "blue sky," laws, or in any directed
selling efforts within the meaning of SEC Regulation S.
3.10. Conformity of Descriptions. The Shares conform in all material
respects to the descriptions contained in the Company's SEC Reports and other
filings with the SEC.
3.11. No Material Adverse Changes. Except as disclosed on Schedule 3.11
or in the SEC Reports filed not less than five (5) business days prior to the
date hereof, there has been no (i) material adverse change in the business,
results of operations, shareholders' equity, cash flows, financial condition of
the Company taken as a whole, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), or (ii) dividend or distribution of any
kind declared, paid or made by the Company on any shares of its capital stock.
3.12. No Conflicts. The execution, delivery and performance of the
Agreements and the Warrants, the issuance and delivery of the Shares, the
Warrants and Warrant Shares by the Company and the consummation by the Company
of the transactions contemplated herein and in the other Agreements do not and
will not (i) conflict with or violate any provision of the Certificate of
Incorporation, Bylaws or other organizational documents of the Company, (ii)
conflict with, or constitute a default (or an event which, with notice or lapse
of time or both, would become a default) under, or give to other Persons any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, license or instrument (whether evidencing a
Company debt or otherwise) to which the Company is a party or by which any
property or asset of the Company is bound or affected or (iii) result in a
violation of any
SPA Page 4
law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company is subject
(including federal and state securities laws and regulations and the rules and
regulations of the principal market, system or exchange on which the Common
Stock is traded, quoted or listed), or by which any assets of the Company is
bound or affected.
3.13. Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration ("Consents") with, any court or other federal, state,
local or other governmental authority, regulatory or self regulatory agency
("Governmental Authorities"), or other Person in connection with the execution,
delivery and performance by the Company of the Agreements, other than (i) the
filing of the Registration Statement with the Commission in accordance with the
Registration Rights Agreement, (ii) the application(s) or any letter(s)
acceptable to Nasdaq for the listing or quoting of the Shares on Nasdaq (and
with any other national securities exchange or market on which the Common Stock
is then traded, listed or quoted), and the notice, if any, required by Nasdaq
Rule 4310 which has been filed as shown in Schedule 3.13, (iii) any filings,
notices or registrations under applicable state securities laws, (iv) the
disclosure requirements of the Exchange Act, and the disclosure requirements of
Item 701 of SEC Regulation S-K, and (v) filing a Form D and a Form 8-K with the
Commission (collectively, the "Required Approvals").
3.14. Proceedings. Except as described in the SEC Reports, there is no
action, suit, hearing, claim, notice of violation, arbitration or other
proceeding, hearing or investigation (each, a "Proceeding") pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its assets before or by any Governmental Authority or any arbitrator, which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Agreements, (ii) could reasonably be expected to, individually or in the
aggregate, have or result in a Material Adverse Effect, or (iii) if adversely
decided, could reasonably be expected to have a material adverse effect on or
delay the issuance of the Securities, or the consummation of the transactions
contemplated by the Agreement.
3.15. No Default or Violation. Except for those that would not,
individually or in the aggregate, result in a Material Adverse Effect, the
Company is not in (i) default under or in violation of any indenture, loan or
other credit agreement or any other agreement or instrument to which it is a
party or by which the Company of its assets or properties is bound, or (ii)
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any arbitrator or Governmental Authority applicable to it.
The Company is not in default under, or in violation of, its certificate of
incorporation, bylaws or other organizational documents or in default under or
in violation of any of the listing or, quotation requirements of Nasdaq as in
effect on the date hereof and the Company is not aware of any facts which would
reasonably lead to delisting or suspension of trading in the Common Stock by
Nasdaq in the foreseeable future. The business of the Company is not being
conducted, and the Company presently has no plans to conduct its business, in
violation of any law, statute, ordinance, rule or regulation of any Governmental
Authority, except where such violations have not resulted or are not reasonably
likely to result, individually or in the aggregate, in a Material Adverse
Effect. The Company is not in breach of any agreement where such breach,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect.
3.16. Broker's Fees. No fees or commissions or similar payments with
respect to the transactions contemplated by the Agreements have been paid or
will be payable by the Company to any broker, financial advisor, finder,
investment banker or bank, and the Company shall indemnify and hold harmless the
Purchasers from and against any such claims.
3.17. Listing Compliance. The principal market on which the Common
Stock is currently traded is Nasdaq. Except as disclosed on Schedule 3.17, the
Company has not in the three (3) years preceding the date hereof received notice
(written or oral) from Nasdaq (or any stock exchange, market or
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trading facility on which the Common Stock is or has been traded or listed (or
on which it has been quoted)) to the effect that the Company is not in
compliance with the listing or maintenance requirements of any such market,
exchange or trading facility. After giving effect to the transactions
contemplated by the Agreements, the Company is and will be in compliance with
all such maintenance requirements.
3.18. Intellectual Property Rights. Except as disclosed on Schedule
3.18, the Company owns or possesses adequate rights or licenses to use all
trademarks, trademark applications, trade names and service marks, whether or
not registered, and all patents, patent applications, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and intellectual
property rights (collectively, "Intellectual Property Rights") which are
necessary for use in connection with its business as now conducted and as
described in the SEC Reports. The Company has no knowledge that it has
infringed, and the Company is not infringing on, any of the Intellectual
Property Rights of any Person. Except as disclosed in the Company's SEC Reports,
there is no Proceeding which is pending, or to the Company's knowledge, is
threatened against, the Company regarding the infringement of any of the
Intellectual Property Rights. The Company has taken reasonable security measures
to protect the secrecy, confidentiality and value of all of its Intellectual
Property Rights.
3.19. Registration Rights; Rights of Participation. Except as described
on Schedule 3.19, (i) the Company has not granted or agreed to grant to any
Person any rights (including "piggy-back" registration rights) to have any
securities of the Company registered with the Commission or any other
Governmental Authority which have not been satisfied, and (ii) no Person,
including current or former shareholders of the Company, underwriters, brokers
or agents, has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Agreements or to require that the Company include any such
securities in the registration of Shares and Warrant Shares as contemplated
herein.
3.20. Title. Except as disclosed on Schedule 3.20, the Company has good
and marketable title in fee simple to all property owned by it, in each case
free and clear of all security interests, liens, pledges or negative pledges,
charges, encumbrances, mortgages, hypothecations, adverse claims or equities
(each, a "Lien"), except for Liens that do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company. Any properties held or used under lease by the
Company are held by it under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such properties by the Company.
3.21. Permits. The Company possesses all certificates, authorizations,
licenses, easements, consents, approvals, orders, permits and approvals
("Permits") necessary to own, lease and operate its properties and to conduct
their businesses as currently conducted except where the failure to possess such
Permits is not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect ("Material Permits"), and there is no Proceeding
pending, or, to the knowledge of the Company, threatened relating to the
revocation, modification, suspension or cancellation of any Material Permit. The
Company has fulfilled and performed all of the material obligations with respect
to such Permits, and no event or change in condition has occurred which allows,
or which upon notice, the lapse of time or both would allow, the revocation or
termination thereof or results in any other material impairment of the rights of
the holder of any such Permits, except for failures which would not,
individually or in the aggregate, have a Material Adverse Effect. The Company is
not in conflict with, in default under or in violation of any Material Permit.
3.22. Insurance. The Company and its respective properties are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management believes is prudent and customary in the
business in which the Company is engaged. Except as disclosed
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on Schedule 3.22, the Company has no reason to believe that it will not be able
to renew such existing insurance policies as and when such coverage expires or
to obtain similar coverage from similar insurers, at a cost that would not
materially and adversely affect the condition, financial or otherwise, or the
earnings, cash flows, business or business prospects of the Company taken as a
whole.
3.23. Investment Company. The Company is not (i) an "investment
company" or a company "controlled by" an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (the "1940 Act"), or
(ii) a "public utility holding company" or a company "controlled by" a "public
utility holding company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended (the "PUHC Act") and the SEC's rules and
regulations under each of such Acts.
3.24. No Stabilization. Neither the Company nor, to the Company's
knowledge, any of its directors, officers, or controlling persons has taken or
will take, directly or indirectly, any action designed to, or which might
reasonably be expected to cause or result in, or which has constituted, under
the Exchange Act, the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Securities.
3.25. Labor. No strike, labor problem, dispute, slowdown, work stoppage
or disturbance with the employees of the Company exists or, to the knowledge of
the Company, is threatened.
3.26. Stock and Other Plans. Other than as disclosed in the SEC
Reports, the Company does not have any profit sharing, deferred compensation,
stock option, stock purchase, phantom stock or similar plans, including
agreements evidencing rights to purchase securities or to share in the profits
of the Company which is material to the Company, taken as a whole.
3.27. Solvency. The Company is, and immediately after the Closing will
be, Solvent. As used herein, the term "Solvent" means, with respect to a
particular date, that on such date, (i) the fair market value of the assets of
the Company exceeds their respective liabilities (including, without limitation,
stated liabilities and contingent liabilities), and (ii) the Company can pay its
debts as they come due or mature. The Company has not taken any steps, and does
not currently expect to take any steps, to seek protection pursuant to any
bankruptcy, insolvency, debtor relief, reorganization or similar law, nor does
the Company have any knowledge or reason to believe that creditors of the
Company have initiated or intend to initiate involuntary bankruptcy or similar
proceedings.
