EXHIBIT 10.48
STOCK PURCHASE AGREEMENT
Endologix, Inc.
13900 Alton Parkway, Suite 122
Irvine, CA 92618
Ladies & Gentlemen:
The undersigned, Wasatch Funds, Inc. on behalf of Wasatch Micro Cap Fund
(the "Investor"), hereby confirms its agreement with you as follows:
1. This Stock Purchase Agreement (the "Agreement") is made effective as of
July 5, 2005 between Endologix, Inc., a Delaware corporation (the "Company"),
and the Investor.
2. The Company is offering up to 4,500,000 shares (the "Shares") of common
stock of the Company, $.001 par value (the "Common Stock"), subject to downward
adjustment by the Company's Board of Directors, to certain investors in a
private placement (the "Offering").
3. The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor 829,750 Shares,
for a purchase price of $4.00 per Share (the "Share Price"), or an aggregate
purchase price of $3,319,000. The purchase of the Shares by the Investor shall
be made pursuant to the Terms and Conditions for Purchase of Shares attached
hereto as Annex I and incorporated herein by reference as if fully set forth
herein. Unless otherwise requested by the Investor, certificates representing
the Shares purchased by the Investor will be registered in the Investor's name
and address as set forth below.
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
Wasatch Funds, Inc. on behalf of Wasatch
Micro Cap Fund
"INVESTOR"
By: /s/ Angela M. Palmer
----------------------------------------
Print Name: Angela M. Palmer
Title: Secretary/Asst. Treasurer
Address: Wasatch Funds, Inc.
150 Social Hall Ave., 4th Floor
Salt Lake City, UT 84111
INFORMATION FOR DISTRIBUTION OF SHARES
Contact name:
Telephone:
Name in which shares should be registered
(if different):
Address where shares should be sent
(if different):
AGREED AND ACCEPTED:
ENDOLOGIX, INC.
/s/ Robert J. Krist
- ------------------------------------
By: Robert J. Krist
Chief Financial Officer
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
STOCK PURCHASE AGREEMENT
2
Endologix, Inc.
13900 Alton Parkway, Suite 122
Irvine, CA 92618
Ladies & Gentlemen:
The undersigned, Wasatch Funds, Inc. on behalf of Wasatch Micro Cap Value
Fund (the "Investor"), hereby confirms its agreement with you as follows:
1. This Stock Purchase Agreement (the "Agreement") is made effective as of
July 5, 2005 between Endologix, Inc., a Delaware corporation (the "Company"),
and the Investor.
2. The Company is offering up to 4,500,000 shares (the "Shares") of common
stock of the Company, $.001 par value (the "Common Stock"), subject to downward
adjustment by the Company's Board of Directors, to certain investors in a
private placement (the "Offering").
3. The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor 120,250 Shares,
for a purchase price of $4.00 per Share (the "Share Price"), or an aggregate
purchase price of $481,000. The purchase of the Shares by the Investor shall be
made pursuant to the Terms and Conditions for Purchase of Shares attached hereto
as Annex I and incorporated herein by reference as if fully set forth herein.
Unless otherwise requested by the Investor, certificates representing the Shares
purchased by the Investor will be registered in the Investor's name and address
as set forth below.
3
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
Wasatch Funds, Inc. on behalf of Wasatch
Micro Cap Value Fund
"INVESTOR"
By: /s/ Angela M. Palmer
-----------------------------------------
Print Name: Angela M. Palmer
Title: Secretary/Asst. Treasurer
Address: Wasatch Funds, Inc.
150 Social Hall Ave., 4th Floor
Salt Lake City, UT 84111
INFORMATION FOR DISTRIBUTION OF SHARES
Contact name:
Telephone:
Name in which shares should be registered
(if different):
Address where shares should be sent (if
different):
AGREED AND ACCEPTED:
ENDOLOGIX, INC.
/s/ Robert J. Krist
- ------------------------------------
By: Robert J. Krist
Chief Financial Officer
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
STOCK PURCHASE AGREEMENT
4
Endologix, Inc.
13900 Alton Parkway, Suite 122
Irvine, CA 92618
Ladies & Gentlemen:
The undersigned, Goldman, Sachs & Co. (the "Investor"), hereby confirms
its agreement with you as follows:
1. This Stock Purchase Agreement (the "Agreement") is made effective as of
July 5, 2005 between Endologix, Inc., a Delaware corporation (the "Company"),
and the Investor.
2. The Company is offering up to 4,500,000 shares (the "Shares") of common
stock of the Company, $.001 par value (the "Common Stock"), subject to downward
adjustment by the Company's Board of Directors, to certain investors in a
private placement (the "Offering").
3. The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor 1,700,000
Shares, for a purchase price of $4.00 per Share (the "Share Price"), or an
aggregate purchase price of $6,800,000. The purchase of the Shares by the
Investor shall be made pursuant to the Terms and Conditions for Purchase of
Shares attached hereto as Annex I and incorporated herein by reference as if
fully set forth herein. Unless otherwise requested by the Investor, certificates
representing the Shares purchased by the Investor will be registered in the
Investor's name and address as set forth below.
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Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
Goldman, Sachs & Co.
"INVESTOR"
By: /s/ Doug Patterson
----------------------------------------
Print Name: Doug Patterson
Title: Managing Director
Address: 1 New York Plaza, 49th Floor NY, NY
10004
INFORMATION FOR DISTRIBUTION OF SHARES
Contact name:
Telephone:
Name in which shares should be registered 6
(if different):
Address where shares should be sent
(if different):
Attn:
AGREED AND ACCEPTED:
ENDOLOGIX, INC.
/s/ Robert J. Krist
- ----------------------------------
By: Robert J. Krist
Chief Financial Officer
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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STOCK PURCHASE AGREEMENT
Endologix, Inc.
13900 Alton Parkway, Suite 122
Irvine, CA 92618
Ladies & Gentlemen:
The undersigned, UBS O'Connor LLC FBO PIPES Corporate Strategies Master
Limited (the "Investor"), hereby confirms its agreement with you as follows:
1. This Stock Purchase Agreement (the "Agreement") is made effective as of
July 5, 2005 between Endologix, Inc., a Delaware corporation (the "Company"),
and the Investor.
2. The Company is offering up to 4,500,000 shares (the "Shares") of common
stock of the Company, $.001 par value (the "Common Stock"), subject to downward
adjustment by the Company's Board of Directors, to certain investors in a
private placement (the "Offering").
3. The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor 250,000 Shares,
for a purchase price of $4.00 per Share (the "Share Price"), or an aggregate
purchase price of $1,000,000. The purchase of the Shares by the Investor shall
be made pursuant to the Terms and Conditions for Purchase of Shares attached
hereto as Annex I and incorporated herein by reference as if fully set forth
herein. Unless otherwise requested by the Investor, certificates representing
the Shares purchased by the Investor will be registered in the Investor's name
and address as set forth below.
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Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
UBS O'Connor LLC FBO O'Connor PIPES
Corporate Strategies Master Limited
"INVESTOR"
By: /s/ George Locasto
----------------------------------------
Print Name: George Locasto
Title: Managing Director
Address: 1 North Wacker, 32nd Floor
Chicago, IL 60606
INFORMATION FOR DISTRIBUTION OF SHARES
Contact name:
Telephone:
Name in which shares should be registered
(if different):
Address where shares should be sent
(if different):
Attn:
AGREED AND ACCEPTED:
ENDOLOGIX, INC.
/s/ Robert J. Krist
- -----------------------------------
By: Robert J. Krist
Chief Financial Officer
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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STOCK PURCHASE AGREEMENT
Endologix, Inc.
13900 Alton Parkway, Suite 122
Irvine, CA 92618
Ladies & Gentlemen:
The undersigned, Federated Kaufmann Fund, a portfolio of Federated Equity
Funds (the "Investor"), hereby confirms its agreement with you as follows:
1. This Stock Purchase Agreement (the "Agreement") is made effective as of
July 5, 2005 between Endologix, Inc., a Delaware corporation (the "Company"),
and the Investor.
2. The Company is offering up to 4,500,000 shares (the "Shares") of common
stock of the Company, $.001 par value (the "Common Stock"), subject to downward
adjustment by the Company's Board of Directors, to certain investors in a
private placement (the "Offering").
3. The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor 1,250,000
Shares, for a purchase price of $4.00 per Share (the "Share Price"), or an
aggregate purchase price of $5,000,000. The purchase of the Shares by the
Investor shall be made pursuant to the Terms and Conditions for Purchase of
Shares attached hereto as Annex I and incorporated herein by reference as if
fully set forth herein. Unless otherwise requested by the Investor, certificates
representing the Shares purchased by the Investor will be registered in the
Investor's name and address as set forth below.
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
Federated Kaufmann Fund,
a portfolio of Federated Equity Funds
"INVESTOR"
By: /s/ Hans P. Utsch
----------------------------------------
Print Name: Hans P. Utsch
Title: Portfolio Manager, Vice-President
Address: 140 E. 45th St. NYC, NY 10017
INFORMATION FOR DISTRIBUTION OF SHARES
Contact name:
Telephone:
Name in which shares should be registered
(if different):
Address where shares should be sent
(if different):
AGREED AND ACCEPTED:
ENDOLOGIX, INC.
/s/ Robert J. Krist
- -----------------------------------
By: Robert J. Krist
Chief Financial Officer
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES
1. Authorization and Sale of the Shares. Subject to the terms and
conditions of this Agreement, the Company is offering up to 4,500,000 shares of
Common Stock.
2. Agreement to Sell and Purchase the Shares; Subscription Date.
2.1 At the Closing (as defined in Section 3), the Company will sell
to the Investor, and the Investor, on behalf of itself or the Investor's
participating clients, will purchase from the Company, upon the terms and
conditions hereinafter set forth, the number of Shares set forth on the cover
page hereto at the Share Price set forth on such cover page.