3.28. Environmental. Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (i) the
Company is in compliance with and not subject to any known liability under
applicable Environmental Laws (as defined below), (ii) the Company has made all
filings and provided all notices required under all applicable Environmental
Laws, and has, and is in compliance with, all permits required under any
applicable Environmental Laws, each of which is in full force and effect, (iii)
(a) there are no pending Proceedings with respect to any Environmental Laws
affecting the Company, (b) the Company has not received any demand, claim or
notice of violation of any Environmental Laws and (c) to the knowledge of the
Company, there is no Proceeding, notice or demand letter or request for
information threatened against the Company under any Environmental Law, (iv) no
Lien or restriction has been recorded under any Environmental Law with respect
to any assets, facility or property owned, operated, leased or controlled by the
Company, (v) the Company has not received notice that it has been identified as
a potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or any comparable
state law, (vi) no property or facility of the Company (a) is listed or, to the
knowledge of the Company, proposed for listing on the National Priorities List
under CERCLA or (b) is listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated pursuant to CERCLA,
or on any comparable list maintained by any state or local governmental
authority.
SPA Page 7
For purposes of this Agreement, "Environmental Laws" means all
applicable federal, provincial, state and local laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, relating to pollution, protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
Hazardous Materials (as defined below) into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata), (ii) the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of Hazardous Materials, and
(iii) underground and above ground storage tanks and related piping, and
emissions, discharges, releases or threatened releases therefrom. The term
"Hazardous Material" means (a) any "hazardous substance," as defined in the
Comprehensive Environmental Response, the Resource Conservation and Recovery
Act, as amended, (b) any "hazardous waste," as defined by the Resource
Conservation and Recovery Act, as amended, (c) any petroleum or petroleum
product, (d) any polychlorinated biphenyl and (e) any pollutant or contaminant
or hazardous, dangerous or toxic chemical, material, waste or substance.
3.29. ERISA. The Company has not incurred any liability for any
prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other plan
("Plans") which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company makes or ever has made a
contribution and which would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. With respect to such Plans, the
Company is in compliance in all respects with all applicable provisions of ERISA
and have performed all their respective obligations under such Plans, except
where the failure to so comply would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
3.30. Form S-3 Eligibility. In relation to the resale of the Shares and
the Warrant Shares by the Purchasers, the Company (i) meets the requirements for
use of SEC Form S-3 under the Securities Act and (ii) is eligible for filing and
maintaining a registration statement on Form S-3.
3.31. Taxes. The Company has made or filed all federal and state income
and all other tax returns, reports and declarations required by any jurisdiction
to which it is subject (unless and only to the extent that the Company has set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) and has paid all taxes and other governmental assessments
and charges that are shown or determined to be due on such returns, reports and
declarations or otherwise, except those being contested in good faith and for
which adequate reserves are shown in the Company's SEC Reports. There are no
unpaid taxes in any material amount claimed to be due from the Company by the
taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim.
SECTION 4
Covenants of the Company
The Company hereby covenants with the Purchasers as follows:
4.1. Notification of Certain Events. From the date hereof until the
Closing, the Company will immediately notify each Purchaser, and confirm such
notice in writing, of (i) any filing made by the Company relating to the
Offering with Nasdaq or any securities exchange or the SEC or other securities
regulator in the United States or any other jurisdiction, and (ii) subject to
the agreement of each of the Purchasers to maintain such information in
confidence, any material changes in or affecting the financial condition,
earnings, cash flows, shareholders' equity, business or business prospects of
the Company and its subsidiaries taken as a whole.
SPA Page 8
4.2. Offering Limitations. None of the Company or, to the Company's
knowledge, any of its Affiliates will solicit any offer to buy or offer to sell
shares of Common Stock or securities convertible into or exchangeable for Common
Stock by means of any form of general solicitation or general advertising (as
such terms are used in Regulation D under the Securities Act) in any manner
involving a public offering (within the meaning of Section 4(2) of the
Securities Act) prior to the effective date ("Effective Date") of the
Registration Statement.
4.3. RESERVED
4.4. Disclosures. The Company, promptly following the Closing will (i)
issue a press release announcing the sale of the Securities, and (ii) file such
press release and other appropriate information with the SEC on a Form 8-K. The
Company shall, immediately following the filing of the Registration Statement on
Form S-3 pursuant to the Registration Rights Agreement, (i) issue such press
releases and make such filings under the Exchange Act, including, without
limitation, the filing of Form 8-K, to disclose the sale of the Shares and the
filing of the Registration Statement on Form S-3 pursuant to the Registration
Rights Agreement and (ii) include in the filing of its next Form 10-Q or Form
10-K, as applicable, appropriate disclosures relating to the sale of the Shares
and the filing of such Registration Statement on Form S-3, including, without
limitation, the disclosure required by Item 701 of Regulation S-K. The Company
shall, from and after the Closing through the period that the Registration
Statement is required to be maintained, timely file all SEC Reports, comply with
all requirements under the Exchange Act, continue to list the Shares on Nasdaq
or a national securities exchange, and otherwise comply with the requirements of
Sections 3.6, 3.13 and 3.30 hereof, which are incorporated herein.
4.5. Reservation of Common Stock. At all times through the expiration
date of the Warrants, the Company covenants and agrees to reserve sufficient
shares of Common Stock for issuance upon exercise of the outstanding Warrants.
4.6. Use of Proceeds. The Company will use the proceeds from the sale
of the Shares and the Warrants for general working capital purposes.
4.7. Adjustments in relation to More Favorable Terms. If, at any time
during the twelve months following the Closing, the Company issues and sells any
shares of capital stock (or debt or equity securities convertible into shares of
capital stock) (a "Financing Transaction") on pricing terms more favorable to
the purchasers in such Financing Transaction than the terms contained herein,
the Company shall take such steps as may be reasonably necessary to give the
Purchasers the benefit of such more favorable pricing terms on the Shares and
Warrants purchased hereunder. Such benefit shall be conferred by issuing
additional Shares to the Purchasers and/or increasing the number Warrant Shares
issuable upon exercise of the Warrants, as applicable; provided, however, that
the maximum number of Shares (a) purchased pursuant to this Agreement, (b)
issuable upon exercise of the Warrants, and (c) issued pursuant to this Section
4.7 will not in the aggregate exceed 19.99% of the outstanding shares of the
Company as of the date hereof. For the avoidance of doubt, the parties
acknowledge and agree that in no event will any portion of the purchase price
paid hereunder be returned or refunded to any Purchaser on account of the
application of this Section.
The provision of Section 4.7 and Section 4.8 below shall not apply in
relation to (i) any securities issued to the Company's officers, directors and
consultants in consideration for services rendered or to be rendered whether
pursuant to the Company's equity compensation plans or otherwise, (ii)
securities issued in any merger, reorganization, recapitalization, and (iii)
securities issued as a dividend or rights offering to the Company's
stockholders.
SPA Page 9
4.8. Limitation on Additional Financings. For so long as ▇▇▇▇▇
▇▇▇▇▇▇▇▇, Ltd. ("Grace") beneficially own at least 75% of the Shares purchased
hereunder, during the period commencing at the Closing and ending on the first
anniversary of the Closing, the Company will not, without the prior written
approval of Grace (which consent shall not be unreasonably withheld) issue and
sell any shares of capital stock (or debt or equity securities convertible into
shares of capital stock) in a Financing Transaction to the extent that the
aggregate consideration received by the Company through such Financing
Transaction exceeds Eight Million Dollars ($8,000,000).
SECTION 5
Representations, Warranties and Covenants of the Purchasers
Each Purchaser, severally and not jointly, hereby represents, warrants
and covenants to the Company with respect to the purchase of the Shares by such
Purchaser and issuance of the Warrants to such Purchaser as follows:
5.1. Experience. Such Purchaser has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company, and the Purchaser is capable of evaluating the
merits and risks of its investment in the Company and has the capacity to
protect its own interests.
5.2. Qualified Institutional Buyer. Such Purchaser is a "qualified
institutional buyer," as defined in Rule 144A of the Securities Act, or an
"accredited investor," as defined in SEC Regulation D promulgated pursuant to
the Securities Act.
5.3. Rule 144. Such Purchaser acknowledges that the Shares, the
Warrants and the Warrant Shares must be held indefinitely unless subsequently
registered for resale under the Securities Act or unless an exemption from such
registration is available. Such Purchaser is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of securities
purchased in a private placement, subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about the
Company, the resale occurring not less than one year after a party has purchased
and fully paid for the security to be sold, the sale being effected through a
"broker's transaction" or in a transaction directly with a "market maker" and
the number of shares being sold during any three-month period not exceeding
specified limitations.
5.4. Confidential Access to Information. Such Purchaser has had an
opportunity to discuss the Company's business, management and financial affairs
with its management. It has also had an opportunity to ask questions of officers
of the Company, which questions were answered to its satisfaction. Such
Purchaser understands that such discussions, as well as any written information
issued by the Company, were intended to describe certain aspects of the
Company's business and prospects. Pursuant to a confidentiality agreement, as
contemplated by the SEC's Regulation FD, such Purchaser acknowledges that it has
been provided access to material, non-public information and that the Purchaser
will keep all such information confidential except to the extent it becomes
public through no fault of the Purchaser. Further, the Purchaser acknowledges
and understands the fact that the Company is seeking to effect the private
placement of the Shares and the Warrants is material non-public information and
disclosure of such information or use of such information by the Purchasers or
anyone receiving such information from the Purchasers in connection with the
purchase, sale or trade of the Company's securities (other than use by the
Purchasers in acquiring the Shares and the Warrants), or any hedging, derivative
or similar transactions or activities involving the Company's securities, is a
violation of
SPA Page 10
securities laws. Neither such inquiries nor any other due diligence
investigation conducted by such Purchaser or any of its advisors or
representatives shall modify, amend or affect such Purchaser's right to rely on
the Company's representations, warranties and covenants contained herein or in
the other Agreements. The Purchaser understands that its investment in the
Shares, the Warrants and the Warrant Shares involves a high degree of risk.
5.5. Organization; Authorization. The Purchaser is a corporation, a
limited liability company or a partnership duly formed, validly existing and in
good standing under the laws of the jurisdiction of its organization with the
requisite power and authority, to enter into and to consummate the transactions
contemplated by the Agreements and otherwise to carry out its obligations under
the Agreements. The purchase by such Purchaser of the Shares and the Warrants
hereunder has been duly authorized by all necessary action on the part of such
Purchaser. This Agreement, when executed and delivered by such Purchaser, will
constitute a valid and binding obligation of the Purchaser, enforceable in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
5.6. Restrictive Legend. Such Purchaser understands that the
certificates evidencing the Shares, and the Warrant Shares will bear the
following legends:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES, OR "BLUE
SKY," LAWS OF ANY STATE OR OTHER DOMESTIC OR FOREIGN JURISDICTION. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION STATEMENT IN
EFFECT UNDER THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR A WRITTEN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED AND THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE FOR SUCH TRANSACTIONS UNDER THE SECURITIES ACT AND OTHER
APPLICABLE LAWS."
In addition, the Purchasers acknowledge that each certificate for
Shares and Warrant Shares shall bear any additional legend required by any other
applicable domestic or foreign securities or blue sky laws.
The Company will direct its transfer agent and registrar to maintain
stop transfer instructions on record for the Securities until it has been
notified by the Company, upon the advice of counsel, that such instructions may
be waived consistent with the Securities Act and applicable domestic and foreign
securities laws. Such stop transfer instructions will limit the method of sale
of the Securities, consistent with Rule 144 or other available exemptions from
registration under the Securities Act. Any transfers other than pursuant to a
registration statement under the Securities Act will require an opinion of
counsel reasonably satisfactory to the Company and its counsel prior to such
transfers.
5.7. No Governmental Review. Each Purchaser understands that no United
States federal or state agency or any other government or governmental agency or
authority has passed upon or made any recommendation or endorsement of the
Shares, Warrants or Warrant Shares.
5.8. Residency. Such Purchaser is a resident of the jurisdiction set
forth immediately below such Purchaser's name on the Subscription Agreement.
5.9. Investment Intent. Such Purchaser is acquiring the Shares and the
Warrants for investment for its own account, not as a nominee or agent, and not
with the view to any distribution thereof. Such
SPA Page 11
Purchaser understands and agrees that the Shares, the Warrants and the Warrant
Shares have not been registered under the Securities Act by reason of the
exemption from the registration provisions of the Securities Act contained in
Rule 506 of Regulation D and Section 4(2) of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of such Purchaser's representations,
warranties and covenants as expressed herein, which are being relied upon by the
Company.
5.10. Rights Agreement. Such Purchaser acknowledges that the Company
has entered into a Rights Agreement, dated October 28, 1998 (as amended, the
"Rights Agreement"), which Rights Agreement has been filed with the Commission
as an exhibit to the Company's periodic reports. Such Purchaser is not, and at
the time of Closing will not be, an Acquiring Person (as such term is defined in
the Rights Agreement). In conjunction with the Offering, the Company shall cause
the Rights Agreement to be amended to increase to 35% the threshold at which a
person or entity becomes an "Acquiring Person" (as defined in the Rights
Agreement).
5.11. No Manipulation. Neither such Purchaser nor, to the Purchaser's
knowledge, any of its directors, officers, managers, subsidiaries, controlling
persons or other affiliates has taken, or presently plans to take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted, under the Exchange Act, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares or Warrant Shares.
SECTION 6
Conditions to Purchasers' Obligations to Close
The obligations of each Purchaser to purchase the Shares and Warrants
at the Closing is subject to the fulfillment of the following conditions, any of
which may be waived by a Purchaser:
6.1. Representations and Warranties Correct. The representations and
warranties made by the Company herein shall be true and correct in all material
respects as of the date when made and as of the Closing.
6.2. Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing shall
have been performed or complied with in all material respects.
6.3. No Injunction. No statute, rule, regulation, order, decree,
ruling or injunction shall have been enacted, entered, promulgated, endorsed or
threatened or is pending by or before any Governmental Authority of competent
jurisdiction which restricts, prohibits or threatens to restrict or prohibit the
consummation of any of the transactions contemplated by the Agreements.
6.4. No Suspensions of Trading in Common Stock. The trading in the
Common Stock shall not have been restricted or suspended by the Commission,
Nasdaq or any other market or exchange where such Common Stock is traded (except
for any suspension of trading of limited duration solely to permit dissemination
of material information regarding the Company).
6.5. Listing of Common Stock. As soon as possible after the Closing,
and in connection with the filing of the Registration Statement, the Shares and
Warrant Shares shall have been listed for trading or quotation on Nasdaq.
SPA Page 12
6.6. Adverse Changes. Since the date of the financial statements
included in the Company's Quarterly Report on Form 10-Q, Annual Report on Form
10-K, or latest Current Report on Form 8-K,whichever is more recent, last filed
prior to the date of this Agreement, no event which has had or could reasonably
be expected to have a Material Adverse Effect shall have occurred.
6.7. Litigation. Except as set forth on Schedule 6.7 to this
Agreement, no Proceeding shall have been instituted or threatened against the
Company which could reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect.
6.8. Change of Control. No Change of Control shall have occurred
between the date hereof and the Closing. As used herein, "Change of Control"
means the occurrence of any of (i) an acquisition after the date hereof by an
individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act), other than the Purchasers or any of their
Affiliates, of in excess of 35% of the voting securities of the Company, (ii) a
replacement of more than one-half of the members of the Company's Board of
Directors that is not approved by a majority of those individuals who are
members of the Board of Directors on the date hereof, or their duly elected
successors who are directors immediately prior to such transaction, in one or a
series of related transactions, (iii) the merger of the Company with or into
another Person, unless following such transaction, the holders of the Company's
securities continue to hold at least 51% of such securities following such
transaction, (iv) the consolidation or sale of all or substantially all of the
assets of the Company in one or a series of related transactions or (v) the
execution by the Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth above in clauses
(i), (ii), (iii) or (iv).
6.9. Certificate of Incorporation. The Company shall have delivered to
each of the Purchasers a copy of a certificate evidencing the incorporation and
good standing of the Company, issued by the Secretary of State of the state
where the Company is organized, as of a date within 10 days of the Closing. The
Company shall have delivered to each of the Purchasers, or their
representatives, acting on behalf of all of the Purchasers, a copy of a
certificate evidencing the qualification and good standing of the Company in
such other states or jurisdictions where the Company's ownership or operation of
its properties or the conduct of its business require the Company to be
qualified to do business as a foreign corporation.
6.10. Compliance Certificate. Should the Closing occur as of a date
other than the date of this Agreement, the Company shall have delivered to the
Purchasers a certificate of the Company executed by the President of the
Company, dated as of the Closing, certifying to the fulfillment of the
conditions specified in Section 6 of this Agreement.
6.11. Secretary's Certificate. The Company shall have delivered to the
Purchaser a certificate of the Company executed by the Chief Financial Officer
and the Secretary of the Company, dated as of the Closing, certifying (i)
resolutions adopted by the Board of Directors of the Company authorizing the
execution of the Agreements, the issuance of the Shares, the filing of the
Registration Statement, and the transactions contemplated hereby; (ii) the
Certificate of Incorporation and Bylaws of the Company, each as amended, and
copies of the third party consents, approvals and filings required in connection
with the consummation of the transactions contemplated by the Agreements; and
(iii) such other documents relating to the transactions contemplated by the
Agreements as the Purchasers may reasonably request.
6.12. Registration Rights Agreement. The Company and the Purchasers
shall have executed, entered into and delivered the Registration Rights
Agreement, in substantially the form attached hereto as Exhibit B.
SPA Page 13
6.13. Amendment to Rights Agreement. The Rights Agreement shall have
been amended as contemplated in Section 5.10 above.
6.14. Other Documents. The Company shall have delivered to each
Purchaser such other documents relating to the transactions contemplated by the
Agreements as the Purchasers or their counsel may reasonably request.
SECTION 7
Conditions to Closing of the Company
The Company's obligation to sell and issue the Shares and the Warrants
at the Closing is, at the option of the Company, subject to the fulfillment as
of the Closing of the following conditions:
7.1. Representations. The representations and warranties made by the
Purchasers herein shall be true and correct in all material respects on the
dates made and on the date of Closing.
7.2. Performance by the Purchasers. Each Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Agreements to be performed, satisfied
or complied with by such Purchaser at or before the Closing.
7.3. No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated,
endorsed or threatened or is pending by or before any Governmental Authority of
competent jurisdiction which prohibits or threatens to prohibit the consummation
of any of the transactions contemplated by the Agreements.
7.4. Amendment to Rights Agreement. The Rights Agreement shall have
been amended as contemplated in Section 5.10 above.