2.2 The Company is entering into this same form of Stock Purchase
Agreement with certain other investors (the "Other Investors") effective as of
the date hereof (the "Subscription Date") and expects to complete sales of
Shares to them. (The Investor and the Other Investors are hereinafter sometimes
collectively referred to as the "Investors," and this Agreement and the Stock
Purchase Agreements executed by the Other Investors are hereinafter sometimes
collectively referred to as the "Agreements.")
3. Delivery of the Shares at Closing. The completion of the purchase and
sale of the Shares (the "Closing") shall occur on the third business day after
the Subscription Date (or upon such earlier date as the Company and the
Investors shall agree) (the "Closing Date"), at the offices of the Company's
counsel. At the Closing, the Company shall deliver to the Investor one or more
stock certificates representing the number of Shares set forth on the cover page
hereto, each such certificate to be registered in the name of the Investor or,
if so indicated on the signature page hereto, in the name of a nominee
designated by the Investor. The Company's obligation to issue the Shares to the
Investor shall be subject to the following conditions, any one or more of which
may be waived by the Company:
(a) receipt by the Company of a wire transfer of funds in the
full amount of the purchase price for the Shares being purchased hereunder; and
(b) the accuracy of the representations and warranties made by
the Investor and the fulfillment of those undertakings of the Investor to be
fulfilled prior to the Closing.
The Investor's obligation to purchase the Shares shall be subject to the
following conditions, any one or more of which may be waived by the Investor in
its sole discretion:
(a) receipt by the Investor of one or more stock certificates
representing the number of Shares set forth on the cover page hereto;
(b) receipt by the Investor of an opinion letter, dated as of
the Closing Date, from Stradling Yocca Carlson & Rauth, counsel to the Company,
in substantially the form attached hereto as Exhibit A;
(c) the accuracy of the representations and warranties made by
the Company as of the Closing Date and the fulfillment of those undertakings of
the Company to be fulfilled prior to the Closing;
(d) on the Closing Date, no legal action, suit or proceeding
shall be pending or threatened which seeks to restrain or prohibit the
transactions contemplated by the Agreements;
(e) the Company shall have delivered to the Investor a
certificate, dated as of the Closing Date, duly executed by its Chief Executive
Officer or Chief Financial Officer, to the effect set forth in clause (c) above;
(f) the Company shall have delivered to the Investor a
certificate, dated as of the Closing Date, duly executed by its Secretary,
certifying as to (i) the Company's Restated Certificate of Incorporation and
(ii) the Company's Bylaws, each as in effect as of the Closing Date, and (iii)
all resolutions, votes or minutes of the Company's Board of Directors (or the
Special Financing Committee of the Board of Directors) in connection with the
Offering;
(g) the Company shall have delivered to the Investor certified
copies of certificates evidencing the incorporation and good standing of the
Company and each of its Subsidiaries (as defined in Section 4.1 below) in each
such entity's state or jurisdiction of incorporation or organization as of a
date within ten (10) days of the Closing Date;
(h) from the date hereof to the Closing Date, trading in the
Common Stock shall not have been suspended by the Nasdaq National Market, the
Securities and Exchange Commission (the "SEC") (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to the Closing), and, at any time prior to the Closing Date,
trading in securities generally as reported by Bloomberg Financial Markets shall
not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities, nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable
judgment of the Investor, makes it impracticable or inadvisable to purchase the
Shares at the Closing;
(i) receipt by the Investor of such other documents or
certificates relating to the Offering as the Investor may reasonably request;
and
(j) the Company shall receive a minimum of $10,000,000 of
aggregate purchase price in connection with the Closing (excluding commissions,
fees and expenses payable in connection with the Closing).
4. Representations, Warranties and Covenants of the Company. The Company
hereby represents and warrants to, and covenants with, the Investor, as follows:
4.1 Subsidiaries; Organization. The Company has no subsidiaries (as
defined by Rule 405 under the Securities Act of 1933, as amended (the
"Securities Act")) except as set forth in Exhibit 21.1 to its Annual Report on
Form 10-K for the fiscal year ended December 31, 2004. The
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Company and each Significant Subsidiary of the Company (as defined in Rule
1-02(w) of Regulation S-X, the "Subsidiaries") is duly organized and validly
existing in good standing under the laws of the jurisdiction of its
incorporation or organization. The Company and each of its Subsidiaries has full
power and authority to own, operate and occupy its properties and to conduct its
business as presently conducted and is registered or qualified to do business
and in good standing in each jurisdiction in which it owns or leases property or
transacts business and where the failure to be so qualified would have a
material adverse effect upon the financial condition or business, operations,
assets or prospects of the Company and its Subsidiaries taken as a whole, and no
proceeding has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification.
4.2 Due Authorization. The Company has all requisite power and
authority to execute, deliver and perform its obligations under the Agreements,
and the Agreements have been duly authorized and validly executed and delivered
by the Company and constitute legal, valid and binding agreements of the Company
enforceable against the Company in accordance with their terms, except as rights
to indemnity and contribution may be limited by state or federal securities laws
or the public policy underlying such laws, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.3 Non-Contravention. The execution and delivery of the Agreements,
the issuance and sale of the Shares to be sold by the Company under the
Agreements, the fulfillment of the terms of the Agreements and the consummation
of the transactions contemplated thereby will not (A) conflict with or
constitute a violation of, or default (with or without the giving of notice or
the passage of time or both) under, (i) any material bond, debenture, note or
other evidence of indebtedness, or under any material lease, indenture,
mortgage, deed of trust, loan agreement, joint venture or other agreement or
instrument to which the Company is a party or by which it or its properties are
bound, (ii) the charter, bylaws or other organizational documents of the Company
or any of its Subsidiaries, or (iii) any law, administrative regulation,
ordinance or order of any court or governmental agency, arbitration panel or
authority applicable to the Company, any of its Subsidiaries or their respective
properties, or (B) result in the creation or imposition of any lien,
encumbrance, claim, security interest or restriction whatsoever upon any of the
material properties or assets of the Company or any of its Subsidiaries or an
acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any material bond, debenture, note or any other evidence of
indebtedness or any material indenture, mortgage, deed of trust or any other
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound or to which
any of the property or assets of the Company or any of its Subsidiaries is
subject. No consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency,
self-regulatory organization, stock exchange or market, or other governmental
body in the United States is required for the execution, delivery and
performance of the Agreements and the valid issuance and sale of the Shares to
be sold pursuant to the Agreements, other than such as have been made or
obtained, and except for any securities filings required to be made under
federal or state securities laws or the rules of the Nasdaq Stock Market.
4.4 Reporting Status. The Company has filed in a timely manner all
documents that the Company was required to file under the Securities Exchange
Act of 1934, as amended (the
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"Exchange Act"), during the twelve (12) months preceding the date of this
Agreement. The following documents complied in all material respects with the
SEC's requirements as of their respective filing dates, and the information
contained therein as of the date thereof did not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances under
which they were made not misleading, except to the extent that information
contained in any such document has been revised or superseded by a later filed
SEC Document (as defined below):
(i) The Company's Proxy Statement for the 2005 Annual Meeting
of Stockholders (the "Proxy Statement");
(ii) The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2004, including the exhibits thereto (the
"Form 10-K"); and
(iii) all other documents, including the exhibits thereto,
filed by the Company with the SEC since December 31, 2004 pursuant
to the reporting requirements of the Exchange Act (together with the
Proxy Statement and the Form 10-K, the "SEC Documents").
The SEC Documents, as of the date of their respective filings with the
SEC, did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.5 Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 55,000,000 shares of capital stock, of which
50,000,000 shares are designated Common Stock and 5,000,000 shares are
designated Preferred Stock. As of June 15, 2005, there were approximately
31,918,205 shares of Common Stock issued and outstanding, and no shares of
Preferred Stock issued and outstanding. As of June 15, 2005, an aggregate of
3,934,314 shares of Common Stock were reserved for issuance upon exercise of
outstanding options and options or shares remaining available for issuance under
the Company's 1996 Stock Option/Stock Issuance Plan, the 1997 Supplemental Stock
Option Plan and the 1996 Employee Stock Purchase Plan, all of which shares
issuable upon exercise of outstanding stock options were issued by the Company
to employees, consultants and directors of the Company. Other than as disclosed
in the SEC Documents, no other shares or options, warrants or other rights to
acquire shares of capital stock of the Company or securities convertible into
capital stock of the Company are outstanding. All outstanding shares of Common
Stock are duly authorized, validly issued, fully paid and nonassessable, free
from any liens or any other encumbrances created by the Company with respect to
the issuance and delivery thereof and not subject to preemptive rights. Other
than as disclosed in the SEC Documents, except as set forth above, there are no
outstanding rights, options, warrants, preemptive rights, rights of first
refusal agreements, commitments or similar rights for the purchase or
acquisition from the Company or any of its Subsidiaries of any securities of the
Company or any of its Subsidiaries. The Shares to be sold pursuant to the
Agreements have been duly authorized, and when issued and paid for in accordance
with the terms of the Agreements will be duly and validly issued, fully paid and
nonassessable, free and clear of all pledges, liens, encumbrances and other
restrictions (other than those arising under federal or state securities laws as
a result of the private placement of the Shares to the Investors). No preemptive
right, co-sale right, right of first refusal or other similar right exists with
respect to the Shares or the issuance and sale thereof. The issuance and sale of
the Shares will not obligate the Company to issue shares of Common Stock or
other securities
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to any person and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under such
securities. No further approval or authorization of any stockholder, the Board
of Directors of the Company or others is required for the issuance and sale of
the Shares. Except as set forth in the SEC Documents, no holder of any of the
securities of the Company has any rights ("demand," "piggyback" or otherwise) to
have such securities registered by reason of the intention to file, filing or
effectiveness of a Registration Statement (as defined in Section 7.1 hereof).