SECTION 8
Miscellaneous
8.1. Governing Law. This Agreement shall be governed in all respects
by the laws of the State of Delaware, without reference to its conflict of laws
principles.
8.2. Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchasers
and the closing of the transactions contemplated hereby.
8.3. Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided that the rights of the Purchasers to purchase the Securities shall not
be assignable without the consent of the Company.
8.4. Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by United States
mail, postage prepaid, by reliable overnight delivery service such as UPS or
FedEx, or by facsimile transmission, or otherwise delivered by hand or by
messenger, addressed (a) if to any Purchaser, at the Purchaser's address set
forth on the Subscription Agreement, or at such other address as such Purchaser
shall have furnished to the Company in writing, or (b) if to any other holder of
any shares, at such address as such holder shall have furnished the Company
SPA Page 14
in writing, or, until any such holder so furnishes an address to the Company,
then to and at the address of the last holder of such shares who has so
furnished an address to the Company, or (c) if to the Company, one copy should
be sent to the Company at the address listed below, in each case with a copy to
each Purchaser at the address indicated on each Purchaser's Subscription
Agreement.
Company:
Nanophase Technologies Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Company Counsel:
Wildman, Harrold, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered, or if by
facsimile transmission, as indicated by the facsimile imprint date.
8.5. Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any
Purchaser upon any breach or default of the Company under the Agreements shall
impair any such right, power or remedy of such Purchaser, nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of any similar breach or default thereafter occurring; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any Purchaser of any breach or
default under this Agreement, or any waiver on the part of any party hereto of
any provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
Purchaser, shall be cumulative and not alternative.
8.6. Expenses. The Company and the Purchasers shall each bear their
own legal and other expenses with respect to this Agreement.
8.7. Subscription Agreement; Counterparts. Persons may become parties
to this Agreement by executing the Subscription Agreement, which may be executed
in two or more identical counterparts and by facsimile, each of which shall be
deemed an original and all of which shall constitute one and the same agreement.
Any signature that is delivered by facsimile transmission shall be valid and
binding, with the same force and effect as if an original, manually signed
counterpart.
8.8. Severability. In the event that any provision of this Agreement
is unenforceable, the remaining provisions shall continue in full force and
effect.
SPA Page 15
8.9. Section Headings, etc. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement. As used herein, any gender shall include all other
genders, and the singular shall include the plural and vice versa. The terms
"include," "including" and similar terms shall mean include without limitation,
whether by enumeration or otherwise.
8.10. No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and no other person is intended to or shall have any rights hereunder
whether as a third party beneficiary or otherwise.
8.11. Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder are several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. The obligations of each Purchaser are not conditioned upon
the action of any other Purchaser. Nothing contained herein or in any other
agreement or document delivered at the Closing, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of Person, or create a presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to protect and enforce its
rights, including, without limitation, the rights arising out of the Agreements,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.
8.12. Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other parties may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
8.13. Confidentiality. All material, non-public information disclosed
by the Company to the Purchasers pursuant to this Agreement or otherwise shall
be held strictly confidential and used by the Purchasers solely for evaluating
purchases of Securities in this Offering, provided this obligation shall not
apply to any information that is generally available to the public or becomes
available to the public without any disclosure by the Purchasers. The provisions
of this Section 8.13 shall not in any way amend or supercede the provisions of
any other confidentiality, non-disclosure or similar agreement with the Company
to which any Purchaser is bound.
8.14. Entire Agreement; Amendment. This Agreement, the Registration
Rights Agreement, the Subscription Agreement Warrants and the other Operative
Documents constitute the entire understanding and agreement between the
Purchasers and the Company with regard to the subject matter. Except as
expressly provided herein, this Agreement, any of the other Agreements or any
term hereof may be amended, modified, waived or discharged only by a written
instrument signed by the party waiving any term, condition, or right or remedy
that benefits it hereunder.
SPA Page 16
APPENDIX 1
FORM OF WARRANT
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
NANOPHASE TECHNOLOGIES CORPORATION
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES OR "BLUE SKY" LAWS
OF ANY STATE OR OTHER DOMESTIC OR FOREIGN JURISDICTION. NEITHER THESE SECURITIES
NOR ANY INTEREST HEREIN MAY BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION STATEMENT
IN EFFECT UNDER THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR UPON DELIVERY OF
A WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED AND THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE FOR
SUCH TRANSACTIONS UNDER THE SECURITIES ACT AND OTHER APPLICABLE LAWS.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH
SECURITY MAY BE OFFERED, RESOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
OR DISPOSED OF, ONLY (1) (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (B) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (C)
PURSUANT TO ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, (AND IN THE CASE OF (B) OR (C), BASED UPON AN OPINION OF COUNSEL
IF THE COMPANY SO REQUESTS) OR (D) TO THE COMPANY, AND (2) IN EACH CASE, IN
ACCORDANCE WITH APPLICABLE BLUE SKY LAWS AND THE SECURITIES LAWS OF ANY OTHER
APPLICABLE DOMESTIC OR FOREIGN JURISDICTION. THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT THAT THE SECURITY
EVIDENCED HEREBY IS SUBJECT TO THE FOREGOING RESALE RESTRICTIONS.
THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS SECURITY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY OTHER STATE SECURITIES, OR "BLUE
SKY," LAWS, AND SUCH SHARES WILL BE RESTRICTED IN THE SAME MANNER AS THESE
SECURITIES. SUCH SHARES ARE ENTITLED TO THE BENEFIT OF A REGISTRATION RIGHTS
AGREEMENT, DATED AS OF SEPTEMBER 8, 2003, BY AND AMONG THE ISSUER AND THE
PURCHASERS NAMED THEREIN, THAT COVERS THE RESALE OF THE SHARES ACQUIRED UPON
EXERCISE OF THESE WARRANTS. A COPY OF THE REGISTRATION RIGHTS AGREEMENT MAY BE
OBTAINED UPON WRITTEN REQUEST TO THE ISSUER.
DATE OF INITIAL ISSUANCE: SEPTEMBER 8, 2003
THIS CERTIFIES THAT, for value received, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Ltd. (the
"Holder") is entitled to purchase, subject to the exercise and other provisions
of this Warrant, from Nanophase Technologies Corporation, a Delaware corporation
(the "Company") at any time on or prior to 5:00 P.M. Eastern Time
Warrant Page 1
on September 7, 2004 (the "Expiration Date"), up to 453,001 shares (as such
number of shares may be adjusted in accordance with Section 2 hereof, the
"Warrant Shares") of the Company's common stock, par value $.01 per share (the
"Common Stock"), at any time and from time to time, in whole or in part, at an
exercise price per share of $4.415 (subject to adjustment as provided in Section
2 hereof, the "Exercise Price"). This Warrant shall expire on September 7, 2004,
and shall become void thereafter.
WHEREAS, the Company proposes to sell, pursuant to a Stock Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), by and among
the Company, the Holder and the other Purchasers named therein, an aggregate of
up to 453,001shares of the Company's Common Stock and, as an inducement for the
Purchasers to purchase such shares, the Company also proposes to grant to the
Purchasers Warrants to purchase an aggregate of up to 453,001 shares of the
Company's Common Stock;
NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
Section 1. Exercise of Warrant.
1.1. Vesting. The Holder's rights under this Warrant are fully
vested as of the date hereof.
1.2. Exercisability. This Warrant shall be exercisable, in whole or
in part, in the discretion of the holder, at any time from the date hereof until
the Expiration Date (such period, the "Exercise Period").
1.3. Procedure for Exercise of Warrant.
(a) To exercise this Warrant in whole or in part, the Holder
shall deliver to the Company, at Nanophase Technologies Corporation,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Facsimile No. (630)
771-0825, Attention: Chief Financial Officer (or at such other address
as the Company may hereafter provide), at any time prior to the
Expiration Date: (i) a completed and signed Notice of Exercise, as
attached hereto; (ii) cash or a certified or official bank check,
payable to the order of the Company in the amount of the aggregate
Exercise Price for the Warrant Shares being purchased; and (iii) this
Warrant. Upon irrevocable payment in good collected funds of the
aggregate Exercise Price (rounded up to the nearest cent) for the
Warrant Shares being purchased, the Holder shall be deemed to be the
holder of record of such Warrant Shares, notwithstanding that the stock
transfer books of the Company may then be closed or that certificates
representing such Warrant Shares may not then be actually delivered to
the Holder.
(b) The Company shall, as promptly as practicable after completion
of the actions specified in Section 1.3(a) above, and in no event later
than five (5) business days after the completion of such actions,
direct its Common Stock registrar and transfer agent to execute to the
Holder a certificate representing the aggregate number of Warrant
Shares specified in the Notice of Exercise. Each stock certificate so
delivered shall be in such denomination as may be requested by the
Holder and shall be registered in the name of the Holder. If this
Warrant shall have been exercised only in part, the Company shall, at
the time of delivery of said stock certificate or certificates, deliver
to the Holder a new Warrant evidencing the right of the Holder to
purchase the remaining Warrant Shares covered by this Warrant. The
Company shall pay all expenses, stock transfer taxes and other charges
payable in connection with the preparation, execution and delivery of
stock certificates representing Common Stock issued upon exercise of
this Warrant.