4.6 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the best knowledge of the Company or any of its
Subsidiaries, threatened to which the Company or any of its Subsidiaries or any
of their respective officers or directors in their capacity as such officer or
director is or may be a party or of which the business or property of the
Company or any of its Subsidiaries is subject that is not disclosed in the SEC
Documents. There is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body (including, without limitation, the SEC)
pending or, to the best knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company or any of its Subsidiaries or any of
their respective officers or directors in their capacity as such wherein an
unfavorable decision, ruling or finding could adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under the Agreements or which otherwise would be reasonably likely
to have a material adverse effect on the financial condition of the business,
operations, assets or prospects of the Company and its Subsidiaries taken as a
whole. The SEC has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
4.7 No Violations. Neither the Company nor any of its Subsidiaries
is (i) in violation of its charter, bylaws, or other organizational document, or
in violation of any law, administrative regulation, rule, ordinance or order of
any court or governmental agency, arbitration panel or authority,
self-regulatory organization or Trading Market applicable to the Company or any
of its Subsidiaries, which violation, individually or in the aggregate, would be
reasonably likely to have a material adverse effect on the financial condition
or business, operations, assets or prospects of the Company and its Subsidiaries
taken as a whole or which would be reasonably likely to have a material adverse
effect on the transactions contemplated by the Agreements, or (ii) in default
(and there exists no condition which, with or without the passage of time or
giving of notice or both, would constitute a default) in any respect in the
performance of any bond, debenture, note or any other evidence of indebtedness
in any indenture, mortgage, deed of trust or any other agreement or instrument
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound or by which the properties of the
Company are bound, which would be reasonably likely to have a material adverse
effect upon the financial condition or business, operations, assets or prospects
of the Company and its Subsidiaries taken as a whole or which would be
reasonably likely to have a material adverse effect on the transactions
contemplated by the Agreements.
4.8 Governmental Permits, Etc. The Company and its Subsidiaries
possess all necessary franchises, licenses, certificates and other
authorizations from any foreign, federal, state or local government or
governmental agency, department, or body that are currently necessary for the
operation of their respective businesses as currently conducted, except where
the failure to currently possess could not reasonably be expected to have a
material adverse effect upon the financial condition or business, operations,
assets or prospects of the Company and its Subsidiaries taken as a whole.
Neither the Company nor any of its Subsidiaries has received any notice of
proceedings
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relating to the revocation or modification of any such license, certificate,
authorization or permit that, if determined adversely to the Company or any of
its Subsidiaries, would have a material adverse effect upon the financial
condition or business, operations, assets or prospects of the Company and its
Subsidiaries taken as a whole.
4.9 Intellectual Property. The Company and its Subsidiaries own or
possess sufficient rights to use all patents, patent rights, trademarks,
copyrights, licenses, inventions, trade secrets, trade names and know-how
(collectively, "Intellectual Property") that are necessary for the conduct of
their respective businesses as now conducted, except where the failure to
currently own or possess would not have a material adverse effect on the
financial condition or business of the Company and its Subsidiaries taken as a
whole. Except as set forth in the SEC Documents, (i) neither the Company nor any
of its Subsidiaries has received any notice in writing of, or has any knowledge
of, any infringement of asserted rights of a third party with respect to any
Intellectual Property that, individually or in the aggregate, would have a
material adverse effect on the financial condition or business, operations,
assets or prospects of the Company and its Subsidiaries taken as a whole and
(ii) neither the Company nor any of its Subsidiaries has received any notice in
writing of any infringement rights by a third party with respect to any
Intellectual Property that, individually or in the aggregate, would have a
material adverse effect upon the financial condition or business, operations,
assets or prospects of the Company and its Subsidiaries taken as whole.
4.10 Financial Statements. The consolidated financial statements of
the Company and its Subsidiaries and the related notes thereto included in the
SEC Documents (i) comply in all material respects with the rules and regulations
of the SEC with respect thereto as in effect at the time of filing and (ii)
fairly present, in accordance with the rules and regulations of the SEC, the
financial position of the Company as of the dates indicated, and the results of
its operations and cash flows for the periods therein specified. Except as set
forth in such financial statements, such financial statements (including the
related notes) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
therein specified, subject, in the case of unaudited statements, to normal,
immaterial year-end adjustments. The other financial information contained in
the SEC Documents has been prepared on a basis consistent with the financial
statements of the Company.
4.11 No Material Adverse Change. Except as disclosed in the SEC
Documents, press releases or in other "public disclosures" as such term is
defined in Section 101(e) of Regulation FD of the Exchange Act, since December
31, 2004 there has not been (i) any material adverse change in the financial
condition, earnings or prospects of the Company or any of its Subsidiaries nor
has any material adverse event occurred to the Company or any of its
Subsidiaries (it being understood that the Company has incurred operating
losses), (ii) any obligation, direct or contingent, that is material to the
Company and its Subsidiaries taken as a whole, incurred by the Company or any of
its Subsidiaries, except obligations incurred in the ordinary course of
business, (iii) any dividend or distribution of any kind declared, paid or made
on the capital stock of the Company, or (iv) any loss or damage (whether or not
insured) to the physical property of the Company or any of its Subsidiaries
which has been sustained which has a material adverse effect on the financial
condition or business, operations, assets or prospects of the Company and its
Subsidiaries taken as a whole. Except as disclosed in the SEC Documents, press
releases or in other "public disclosures" as such term is defined in Section
101(e) of Regulation FD of the Exchange Act, since December 31, 2004, neither
the Company nor any of its Subsidiaries has (i) sold, assigned, transferred,
abandoned, mortgaged, pledged or subjected to lien any of its material
properties, tangible or intangible, or rights
16
under any material contract, permit, license, franchise or other agreement or
(ii) waived or cancelled any indebtedness or other obligations owed to the
Company or any of its Subsidiaries.
4.12 NASDAQ Listing. The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act and is listed on The Nasdaq Stock Market, Inc.
National Market (the "Nasdaq National Market"), and the Company has taken no
action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or de-listing the Common
Stock from the Nasdaq National Market, nor to the best of the Company's
knowledge is the National Association of Securities Dealers, Inc. ("NASD")
currently contemplating such de-listing. The Company has not, in the twelve (12)
months preceding the date hereof, received notice from the Nasdaq National
Market to the effect that the Company is not in compliance with the listing or
maintenance requirements thereof. The Company and the Common Stock meet the
criteria for continued listing and trading on the Nasdaq National Market.
4.13 Listing of the Shares. The Company shall comply with all
requirements of the NASD with respect to the issuance of the Shares and the
listing thereof on the Nasdaq National Market. In furtherance thereof, the
Company shall use its commercially reasonable efforts to take such actions as
may be necessary and as soon as practicable and in no event later than twenty
(20) days after the Closing Date to file with the Nasdaq National Market an
application or other document required by the Nasdaq National Market and shall,
upon request, provide evidence of such filing to the Investors. The Company
knows of no reason why the Shares will not be eligible for listing on the Nasdaq
National Market. The Company further agrees, if the Company applies to have the
Common Stock traded on any other Trading Market, it will include in such
application the Shares, and will take such other action as is necessary or
desirable in the opinion of the Investors to cause the Shares to be listed on
such other Trading Market as promptly as possible. The Company will take all
action reasonably necessary to continue the listing and trading of its Common
Stock on a Trading Market and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the Trading
Market.
4.14 No Manipulation of Stock. The Company has not taken and will
not, in violation of applicable law, take any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Shares.
4.15 S-3 Status. The Company meets the requirements for the use of
Form S-3 for the registration of the resale of the Shares by the Investors.
4.16 Insurance. The Company and each of its Subsidiaries maintains
and will continue to maintain insurance against loss or damage by fire or other
casualty and such other insurance, including, but not limited to, product
liability insurance, in such amounts and covering such risks as is reasonably
adequate consistent with industry practice for the conduct of their respective
businesses and the value of their respective properties. Neither the Company nor
any Subsidiary has any present reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.
4.17 Tax Matters. The Company and each of its Subsidiaries has filed
all material federal, state, local and foreign income, franchise and other tax
returns required to be filed by any jurisdiction to which it is subject and has
paid all taxes due in accordance therewith, and no tax
17
deficiency has been determined adversely to the Company or any of its
Subsidiaries which has had (nor does the Company or any of its Subsidiaries have
any knowledge of any tax deficiency which, if determined adversely to the
Company or any of its Subsidiaries, would reasonably be expected to have) a
material adverse effect on the financial condition or results of operations of
the Company and its Subsidiaries taken as a whole.
4.18 Investment Company. The Company is not an "investment company"
within the meaning of such term under the Investment Company Act of 1940 and the
rules and regulations of the SEC thereunder.
4.19 No Registration. Assuming the accuracy of the representations
and warranties made by, and compliance with the covenants of, the Investor in
Section 5 hereof, no registration of the Shares under the Securities Act is
required in connection with the offer and sale of the Shares by the Company to
the Investors as contemplated by the Agreements.
4.20 Internal Accounting Controls; Disclosure Controls and
Procedures. The Company and each of its Subsidiaries maintains a system of
internal accounting controls sufficient, in the judgment of the Company's Chief
Executive Officer and Chief Financial Officer (the "Certifying Officers"), to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of consolidated financial statements
in conformity with generally accepted accounting principles and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15 and 15d-15) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including its Subsidiaries, is made known to the Certifying
Officers by others within those entities, particularly during the period in
which the Company's Form 10-K or 10-Q, as the case may be, is being prepared.
The Certifying Officers have evaluated the effectiveness of the Company's
controls and procedures as of the end of the Company's most recently ended
fiscal quarter (such date, the "Evaluation Date"). The Company presented in its
most recently filed Form 10-K or Form 10-Q the conclusions of the Certifying
Officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the Company's internal controls over
financial reporting (as such term is defined in Item 308(c) of Regulation S-K
promulgated under the Securities Act) or, to the Company's knowledge, in other
factors that could significantly affect the Company's internal control over
financial reporting.
4.21 Transactions With Affiliates and Employees. Except as set forth
in the SEC Documents, none of the officers or directors of the Company and, to
the knowledge of the Company, none of the employees of the Company is presently
a party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or other employee of the
Company or, to the knowledge of the Company, any entity in which any officer,
director, or other employee of the Company has a substantial interest or is an
officer, director, trustee or partner.
18
4.22 Form D. With respect to the Shares, the Company agrees to file
on a timely basis one or more Forms D, as required by Regulation D promulgated
under the Securities Act to claim the exemption provided by Rule 506 of
Regulation D, and any filings required under applicable state securities laws to
claim any exemption provided thereunder.
4.23 Certain Future Financings and Related Actions.
(a) The Company will not sell, offer to sell, solicit offers
to buy or otherwise negotiate in respect of any "security" (as defined in the
Securities Act) that is or could be integrated with the sale of the Shares in a
manner that would require the registration of the Shares under the Securities
Act or that would be integrated with the offer or sale of the Shares for
purposes of the rules and regulations of the Nasdaq National Market.
(b) The Company shall not offer, sell, contract to sell or
issue (or engage any person to assist the Company in taking any such action) any
equity securities or securities convertible into, exchangeable for or otherwise
entitling the holder to acquire, any Common Stock at a price below the market
price of the Common Stock during the period from the date of this Agreement to
the ninetieth (90th) day following the effective date of the Registration
Statement; provided, however, that nothing in this Section 4.23(b) shall
prohibit the Company from issuing securities (v) to employees, directors,
officers, advisors or consultants of the Company or any of its Subsidiaries; (w)
upon exercise of conversion, exchange, purchase or similar rights issued,
granted or given by the Company and outstanding as of the date of this
Agreement; (x) pursuant to a public offering underwritten on a firm commitment
basis registered under the Securities Act; (y) for the purpose of funding the
acquisition of securities or assets of any entity in a single transaction or a
series of related transactions; or (z) pursuant to a strategic partnership or
alliance agreement, loan agreement, equipment lease or similar commercial
agreement (including licensing and similar arrangements).
4.24 Use of Proceeds. The Company will use the net proceeds from the
sale of the Shares for working capital and general corporate purposes.
4.25 Non-Public Information. The Company confirms that it has not
provided any Investor or its agents or counsel with any information, other than
the existence of the transactions contemplated by this Agreement or other than
pursuant to a nondisclosure agreement, that constitutes or might constitute
material non-public information as of the Closing Date. The Company understands
and confirms that the Investors shall be relying on the foregoing
representations in effecting transactions in securities of the Company. The
Company covenants and agrees that it will not provide the Investor or its agents
or counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto such Investor shall have executed a
written agreement regarding the confidentiality and use of such information. The
Company understands and confirms that the Investor shall be relying on the
foregoing covenant in effecting transactions in securities of the Company.
4.26 Securities Law Disclosure; Publicity. The Company shall, at or
prior to 8:30 a.m., Eastern Standard Time, on the first day following the
Closing Date on which trading occurs on the Nasdaq National Market, (a) issue a
press release disclosing the transactions contemplated hereby, and (b) file a
Current Report on Form 8-K with the SEC (the "8-K Filing") describing the
transactions contemplated hereby and including this Agreement as an exhibit
thereto, in the form required by the Exchange Act. Thereafter, the Company shall
timely file any filings and notices
19
required by the SEC or the NASD with respect to the transactions contemplated
hereby. Notwithstanding the foregoing, the Company shall not publicly disclose
the name of any Investor, or include the name of any Investor in any filing with
the SEC (other than pursuant to the Registration Statement and exhibits to the
8-K Filing and other periodic filings made by the Company under the Exchange
Act) or the NASD (other than pursuant to an application for the listing of the
Shares on the Nasdaq National Market), without the prior written consent of such
Investor, except to the extent such disclosure is required by law or NASD
regulations or is made pursuant to a lawful request by a regulatory agency,
including without limitation, the SEC or the NASD.
5. Representations, Warranties and Covenants of the Investor.
5.1 The Investor represents and warrants to the Company that: (i)
the Investor is an "accredited investor" as defined in Regulation D promulgated
under the Securities Act and the Investor has the knowledge, sophistication and
experience necessary to make, and is qualified to make decisions with respect
to, investments in shares presenting an investment decision like that involved
in the purchase of the Shares, including investments in securities issued by the
Company and investments in comparable companies, and has had the opportunity to
request and review all information it deemed relevant in making an informed
decision to purchase the Shares; (ii) the Investor is acquiring the number of
Shares set forth on the cover page hereto for its own account, or for the
account of others for whom it acts as investment advisor only, for investment
only and with no present intention of distributing any of such Shares in
violation of the Securities Act nor does the Investor have any arrangement or
understanding with any other persons regarding the distribution of such Shares;
provided, that this representation and warranty shall not limit the Investor's
right to sell the Shares pursuant to the Registration Statement or otherwise in
compliance with applicable federal and state securities laws, (iii) the Investor
has filled in all requested information on the Selling Stockholder Notice and
Questionnaire attached hereto as Exhibit C (the "Questionnaire") for use in
preparing the Registration Statement and the answers thereto are true and
correct as of the date hereof and will be true and correct as of the Closing
Date; (iv) the Investor will notify the Company promptly of any material change
in any of such information in the Questionnaire until such time as the Investor
has sold all of its Shares or until the Company is no longer required to keep
the Registration Statement effective; and (v) the Investor has, in connection
with its decision to purchase the number of Shares set forth on the cover page
hereto, relied only upon the SEC Documents, other publicly available information
and the representations and warranties of the Company contained herein. The
Investor understands that its acquisition of the Shares has not been registered
under the Securities Act or registered or qualified under any state securities
law in reliance on specific exemptions therefrom, which exemptions may depend
upon, among other things, the bona fide nature of the Investor's investment
intent as expressed herein.
5.2 The Investor acknowledges that the Company has represented that
no action has been or will be taken in any jurisdiction outside the United
States by the Company that would permit an offering of the Shares, or possession
or distribution of offering materials in connection with the issuance of the
Shares, in any jurisdiction outside the United States where action for that
purpose is required. If the Investor is located or domiciled outside the United
States, it agrees to comply with all applicable laws and regulations in each
foreign jurisdiction in which it purchases, offers, sells or delivers the Shares
or has in its possession or distributes any offering material, in all cases at
its own expense.
5.3 The Investor hereby covenants with the Company not to make any
sale of the Shares without complying with the provisions of this Agreement,
including Section 7.2 hereof and,
20
without effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied, if applicable (unless the Investor is selling
such Shares in a transaction not subject to the prospectus delivery
requirement), and the Investor acknowledges that the certificates evidencing the
Shares will be imprinted with a legend that prohibits their transfer except in
accordance therewith. The Investor acknowledges that there may occasionally be
times when the Company, based on the advice of its counsel, determines that,
subject to the limitations of Section 7.2, it must suspend the use of the
prospectus forming a part of the Registration Statement (the "Prospectus") until
such time as an amendment to the Registration Statement has been filed by the
Company and declared effective by the SEC or until the Company has amended or
supplemented such Prospectus.
5.4 The Investor further represents and warrants to the Company that
(i) the Investor has full right, power, authority and capacity to enter into
this Agreement and to consummate the transactions contemplated hereby and has
taken all necessary action to authorize the execution, delivery and performance
of this Agreement and (ii) this Agreement constitutes a valid and binding
obligation of the Investor enforceable against the Investor in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as such
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification and contribution agreements of the Investor
herein may be legally unenforceable.
5.5 The Investor understands that nothing in this Agreement or any
other materials presented to the Investor in connection with the purchase and
sale of the Shares constitutes legal, tax or investment advice. The Investor has
consulted such legal, tax and investment advisors as it, in its sole discretion,
has deemed necessary or appropriate in connection with its purchase of Shares.
5.6 The Investor represents and warrants that neither it, nor any of
its affiliates (or any other third party acting on the instructions of the
Investor or its affiliates), have entered into any Short Sales (as hereinafter
defined) or otherwise traded in the Common Stock or acted in a manner that could
reasonably be expected to result in downward price pressure on the Common Stock
following the receipt of any information or documents related to the sale of the
Shares contemplated herein. For purposes of this Section 5.6, a "Short Sale" by
the Investor shall mean a sale of Common Stock by the Investor that is marked as
a short sale and that is made at a time when there is no equivalent offsetting
long position in Common Stock held by the Investor.
6. Survival of Representations, Warranties and Agreements. Notwithstanding
any investigation made by any party to this Agreement, all covenants,
agreements, representations and warranties made by the Company and the Investor
herein shall survive the execution of this Agreement, the delivery to the
Investor of the Shares being purchased and the payment therefor.