Warrant Page 2
1.4. Restrictive Legend. Each certificate for Warrant Shares shall
contain the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE OR OTHER DOMESTIC OR FOREIGN
JURISDICTION. NEITHER THESE SECURITIES NOR ANY INTEREST HEREIN MAY BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION STATEMENT IN EFFECT UNDER
THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR UPON DELIVERY OF A
WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED AND THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE FOR SUCH TRANSACTIONS UNDER THE SECURITIES
ACT AND OTHER APPLICABLE LAWS.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT
SUCH SECURITY MAY BE OFFERED, RESOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED OR DISPOSED OF, ONLY (1) (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (B) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (C) PURSUANT TO
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, (AND IN THE CASE OF (B) OR (C), BASED UPON AN OPINION OF COUNSEL
IF THE COMPANY SO REQUESTS) OR (D) TO THE COMPANY, AND (2) IN EACH
CASE, IN ACCORDANCE WITH APPLICABLE BLUE SKY LAWS AND THE SECURITIES
LAWS OF ANY OTHER APPLICABLE DOMESTIC OR FOREIGN JURISDICTION. THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT THAT THE SECURITY EVIDENCED HEREBY IS SUBJECT TO THE
FOREGOING RESALE RESTRICTIONS.
THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS SECURITY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY OTHER STATE
SECURITIES, OR "BLUE SKY," LAWS, AND SUCH SHARES WILL BE RESTRICTED IN
THE SAME MANNER AS THESE SECURITIES. SUCH SHARES ARE ENTITLED TO THE
BENEFIT OF A REGISTRATION RIGHTS AGREEMENT, DATED AS OF SEPTEMBER 8,
2003, BY AND AMONG THE ISSUER AND THE PURCHASERS NAMED THEREIN, THAT
COVERS THE RESALE OF THE SHARES ACQUIRED UPON EXERCISE OF THESE
WARRANTS. A COPY OF THE REGISTRATION RIGHTS AGREEMENT MAY BE OBTAINED
UPON WRITTEN REQUEST TO THE ISSUER.
The certificates shall also bear any additional legends that are
required by, or are appropriate with respect to the rules and regulation of, the
United States Securities and Exchange Commission (the "SEC") and any applicable
state, foreign or other securities or "blue sky" authorities. The Company's
transfer agent and registrar will maintain stop transfer instructions on record
for the Warrant Shares until it has been notified by the Company, upon the
advice of counsel, that such instructions may be waived. Such stop transfer
instructions will limit the method of sale of the Warrant Shares, consistent
with Rule 144 or other available exemptions from registration under the
Securities Act of 1933, as amended. Any transfers
Warrant Page 3
will require an opinion of counsel reasonably satisfactory to the Company and
its counsel prior to such transfers.
1.5. Character of Warrant Shares. The Company represents, warrants
and covenants that all Warrant Shares shall be duly authorized, validly issued,
and, upon payment of the Exercise Price therefor, fully paid and nonassessable,
and free from all taxes, liens, hypothecations, security interests, adverse
claims or interests and charges created in respect of the issue thereof.
1.6 No Fractional Shares. The Company shall have no obligation to
issue fractional shares, or scrip representing fractional shares, of its Common
Stock under this Warrant, and, to the extent that the Holder would otherwise be
entitled to purchase and/or receive fractional shares of Common Stock hereunder,
such fractional shares shall instead be disregarded and shall be of no value or
consequence.
Section 2. Certain Adjustments.
2.1. Stock Dividends, Subdivisions and Combinations. If at any time
the Company shall:
(a) establish a record date for the determination of holders
of record of its Common Stock for the purpose of entitling them to
receive a dividend payable in, or other distribution of, additional
shares of the Company's Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (1) the number of Warrant Shares for which this Warrant is exercisable
immediately after the occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the same number of
shares of Common Stock for which this Warrant is exercisable immediately prior
to the occurrence of such event would own or be entitled to receive upon or as a
result of such event, and (2) the Exercise Price shall be adjusted to equal (x)
the Exercise Price multiplied by the Warrant Shares for which this Warrant is
exercisable immediately prior to the adjustment divided by (y) the Warrant
Shares for which this Warrant is exercisable immediately after such adjustment.
2.2. Adjustment Procedures. The following provisions shall be
applicable to adjustments to be made pursuant to Section 2.1 hereof:
(a) When Adjustments to be Made. The adjustments required by
this Section 2 shall be made whenever and as often as any event
requiring an adjustment shall occur.
(b) Fractional Interests. In computing adjustments under
this Section 2, fractional interests in the Common Stock shall be taken
into account to the nearest 1/10th of a share. In no event, however,
shall fractional shares or scrip representing fractional shares be
issued upon the exercise of this Warrant.
(c) When Adjustment Not Required. If the Company establishes
a record date for the determination of the holders of record of the
Common Stock for the purpose of entitling such holders to receive a
dividend or distribution payable in Common Stock and thereafter and
before the distribution to shareholders thereof, legally abandons its
plan to pay or deliver such dividend
Warrant Page 4
or distribution, then no adjustment shall be required by reason of the
establishment of such record date and any such adjustment previously
made in respect thereof shall be rescinded and annulled.
2.3. Reorganization, Reclassification, Merger, Consolidation or
Share Exchange. If the Company at any time reorganizes or reclassifies the
outstanding shares of Common Stock (other than a change in par value, or from no
par value to par value, or from par value to no par value, or as a result of a
subdivision or combination) or consolidates with, merges into, or effects a
share exchange with, another person or entity (where the Company is not the
continuing corporation after such transaction) or the Company sells all or
substantially all its assets in one or a series of transactions (each, a
"Business Combination"), then the Holder shall thereafter be entitled to receive
upon the exercise of this Warrant in whole or in part, the same kind and number
of shares of stock and other securities, cash or other property (and upon the
same terms and with the same rights) as would have been distributed to the
Holder upon such reorganization, reclassification or Business Combination had
the Holder exercised this Warrant immediately prior to such reorganization,
reclassification or Business Combination (subject to subsequent adjustments
under this Section 2), and the Exercise Price shall be adjusted appropriately to
reflect such action and adjustment.
If any such reorganization, reclassification, consolidation, merger or share
exchange results in a cash distribution in excess of the Exercise Price
provided by this Warrant, the Holder may, at the Holder's option, exercise
this Warrant without making payment of the Exercise Price, and in such case
the Company or its successors and assigns shall, upon distribution to such
Holder, consider the Exercise Price to have been paid in full, and in making
settlement to such Holder, shall deduct an amount equal to the Exercise
Price from the cash amount otherwise payable to such Holder. Notwithstanding
anything herein to the contrary, the Company will not effect any such
reorganization, reclassification or Business Combination, unless, prior to
the consummation thereof, the person or entity that may be required to
deliver any stock, securities or other assets upon the exercise of this
Warrant shall agree expressly in writing to bound hereby, to perform timely
and observe each and every provision of this Warrant and the Registration
Rights Agreement, and to deliver such stock, cash, securities or other
assets to the Holder.
2.4. Officer's Certificate. Upon each adjustment of the Exercise
Price and the Warrant Shares issuable upon the exercise of this Warrant, and in
the event of any change in the rights of the Holder by reason of other events
herein set forth, then and in each such case, the Company will promptly prepare
a certificate of a responsible officer of the Company, stating the adjusted
Exercise Price, the adjusted number of Warrant Shares so issuable, and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company will promptly mail a copy of such
certificate to the Holder. Such calculation shall be final and binding on the
parties and shall be conclusive evidence of the correctness of the computation
with respect to any such adjustment of the Exercise Price and any such change in
the number of Warrant Shares so issuable, absent manifest error.
2.5. Notice of Certain Proposed Actions. In the event the Company
shall propose to take any action of the types described in Sections 2.1 or 2.3
above, then the Company shall forward, at the same time and in the same manner,
to the Holder such notice and related proxy or other materials, if any, that the
Company gives to the holders of the Common Stock. Failure to give such notice,
or any defect therein, however, shall not affect the legality or validity of any
such action.
Section 3. Ownership and Transfer.
3.1. Ownership. The Company may deem and treat the person in whose
name this Warrant is registered as the sole Holder and owner hereof
(notwithstanding any notations of ownership or writing
Warrant Page 5
hereon made by anyone other than the Company) for all purposes, and the Company
shall not be affected by any notice to the contrary until presentation of this
Warrant to the Company for registration of transfer.
3.2. Transfers. Upon the sale, disposition, transfer or conveyance
of this Warrant, the purchaser, transferee or other recipient hereof shall,
together with the previous Holder hereof, promptly notify the Company of such
sale, disposition, transfer or conveyance and shall provide such recipient's
name, address and capacity in which this Warrant is held, and present such other
information as the Company may reasonably request, and such recipient will
thereafter be subject to, and bound by, the terms and provisions of, this
Warrant to the same extent as the previous Holder. Nothing in this Section 3.2
is intended to or shall affect the limitations on sales, offers for sale,
dispositions and transfers hereunder.
3.3. Replacement. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft or destruction of this Warrant, and of
indemnity or security reasonably satisfactory to it, or upon surrender of this
Warrant if mutilated, the Company will make and deliver a new Warrant of like
tenor, in lieu of this Warrant. This Warrant shall be promptly canceled by the
Company upon the surrender hereof in connection with any transfer or
replacement. Except as otherwise provided above in the case of the loss, theft
or destruction of a Warrant, the Company shall pay all expenses, taxes and other
charges payable in connection with any transfer or replacement of this Warrant.
Applicants for such substitute Warrants shall also comply with such other
reasonable regulations and pay such other reasonable charges incidental thereto
as the Company may reasonably prescribe. Any such new Warrant shall constitute
an original contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant shall at any time be presented.