7. Registration of the Shares; Compliance with the Securities Act.
7.1 Registration Procedures and Expenses. The Company shall:
(a) subject to receipt of the Questionnaire from the Investor,
use commercially reasonable efforts to prepare and file with the SEC, as soon as
reasonably practicable but in any event within thirty (30) days after the
Closing Date, a registration statement (the "Registration Statement") on Form
S-3 (except if the Company is not then eligible to register for
21
resale the Registrable Shares (as defined below) on Form S-3, in which case the
Registration Statement shall be on another appropriate form in accordance
herewith) to enable the resale of the Registrable Shares by the Investors on a
delayed or continuous basis under Rule 415 of the Securities Act. "Registrable
Shares" means (a) all shares of Common Stock purchased in the Offering and (b)
Penalty Shares (as defined below), if any;
(b) use commercially reasonable efforts, subject to receipt of
the Questionnaire from the Investor, to cause the Registration Statement to
become effective as soon as reasonably practicable but in any event within one
hundred twenty (120) days after the Closing Date (with respect to this Section
7.1(b), the term "commercially reasonable efforts" shall mean that the Company
shall submit to the SEC, within two business days after the Company learns that
no review of the Registration Statement will be made by the staff of the SEC or
that the staff has no further comments on the Registration Statement, as the
case may be, a request for acceleration of effectiveness of the Registration
Statement to a time and date not later than forty-eight (48) hours after the
submission of such request);
(c) use commercially reasonable efforts to prepare and file
with the SEC such amendments and supplements to the Registration Statement and
the Prospectus used in connection therewith and take all such other actions as
may be necessary to keep the Registration Statement current and effective and
free from any material misstatement or omission to state a material fact for a
period (the "Registration Period") not exceeding, with respect to the Investor's
Registrable Shares, the earliest of (i) the second anniversary of the Closing
Date, (ii) the date on which the Investor may sell all Shares then held by the
Investor pursuant to Rule 144(k) promulgated under the Securities Act, and (iii)
such time as all Registrable Shares held by such Investor have been sold (A)
pursuant to a registration statement, (B) to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, and/or
(C) in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions and restrictive legends with respect thereto, if any, are
removed upon the consummation of such sale;
(d) promptly furnish to the Investor with respect to the
Shares registered under the Registration Statement such number of copies of the
Registration Statement and the Prospectus in conformity with the requirements of
the Securities Act and such other documents as the Investor may reasonably
request, in order to facilitate the public sale or other disposition of all or
any of the Shares by the Investor;
(e) promptly take such action as may be necessary to qualify,
or obtain, an exemption for the Registrable Shares under such of the state
securities laws of United States jurisdictions as shall be necessary to qualify,
or obtain an exemption for, the sale of the Registrable Shares in states
specified in writing by the Investor; provided, however, that the Company shall
not be required to qualify to do business or file a general consent to service
of process in any jurisdiction in which it is not now so qualified or has not so
consented;
(f) bear all expenses in connection with the procedures in
paragraph (a) through (e) of this Section 7.1 and the registration of the Shares
pursuant to the Registration Statement, regardless of whether a Registration
Statement becomes effective, including without limitation: (i) all registration
and filing fees and expenses (including filings made with the NASD); (ii) fees
and expenses of compliance with federal securities and state "blue sky" or
securities laws; (iii) expenses of printing (including printing certificates for
the Registrable Shares and Prospectuses);
22
(iv) all application and filing fees in connection with listing the Registrable
Shares on a national securities exchange or automated quotation system pursuant
to the requirements hereof; and (v) all fees and disbursements of counsel of the
Company and independent certified public accountants of the Company (including
the expenses of any special audit and "cold comfort" letters required by or
incident to such performance); provided, however, that each Investor shall be
responsible for paying the underwriting commissions or brokerage fees, and taxes
of any kind (including, without limitation, transfer taxes) applicable to any
disposition, sale or transfer of such Investor's Registrable Shares. The Company
shall, in any event, bear its internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, rating agency fees and the
fees and expenses of any person, including special experts, retained by the
Company;
(g) advise the Investor, within two (2) business days by
e-mail, fax or other type of communication, and, if requested by the Investor,
confirm such advice in writing: (i) after it shall receive notice or obtain
knowledge of the issuance of any stop order by the SEC delaying or suspending
the effectiveness of the Registration Statement or of the initiation or threat
of any proceeding for that purpose, or any other order issued by any state
securities commission or other regulatory authority suspending the qualification
or exemption from qualification of such Registrable Shares under state
securities or "blue sky" laws; and it will promptly use its best efforts to
prevent the issuance of any stop order or other order or to obtain its
withdrawal at the earliest possible moment if such stop order or other order
should be issued; and (ii) when the Prospectus or any Prospectus Supplement or
post-effective amendment has been filed, and, with respect to the Registration
Statement or any post-effective amendment thereto, when the same has become
effective;
(h) comply with all applicable rules and regulations of the
SEC;
(i) use commercially reasonable efforts to cause all
Registrable Shares to be listed on each securities exchange or market, if any,
on which equity securities issued by the Company are then listed; and
(j) use commercially reasonable efforts to take all other
steps necessary to effect the registration of the Registrable Shares
contemplated hereby and to enable the Investors to sell the Shares under Rule
144 under the Securities Act.
(k) The Company further agrees that, subject to the Company's
right to cause a Suspension under Section 7.2 of this Agreement, in the event
that the Registration Statement has not (i) in the event of a "no review" of the
Registration Statement by the SEC, been declared effective by the SEC within
sixty (60) days after the Closing Date, or (ii) in the event the Registration
Statement is reviewed by the SEC, been declared effective by the SEC within
ninety (90) days after the Closing Date, unless in either case the failure to
become effective is due to the fault of the Investor (each such event referred
to in clauses (i) and (ii), a "Registration Default" and the date of such event
referred to in clauses (i) and (ii), an "Event Date"), then:
(A) if the Registration Default exists for sixty
(60) or fewer days from the Event Date, then the Company
shall issue additional shares to the Investor equal to
one-sixth (1/6th) of one percent (1%) of the number of
Shares issued to the Investor at the Closing, per day of
the Registration Default period;
23
(B) if the Registration Default exists for
sixty-one (61) to ninety (90) days from the Event Date,
then, on the ninety-first (91st) day, the Company shall
issue further additional shares to the Investor equal to
ten percent (10%) of the number of Shares issued to the
Investor at the Closing; and
(C) if the Registration Default exists for more
than ninety (90) days from the Event Date, then the
Company shall, on each thirtieth (30th) day after the
ninety-first (91st) day, issue further additional shares
to the Investor equal to ten percent (10%) of the number
of Shares issued to the Investor at the Closing.
To the extent that the Company has insufficient authorized but unissued shares
available to issue such additional shares (the "Penalty Shares"), or such
issuance would result in the Company being required under Nasdaq Marketplace
Rule 4350 or other applicable rules to obtain the approval of the Company's
stockholders, then the Company shall pay to the Investor cash in lieu of shares,
an amount equal to the Share Price per share. The Company shall deliver the
Penalty Shares or cash payment to the Investor by the fifth business day after
the end of each such period described above. Subject to the Investor's right to
specific performance under Section 17, but otherwise notwithstanding anything to
the contrary in Section 7.3 or any other provision of this Agreement (other than
Section 17), the issuance of the Penalty Shares or cash as provided in this
Section 7.1(k) shall be the Investor's sole and exclusive remedy in the event of
any Registration Default; provided, however, that if the foregoing remedy is
deemed unenforceable by a court of competent jurisdiction then the Investor
shall have all other remedies available at law or in equity.
(l) The Investor agrees to furnish to the Company a completed
Questionnaire at the Closing for use in preparation of the Registration
Statement contemplated in this Section 7.1. The Company shall not be required to
include the Registrable Shares of the Investor in the Registration Statement and
shall not be required to issue any Penalty Shares or pay a cash payment pursuant
to Section 7.1(k) so long as the Investor fails to furnish a fully completed
Questionnaire at the Closing or thereafter.
7.2 Transfer of Shares; Suspension.
(a) The Investor agrees that it will promptly notify the
Company of any changes in the information set forth in the Registration
Statement regarding the Investor or its plan of distribution.
(b) Except in the event that paragraph (c) below applies, the
Company shall, at all times during the Registration Period, promptly (i) prepare
and file from time to time with the SEC a post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or a supplement
or amendment to any document incorporated therein by reference or file any other
required document so that such Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
so that, as thereafter delivered to purchasers of the Shares being sold
thereunder, such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; (ii) provide the Investor copies of any documents
filed pursuant to Section 7.2(b)(i); and (iii) inform each Investor that the
24
Company has complied with its obligations in Section 7.2(b)(i) (or that, if the
Company has filed a post-effective amendment to the Registration Statement which
has not yet been declared effective, the Company will notify the Investor to
that effect, will use its commercially reasonable efforts to secure the
effectiveness of such post-effective amendment as promptly as possible and will
promptly notify the Investor pursuant to Section 7.2(b)(i) hereof when the
amendment has become effective).
(c) Subject to paragraph (d) below, in the event (i) of any
request by the SEC or any other federal or state governmental authority during
the period of effectiveness of the Registration Statement for amendments or
supplements to a Registration Statement or related Prospectus or for additional
information; (ii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Shares for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; or (iv) after effectiveness of the
Registration Statement, of any event or circumstance which necessitates the
making of any changes in the Registration Statement or Prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or any omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and that in the case of the Prospectus, it will not contain any untrue statement
of a material fact or any omission 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; then the Company shall
deliver a notice in writing to the Investor (the "Suspension Notice") to the
effect of the foregoing and, upon receipt of such Suspension Notice, the
Investor will refrain from selling any Registrable Shares pursuant to the
Registration Statement (a "Suspension") until the Investor's receipt of copies
of a supplemented or amended Prospectus prepared and filed by the Company, or
until it is advised in writing by the Company that the current Prospectus may be
used, and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such Prospectus. In the
event of any Suspension, the Company will use its commercially reasonable
efforts, consistent with the best interests of the Company and its stockholders,
to cause the use of the Prospectus so suspended to be resumed as soon as
reasonably practicable after the delivery of a Suspension Notice to the
Investor. In addition to and without limiting any other remedies (including,
without limitation, at law or at equity) available to the Investor, the Investor
shall be entitled to specific performance in the event that the Company fails to
comply with the provisions of this Section 7.2(c).
(d) Notwithstanding the foregoing paragraphs of this Section
7.2, the Investor shall not be prohibited from selling Registrable Shares under
the Registration Statement as a result of Suspensions on more than two occasions
(for two separate suspension events) of not more than forty-five days each in
any twelve month period. If the Investor is prohibited from selling Registrable
Shares under the Registration Statement as a result of Suspensions on more than
two occasions in any twelve month period or for more than forty-five days on any
one occasion, it shall be deemed a Registration Default, and the Company shall
issue Penalty Shares or pay cash to the Investor, as the case may be, in
accordance with the provisions of Section 7.1(k) based on the aggregate number
of Registrable Shares that have not been previously sold by the Investor.
(e) Provided that a Suspension is not then in effect, the
Investor may sell Registrable Shares under the Registration Statement, provided
that it arranges for delivery of a current Prospectus to the transferee of such
Shares. Upon receipt of a request therefor, the Company
25
has agreed to provide, at its own expense, an adequate number of current
Prospectuses (including documents incorporated by reference therein) to the
Investor and to supply copies to any other parties requiring such Prospectuses.
(f) In the event of a sale of Registrable Shares by the
Investor under the Registration Statement, the Investor must also deliver to the
Company's transfer agent, with a copy to the Company, a Certificate of
Subsequent Sale substantially in the form attached hereto as Exhibit B, so that
the Registrable Shares may be properly transferred.
7.3 Indemnification. For the purpose of this Section 7.3:
(i) the term "Selling Stockholder" shall include the Investor, its
officers and directors, and any person controlling such Investor;
(ii) the term "Registration Statement" shall include any final
Prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 7.1; and
(iii) the term "untrue statement" shall include (1) any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement a material fact required to be stated
therein or necessary to make the statements therein not misleading and (2) any
untrue statement or alleged untrue statement, or any omission or alleged
omission to state in the Prospectus 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.
(a) The Company agrees to indemnify and hold harmless each
Selling Stockholder from and against any losses, claims, damages, liabilities or
expenses to which such Selling Stockholder may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof) arise out
of, or are based upon (i) any untrue statement of a material fact contained in
the Registration Statement or Prospectus, (ii) any failure by the Company to
fulfill any undertaking included in the Registration Statement, (iii) any breach
of any representation, warranty or covenant made by the Company in this
Agreement and (iv) any violation or alleged violation of the Securities Act, the
Exchange Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
Registrable Shares, and the Company will promptly reimburse such Selling
Stockholder for any reasonable legal or other expenses incurred in
investigating, defending or preparing to defend, settling, compromising or
paying any such action, proceeding or claim, provided, however, that the Company
shall not be liable in any such case to the extent that such loss, claim,
damage, liability or expense arises solely out of, or is based solely upon, an
untrue statement made in such Registration Statement in reliance upon and in
conformity with written information furnished to the Company by such Selling
Stockholder specifically for use in preparation of the Registration Statement or
the failure of such Selling Stockholder to comply with its covenants and
agreements contained in Sections 5.3 or 7.2 hereof respecting sale of the Shares
or any statement or omission in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Investor at least three business
days prior to the pertinent sale or sales by the Investor. Notwithstanding the
foregoing, the Company shall not be liable to any Selling Stockholder for any
consequential damages, including lost profits, solely with respect to losses,
claims, damages, liabilities or expenses to which such Selling Stockholder may
become subject, arising out of, or
26
based upon, any breach of any representation, warranty or covenant made by the
Company in this Agreement.
(b) The Investor agrees (severally and not jointly with any
other Investor) to indemnify and hold harmless the Company (and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act, each officer of the Company who signs the Registration Statement and each
director of the Company) from and against any losses, claims, damages,
liabilities or expenses to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise solely out of, or are based solely upon,
(i) any failure by the Investor to comply with the covenants and agreements
contained in Sections 5.3 or 7.2 hereof respecting sale of the Shares, (ii) any
untrue statement of a material fact contained in the Registration Statement, but
only if and to the extent that such untrue statement was made in reliance upon
and in conformity with written information furnished by the Investor
specifically for use in preparation of the Registration Statement (provided,
however, that the Investor shall not be liable in any such case for any untrue
statement in any Registration Statement or Prospectus if such statement has been
corrected in writing by the Investor and delivered to the Company at least three
business days prior to the pertinent sale or sales by the Investor) or (iii) any
violation or alleged violation of the Securities Act, the Exchange Act, any
other law, including, without limitation, any state securities law, or any rule
or regulation thereunder relating to the offer or sale of the Registrable Shares
by the Investor, and the Investor will reimburse the Company (or such officer,
director or controlling person), as the case may be, for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend,
settling, compromising or paying any such action, proceeding or claim.
Notwithstanding the foregoing, (x) the Investor's aggregate liability pursuant
to this subsection (b) and subsection (d) shall be limited to the net amount
received by the Investor from the sale of the Shares and (y) the Investor shall
not be liable to the Company for any consequential damages, including lost
profits, solely with respect to losses, claims, damages, liabilities or expenses
to which the Company (or any officer, director or controlling person as set
forth above) may become subject (under the Securities Act or otherwise), arising
out of, or based upon, any failure to comply with the covenants and agreements
contained in Sections 5.3 or 7.2 hereof respecting sale of the Shares.
(c) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this Section 7.3,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, but the omission to so notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party under this Section 7.3 (except to the extent that such
omission materially and adversely affects the indemnifying party's ability to
defend such action) or from any liability otherwise than under this Section 7.3.
Subject to the provisions hereinafter stated, in case any such action shall be
brought against an indemnified person, the indemnifying person shall be entitled
to participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified person. After notice
from the indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof; provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnifying person, for the
same counsel to represent
27
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person; provided, further, that no
indemnifying person shall be responsible for the fees and expenses of more than
one separate counsel (together with appropriate local counsel) for all
indemnified parties. In no event shall any indemnifying person be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
person shall have approved the terms of such settlement; provided that, such
consent shall not be unreasonably withheld. No indemnifying person shall,
without the prior written consent of the indemnified person, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified person is or could have been a party and indemnification could have
been sought hereunder by such indemnified person, unless such settlement
includes an unconditional release of such indemnified person from all liability
on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in this Section 7.3 is
unavailable to or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above in respect of any losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and the
Investor on the other in connection with the statements or omissions or other
matters which resulted in such losses, claims, damages, liabilities or expenses
(or actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, in the case of an untrue statement, whether the untrue statement
relates to information supplied by the Company on the one hand or an Investor on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement. The Company and the
Investor agree that it would not be just and equitable if contribution pursuant
to this subsection (d) were determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), the
Investor shall not be required to contribute any amount in excess of the net
amount received by the Investor from the sale of the Shares. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Investor's obligations in this
subsection to contribute are several in proportion to their sales of Shares to
which such loss relates and not joint.
(e) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 7.3, and are fully informed regarding said
provisions.
7.4 Transfer Restrictions.
(a) The Investor agrees that it will not effect any sale,
offer to sell, solicit offers to buy, dispose of, loan, pledge or grant any
right with respect to (collectively, a "Disposition") the Shares or its right to
purchase the Shares that would constitute a sale within the meaning of the
28
Securities Act except as contemplated in the Registration Statement referred to
in Section 7.1 and as described in this Agreement or otherwise in accordance
with the Securities Act. In connection with any transfer of Shares other than
pursuant to an effective registration statement, to the Company, to an Affiliate
of the Investor or in connection with a pledge as contemplated in Section
7.4(b), the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Shares
under the Securities Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and shall have the
rights of the Investor under this Agreement.
(b) The Investor agrees to the imprinting of a legend on any
of the Shares in the following form until such time as the Investor has resold
the Shares pursuant to the Registration Statement in compliance with applicable
laws or until such time as the legend may be removed pursuant to Section 7.4(d)
below:
THESE SHARES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED, IN CERTAIN
CIRCUMSTANCES, BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE
TO THE COMPANY. THESE SHARES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER
LOAN WITH A FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR"
AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.
(c) The Company acknowledges and agrees that the Investor may
from time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of the
Shares to a financial institution that is an "accredited investor" as defined in
Rule 501(a) under the Securities Act and, if required under the terms of such
arrangement, the Investor may transfer pledged or secured Shares to the pledgees
or secured parties. Such a pledge or transfer would not be subject to approval
of the Company and no legal opinion of legal counsel of the pledgee, secured
party or pledgor shall be required in connection therewith. Further, no notice
shall be required of such pledge. At the Investor's expense, the Company will
execute and deliver such reasonable documentation as a pledgee or secured party
of the Shares may reasonably request in connection with a pledge or transfer of
the Shares, including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling
stockholders thereunder.
29
(d) If requested by the Investor, the Company agrees to use
its commercially reasonable efforts to cause its transfer agent to issue a
certificate to the Investor without the legend set forth in Section 7.4(b), if
(i) such Registrable Shares (as defined in Section 7.1(a)) are registered for
resale under the 1933 Act, (ii) in connection with a sale, assignment or other
transfer, such holder provides the Company with an opinion of counsel, in a
generally acceptable form, to the effect that such sale, assignment or transfer
of such Registrable Shares may be made without registration under the applicable
requirements of the 1933 Act, or (iii) such holder provides the Company with
reasonable assurance that such Registrable Shares can be sold, assigned or
transferred pursuant to Rule 144. Following the delivery to any Investor of any
certificate representing Registrable Shares that is free from all restrictive
and other legends, such Investor agrees that any sale of such Registrable Shares
shall be made pursuant to the Registration Statement and in accordance with the
plan of distribution described therein or pursuant to an available exemption
from the registration requirements of the 1933 Act.
7.5 Rule 144. Until the earlier of (i) the date on which the Company
no longer has securities registered pursuant to Section 12 of the Exchange Act,
or (ii) the second anniversary of the Closing, the Company agrees with each
holder of Registrable Shares to:
(a) comply with the requirements of Rule 144(c) under the
Securities Act with respect to current public information about the Company; and
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time it is subject to such reporting requirements).
7.6 Termination of Conditions and Obligations. The conditions
precedent imposed by Section 5 or this Section 7 upon Dispositions of the
Registrable Shares by the Investor shall cease and terminate as to any
particular number of the Registrable Shares and the restrictive legend shall be
removed when such Registrable Shares shall have been effectively registered
under the Securities Act and sold or otherwise disposed of in accordance with
the intended method of disposition set forth in the Registration Statement
covering such Registrable Shares or at such time as an opinion of counsel
reasonably satisfactory to the Company shall have been rendered to the effect
that such conditions are not necessary in order to comply with the Securities
Act (provided that such opinion shall not be required if the Company shall be
furnished with written documentation reasonably satisfactory to it that such
Registrable Shares are being transferred in a customary transaction exempt from
registration under Rule 144 under the Securities Act).
8. Notices. Except as specifically permitted by Section 7.1(g), all
notices, requests, consents and other communications hereunder shall be in
writing, shall be mailed (A) if within domestic United States by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, or by facsimile, or (B) if delivered from outside the
United States, by International Federal Express or facsimile, and shall be
deemed given (i) if delivered by first-class registered or certified mail
domestic, three business days after so mailed, (ii) if delivered by nationally
recognized overnight carrier, one business day after so mailed, (iii) if
delivered by International Federal Express, two business days after so mailed,
and (iv) if delivered by facsimile, upon electric confirmation of receipt and
shall be delivered as addressed as follows:
(a) if to the Company, to:
30
Endologix, Inc.