3.4 Cancellation of Warrant. Any Warrant surrendered upon exercise
or for split up, combination, exchange or transfer, or purchased or otherwise
acquired by the Company, shall be cancelled and shall not be reissued by the
Company; and, except as provided herein in the case of the purchase of less than
all of the Warrant Shares pursuant to the third sentence of Section 1.3(b)
hereof or in the case of a Warrant surrendered upon a split up, combination,
exchange or transfer, no Warrant shall be issued hereunder in lieu of such
cancelled Warrant. Any Warrant so cancelled shall be marked cancelled and
destroyed by the Company.
3.5 Expiration of Warrant. This Warrant shall expire on September
7, 2004, and shall become void thereafter.
Section 4. Miscellaneous.
4.1. Reservation of Shares. The Company covenants that, at all times
during the Exercise Period, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares of Common Stock to provide for the
issuance of Common Stock upon the exercise of this Warrant, as well as for the
issuance of Common Stock pursuant to any other outstanding warrants, options or
other instruments convertible or exercisable into the Company's Common Stock,
and with respect to any employee benefit or similar plans.
4.2. No Rights as Shareholder; Limitation of Liability. This Warrant
shall not entitle the Holder to any of the rights of a holder of Company Common
Stock, including, without limitation, the right to vote, to receive dividends
and other distributions, or to receive any notice of, or to attend, meetings of
Company shareholders, prior to exercise of this Warrant and irrevocable payment
in good, collected funds of the Exercise Price therefor.
Warrant Page 6
4.3. Amendment. This Warrant may only be modified or amended and any
provision hereof may only be waived by a writing executed by the Company and the
Holder of this Warrant.
4.4. Successors and Assigns. This Warrant shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns permitted hereunder, and no other parties are intended to, or shall have
any rights hereunder, whether as third party beneficiaries or otherwise.
4.5. Governing Law. This Warrant shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware.
4.6. Entire Agreement. The Holder is entitled, with respect to his
ownership of this Warrant and/or the Warrant Shares to the benefits of the
Purchase Agreement and the Registration Rights Agreement, dated as of the date
hereof (the "Registration Rights Agreement"), by and among the Company, the
Holder and the other Purchasers named in the Purchase Agreement. Except as
otherwise expressly provided herein, this Warrant (including the Purchase
Agreement, the Registration Rights Agreement and any other agreements,
instruments and other documents referred to herein or therein) constitute the
entire agreement among the parties hereto with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereto, written or oral.
4.7. Headings, etc. The descriptive headings of the articles and
sections of this Warrant are inserted for convenience of reference only and
shall not control or affect the meaning or construction of any of the provisions
hereof. As used herein, the singular shall include the plural and vice versa and
the terms "include," "included" and "including" shall mean without limitation by
way of enumeration or otherwise.
4.8. Counterparts. This Warrant may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
[Signatures on following page.]
Warrant Page 7
IN WITNESS WHEREOF, the parties have executed or caused their proper
officers or officials thereunto duly authorized to execute this Warrant as of
the date first written above.
THE COMPANY
Nanophase Technologies Corporation
By: ________________________________
▇▇▇▇▇▇ ▇▇▇▇▇, CEO
THE HOLDER
_____________________________________
Name:
By: ________________________________
Name:
Title:
Warrant Page 8
NOTICE OF EXERCISE OF
WARRANT TO PURCHASE COMMON STOCK OF
NANOPHASE TECHNOLOGIES CORPORATION
To: Nanophase Technologies Corporation
Attn: Chief Financial Officer
The undersigned, the registered owner of this Warrant, hereby
irrevocably elects to exercise the purchase rights represented thereby for, and
to purchase thereunder, _________ shares of Common Stock of Nanophase
Technologies Corporation and herewith makes payment of $__________ therefor, and
requests that the certificates evidencing such shares be issued in the name of
and be delivered to:
Name: _________________________________________
Address: _________________________________________
_________________________________________
_________________________________________
Social Security or
Tax I.D. Number: _________________________________________
and if such shares shall not be all of the shares purchasable hereunder, that a
new Warrant of like tenor for the balance of the shares purchasable hereunder be
delivered to the undersigned.
THE UNDERSIGNED ACKNOWLEDGES THAT THIS WARRANT SHALL EXPIRE ON SEPTEMBER 7,
2004, AND SHALL BECOME VOID THEREAFTER.
IN WITNESS WHEREOF, the undersigned thereunto duly authorized has
executed this instrument on the date shown below.
Dated: _________________
THE HOLDER
_____________________________________
Name
By:__________________________________
Name
Warrant Page 9
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of September 8, 2003, by and among NANOPHASE TECHNOLOGIES
CORPORATION, a Delaware corporation (the "Company"), and those persons (the
"Purchasers") identified on, and a party to, an executed copy of the
Subscription Agreement to which this Agreement is an Exhibit (the "Subscription
Agreement").
This Agreement is made pursuant to the Subscription Agreement and the
Stock Purchase Agreement, dated on or about the date hereof, which is an Exhibit
to the Subscription Agreement (the "Stock Purchase Agreement"), by and between
the Company and the Purchasers, pursuant to which the Company is issuing and
selling (i) up to 453,001shares of its common stock, $.01 par value per share
(the "Common Stock" or the "Shares") to the Purchasers and (ii) to each
Purchaser a warrant to purchase a number of shares of Common Stock equal to 100%
of the whole number of shares of Common Stock purchased by each Purchaser
therein (a "Warrant").
The Shares, the Warrants and the shares of Common Stock issuable upon
exercise of the Warrants ("Warrant Shares") are referred to herein as the
"Securities".
The Shares are being offered and sold to the Purchasers without
registration under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance upon the exemption from registration provided by Section 4(2)
of the Securities Act, and the provisions of Rule 506 of Regulation D,
promulgated under the Securities Act. In order to induce the Purchasers to enter
into the Stock Purchase Agreement, the Company has agreed to provide to the
Purchasers (and their direct and indirect permitted transferees, if any) the
registration rights set forth in this Agreement with respect to the resale of
the Securities. The execution and delivery of this Agreement is a condition to
the Closing under the Stock Purchase Agreement. Capitalized terms used but not
defined herein shall have the meaning provided in the Stock Purchase Agreement.
In consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
SECTION 1
Registration Rights
1.1. Filing of Form S-3 Resale Registration Statement. As soon as
practical and, within thirty (30) business days after the closing under the
Stock Purchase Agreement, the Company shall file with the Securities and
Exchange Commission (the "SEC" or the "Commission") a registration statement on
Form S-3 pursuant to Rule 415 under the Securities Act, or, in the event that
Form S-3 is unavailable to the Company, a registration statement on such other
SEC Form that is available to the Company (together with any exhibits,
amendments or supplements thereto, and any documents incorporated by reference
therein, the "Registration Statement"), with respect to the resale of the Shares
and Warrant Shares, and any securities of the Company issued as a dividend or
other distribution with respect to, or in exchange for or in replacement of, the
Shares or Warrant Shares. The securities described in the preceding sentence are
collectively referred to herein as the "Registrable Securities"; provided, that
the term "Registrable
Registration Rights Agreement Page 1
Securities" shall not include securities transferred to a person other than a
permitted transferee. The Registration Statement may not include securities of
the Company other than Registrable Securities.
1.2. Effectiveness of Registration Statement. The Company shall,
subject to Section 6 hereof, use its commercially reasonable efforts to cause
the Registration Statement to become effective as soon as practicable and within
six (6) months after the date hereof, and shall use its commercially reasonable
best efforts to keep the Registration Statement continuously effective from the
date such Registration Statement becomes effective until the earlier of (i) the
date on which all Securities have been resold under such Registration Statement
and (ii) the date on which all Registrable Securities may be resold without
restriction or limitation.
1.3. Supplements; Amendments. Subject to Section 6 hereof, the Company
shall supplement or amend the Registration Statement, (i) as required by Form
S-3, including, without limitation, the instructions applicable to Form S-3, or
by the Securities Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or the rules and regulations promulgated under the Securities
Act or the Exchange Act, respectively, and (ii) to include in the Registration
Statement any additional securities that become Registrable Securities by
operation of the definition thereof. The Company shall furnish to the holders of
the Registrable Securities, or their permitted transferees, as appropriate
(collectively, the "Holders"), to which the Registration Statement relates
copies of any such supplement or amendment sufficiently in advance (but in no
event less than five (5) business days in advance) of its use and/or filing with
the Commission to allow the Holders a meaningful opportunity to comment thereon
with respect to the information contained therein regarding the Holders and any
plan for resale of the Registrable Securities. The Holders acknowledge that they
have supplied the information regarding themselves and their plan of resale in
the Registration Statement to be filed within five (5) business days of the
Closing and hereby waive any notice of the initial filing of the Registration
Statement, and that such Holders and their successors and assigns will promptly
notify the Company of any changes in such information.
SECTION 2
Expenses
The Company shall pay all expenses, fees and costs incurred in
connection with the preparation, filing, distribution and effectiveness of the
Registration Statement and any supplements or amendments thereto, whether or not
the Registration Statement becomes effective, and whether all, none or some of
the Registrable Securities are sold pursuant to the Registration Statement,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company, fees and state
securities, or "blue sky," fees and expenses, and the expense of any special
audits incident to or required by, or in connection with the filing and
effectiveness of the Registration Statement (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company). The Holders shall pay all underwriting fees and discounts, selling
commissions, brokerage fees and stock transfer taxes applicable to the
Registrable Securities sold by such Holder and the fees and expenses of their
counsel, if any.
SECTION 3
Registration Procedures
3.1. Registration. The Company will advise the Holders as to the
status of the preparation, filing and effectiveness of the Registration
Statement and, at the Company's expense, will do the following:
Registration Rights Agreement Page 2
(a) furnish to each Holder a copy of the Registration Statement
(including all exhibits thereto) and any prospectus forming a part
thereof and any amendments and supplements thereto (including all
documents incorporated or deemed incorporated by reference therein
prior to the effectiveness of the Registration Statement and including
each preliminary prospectus) and any other prospectus filed under Rule
424 under the Securities Act, which documents, other than documents
incorporated or deemed incorporated by reference, will be subject to
the review of the Holders and any such underwriter for a period of at
least three (3) business days, and the Company shall not file the
Registration Statement or such prospectus or any amendment or
supplement to the Registration Statement or prospectus if any Holder
shall reasonably object within three (3) business days after the
receipt thereof. A Holder shall be deemed to have reasonably objected
to such filing only if the Registration Statement, amendment,
prospectus or supplement, as applicable, as proposed to be filed,
contains a material misstatement or omission with respect to such
Holder or its plan of resale;
(b) furnish to each Holder one conformed copy of the Registration
Statement and of each amendment and supplement thereto (in each case
including all exhibits) and such number of copies of the prospectus
forming a part of the Registration Statement (including each
preliminary prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, including, without
limitation, documents incorporated or deemed to be incorporated by
reference prior to the effectiveness of such Registration Statement, as
each of the Holders or any such underwriter, from time to time may
reasonably request;
(c) to the extent practicable, promptly upon the filing of any
document that is to be incorporated by reference into the Registration
Statement or prospectus forming a part thereof subsequent to the
effectiveness thereof, and in any event no later than five (5) business
days after such document is filed with the Commission, provide copies
of such document to the Holders, if requested, and make representatives
of the Company available for discussion of such document and other
customary due diligence matters; and provide promptly to the Holders
upon request any document filed by the Company with the Commission
pursuant to the requirements of Section 13 and Section 15 of the
Exchange Act;
(d) make available at reasonable times for inspection by the
Holders, and any attorney, accountant, financial adviser or other
representative (collectively, "Representatives") retained by the
Holders, subject to the recipient's prior written agreement to keep
such information confidential and not use or disclose it, all financial
and other records, pertinent corporate documents and properties of the
Company and cause the officers, directors and employees of the Company
to supply all information reasonably requested by the Holders or their
respective Representatives in connection with the preparation, filing
and effectiveness of the Registration Statement;
(e) use its commercially reasonable best efforts (i) to register
or qualify all Registrable Securities covered by the Registration
Statement under state securities, or "blue sky," laws of such States of
the United States of America where required and where an exemption is
not available and as the Holders of Registrable Securities covered by
the Registration Statement shall reasonably request, (ii) to keep such
registration or qualification in effect for so long as the Registration
Statement is required to be effective hereunder, and (iii) to take any
other action which may be reasonably necessary or advisable to enable
the Holders to consummate the disposition of the securities to be sold
by the Holders in such jurisdictions, consistent with the plan of
distribution described in the prospectus included in the Registration
Statement, except that the Company shall not for any such purpose be
required to qualify generally to do business as a
Registration Rights Agreement Page 3
foreign corporation in any jurisdiction where it is not so qualified,
or to execute a general consent to service of process in effecting such
registration, qualification or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be
required by the Securities Act or applicable rules or regulations
thereunder;
(f) use its commercially reasonable best efforts to cause all
Registrable Securities covered by the Registration Statement to be
registered or qualified with or approved by all other applicable
Governmental Authorities as may be necessary, in the opinion of counsel
to the Company and counsel to the Holders of Registrable Securities, to
enable the Holders thereof the consummate the disposition of such
Registrable Securities;
(g) subject to Section 6 hereof, promptly notify each Holder of
Registrable Securities covered by the Registration Statement (i) upon
discovery that, or upon the occurrence of any event as a result of
which, the prospectus forming a part of the Registration Statement, as
then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, (ii) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of
proceedings for that purpose, (iii) of any request by the Commission
for (A) amendments to the Registration Statement or any document
incorporated or deemed to be incorporated by reference in the
Registration Statement, or (B) supplements to the prospectus forming a
part of the Registration Statement, or (C) additional information, or
(iv) of the receipt by the Company of any notification with respect to
the suspension of the registration, qualification or exemption from
registration or qualification of any of the Registrable Securities for
sale in any jurisdiction or the initiation of any proceeding for such
purpose, and at the request of any such Holder promptly prepare and
file an amendment to the Registration Statement or a supplement to the
prospectus as the Company may deem necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and furnish to each Holder a reasonable
number of copies of such supplement to, or amendment of, such
registration statement and prospectus, and, in the event of a stop
order, use its commercially reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of any the
Registration Statement, or the lifting of any suspension of the
qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction;
(h) if reasonably requested by any Holder or if required by law
or SEC or other applicable rule or regulation, promptly incorporate in
the Registration Statement such appropriate information as the Holder
may reasonably request to have included therein by filing a Form 8-K,
or filing a supplement to the prospectus, to reflect any change in the
information regarding the Holder, and make all required filings with
the Commission in respect of any offer or sale of Registrable
Securities or any amendment or supplement to the Registration Statement
or related prospectus;
(i) otherwise use its commercially reasonable best efforts to
comply with all applicable rules and regulations, and make available to
its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least 12 months, but not more than
18 months, beginning with the first full calendar month after the
effective date of the Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 promulgated thereunder and to provide promptly to the Holders
upon request
Registration Rights Agreement Page 4
any document filed by the Company with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange Act; and
(j) use its commercially reasonable best efforts to cause all
Registrable Securities included in the Registration Statement to be
listed on Nasdaq and each securities exchange on which securities of
the same class are then listed, or, if not then listed on any
securities exchange or Nasdaq, to be eligible for trading in any
over-the-counter market or trading system in which securities of the
same class are then traded.
SECTION 4
Indemnification
4.1. Indemnification by the Company. The Company will indemnify:
(a) each of the Holders, as applicable,
(b) each of the Holder's officers, directors, members and
partners, and
(c) each individual, partnership, joint stock company,
corporation, trust, unincorporated organization, government
agency or political subdivision (each of the foregoing, a
"Person") controlling each of the Holders within the meaning
of SEC Rule 405 under the Securities Act,
with respect to the Registration Statement, against all expenses, claims,
losses, damages and liabilities (or actions, investigations or proceedings in
respect thereof) (collectively, a "Claim") arising out of or based on any actual
or alleged untrue statement of a material fact, or any omission of a material
fact required to be stated therein or necessary in order to make the statements
included therein not misleading, contained in the Registration Statement, any
prospectus or other offering document (including any related registration
statement, notification or the like) incident to the registration, qualification
or compliance, or any violation by the Company of the Securities Act or the
Exchange Act or any other laws or any rule or regulation thereunder applicable
to the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each of the Holders, each of its officers, directors, members and
partners, and each Person controlling each of the Holders, for any legal and any
other expenses reasonably incurred in connection with investigating and
defending any such Claim; provided, however, that the Company will not be liable
in any such case to the extent that any such Claim (i) arises out of or is based
on any untrue statement or omission based upon written information furnished to
the Company by the Holders or their Representatives and stated to be
specifically for use therein, or (ii) is finally judicially determined to have
resulted primarily from the gross negligence or willful misconduct of any person
or entity set forth in subsections (a) through (c) above.
4.2. Indemnification by the Holders. Each of the Holders will, if
Registrable Securities held by it are included in the securities as to which
such Registration Statement is being effected, indemnify the Company, each of
its directors and officers, and each Person who "controls" the Company within
the meaning of SEC Rule 405 under the Securities Act, against all Claims arising
out of or based on any actual or alleged untrue statement of a material fact, or
any omission or a material fact required to be stated therein or necessary in
order to make the statement included or incorporated therein not misleading,
contained in the Registration Statement, prospectus, or other offering document
made by or on behalf of such Holder, and will reimburse the Company, its
directors, officers, partners, members or control
Registration Rights Agreement Page 5
Persons for any legal or any other expenses reasonably incurred in connection
with investigating and defending any such Claim, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in the Registration Statement, prospectus
or other document in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Holder and stated to be
specifically for use therein; provided, however, that the obligations of each of
the Holders hereunder shall be limited to an amount equal to the net proceeds
received by such Holder from the sale of the Registrable Securities pursuant to
the Registration Statement.
4.3. Procedures. Each party entitled to indemnification under this
Agreement (each, an "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any Claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such Claim; provided that counsel for the Indemnifying Party, who shall conduct
the defense of such Claim, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense (unless the Indemnified
Party shall have reasonably concluded that there may be a conflict of interest
between the Indemnifying Party and the Indemnified Party in such action, in
which case the fees and expenses of one such counsel for all Indemnified Parties
shall be at the expense of the Indemnifying Party), and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement unless
the Indemnifying Party is materially prejudiced thereby. No Indemnifying Party,
in the investigation or defense of any such Claim shall, except with the consent
of each Indemnified Party (which consent shall not be unreasonably withheld or
delayed), consent to entry of any judgment or enter into any settlement or
compromise which does not include an unconditional release of the Indemnified
Party from all liability in respect to such Claim. Each Indemnified Party shall
furnish such information regarding itself or the Claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the investigation and defense of such Claim.
4.4. Contribution. If the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any Claim, then the Indemnifying Party, in
lieu of indemnifying such Indemnified Party hereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements or omissions
which resulted in such Claim, as well as any other relevant equitable
considerations; provided, however, that the Company will not be liable in any
such case to the extent that any such Claim (i) arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by the Holders or their Representatives and stated to be specifically
for use therein, or (ii) is finally judicially determined to have resulted
primarily from the gross negligence or willful misconduct of any person or
entity set forth in Section 4.1(a) through 4.1(c) above. The relative fault of
the Indemnifying Party and of the Indemnified Party shall be determined by
reference to, among other things, whether the untrue (or alleged untrue)
statement of a material fact or the omission (or alleged omission) to state a
material fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
and provided that each Holder shall not be required to contribute, in the
aggregate, more than the net proceeds received by the Holders from the sale of
the Registrable Securities pursuant to the Registration Statement.
SECTION 5
Registration Rights Agreement Page 6
Provision of Information by the Holders
Each of the Holders whose Registrable Securities are included in the
Registration Statement shall furnish to the Company such information regarding
such Holder as the Company may reasonably request in writing and as shall be
reasonably required or advisable in connection with any registration,
qualification or compliance referred to in this Agreement, and shall promptly
notify the Company if such information becomes incorrect or misleading, or
requires amendment or updating. Each of the Holders agrees that the plan of
distribution included in any prospectus relating to the Registrable Securities
shall be as set forth on Schedule 3 hereto and that such Holder will not resell
any Registrable Securities pursuant to the Registration Statement in any manner
other than as provided therein or herein. The other information regarding the
Holders required for the initial filing of the Registration Statement has been
provided by each Holder on the Subscription Agreement. Each Holder represents,
warrants and covenants to the Company that the information regarding such Holder
that appears in the Subscription Agreement is accurate and complete in all
material respects consistent with Commission Regulation S-K, Items 507 and 508.
Upon written request from the Company, the Purchaser will confirm promptly the
sale of any Shares or Warrant Shares pursuant to Rule 144 or the Registration
Statement.
SECTION 6
Holdback; Postponement
Notwithstanding the other provisions of this Agreement, if (a) there is
material non-public information regarding the Company which the Company's Board
of Directors reasonably and in good faith determines not to be in the Company's
best interest to disclose and which the Company is not otherwise required to
disclose, or (b) there is a extraordinary business opportunity (including but
not limited to the acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer or other
similar extraordinary transaction not in the ordinary course of business)
available to the Company which the Company's Board of Directors reasonably and
in good faith determines not to be in the Company's best interest to disclose,
then the Company may (upon not less than two trading days prior written notice
by same day delivery of fax or hand delivery) postpone or suspend filing or
effectiveness of a registration statement for a period not to exceed 45 days,
provided that the Company may not postpone or suspend filing or effectiveness of
a registration statement for more than 90 days in the aggregate during any
365-day period and there shall be an aggregate of not more than two (2)
suspensions during any 365-day period; provided, however that no postponement or
suspension shall be permitted for consecutive 45 day periods arising out of the
same set of facts, circumstances or transactions.
SECTION 7
Rule 144 Reporting, Etc.
7.1. SEC Reporting Compliance. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, through the second anniversary of this Agreement, the Company
will:
(a) make and keep "current public information" regarding the
Company available, as defined in Commission Rule 144(c) under the
Securities Act;
(b) use its commercially reasonable best efforts to file with
the Commission in a timely manner all SEC Reports and other filings and
documents required of the Company under the Securities Act and the
Exchange Act and otherwise; and
Registration Rights Agreement Page 7
(c) so long as a Holder owns any Registrable Securities,
furnish the Holder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements under the
Securities Act and the Exchange Act, including compliance with SEC Rule
144(c), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company and other
information in the possession of, or reasonably obtainable by, the
Company as a Holder may reasonably request in availing itself of any
rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
7.2. Stock Purchase Agreement Covenants. The Company will comply with
its covenants under Section 4 of the Stock Purchase Agreement, which are
incorporated herein by this reference.
SECTION 8
Miscellaneous
8.1. Assignment. The registration rights set forth herein may be
assigned, in whole or in part, to any transferee of Registrable Securities
permitted in accordance with the Stock Purchase Agreement, which transferee,
upon registration on the Company's or its transfer agent's books and records as
a holder of record of Registrable Securities, shall be considered thereafter to
be a Holder (provided that any transferee who is not an affiliate of a Purchaser
shall be a Holder only with respect to such Registrable Securities so acquired
and any stock of the Company issued as a dividend or other distribution with
respect to, or in exchange for or in replacement of, such Registrable
Securities) and shall be bound by all obligations and limitations of this
Agreement and the Stock Purchase Agreement.
8.2. Section Headings. The titles and headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
8.3. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
8.4. Notices.
(a) All communications under this Agreement shall be in
writing and shall be delivered by facsimile, by hand, by reliable
overnight delivery service such as UPS or FedEx or by registered or
certified mail, postage prepaid:
(i) if to the Company, to Nanophase Technologies
Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, or at such
other address as it may have furnished in writing to the
Purchasers;
(ii) if to the Purchasers, at the addresses listed on
Schedule 1 hereto, or at such other addresses as may have been
furnished the Company in writing.
(b) Any notice so addressed shall be deemed to be given (i)
if delivered by hand, on the date of such delivery, (ii) if sent by
reliable overnight delivery service such as UPS or FedEx, on the first
business day following the date of delivery to such service for
overnight delivery, (iii) if delivered by facsimile, on the date of
such facsimile, or (iv) if mailed by registered or certified mail, on
the third business day after the date of such mailing.
Registration Rights Agreement Page 8
8.5. Successors and Assigns; No Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties. No other person is intended to or
shall have any rights or remedies hereunder, whether as a third part beneficiary
or otherwise.
8.6. Counterparts. Persons may become parties to this Agreement be
entering into the Subscription Agreement, which may be executed in one or more
identical counterparts, each of which shall be deemed an original and all of
which shall be one and the same agreement. Any signature that is delivered by
facsimile signature page shall be valid and binding, with the same force and
effect as if an original, manually signed counterpart.
8.7. Remedies. Each Holder of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
8.8. Severability. In the event that any provision contained herein is
unenforceable, the remaining provisions shall continue in full force and effect.
8.9. Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to the Holders, upon any breach or
default of the Company under this Agreement, shall impair any such right, power
or remedy, nor shall it be construed to be a waiver of any provision hereof, or
of any similar breach or default thereafter occurring; nor shall any wavier of
any single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. It is further agreed that any waiver,
permit, consent or approval of any kind or character by a Holder of any breach
or default under this Agreement, or any waiver by a Holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in the writing, and that all remedies, either
under this Agreement, or by law or otherwise afforded to a Holder, shall be
cumulative and not alternative.
8.10. Attorney's Fees. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
8.11. Entire Agreement; Amendment. This Agreement, the Subscription
Agreement and the Operative Documents constitute the entire understanding and
agreement of the parties with respect to the subject matter hereof and supersede
all prior understandings, written or otherwise, among such parties. This
Agreement may be amended only in a writing signed by the Company and the Holders
of a majority of the then outstanding Registrable Securities.
Registration Rights Agreement Page 9
SCHEDULE B-1
Plan of Distribution
Any or all of the shares offered by the selling shareholders may be
offered for sale and sold by, or on behalf of, the selling shareholders from
time to time in varying amounts, including in block transactions, on the Nasdaq
Stock Market, or the over-the-counter market, in privately negotiated
transactions, though put or call options transactions relating to the shares,
through short sales, or a combination of such methods of sale, at prices
prevailing in such market or as may be negotiated at the time of the sale. The
shares may be sold by the selling shareholders directly to one or more
purchasers, through agents designated from time to time or to or through
broker-dealers designated from time to time. In the event the shares are
publicly offered through broker-dealers or agents, the selling shareholders may
enter into agreements with respect thereto. Such broker-dealers or agents may
receive compensation in the form of discounts, concessions or commissions from
the selling shareholders, and any such broker-dealers or agents that participate
in the distribution of the shares may be deemed to be underwriters within the
meaning of the Securities Act, and any profit on the sale of the shares by them
and any discounts and commissions might be deemed to be underwriting discounts
or commissions under the Securities Act. Any such broker-dealers and agents may
engage in transactions with, and perform services for, the Company. At the time
a particular offer of shares is made by the selling shareholders, to the extent
required, a prospectus supplement will be distributed which will set forth the
aggregate number of shares being offered, and the terms of the offering,
including the public offering price thereof, the name or names of any
broker-dealers or agents, any discounts, commissions and other items
constituting compensation from, and the resulting net proceeds to, the selling
shareholders.
As used herein, "selling shareholders" includes donees and pledgees
selling shares received from a named selling shareholder after the date of this
prospectus.
Selling shareholders also may resell all or a portion of the shares in
open market transactions in reliance on Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of such rule.
In order to comply with the securities laws of certain states, sales of
shares offered hereby to the public in such states may be made only through
broker-dealers who are registered or licensed in such states. Sales of shares
offered hereby must also be made by the selling shareholders in compliance with
other applicable state securities laws and regulations.
Registration Rights Agreement Page 10