13900 Alton Parkway, Suite 122
Irvine, CA 92618
Attn: Chief Executive Officer
Tel: 949-595-7200
Fax: 949-457-9561
with a copy to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
Attn: Lawrence B. Cohn
Tel: 949-725-4132
Fax: 949-823-5132
(b) if to the Investor, at its address on the signature page
hereto, or at such other address or addresses as may have been furnished to the
Company in writing.
9. Changes. This Agreement may not be modified or amended except pursuant
to an instrument in writing signed by the Company and the Investor.
10. Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
11. Severability. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
12. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in Manhattan, New York. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
Manhattan, New York for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement hereof), and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is improper. Each party hereto
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto (including its affiliates, agents, officers, directors and
employees) hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby.
31
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, and any and
all other written or oral agreements relating to such subject matter are
expressly cancelled.
14. Finders Fees. Neither the Company nor the Investor nor any affiliate
thereof has incurred any obligation which will result in the obligation of the
other party to pay any finder's fee or commission in connection with this
transaction, except for fees payable by the Company to Adams Harkness, Inc. and
Montgomery & Co., LLC.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
16. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of the Company and the
Investors, including without limitation and without the need for an express
assignment, affiliates of the Investors. With respect to transfers that are not
made pursuant to the Registration Statement, the rights and obligations of an
Investor under this Agreement shall be automatically assigned by such Investor
to any transferee of all or any portion of such Investor's Registrable Shares
who is a Permitted Transferee (as defined below); provided, however, that within
two business days prior to the transfer, (i) the Company is provided notice of
the transfer including the name and address of the transferee and the number of
Registrable Shares transferred; and (ii) that such transferee agrees in writing
to be bound by the terms of this Agreement. (For purposes of this Agreement, a
"Permitted Transferee" shall mean any Person who (a) is an "accredited
investor," as that term is defined in Rule 501(a) of Regulation D under the
Securities Act and (b) is a transferee of at least 20,000 Registrable Shares as
permitted under the securities laws of the United States). Upon any transfer
permitted by this Section 16, the Company shall be obligated to such transferee
to perform all of its covenants under this Agreement as if such transferee were
an Investor.
17. Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Investor
and the Company will be entitled to specific performance under the Agreement.
The parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agree to waive in any action for specific performance of any
such obligation the defense that a remedy at law would be adequate.
18. Independent Nature of Investors' Obligations and Rights. The
obligations of the Investor under this Agreement are several and not joint with
the obligations of any Other Investor under any other Agreement, and the
Investor shall not be responsible in any way for the performance of the
obligations of any Other Investor under any of the Agreements. The decision of
the Investor to purchase the Shares pursuant to this Agreement has been made by
such Investor independently of any Other Investor. Nothing contained herein or
in any of the other Agreements, and no action taken by any Investor pursuant
thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Agreements. The Investor acknowledges that no Other Investor has acted as an
agent for the Investor in connection with making its investment hereunder and
that no Other Investor will be acting as an agent of the Investor in connection
with monitoring its investment in the Shares
32
or enforcing its rights under this Agreement. The Investor shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement, and it shall not be necessary for any
other Investor to be joined as an additional party in any proceeding for such
purpose.
19. Limitation of Liability. Notwithstanding anything herein to the
contrary, the Company acknowledges and agrees that the liability of the Investor
arising directly or indirectly, under this Agreement of any and every nature
whatsoever shall be satisfied solely out of the assets of the Investor, and that
no trustee, officer, other investment vehicle or any other affiliate of the
Investor or any investor, shareholder or holder of shares of beneficial interest
of the Investor shall be personally liable for any liabilities of the Investor;
provided, however, that such limitation of liability shall not apply to acts of
fraud by such trustee, officer, affiliate, investor, shareholder or holder of
beneficial interests of the Investor.
20. Expenses. Each of the Company and the Investor shall bear its own
expenses in connection with the preparation and negotiation of the Agreement.
21. Replacement of Shares. If any certificate or instrument evidencing any
Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause
to be issued in exchange and substitution for and upon cancellation thereof, or
in lieu of and substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested. The
applicants for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs associated with the issuance of such
replacement Shares.
22. Payment Set Aside. To the extent that the Company makes a payment or
payments to the Investor pursuant to this Agreement or the Investor enforces or
exercises its rights thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
23. Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 23:
"business day" means any day except Saturday, Sunday and any day
which shall be a federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or
other governmental action to close.
"Trading Market" means the following markets or exchanges on which
the Common Stock is listed or quoted for trading on the date in question:
the American Stock Exchange, the New York Stock Exchange, the Nasdaq
National Market or the Nasdaq SmallCap Market.
33
24. Stock Splits, Etc. The provisions of this Agreement shall be
appropriately adjusted to reflect any stock split, stock dividend, reverse stock
split, reorganization or other similar event effected after the date hereof.
25. Termination.
(a) This Agreement may be terminated and the sale and purchase
of the Shares abandoned at any time prior to the Closing, by written notice of
any individual Investor if the Closing has not occurred within five (5) business
days of the Subscription Date (other than as a result of the failure on the part
of the party giving such notice of termination to perform its covenants and
obligations under this Agreement in all material respects); provided, however,
that the abandonment of the sale and purchase of the Shares shall be applicable
only to such Investor providing such written notice.
(b) If this Agreement is terminated pursuant to this Section
25, all further obligations of the parties shall terminate; provided, however,
that no party shall be relieved of any liability arising from any breach by such
party of any provision of this Agreement.
26. Additional Investor Considerations.
(a) The investments in the Company being made by each Investor
pursuant to this Agreement, and any subsequent investments in the Company by an
Investor or its affiliates after the date hereof, is being made notwithstanding
any engagement, prior to or subsequent to the date hereof, by the Company, of
any Investor or its affiliates as financial advisor, agent or underwriter to the
Company. Notwithstanding anything in this Agreement to the contrary, no Investor
or its affiliates shall be restricted in any way from engaging in any brokerage,
investment advisory, financial advisory, anti-raid advisory, financing, asset
management, trading, market making, arbitrage and other similar activities
conducted in the ordinary course of its business.
(b) Notwithstanding any duty otherwise existing at law or in
equity (including, without limitation, by reason of an employee or partner of an
affiliate of any Investor serving on the board of directors of the Company or as
an observer thereto), employees and partners of any Investor or its affiliates
may act as a director, officer, employee or advisor of any corporation, a
trustee of any trust, a partner of any partnership or member of a limited
liability company; may receive compensation for his, her or its services as an
advisor with respect to, or participation in profits derived from, the
investments of any such corporation, trust, partnership or company; and may
acquire, invest in, hold and sell securities of any entity; provided that no
such employee or partner of any Investor or its affiliates shall disclose any
confidential or proprietary information of the Company, acquired pursuant to
such service on the board of directors of the Company or as an observer thereto
or pursuant to the transactions contemplated by this Agreement or otherwise as a
stockholder of the Company. The Company shall not have by virtue of this
Agreement, any right, title or interest in or to such other corporation, trust,
partnership, company or investment.
(c) Except as otherwise required by law, the Company agrees
that it will not, without the prior written consent of the appropriate Investor
or its affiliates in each instance, (i) use in advertising, publicity, or
otherwise the name of any Investor or its affiliates, or any partner or employee
of any Investor or its affiliates, nor any trade name, trademark, trade device,
service mark, symbol or any abbreviation, contraction or simulation thereof
owned by any Investor or its affiliates, or (ii) represent, directly or
indirectly, that any product or any service provided by the Company has
34
been approved or endorsed by any Investor or its affiliates. This provision
shall survive termination of the Agreement.
(d) The Company agrees that, if any Investor or its affiliates
could reasonably be deemed to be an "underwriter," as defined in Section
2(a)(11) of the Securities Act, in connection with any registration of
Registrable Securities of any Investor or its affiliates pursuant to Section 7.1
of this Agreement, then the Company will cooperate with such Investor or its
affiliates in allowing such Investor or its affiliates to conduct customary
"underwriter's due diligence" with respect to the Company and satisfy its
obligations in respect thereof. The Company will also include appropriate
disclosure, which shall be reasonably acceptable to the Investor, in any
registration statement in which an Investor or its affiliates is a selling
stockholder with respect to such Investor or its affiliates' status as an
underwriter and/or broker-dealer.
(e) Notwithstanding anything in this Agreement to the
contrary, any Investor may transfer all or a portion of its Shares at any time
to an affiliate without a written opinion and without compliance with Section
7.4; provided, however, that any such (a) transferee agrees in writing to be
bound by the terms of this Agreement and (b) transfer is in compliance with all
applicable federal and state securities laws and the transferee is an
"accredited investor" as defined in Regulation D promulgated under the
Securities Act. Any Investor may hold its investment in nominee form.
35
Exhibit A
CONTENT OF OPINION OF COUNSEL TO THE COMPANY
(i) The Company and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. To our knowledge, all of the Company's Subsidiaries,
as defined in the Agreements, are listed on Exhibit 21.1 to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2004 (the "Form 10-K"). The Company and each of its Subsidiaries is
duly qualified to do business as a foreign corporation and is in good
standing in each other state in which the nature of its activities or
of its properties owned or leased makes such qualification necessary,
except to the extent that failure to so qualify would not have a
material adverse effect on the Company and its consolidated
subsidiaries (taken as a whole).
(ii) The Company and each of its Subsidiaries has the corporate power and
authority to own its properties and assets, to carry on its business as
presently conducted.
(iii) The Company has the corporate power to enter into the Agreements and
perform its obligations thereunder.
(iv) Each of the Agreements and that certain Engagement Letter dated May 26,
2005, by and between the Company, Adams Harkness, Inc., and Montgomery
& Co., LLC (the "Engagement Letter"), has been duly authorized by all
necessary corporate action on the part of the Company and has been duly
executed and delivered by the Company.
(v) The shares of Common Stock to be issued to the Investors at the Closing
have been duly authorized and, when issued and paid for in accordance
with the terms of the Agreements, will be validly issued, fully paid
and nonassessable.
(vi) The execution and delivery of the Agreements and the performance by the
Company of their respective terms (a) will not breach or result in a
violation of the Company's Restated Certificate of Incorporation,
Bylaws, or any judgment, order or decree of any domestic court or
arbitrator, known to us, to which the Company is a party or subject and
(b) will not constitute a breach of the terms, conditions or provisions
of, or constitute a default under, any contract, undertaking, indenture
or other agreement or instrument filed as an exhibit to the Form 10-K
or the Company's quarterly reports on Form 10-Q or the Company's
current reports on Form 8-K filed since the date of the Form 10-K.
(vii) No consent, approval or authorization of, or designation, declaration
or filing with, any governmental authority is required in connection
with the valid execution, delivery and performance by the Company of
the Agreements, other than such consents, approvals, authorizations,
designations, declarations or filings as have been made or obtained on
or before the date hereof or which are not required to be made or
obtained until after the date hereof.
(viii) Except as disclosed in the Agreements or the exhibits and schedules
delivered in connection therewith, there is, to our current actual
knowledge, no action, suit or proceeding pending against the Company or
its properties in any court or before any governmental authority or
agency, or arbitration board or tribunal (a) which seeks to restrain,
enjoin, prevent the
consummation of, or otherwise challenge the Agreements or any of the
transactions contemplated thereby, or (b) which, if adversely
determined, could reasonably be expected to have a material adverse
effect on the Company or its business or properties (taken as a whole).
(ix) Based upon the representations of each Investor contained in the
Agreements, the offer, sale, issuance and delivery of the shares of
Common Stock under the circumstances contemplated by the Agreement are
exempt from the registration requirements of the Securities Act.
(x) To our knowledge, no stockholder of the Company has any right to
require the Company to register the sale of any shares owned by such
stockholder under the Securities Act in the Registration Statement.
The opinion will also include the following statement:
In connection with our participation in the preparation of the SEC
Documents, we have not independently verified the accuracy,
completeness or fairness of the statements contained therein (except
with respect to the descriptions of the Company's capital stock), and
the limitations inherent in the examination made by us and the
knowledge available to us are such that we are unable to assume, and we
do not assume, any responsibility for the accuracy, completeness or
fairness of the statements contained in the SEC Documents (except with
respect to the descriptions of the Company's capital stock). However,
on the basis of our examination and our participation in conferences
with certain officers of the Company in connection with the preparation
of the SEC Documents, we can advise you supplementally as a matter of
fact and not as an opinion that we have no current actual knowledge
that the SEC Documents contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
However, we are not expressing any belief as to (i) the financial
statements and the notes thereto or the schedules or other financial
and numerical data contained in the SEC Documents, (ii) disclosures
relating to governmental regulation of the Company's products, and
(iii) disclosures relating to the Company's intellectual property.
37
Exhibit B
CERTIFICATE OF SUBSEQUENT SALE
American Stock Transfer & Trust Company
6201 15th Avenue, 3rd Floor
Brooklyn, NY 11219
Attention: Paula Carappoli
RE: Sale of Shares of Common Stock of Endologix, Inc. (the
"Company") pursuant to the Company's Prospectus dated _______,
2005 (the "Prospectus")
Ladies and Gentlemen:
The undersigned hereby certifies, in connection with the sale of shares of
Common Stock of the Company included in the table of Selling Stockholders in the
Prospectus, that the undersigned has sold the shares pursuant to the Prospectus
and in a manner described under the caption "Plan of Distribution" in the
Prospectus and that such sale complies with all applicable securities laws,
including, without limitation, the Prospectus delivery requirements of the
Securities Act of 1933, as amended, and Regulation M under the Securities
Exchange Act of 1934, as amended.
Selling Stockholder (the beneficial owner):_____________________________________
Record Holder (e.g., if held in name of nominee):_______________________________
Restricted Stock Certificate No.(s):____________________________________________
Number of Shares Sold:__________________________________________________________
Date of Sale:___________________________________________________________________
In the event that you receive a stock certificate(s) representing more
shares of Common Stock than have been sold by the undersigned, then you should
return to the undersigned a newly issued certificate for such excess shares in
the name of the Record Holder and BEARING A RESTRICTIVE LEGEND IN THE FORM
CONTEMPLATED BY THE STOCK PURCHASE AGREEMENT, DATED JUNE __, 2005 BETWEEN THE
COMPANY AND THE SELLING STOCKHOLDER.
Very truly yours,
Dated:________________________ By:______________________________________
Print Name:______________________________
Title:___________________________________
cc: Paul McCormick, President and Chief Executive Officer
Endologix, Inc.
Exhibit C
ENDOLOGIX, INC.
SELLING STOCKHOLDER NOTICE AND QUESTIONNAIRE
The undersigned beneficial owner of common stock, par value $.001 per
share (the "Registrable Securities"), of Endologix, Inc. (the "Company")
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the "Commission") a registration statement on Form S-3
(the "Registration Statement") for the registration and resale under Rule 415 of
the Securities Act of 1933, as amended (the "Securities Act"), of the
Registrable Securities, in accordance with the terms of each Stock Purchase
Agreement, dated as of June __, 2005 (the "Stock Purchase Agreement," and
collectively the "Stock Purchase Agreements"), between the Company and the
Investors named therein.
The undersigned beneficial owner of Registrable Securities (the "Selling
Stockholder") hereby gives notice to the Company of its intention to sell or
otherwise dispose of Registrable Securities beneficially owned by it pursuant to
the Registration Statement. Each beneficial owner of Registrable Securities is
entitled to the benefits of the Stock Purchase Agreement. In order to sell or
otherwise dispose of any Registrable Securities pursuant to the Registration
Statement, a beneficial owner of Registrable Securities generally will be
required to be named as a selling stockholder in the related prospectus, deliver
a prospectus to purchasers of Registrable Securities and be bound by those
provisions of the Stock Purchase Agreement applicable to such beneficial owner.
Beneficial owners that do not complete this Notice and Questionnaire and deliver
it to the Company at the Closing or do not respond to subsequent written
requests for information by the Company within two (2) business days will not be
named as a selling stockholder in the prospectus, except as specifically
provided in the Stock Purchase Agreement, and therefore will not be permitted to
sell any Registrable Securities pursuant to the Registration Statement.
Certain legal consequences arise from being named as a selling stockholder
in the Registration Statement and the related prospectus. Accordingly, holders
and beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling stockholder in the Registration Statement and the related
prospectus.
NOTICE
The undersigned Selling Stockholder hereby requests that the Company
include the Registrable Securities owned by it and listed below in Item 3
(unless otherwise specified under such Item 3) pursuant to the Registration
Statement.
The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
QUESTIONNAIRE
1. NAME.
(a) Full Legal Name of Selling Stockholder:
_________________________________________________
(b) Full Legal Name of Registered Holder (if not the same as (a) above)
through which Registrable Securities listed in Item 3 below are held:
_________________________________________________
38
(c) Full Legal Name of Natural Control Person (which means a natural
person who directly or indirectly, alone or with others, has the power to vote
or dispose of the Registrable Securities covered by the questionnaire):
(d) Does the Natural Control Person disclaim beneficial ownership of the
Registrable Securities covered by the questionnaire?
Yes [ ] No [ ]
(e) Full Legal Name of DTC participant (if applicable and if not the same
as (b) above) through which Registrable Securities listed in Item 3 below are
held (enter N/A if not applicable):
2. ADDRESS FOR NOTICES TO SELLING STOCKHOLDER:
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
Telephone: ______________________________________
Fax: ____________________________________________
Contact Person: _________________________________
3. BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:
(a) Type and Principal Amount of Registrable Securities beneficially
owned:
4. BROKER-DEALER STATUS:
(a) Are you a broker-dealer?
Yes [ ] No [ ]
Note: If yes, the Commission's staff has indicated that you should be
identified as an underwriter in the Registration Statement.
(b) Are you an affiliate of a broker-dealer?
Yes [ ] No [ ]
(c) If you are an affiliate of a broker-dealer, do you certify that you
bought the Registrable Securities in the ordinary course of business, and at the
time of the purchase of the Registrable Securities to be resold, you had no
agreements or understandings, directly or indirectly, with any person to
distribute the Registrable Securities?
Yes [ ] No [ ]
Note: If no, the Commission's staff has indicated that you should be
identified as an underwriter in the Registration Statement.
5. BENEFICIAL OWNERSHIP OF OTHER SECURITIES OF THE COMPANY OWNED BY THE SELLING
STOCKHOLDER.
Except as set forth below in this Item 5, the undersigned is not the
beneficial or registered owner of any securities of the Company other than the
Registrable Securities listed above in Item 3.
(a) Type and Amount of Other Securities beneficially owned by the Selling
Stockholder:
_________________________________________________
_________________________________________________
6. RELATIONSHIPS WITH THE COMPANY:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (owners of 5% of
more of the equity securities of the undersigned) has held any position or
office or has had any other material relationship with the Company (or its
predecessors or affiliates) during the past three (3) years.
State any exceptions here:
_________________________________________________
_________________________________________________
Pursuant to the Stock Purchase Agreement, the Company has agreed under
certain circumstances to indemnify the Selling Stockholder against certain
liabilities.
The undersigned agrees to promptly notify the Company of any material
inaccuracies or changes in the information provided herein that may occur
subsequent to the date hereof at any time while the Registration Statement
remains effective.
All notices hereunder and pursuant to the Stock Purchase Agreement shall
be made in writing by hand delivery, first class mail or air courier
guaranteeing overnight delivery to the address set forth below.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 6 and the
inclusion of such information in the Registration Statement and the related
prospectus. The undersigned understands that such information will be relied
upon by the Company in connection with the preparation or amendment of the
Registration Statement and the related prospectus.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Questionnaire to be executed and delivered either in person or by its duly
authorized agent.
Dated: Beneficial Owner: ________________________________
By: _________________________
Name:
Title: