Exhibit 10.1

 

 

Execution Copy

 

 

 

 

 

 

 COMMON STOCK PURCHASE AGREEMENT

 

Dated as of November 8, 2013

 

by and among

 

LIQUIDMETAL TECHNOLOGIES, INC.,

 

KINGSBROOK OPPORTUNITIES MASTER FUND LP

 

 

TECH OPPORTUNITIES LLC,

 

and

 

IROQUOIS MASTER FUND LTD.

 

 

 

 

 

 

 

 

 

 
 

--------------------------------------------------------------------------------

 

 

Table of Contents 

 

  Page     

ARTICLE I DEFINITIONS  

 1

 

 

 

ARTICLE II PURCHASE AND SALE OF COMMON STOCK  

2

 

 

 

Section 2.1. 

Purchase and Sale of Stock     

 2

Section 2.2.

Closing Date; Settlement Dates     

 2

Section 2.3. 

Initial Public Announcements and Required Filings     

 2

 

 

 

ARTICLE III DRAW DOWN TERMS  

 3

 

 

 

Section 3.1.

Draw Down Notice     

 3

Section 3.2.

Limitation of Draw Downs     

 4

Section 3.3.

Reduction of Commitment     

 4

Section 3.4. 

Below Floor Price     

 4

Section 3.5.

Settlement     

 4

Section 3.6.

Failure to Deliver Shares     

 5

Section 3.7.

Certain Limitations     

 5

Section 3.8. 

Blackout Periods     

 6

 

 

 

ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR

7

 

 

 

Section 4.1.     

Organization and Standing of the Investor     

 7

Section 4.2.  

Authorization and Power     

 7

Section 4.3. 

No Conflicts     

 8

Section 4.4.  

Investment Purpose     

 8

Section 4.5.  

Accredited Investor Status     

 8

Section 4.6.  

Reliance on Exemptions     

 8

Section 4.7.

Information     

 9

Section 4.8. 

No Governmental Review     

 9

Section 4.9. 

No General Solicitation     

 9

Section 4.10.  

Not an Affiliate     

 9

Section 4.11. 

Statutory Underwriter Status     

 9

Section 4.12.

Resales of Securities     

 9

Section 4.13.   

Certain Trading Activities     

 10

 

 

 

ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

 10

 

 

 

Section 5.1.

Organization, Good Standing and Power     

 10

Section 5.2.

Authorization, Enforcement     

 10

Section 5.3.  

Capitalization and Voting Rights     

 11

Section 5.4.   Issuance of Securities      11

--------------------------------------------------------------------------------

Section 5.5. No Conflicts      11 Section 5.6.  Commission Documents, Financial
Statements      12 Section 5.7.   Subsidiaries      14 Section 5.8. No Material
Adverse Effect      14 Section 5.9.  No Undisclosed Liabilities      14 Section
5.10.    No Undisclosed Events or Circumstances      14 Section 5.11. 

Indebtedness; Solvency     

15 Section 5.12.  Title To Assets      15 Section 5.13.  Actions Pending      15
Section 5.14.  Compliance With Law      16 Section 5.15. Certain Fees      16
Section 5.16. Disclosure      16 Section 5.17.  Operation of Business      17
Section 5.18.    Environmental Compliance      17 Section 5.19.  Material
Agreements      18 Section 5.20.  Transactions With Affiliates      18 Section
5.21.   Employees      19 Section 5.22.  Use of Proceeds      19 Section 5.23.
Investment Company Act Status      19 Section 5.24. ERISA      19 Section 5.25.
Taxes      19 Section 5.26.  Insurance      20 Section 5.27.  U.S. Real Property
Holding Corporation      20 Section 5.28.  Exemption from Registration; Valid
Issuances      20 Section 5.29.  No General Solicitation or Advertising      20
Section 5.30. No Integrated Offering      21 Section 5.31. Dilutive Effect     
21 Section 5.32.   

Manipulation of Price     

21 Section 5.33.  Securities Act      21 Section 5.34.  Listing and Maintenance
Requirements; DTC Eligibility      21 Section 5.35. 

Application of Takeover Protections     

22 Section 5.36. Foreign Corrupt Practices Act      22 Section 5.37.   Money
Laundering Laws      22 Section 5.38. OFAC      22 Section 5.39.   No
Disqualification Events.      23 Section 5.40. Acknowledgement Regarding
Investors’ Acquisition of Securities      23       ARTICLE VI ADDITIONAL
COVENANTS

23

      Section 6.1.  Securities Compliance      23 Section 6.2.  Reservation of
Common Stock      24 Section 6.3.  Registration and Listing      24 Section 6.4.
Compliance with Laws.      24 Section 6.5.   Keeping of Records and Books of
Account; Due Diligence.      25

 

ii

--------------------------------------------------------------------------------

 

Section 6.6.   Limitations on Holdings and Issuances      25 Section 6.7.   
Other Agreements and Alternate Transactions.      25 Section 6.8. Corporate
Existence      28 Section 6.9.   Fundamental Transaction      28 Section 6.10. 
Delivery of Registration Statement and Prospectus; Subsequent Changes      28
Section 6.11.   Amendments to the Registration Statement; Prospectus
Supplements      29 Section 6.12.  

Stop Orders     

29 Section 6.13.  Selling Restrictions.      30 Section 6.14. Effective
Registration Statement      31 Section 6.15.  Blue Sky      31 Section 6.16. 
Non-Public Information      31 Section 6.17.   

Broker/Dealer     

31 Section 6.18.  Disclosure Schedule.      31      

ARTICLE VII CONDITIONS TO CLOSING AND CONDITIONS TO THE SALE AND PURCHASE OF THE
SHARES

32       Section 7.1.  Conditions Precedent to Closing      32 Section 7.2.  
Conditions Precedent to a Draw Down      33      

ARTICLE VIII TERMINATION

36

      Section 8.1. Termination      36 Section 8.2.  Other Termination      37
Section 8.3.    Effect of Termination      37      

ARTICLE IX INDEMNIFICATION

38

      Section 9.1. Indemnification of Investors      38 Section 9.2.
Indemnification Procedures      39      

ARTICLE X MISCELLANEOUS

40

      Section 10.1.   Fees and Expenses; Commitment Shares.      40 Section
10.2.   Specific Enforcement, Consent to Jurisdiction, Waiver of Jury
Trial.      42 Section 10.3.   Entire Agreement; Amendment      43 Section
10.4.   Notices      43 Section 10.5.   Waivers      45 Section 10.6.  
Headings      45 Section 10.7.  Construction      45 Section 10.8. Successors
and Assigns      45 Section 10.9.  No Third Party Beneficiaries      46 Section
10.10.   Governing Law      46 Section 10.11.  Survival      46 Section 10.12. 
Counterparts      46

iii

--------------------------------------------------------------------------------

Section 10.13. Publicity      46 Section 10.14. Severability      47 Section
10.15.  Further Assurances      47 Section 10.16. Independent Nature of
Investors’ Obligations and Rights.      47      

American Stock Transfer and Trust

23

       

Annex I. Definitions 

 

   

 
iv

--------------------------------------------------------------------------------

 

 

COMMON STOCK PURCHASE AGREEMENT

 

This COMMON STOCK PURCHASE AGREEMENT is made and entered into as of November 8,
2013 (this “Agreement”), by and among Liquidmetal Technologies, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
“Company”), and Kingsbrook Opportunities Master Fund LP, a Cayman Islands
exempted limited partnership (“Kingsbrook”), Tech Opportunities LLC, a Delaware
limited liability company (“Tech Opportunities”), and Iroquois Master Fund Ltd.,
a Cayman Islands exempted company (“Iroquois”). Kingsbrook, Tech Opportunities,
and Iroquois are sometimes hereinafter referred to individually as an “Investor”
and collectively as the “Investors”.

 

RECiTALS

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions
and limitations set forth herein, the Company may issue and sell to each of the
Investors, from time to time as provided herein, and each of the Investors shall
purchase from the Company, severally and not jointly, such Investor’s Pro Rata
Amount of up to $20,000,000 of newly issued shares of the Company’s common
stock, $0.001 par value (“Common Stock”);

 

WHEREAS, such investments will be made in reliance upon the provisions of
Section 4(a)(2) of the Securities Act (“Section 4(a)(2)”) and Rule 506 of
Regulation D promulgated by the Commission under the Securities Act
(“Regulation D”), and upon such other exemption from the registration
requirements of the Securities Act as may be available with respect to any or
all of the investments in Common Stock to be made hereunder;

 

WHEREAS, the parties hereto are concurrently entering into a Registration Rights
Agreement in the form of Exhibit A hereto (the “Registration Rights Agreement”),
pursuant to which the Company shall register the Registrable Securities (as
defined in the Registration Rights Agreement), upon the terms and subject to the
conditions set forth therein; and

 

WHEREAS, in consideration for the Investors’ execution and delivery of this
Agreement, the Company is concurrently causing its transfer agent to issue to
each of the Investors its Pro Rata Amount of the Commitment Shares, upon the
terms and subject to the conditions set forth in this Agreement;

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:

 

Article I
DEFINITIONS

 

Capitalized terms used in this Agreement shall have the meanings ascribed to
such terms in Annex I hereto, and hereby made a part hereof, or as otherwise set
forth in this Agreement.

 

 

--------------------------------------------------------------------------------

 

 

Article II
PURCHASE AND SALE OF COMMON STOCK

 

Section 2.1.     Purchase and Sale of Stock. Upon the terms and subject to the
conditions of this Agreement, during the Investment Period, the Company in its
discretion may issue and sell to each of the Investors, and each of the
Investors shall purchase, severally and not jointly, from the Company, such
Investor’s Pro Rata Amount of up to $20,000,000 (the “Total Commitment”) of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
(the “Aggregate Limit”), by the delivery of Draw Down Notices to each of the
Investors as provided in Article III hereof.

 

Section 2.2.     Closing Date; Settlement Dates. This Agreement shall become
effective and binding (the “Closing”) upon the delivery of irrevocable
instructions to issue the Commitment Shares to the Investors or their respective
designees as provided in Sections 7.1 and 10.1, the delivery of counterpart
signature pages of this Agreement and the Registration Rights Agreement executed
by each of the parties hereto and thereto, and the delivery of all other
documents, instruments and writings required to be delivered at the Closing, in
each case as provided in Section 7.1, to the offices of Greenberg Traurig, LLP,
200 Park Avenue, New York, New York 10166, at 5:00 p.m., New York City time, on
the Closing Date. In consideration of and in express reliance upon the
representations, warranties and covenants contained in, and upon the terms and
subject to the conditions of, this Agreement, during the Investment Period the
Company shall issue and sell to each of the Investors, and each of the Investors
shall purchase from the Company, such Investor’s Pro Rata Amount of the Shares
in respect of each Draw Down. The issuance and sale of Shares to the Investors
pursuant to any Draw Down shall occur on the applicable Settlement Date in
accordance with Section 3.5, provided that all of the conditions precedent
thereto set forth in Article VII theretofore shall have been fulfilled on or
prior to such Settlement Date.

 

Section 2.3.     Initial Public Announcements and Required Filings. The Company
shall, at or before 8:30 a.m., New York City time, on the first Trading Day
after the Closing, issue a press release (the “Press Release”) reasonably
acceptable to each of the Investors disclosing the execution of this Agreement
and the Registration Rights Agreement by the Company and the Investors and the
issuance of the Commitment Shares to the Investors, and briefly describing the
transactions contemplated thereby. At or before 8:30 a.m., New York City time,
on the second Trading Day following the Closing Date, the Company shall file a
Current Report on Form 8-K describing all the material terms of the transactions
contemplated by the Transaction Documents in the form required by the Exchange
Act and attaching copies of each of this Agreement, the Registration Rights
Agreement and the Press Release as exhibits thereto (including all exhibits
thereto, the “Current Report”). The Company shall provide each of the Investors
a reasonable opportunity to comment on a draft of the Current Report prior to
filing the Current Report with the Commission and shall give due consideration
to all such comments. From and after the issuance of the Press Release and the
filing of the Current Report, the Company shall have disclosed all material,
nonpublic information delivered to the Investors (or the Investors’
representatives or agents) by the Company or any of its Subsidiaries, or any of
their respective officers, directors, employees, agents or representatives (if
any) in connection with the transactions contemplated by the Transaction
Documents. Each of the Investors covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in this Section 2.3, such Investor will maintain the
confidentiality of all disclosures made to it in connection with the
transactions contemplated by the Transaction Documents (including the existence
and terms of the transactions), except that such Investor may disclose the terms
of such transactions to its financial, accounting, legal and other advisors
(provided that such Investor directs such Persons to maintain the
confidentiality of such information). Not later than 15 calendar days following
the Closing Date, the Company shall file a Form D with respect to the Securities
in accordance with Regulation D and shall provide a copy thereof to each of the
Investors promptly after such filing. The Company shall prepare and file with
the Commission the Registration Statement (including the Prospectus) covering
only the resale by the Investors of the Registrable Securities in accordance
with the Securities Act and the Registration Rights Agreement. At or before 8:30
a.m. (New York City time) on the Trading Day immediately following the Effective
Date, the Company shall file with the Commission in accordance with Rule 424(b)
under the Securities Act the final Prospectus to be used in connection with
sales pursuant to the Registration Statement. If the transactions contemplated
by any Draw Down are material to the Company (individually or collectively with
all other prior Draw Downs, the consummation of which have not previously been
reported in any Prospectus Supplement filed with the Commission under Rule
424(b) under the Securities Act or in any report, statement or other document
filed by the Company with the Commission under the Exchange Act), or if
otherwise required under the Securities Act (or the interpretations of the
Commission thereof), in each case as reasonably determined by the Company or any
of the Investors, then, on the first Trading Day immediately following the last
Trading Day of the applicable Pricing Period with respect to such Draw Down, the
Company shall file with the Commission a Prospectus Supplement pursuant to Rule
424(b) under the Securities Act with respect to the applicable Draw Down(s),
disclosing the total Draw Down Amount Requested pursuant to such Draw Down(s),
the total number of Shares that are to be (and, if applicable, have been) issued
and sold to the Investors pursuant to such Draw Down(s), the applicable Purchase
Price(s) for the Shares subject to such Draw Down(s) and the net proceeds that
are to be (and, if applicable, have been) received by the Company from the sale
of such Shares. To the extent not previously disclosed in the Prospectus or a
Prospectus Supplement, the Company shall disclose in its Quarterly Reports on
Form 10-Q and in its Annual Reports on Form 10-K the information described in
the immediately preceding sentence relating to all Draw Down(s) consummated
during the relevant fiscal quarter, and include each such Quarterly Report on
Form 10-Q and Annual Report on Form 10-K in a Prospectus Supplement and file
such Prospectus Supplement with the Commission under Rule 424(b) under the
Securities Act.

 

 
2

--------------------------------------------------------------------------------

 

 

Article III
DRAW DOWN TERMS

 

Subject to the satisfaction of the conditions set forth in this Agreement, the
parties agree as follows:

 

Section 3.1.     Draw Down Notice. From time to time during the Investment
Period, the Company may, in its sole discretion, no later than 8:00 a.m. (New
York City time) on the first Trading Day of the Pricing Period, provide to each
of the Investors, by email (with the subject line reading “TIMELY-DRAW DOWN”)
and by facsimile in accordance with Section 10.4, a Draw Down Notice,
substantially in the form attached hereto as Exhibit B (the “Draw Down Notice”),
which Draw Down Notice shall become effective at 8:00 a.m. (New York City time)
on the first Trading Day of the Pricing Period specified in the Draw Down
Notice; provided, however, that if the Company delivers the Draw Down Notice to
any of the Investors later than 8:00 a.m. (New York City time) on a Trading Day,
then the first Trading Day of such Pricing Period shall not be the Trading Day
on which the Investors received such Draw Down Notice, but rather shall be the
immediately following Trading Day (unless a subsequent Trading Day is therein
specified). The date on which the Company delivers any Draw Down Notice in
accordance with this Section 3.1 hereinafter shall be referred to as a “Draw
Down Exercise Date”. The Draw Down Notice shall specify the Draw Down Amount
Requested (which shall not exceed the Maximum Draw Down Amount Requested), the
applicable Floor Price for such Draw Down and the first and last Trading Day of
the Pricing Period. Upon the terms and subject to the conditions of this
Agreement, each of the Investors is obligated to accept each Draw Down Notice
prepared and delivered in accordance with the provisions of this Agreement and
shall purchase, severally and not jointly, from the Company such Investor’s Pro
Rata Amount of the Shares subject to such Draw Down Notice at the applicable
Purchase Price on the applicable Settlement Date. Anything to the contrary in
this Agreement notwithstanding, the parties hereto acknowledge and agree that
(i) none of the Investors shall be required to purchase, and none of the
Investors shall purchase, more than such Investor’s Pro Rata Amount of the
Shares subject to any single Draw Down Notice and (ii) the Company shall not
effect any Draw Down under this Agreement if, on the applicable Draw Down
Exercise Date, the applicable Floor Price is less than $0.03875.

 

 
3

--------------------------------------------------------------------------------

 

 

Section 3.2.     Limitation of Draw Downs. The Company shall not make more than
one Draw Down in each Pricing Period. At least two (2) Trading Days shall elapse
between the completion of the settlement of one Draw Down in accordance with
Section 3.5 below and the commencement of a Pricing Period for any other Draw
Down during the Investment Period. Each Draw Down automatically shall expire
immediately following the completion of the settlement thereof in accordance
with Section 3.5 below.

 

Section 3.3.     Reduction of Commitment. On each Settlement Date, the
Investors’ Total Commitment under this Agreement automatically shall be reduced,
on a dollar-for-dollar basis, by the total Draw Down Amount paid to the Company
on such Settlement Date.

 

Section 3.4.     Below Floor Price. If the VWAP on any Trading Day during the
applicable Pricing Period is lower than the applicable Floor Price, then for
each such Trading Day, the Draw Down Amount Requested shall be reduced by an
amount of shares of Common Stock equal to the product of (x) 0.20 and (y) the
total Draw Down Amount Requested, and no Shares shall be purchased or sold with
respect to such Trading Day. If trading in the Common Stock on the Trading
Market is suspended for any reason for more than three hours on any Trading Day
during the applicable Pricing Period, then for each such Trading Day during the
Pricing Period the Draw Down Amount Requested shall be reduced as provided in
the immediately preceding sentence, and no Shares shall be purchased or sold
with respect to such Trading Day.

 

Section 3.5.     Settlement. The payment for, against simultaneous delivery of,
Shares in respect of each Draw Down shall be settled not later than the first
Trading Day next following the last Trading Day of each Pricing Period (the
“Settlement Date”). On each Settlement Date, the Company shall, or shall cause
its transfer agent to, electronically transfer the Shares purchased by each
Investor by crediting such Investor’s or its designees’ account (provided such
Investor shall have given the Company written notice of such designee prior to
the Settlement Date) at DTC through its Deposit/Withdrawal at Custodian (DWAC)
system, which Shares shall be freely tradable and transferable and without
restriction on resale pursuant to the Registration Statement, against
simultaneous payment therefor to the Company’s designated account by wire
transfer of immediately available funds; provided that if the Shares are
received by such Investor later than 1:00 p.m., New York City time, payment
therefor shall be made with next day funds. As set forth in Section 3.6, a
failure by the Company or its transfer agent (if applicable) to deliver such
Shares on the applicable Settlement Date, among other things, shall result in
the payment of partial damages by the Company to the Investors.

 

 
4

--------------------------------------------------------------------------------

 

 

Section 3.6.     Failure to Deliver Shares. If the Company issues a Draw Down
Notice to the Investors, and the Company or its transfer agent shall fail for
any reason or for no reason to electronically deliver all of the Shares subject
thereto to any Investor on the applicable Settlement Date or within two (2)
Trading Days thereafter by crediting such Investor’s or its designees’ account
at DTC through its Deposit/Withdrawal at Custodian (DWAC) system in compliance
with Section 3.5 of this Agreement, then, in addition to all other remedies
available to such Investor, the Company shall pay such Investor, in cash, as
partial damages for such failure and not as a penalty, an amount equal to 2.0%
of the payment required to be paid by such Investor on such Settlement Date for
the initial 30 days following such Settlement Date until the Shares have been
delivered, and an additional 2.0% for each additional 30-day period thereafter
until the Shares have been delivered, which amount shall be prorated for such
periods less than 30 days. In addition to the foregoing, if the Company or its
transfer agent shall fail for any reason or for no reason to electronically
transfer all of the Shares subject to a Draw Down Notice to any Investor on the
applicable Settlement Date by crediting such Investor’s or its designees’
account at DTC through its Deposit/Withdrawal at Custodian (DWAC) system in
compliance with Section 3.5 of this Agreement, and if on or after such
applicable Settlement Date such Investor purchases, in an open market
transaction or otherwise, shares of Common Stock necessary to make delivery by
such Investor in satisfaction of a sale by such Investor of Shares that such
Investor anticipated receiving from the Company in connection with such Draw
Down, then the Company shall, in addition to any other amounts due to such
Investor pursuant to this Agreement, within three Trading Days after such
Investor’s request, pay cash to such Investor in an amount equal to such
Investor’s total purchase price (including brokerage commissions, if any) for
the Shares so purchased, at which point the Company’s obligation to credit such
Investor’s or its designee’s account at DTC for such Shares shall terminate. All
amounts due and payable to any Investor pursuant to this Section 3.6 are
hereinafter referred to collectively as the “Make Whole Amount”. If the Make
Whole Amount is not paid within two Trading Days following the date when due
hereunder, the Make Whole Amount shall accrue annual interest (on the basis of
the 365 day year) compounded daily at a rate equal to the greater of (i) the
prime rate of interest then in effect as published by the Wall Street Journal
plus 3.0% and (ii) 10.0%, up to and including the date on which the Make Whole
Amount is actually paid. The Company shall not issue a Draw Down Notice to any
of the Investors until the Make Whole Amount, plus all accrued interest, has
been paid to the applicable Investor(s) in full.

 

Section 3.7.     Certain Limitations. Notwithstanding anything to the contrary
contained in this Agreement, in no event may the Company issue a Draw Down
Notice to the extent that (i) the Draw Down Amount Requested in such Draw Down
Notice exceeds the Maximum Draw Down Amount Requested, (ii) the sale of Shares
pursuant to such Draw Down Notice would cause the Company to issue or sell or
the Investors to acquire or purchase a dollar value of shares of Common Stock
which, when aggregated with all Draw Down Amounts paid by the Investors pursuant
to all prior Draw Down Notices issued under this Agreement, would exceed the
Aggregate Limit, or (iii) the sale of Shares pursuant to such Draw Down Notice
would cause the Company to sell or the Investors to purchase from the Company, a
number of shares of Common Stock which, when aggregated with all other shares of
Common Stock then beneficially owned (as calculated pursuant to Section 13(d) of
the Exchange Act and Rule 13d-3 promulgated thereunder) by all of the Investors
and their respective Affiliates, would result in the collective beneficial
ownership by the Investors of more than 9.99% of the then issued and outstanding
shares of Common Stock (the “Ownership Limitation”). If the Company issues a
Draw Down Notice in which the Draw Down Amount Requested exceeds the Maximum
Draw Down Amount Requested, such Draw Down Notice shall be void ab initio to the
extent the Draw Down Amount Requested exceeds the Maximum Draw Down Amount
Requested. If the Company issues a Draw Down Notice that otherwise would require
the Investors to purchase shares of Common Stock which would cause the aggregate
purchases of Common Stock by the Investors under this Agreement to exceed the
Aggregate Limit, such Draw Down Notice shall be void ab initio to the extent of
the amount by which the dollar value of shares of Common Stock otherwise
issuable pursuant to such Draw Down Notice, together with all Draw Down Amounts
paid by the Investors pursuant to all prior Draw Down Notices issued under this
Agreement, would exceed the Aggregate Limit. If the Company issues a Draw Down
Notice that otherwise would require any Investor to purchase shares of Common
Stock which would cause the aggregate number of shares of Common Stock then
beneficially owned (as calculated pursuant to Section 13(d) of the Exchange Act
and Rule 13d-3 promulgated thereunder) by such Investor and its Affiliates to
exceed the Ownership Limitation, such Draw Down Notice shall be void ab initio
to the extent of the amount by which the number of shares of Common Stock
otherwise issuable pursuant to such Draw Down Notice, together with all shares
of Common Stock then beneficially owned by such Investor and its Affiliates,
would exceed the Ownership Limitation.

 

 
5

--------------------------------------------------------------------------------

 

 

Section 3.8.     Blackout Periods. Notwithstanding any other provision of this
Agreement, the Company shall not deliver any Draw Down Notice or otherwise offer
or sell Shares to the Investors, and the Investors shall not be obligated to
purchase any Shares pursuant to this Agreement, (i) during any period in which
the Company is, or may be deemed to be, in possession of material non-public
information, or (ii) except as expressly provided in this Section 3.8, at any
time from and including the date (each, an “Announcement Date”) on which the
Company shall issue a press release containing, or shall otherwise publicly
announce, its earnings, revenues or other results of operations (each, an
“Earnings Announcement”) through and including the time that is 24 hours after
the time that the Company files (a “Filing Time”) a Quarterly Report on Form
10-Q or an Annual Report on Form 10-K that includes consolidated financial
statements as of and for the same period or periods, as the case may be, covered
by such Earnings Announcement. If the Company wishes to deliver any Draw Down
Notice or otherwise offer, sell or deliver Shares to the Investors at any time
during the period from and including an Announcement Date through and including
the time that is 24 hours after the corresponding Filing Time, the Company
shall, as conditions thereto, (1) prepare and deliver to each of the Investors
(with a copy to counsel to the Investors) a report on Form 8-K which shall
include substantially the same financial and related information as was set
forth in the relevant Earnings Announcement (other than any earnings or other
projections, similar forward-looking data and officers’ quotations) (each, an
“Earnings 8-K”), (2) provide each of the Investors with the compliance
certificate substantially in the form attached hereto as Exhibit D, dated the
date of such Draw Down Notice, which certificate shall be deemed to remain in
effect during the applicable Pricing Period through and including the applicable
Settlement Date, and the “bring down” opinions in the form mutually agreed to by
the parties hereto prior to the date hereof, dated the date of such Draw Down
Notice and (3) file such Earnings 8-K with the Commission (so that it is deemed
“filed” for purposes of Section 18 of the Exchange Act), include such Earnings
8-K in a Prospectus Supplement and file such Prospectus Supplement with the
Commission under Rule 424(b) under the Securities Act, in each case on or prior
to the date of such Draw Down Notice. The provisions of clause (ii) of this
Section 3.8 shall not be applicable for the period from and after the time at
which all of the conditions set forth in the immediately preceding sentence
shall have been satisfied (or, if later, the time that is 24 hours after the
time that the relevant Earnings Announcement was first publicly released)
through and including the time that is 24 hours after the Filing Time of the
relevant Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as the
case may be. For purposes of clarity, the parties agree that the delivery of the
compliance certificate and the “bring down” opinions pursuant to this Section
3.8 shall not relieve the Company from any of its obligations under this
Agreement with respect to the delivery of the compliance certificate called for
by Section 7.2(ii) and the “bring down” opinions called for by Section 7.2(xv)
on the applicable Settlement Date, which Sections shall have independent
application.

 

 
6

--------------------------------------------------------------------------------

 

 

Article IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR

 

Each Investor, severally and not jointly, represents, warrants and covenants to
the Company with respect to only itself that:

 

Section 4.1.     Organization and Standing of the Investor. Such Investor is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization.

 

Section 4.2.     Authorization and Power. Such Investor has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement and the Registration Rights Agreement and to purchase or acquire
the Securities in accordance with the terms hereof. The execution, delivery and
performance by such Investor of this Agreement and the Registration Rights
Agreement and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action, and no
further consent or authorization of such Investor, its board of directors,
general partner, managing member, limited partners or stockholders (as
applicable) is required. Each of this Agreement and the Registration Rights
Agreement has been duly executed and delivered by such Investor and constitutes
a valid and binding obligation of such Investor enforceable against it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership, or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application (including any limitation of
equitable remedies).

 

Section 4.3.     No Conflicts. The execution, delivery and performance by such
Investor of this Agreement and the Registration Rights Agreement and the
consummation by such Investor of the transactions contemplated hereby and
thereby do not and shall not (i) result in a violation of such Investor’s
charter documents, bylaws or other applicable organizational instruments, (ii)
conflict with, constitute a default (or an event which, with notice or lapse of
time or both, would become a default) under, or give rise to any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
mortgage, deed of trust, indenture, note, bond, license, lease agreement,
instrument or obligation to which such Investor is a party or is bound, (iii)
create or impose any lien, charge or encumbrance on any property of such
Investor under any agreement or any commitment to which such Investor is party
or under which such Investor is bound or under which any of its properties or
assets are bound, or (iv) result in a violation of any federal, state, local or
foreign statute, rule, or regulation, or any order, judgment or decree of any
court or governmental agency applicable to such Investor or by which any of its
properties or assets are bound or affected, except, in the case of clauses (ii),
(iii) and (iv), for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the
aggregate, prohibit or otherwise interfere with, in any material respect, the
ability of such Investor to enter into and perform its obligations under this
Agreement and the Registration Rights Agreement. Such Investor is not required
under any applicable federal, state, local or foreign law, rule or regulation to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement and the
Registration Rights Agreement or to purchase the Securities in accordance with
the terms hereof; provided, however, that for purposes of the representation
made in this sentence, such Investor is assuming and relying upon the accuracy
of the relevant representations and warranties and the compliance with the
relevant covenants and agreements of the Company in the Transaction Documents to
which it is a party.

 

 
7

--------------------------------------------------------------------------------

 

 

Section 4.4.     Investment Purpose. Such Investor is acquiring the Securities
for its own account, for investment purposes and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered under or exempt from the registration requirements
of the Securities Act; provided, however, that by making the representations
herein, such Investor does not agree, or make any representation or warranty, to
hold any of the Securities for any minimum or other specific term and reserves
the right to dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption under the Securities Act.
Such Investor does not presently have any agreement or understanding, directly
or indirectly, with any Person to distribute any of the Securities.

 

Section 4.5.     Accredited Investor Status. Such Investor is an “accredited
investor” as that term is defined in Rule 501(a) of Regulation D.

 

Section 4.6.     Reliance on Exemptions. Such Investor understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of U.S. federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Investor’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of such
Investor to acquire the Securities.

 

Section 4.7.     Information. All materials relating to the business, financial
condition, management and operations of the Company and materials relating to
the offer and sale of the Securities which have been requested by such Investor
have been furnished or otherwise made available to such Investor or its
advisors, including, without limitation, the Commission Documents. Such Investor
understands that its investment in the Securities involves a high degree of
risk. Such Investor is able to bear the economic risk of an investment in the
Securities and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of a proposed
investment in the Securities. Such Investor and its advisors have been afforded
the opportunity to ask questions of and receive answers from representatives of
the Company concerning the financial condition and business of the Company and
other matters relating to an investment in the Securities. Neither such
inquiries nor any other due diligence investigations conducted by such Investor
or its advisors, if any, or its representatives shall modify, amend or affect
such Investor’s right to rely on the Company’s representations and warranties
contained in this Agreement or in any other Transaction Document to which the
Company is a party or such Investor’s right to rely on any other document or
instrument executed and/or delivered in connection with this Agreement or the
consummation of the transaction contemplated hereby (including, without
limitation, the opinions of the Company’s counsel delivered pursuant to Sections
7.1(iv) and 7.2(xv)). Such Investor has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Securities. Such Investor understands
that it (and not the Company) shall be responsible for its own tax liabilities
that may arise as a result of this investment or the transactions contemplated
by this Agreement.

 

 
8

--------------------------------------------------------------------------------

 

 

Section 4.8.     No Governmental Review. Such Investor understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

Section 4.9.     No General Solicitation. Such Investor is not purchasing the
Securities as a result of any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or
sale of the Securities.

 

Section 4.10.     Not an Affiliate. Such Investor is not an officer, director or
an Affiliate of the Company.

 

Section 4.11.     Statutory Underwriter Status. Such Investor acknowledges that
it will be disclosed as an “underwriter” and a “selling stockholder” in the
Registration Statement and in any Prospectus contained therein to the extent
required by applicable law and to the extent the Prospectus is related to the
resale of Registrable Securities.

 

Section 4.12.     Resales of Securities. Such Investor represents, warrants and
covenants that it will resell such Securities only pursuant to the Registration
Statement, in a manner described under the caption “Plan of Distribution” in the
Registration Statement, and in a manner in compliance with all applicable U.S.
federal and state securities laws, rules and regulations, including, without
limitation, any applicable prospectus delivery requirements of the Securities
Act.

 

Section 4.13.     Certain Trading Activities. Such Investor has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Investor, engaged in any transactions in the securities
of the Company (including, without limitation, any Short Sales (as defined in
Regulation SHO promulgated under the Exchange Act) involving the Company’s
securities since the time that such Investor was first contacted by the Company
or any other Person regarding the transactions contemplated by this Agreement.
Such Investor covenants that neither it nor any Person acting on its behalf or
pursuant to any understanding with it will engage in any transactions in the
securities of the Company (including Short Sales) prior to the time that the
transactions contemplated by this Agreement are publicly disclosed by the
Company. Such Investor has maintained, and covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company pursuant to this Agreement, such Investor will maintain, the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction) and any
information other than the terms of this transaction that the Company provided
to such Investor on a confidential basis.

 

 
9

--------------------------------------------------------------------------------

 

 

Article V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

 

Except as set forth in the disclosure schedule delivered by the Company to each
Investor (which is hereby incorporated by reference in, and constitutes an
integral part of, this Agreement) (the “Disclosure Schedule”), the Company
hereby makes the following representations, warranties and covenants to each of
the Investors:

 

Section 5.1.     Organization, Good Standing and Power. The Company and each of
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its properties
and assets and to conduct its business as it is now being conducted and as
presently proposed to be conducted. The Company and each Subsidiary is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except for any jurisdiction in
which the failure to be so qualified would not have a Material Adverse Effect.

 

Section 5.2.     Authorization, Enforcement. The Company has the requisite
corporate power and authority to enter into and perform its obligations under
each of the Transaction Documents to which it is a party and to issue the
Securities in accordance with the terms hereof and thereof. Except for approvals
of the Company’s Board of Directors or a committee thereof as may be required in
connection with any issuance and sale of Securities to the Investors hereunder
(which approvals shall be obtained prior to the delivery of any Draw Down
Notice), the execution, delivery and performance by the Company of each of the
Transaction Documents to which it is a party and the consummation by it of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no further consent or
authorization of the Company, its Board of Directors or its stockholders is
required. Each of the Transaction Documents to which the Company is a party has
been duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application (including any limitation of
equitable remedies).

 

Section 5.3.     Capitalization and Voting Rights. The authorized capital stock
of the Company and the shares thereof issued and outstanding were as set forth
in the Commission Documents as of the dates reflected therein. All of the
outstanding shares of Common Stock have been duly authorized and validly issued,
and are fully paid and nonassessable. Except as set forth in the Commission
Documents, this Agreement and the Registration Rights Agreement, there are no
agreements or arrangements under which the Company is obligated to register the
sale of any securities under the Securities Act. Except as set forth in the
Commission Documents, no shares of Common Stock are entitled to preemptive
rights and there are no outstanding debt securities and no contracts,
commitments, understandings, or arrangements by which the Company is or may
become bound to issue additional shares of the capital stock of the Company or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, any shares of capital stock of the Company other than those
issued or granted in the ordinary course of business pursuant to the Company’s
equity incentive and/or compensatory plans or arrangements. Except for customary
transfer restrictions contained in agreements entered into by the Company to
sell restricted securities or as set forth in the Commission Documents, the
Company is not a party to, and it has no Knowledge of, any agreement restricting
the voting or transfer of any shares of the capital stock of the Company. Except
as set forth in the Commission Documents, the offer and sale of all capital
stock, convertible or exchangeable securities, rights, warrants or options of
the Company issued prior to the Closing Date complied with all applicable
federal and state securities laws, and no stockholder has any right of
rescission or damages or any “put” or similar right with respect thereto that
would have a Material Adverse Effect. Except as set forth in the Commission
Documents, there are no securities or instruments containing anti-dilution or
similar provisions that will be triggered by this Agreement or any of the other
Transaction Documents or the consummation of the transactions described herein
or therein. The Company has furnished or made available to each of the Investors
via EDGAR true and correct copies of the Company’s Certificate of Incorporation
as in effect on the Closing Date (the “Charter”), and the Company’s Bylaws as in
effect on the Closing Date (the “Bylaws”).

 

 
10

--------------------------------------------------------------------------------

 

 

Section 5.4.     Issuance of Securities. The Commitment Shares have been, and
the Shares to be issued under this Agreement have been or will be (prior to the
delivery of any Draw Down Notice to the Investors hereunder), duly authorized by
all necessary corporate action on the part of the Company. The Commitment
Shares, when issued in accordance with the terms of this Agreement, and the
Shares, when issued and paid for in accordance with the terms of this Agreement,
shall be validly issued and outstanding, fully paid and nonassessable and free
from all liens, charges, taxes, security interests, encumbrances, rights of
first refusal, preemptive or similar rights and other encumbrances with respect
to the issue thereof.

 

Section 5.5.     No Conflicts. The execution, delivery and performance by the
Company of each of the Transaction Documents to which it is a party and the
consummation by the Company of the transactions contemplated hereby and thereby
do not and shall not (i) result in a violation of any provision of the Company’s
Charter or Bylaws, (ii) conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or give rise to
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company or any of its
Significant Subsidiaries is a party or is bound, (iii) create or impose a lien,
charge or encumbrance on any property or assets of the Company or any of its
Significant Subsidiaries under any agreement or any commitment to which the
Company or any of its Significant Subsidiaries is a party or by which the
Company or any of its Significant Subsidiaries is bound or to which any of their
respective properties or assets is subject, or (iv) result in a violation of any
federal, state, local or foreign statute, rule, regulation, order, judgment or
decree applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries are bound or
affected (including federal and state securities laws and regulations and the
rules and regulations of the Trading Market), except, in the case of clauses
(ii), (iii) and (iv), for such conflicts, defaults, terminations, amendments,
acceleration, cancellations, liens, charges, encumbrances and violations as
would not, individually or in the aggregate, have a Material Adverse Effect.
Except as specifically contemplated by this Agreement or the Registration Rights
Agreement and as required under the Securities Act and any applicable state
securities laws, the Company is not required under any federal, state, local or
foreign law, rule or regulation to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency
(including, without limitation, the Trading Market) in order for it to execute,
deliver or perform any of its obligations under the Transaction Documents to
which it is a party, or to issue the Securities to the Investors in accordance
with the terms hereof and thereof (other than such consents, authorizations,
orders, filings or registrations as have been obtained or made prior to the
Closing Date); provided, however, that, for purposes of the representation made
in this sentence, the Company is assuming and relying upon the accuracy of the
representations and warranties of each of the Investors in this Agreement and
the compliance by the Investors with their respective covenants and agreements
contained in this Agreement and the Registration Rights Agreement.

 

 
11

--------------------------------------------------------------------------------

 

 

Section 5.6.     Commission Documents, Financial Statements. (a) The Company has
timely filed (giving effect to permissible extensions in accordance with Rule
12b-25 under the Exchange Act) all Commission Documents. The Company has
delivered or made available to each of the Investors via EDGAR or otherwise true
and complete copies of the Commission Documents filed with or furnished to the
Commission prior to the Closing Date (including, without limitation, the 2012
Form 10-K). No Subsidiary of the Company is required to file or furnish any
report, schedule, registration, form, statement, information or other document
with the Commission. As of its filing date, each Commission Document filed with
or furnished to the Commission prior to the Closing Date (including, without
limitation, the 2012 Form 10-K) complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable, and other
federal, state and local laws, rules and regulations applicable to it, and, as
of its filing date (or, if amended or superseded by a filing prior to the
Closing Date, on the date of such amended or superseded filing), such Commission
Document did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Registration Statement, on the date it is filed with
the Commission, on the date it is declared effective by the Commission, on each
Draw Down Exercise Date and on each Settlement Date, shall comply in all
material respects with the requirements of the Securities Act (including,
without limitation, Rule 415 under the Securities Act) and shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, except that this representation and warranty shall not apply to
statements in or omissions from the Registration Statement made in reliance upon
and in conformity with information relating to any Investor furnished to the
Company in writing by or on behalf of such Investor expressly for use therein.
The Prospectus and each Prospectus Supplement required to be filed pursuant to
this Agreement or the Registration Rights Agreement after the Closing Date, when
taken together, on its date, on each Draw Down Exercise Date and on each
Settlement Date, shall comply in all material respects with the requirements of
the Securities Act (including, without limitation, Rule 424(b) under the
Securities Act) and shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that this representation and warranty
shall not apply to statements in or omissions from the Prospectus or any
Prospectus Supplement made in reliance upon and in conformity with information
relating to any Investor furnished to the Company in writing by or on behalf of
such Investor expressly for use therein. Each Commission Document (other than
the Registration Statement, the Prospectus or any Prospectus Supplement) to be
filed with or furnished to the Commission after the Closing Date and
incorporated by reference in the Registration Statement, the Prospectus or any
Prospectus Supplement required to be filed pursuant to this Agreement or the
Registration Rights Agreement (including, without limitation, the Current
Report), when such document is filed with or furnished to the Commission and, if
applicable, when such document becomes effective, as the case may be, shall
comply in all material respects with the requirements of the Securities Act or
the Exchange Act, as applicable, and other federal, state and local laws, rules
and regulations applicable to it, and shall not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company has
delivered or made available to each of the Investors via EDGAR or otherwise true
and complete copies of all comment letters and substantive correspondence
received by the Company from the Commission relating to the Commission Documents
filed with or furnished to the Commission as of the Closing Date, together with
all written responses of the Company thereto in the form such responses were
filed via EDGAR. There are no outstanding or unresolved comments or undertakings
in such comment letters received by the Company from the Commission. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company under the
Securities Act or the Exchange Act.

 

 
12

--------------------------------------------------------------------------------

 

 

(b)     The financial statements, together with the related notes and schedules,
of the Company included in the Commission Documents comply as to form in all
material respects with all applicable accounting requirements and the published
rules and regulations of the Commission and all other applicable rules and
regulations with respect thereto. Such financial statements, together with the
related notes and schedules, have been prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present in all
material respects the financial condition of the Company and its consolidated
Subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).

 

(c)     The Company has timely filed with the Commission and made available to
each Investor via EDGAR or otherwise all certifications and statements required
by (x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or (y) 18 U.S.C.
Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002 (“SOXA”)) with
respect to all relevant Commission Documents. The Company is in compliance in
all material respects with the provisions of SOXA applicable to it as of the
date hereof. The Company maintains disclosure controls and procedures required
by Rule 13a-15 or Rule 15d-15 under the Exchange Act; such controls and
procedures are effective to ensure that all material information concerning the
Company and its Subsidiaries is made known on a timely basis to the individuals
responsible for the timely and accurate preparation of the Company’s Commission
filings and other public disclosure documents. As used in this Section 5.6(c),
the term “file” shall be broadly construed to include any manner in which a
document or information is furnished, supplied or otherwise made available to
the Commission.

 

 
13

--------------------------------------------------------------------------------

 

 

(d)     SingerLewak LLP, who shall consent to the inclusion of their opinion on
the audited financial statements and related schedules to be included or
incorporated by reference in the Registration Statement and the Prospectus are,
with respect to the Company, independent public accountants as required by the
Securities Act and is an independent registered public accounting firm within
the meaning of SOXA as required by the rules of the Public Company Accounting
Oversight Board. SingerLewak LLP has not been engaged by the Company to perform
any “prohibited activities” (as defined in Section 10A of the Exchange Act).

 

Section 5.7.     Subsidiaries. The 2012 Form 10-K sets forth each Subsidiary of
the Company as of the Closing Date, showing its jurisdiction of incorporation or
organization and the percentage of the Company’s ownership of the outstanding
capital stock or other ownership interests of such Subsidiary, and the Company
does not have any other Subsidiaries as of the Closing Date.

 

Section 5.8.     No Material Adverse Effect. Except as disclosed in any
Commission Documents filed since December 31, 2012, or which may be deemed to
have resulted from the Company’s continued losses from operations, since
December 31, 2012, the Company has not experienced or suffered any Material
Adverse Effect.

 

Section 5.9.     No Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) that would be required to be disclosed on a balance sheet of the
Company or any Subsidiary (including the notes thereto) in conformity with GAAP
and are not disclosed in the Commission Documents, other than those incurred in
the ordinary course of the Company’s or its Subsidiaries respective businesses
since December 31, 2012 and which, individually or in the aggregate, do not or
would not have a Material Adverse Effect.

 

Section 5.10.     No Undisclosed Events or Circumstances. No event or
circumstance has occurred or information exists with respect to the Company or
any of its Subsidiaries or its or their business, properties, liabilities,
operations (including results thereof) or conditions (financial or otherwise),
which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company at or before the Closing but which has not been so
publicly announced or disclosed, except for events or circumstances which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect.

 

Section 5.11.     Indebtedness; Solvency. The Company’s Quarterly Report on Form
10-Q for its fiscal quarter ended June 30, 2013 sets forth, as of June 30, 2013,
all outstanding secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments through
such date. For the purposes of this Agreement, “Indebtedness” shall mean (a) any
liabilities for borrowed money or amounts owed in excess of $1,000,000 (other
than trade accounts payable incurred in the ordinary course of business), (b)
all guaranties, endorsements, indemnities and other contingent obligations in
respect of Indebtedness of others in excess of $1,000,000, whether or not the
same are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $1,000,000 due under
leases required to be capitalized in accordance with GAAP. There is no existing
or continuing default or event of default in respect of any Indebtedness of the
Company or any of its Subsidiaries. The Company has not taken any steps, and
does not currently expect to take any steps, to seek protection pursuant to
Title 11 of the United States Code or any similar federal or state bankruptcy
law or law for the relief of debtors, nor does the Company have any Knowledge
that its creditors intend to initiate involuntary bankruptcy, insolvency,
reorganization or liquidation proceedings or other proceedings for relief under
Title 11 of the United States Code or any other federal or state bankruptcy law
or any law for the relief of debtors. The Company is financially solvent and is
generally able to pay its debts as they become due.

 

 
14

--------------------------------------------------------------------------------

 

 

Section 5.12.     Title To Assets. Each of the Company and its Subsidiaries has
good and valid title to, or has valid rights to lease or otherwise use, all of
their respective real and personal property reflected in the Commission
Documents, free of mortgages, pledges, charges, liens, security interests or
other encumbrances, except for those indicated in the Commission Documents and
those that would not have a Material Adverse Effect. All real property and
facilities held under lease by the Company or any of its Subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company or any of its Subsidiaries.

 

Section 5.13.     Actions Pending. There is no action, suit, claim,
investigation or proceeding pending, or, to the Knowledge of the Company,
threatened, against the Company or any Subsidiary which questions the validity
of the Transaction Documents or the transactions contemplated thereby or any
action taken or to be taken pursuant thereto. Except as set forth in the
Commission Documents, there is no action, suit, claim, investigation or
proceeding pending, or to the Knowledge of the Company threatened, against or
involving the Company, any Subsidiary or any of their respective properties or
assets, or involving any officers or directors of the Company or any of its
Subsidiaries, including, without limitation, any securities class action lawsuit
or stockholder derivative lawsuit related to the Company, in each case which, if
determined adversely to the Company, its Subsidiary or any officer or director
of the Company or its Subsidiaries, would have a Material Adverse Effect. Except
as set forth in the Commission Documents, no judgment, order, writ, injunction
or decree or award has been issued by or, to the Knowledge of the Company,
requested of any court, arbitrator or governmental agency which would be
reasonably expected to result in a Material Adverse Effect.

 

Section 5.14.     Compliance With Law. The business of the Company and the
Subsidiaries has been and is presently being conducted in compliance with all
applicable federal, state, local and foreign governmental laws, rules,
regulations and ordinances, except as set forth in the Commission Documents and
except for such non-compliance which, individually or in the aggregate, would
not have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except in all cases for
possible violations which could not, individually or in the aggregate, have a
Material Adverse Effect. Without limiting the generality of the foregoing, the
Company has maintained all requirements for the continued listing or quotation
of its Common Stock on the Trading Market, and the Company is not in violation
of any of the rules, regulations or requirements of the Trading Market and has
no Knowledge of any facts or circumstances that could reasonably lead to
delisting or suspension of the Common Stock by the Trading Market in the
foreseeable future.

 

 
15

--------------------------------------------------------------------------------

 

 

Section 5.15.     Certain Fees. No brokers, finders or financial advisory fees
or commissions are or shall be payable by the Company or any Subsidiary (or any
of their respective Affiliates) with respect to the transactions contemplated by
the Transaction Documents.

 

Section 5.16.     Disclosure. The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Investors or any of their
respective agents, advisors or counsel with any information that constitutes or
could reasonably be expected to constitute material, nonpublic information
concerning the Company or any of its Subsidiaries, other than the existence of
the transactions contemplated by the Transaction Documents. The Company
understands and confirms that each of the Investors will rely on the foregoing
representations in effecting transactions in securities of the Company. All
disclosure provided to any of the Investors regarding the Company and its
Subsidiaries, their businesses and the transactions contemplated by the
Transaction Documents (including, without limitation, the representations and
warranties of the Company contained in the Transaction Documents to which it is
a party (as modified by the Disclosure Schedule)) furnished by or on behalf of
the Company or any of its Subsidiaries, taken together, is true and correct and
does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. Each press
release issued by the Company or any of its Subsidiaries during the 12 months
preceding the Closing Date did not at the time of release (or, if amended or
superseded by a later dated press release issued by the Company or any of its
Subsidiaries prior to the Closing Date or by a later dated Commission Document
filed with or furnished to the Commission by the Company prior to the Closing
Date, at the time of issuance of such later dated press release or filing or
furnishing of such Commission Document, as applicable) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.

 

Section 5.17.     Operation of Business. (a) The Company or one or more of its
Subsidiaries possesses such permits, licenses, approvals, consents and other
authorizations (including licenses, accreditation and other similar
documentation or approvals of any local health departments) issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies as
are necessary to conduct the business now operated by it (collectively,
“Governmental Licenses”), except where the failure to possess such Governmental
Licenses, individually or in the aggregate, would not have a Material Adverse
Effect. The Company and its Subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure to so
comply, individually or in the aggregate, would not have a Material Adverse
Effect or except as otherwise disclosed in the Commission Documents. All of the
Governmental Licenses are valid and in full force and effect, except where the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect, individually or in the aggregate, would
not have a Material Adverse Effect or except as otherwise disclosed in the
Commission Documents. Except as set forth in the Commission Documents, neither
the Company nor any of its Subsidiaries has received any written notice of
proceedings relating to the revocation or modification of any such Governmental
Licenses which, if the subject of any unfavorable decision, ruling or finding,
individually or in the aggregate, would have a Material Adverse Effect. This
Section 5.17 does not relate to environmental matters, such items being the
subject of Section 5.18.

 

 
16

--------------------------------------------------------------------------------

 

 

(b)     The Company or one or more of its Subsidiaries owns or possesses
adequate patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names, trade dress, logos, copyrights and other intellectual property,
including, without limitation, all of the intellectual property described in the
Commission Documents as being owned or licensed by the Company (collectively,
“Intellectual Property”), necessary to carry on the business now operated by it.
Except as set forth in the Commission Documents, there are no actions, suits or
judicial proceedings pending, or to the Company’s Knowledge threatened, relating
to patents or proprietary information to which the Company or any of its
Subsidiaries is a party or of which any property of the Company or any of its
Subsidiaries is subject, and neither the Company nor any of its Subsidiaries has
received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which could render any Intellectual Property invalid
or inadequate to protect the interest of the Company and its Subsidiaries
therein, and which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, individually or in the
aggregate, would have a Material Adverse Effect.

 

Section 5.18.     Environmental Compliance. Except as disclosed in the
Commission Documents, the Company and each of its Subsidiaries have obtained all
material approvals, authorization, certificates, consents, licenses, orders and
permits or other similar authorizations of all governmental authorities, or from
any other person, that are required under any Environmental Laws, except for any
approvals, authorization, certificates, consents, licenses, orders and permits
or other similar authorizations the failure of which to obtain does not or would
not have a Material Adverse Effect. “Environmental Laws” shall mean all
applicable laws relating to the protection of the environment including, without
limitation, all requirements pertaining to reporting, licensing, permitting,
controlling, investigating or remediating emissions, discharges, releases or
threatened releases of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, materials or wastes, whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater or land, or relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature. Except for such instances as would not, individually or in
the aggregate, have a Material Adverse Effect, to the Company’s Knowledge, there
are no past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its Subsidiaries
that violate or could reasonably be expected to violate any Environmental Law
after the Closing Date or that could reasonably be expected to give rise to any
environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance.

 

 
17

--------------------------------------------------------------------------------

 

 

Section 5.19.     Material Agreements. Except as set forth in the Commission
Documents, neither the Company nor any Subsidiary of the Company is a party to
any written or oral contract, instrument, agreement commitment, obligation, plan
or arrangement, a copy of which would be required to be filed with the
Commission as an exhibit to an annual report on Form 10-K (collectively,
“Material Agreements”). Except as set forth in the Commission Documents, the
Company and each of its Subsidiaries have performed in all material respects all
the obligations then required to be performed by them under the Material
Agreements, have received no notice of default or an event of default by the
Company or any of its Subsidiaries thereunder and are not aware of any basis for
the assertion thereof, and neither the Company or any of its Subsidiaries nor,
to the Knowledge of the Company, any other contracting party thereto are in
default under any Material Agreement now in effect, the result of which would
have a Material Adverse Effect. Except as set forth in the Commission Documents,
each of the Material Agreements is in full force and effect, and constitutes a
legal, valid and binding obligation enforceable in accordance with its terms
against the Company and/or any of its Subsidiaries (as applicable) and, to the
Knowledge of the Company, each other contracting party thereto, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general application.

 

Section 5.20.     Transactions With Affiliates. Except as set forth in the
Commission Documents, there are no loans, leases, agreements, contracts, royalty
agreements, management contracts, service arrangements or other continuing
transactions exceeding $120,000 between (a) the Company or any Subsidiary, on
the one hand, and (b) any person or entity who would be covered by Item 404(a)
of Regulation S-K, on the other hand. Except as disclosed in the Commission
Documents, there are no outstanding amounts payable to or receivable from, or
advances by the Company or any of its Subsidiaries to, and neither the Company
nor any of its Subsidiaries is otherwise a creditor of or debtor to, any
beneficial owner of more than 5% of the outstanding shares of Common Stock, or
any director, employee or affiliate of the Company or any of its Subsidiaries,
other than (i) reimbursement for reasonable expenses incurred on behalf of the
Company or any of its Subsidiaries or (ii) as part of the normal and customary
terms of such person’s employment or service as a director with the Company or
any of its Subsidiaries.

 

Section 5.21.     Employees. Neither the Company nor any Subsidiary of the
Company has any collective bargaining arrangements or agreements covering any of
its employees, except as set forth in the Commission Documents. Except as
disclosed in the Commission Documents, no officer, consultant or key employee of
the Company or any Subsidiary whose termination, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect, has
terminated or, to the Knowledge of the Company, has any present intention of
terminating his or her employment or engagement with the Company or any
Subsidiary.

 

 
18

--------------------------------------------------------------------------------

 

 

Section 5.22.     Use of Proceeds. The proceeds from the sale of the Shares
shall be used by the Company and its Subsidiaries as set forth in the Prospectus
and any Prospectus Supplement filed pursuant to Section 2.3 of this Agreement
and pursuant to the Registration Rights Agreement.

 

Section 5.23.     Investment Company Act Status. The Company is not, and as a
result of the consummation of the transactions contemplated by the Transaction
Documents and the application of the proceeds from the sale of the Shares as set
forth in the Prospectus and any Prospectus Supplement shall not be required to
be registered as, an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended.

 

Section 5.24.     ERISA. No liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any Plan by the Company or any of
its Subsidiaries which has had or would have a Material Adverse Effect. No
“prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of
the Code) or “accumulated funding deficiency” (as defined in Section 302 of
ERISA) or any of the events set forth in Section 4043(b) of ERISA has occurred
with respect to any Plan which has had or would have a Material Adverse Effect,
and the execution and delivery of this Agreement and the issuance and sale of
the Securities hereunder shall not result in any of the foregoing events. Each
Plan is in compliance in all material respects with applicable law, including
ERISA and the Code; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any Plan; and each Plan for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred, whether by
action or failure to act, which would cause the loss of such qualifications. As
used in this Section 5.24, the term “Plan” shall mean an “employee pension
benefit plan” (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or any Subsidiary or by any trade or business, whether or not
incorporated, which, together with the Company or any Subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.

 

Section 5.25.     Taxes. The Company and each of its Subsidiaries (i) has filed
all necessary federal, state and foreign income and franchise tax returns or has
duly requested extensions thereof, except for those the failure of which to file
would not have a Material Adverse Effect, (ii) has paid all federal, state,
local and foreign taxes due and payable for which it is liable, except to the
extent that any such taxes are being contested in good faith and by appropriate
proceedings, except for such taxes the failure of which to pay would not have a
Material Adverse Effect, and (iii) does not have any tax deficiency or claims
outstanding or assessed or, to the Company’s Knowledge, proposed against it
which would have a Material Adverse Effect. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company and its Subsidiaries know of no basis for any
such claim. The Company is not operated in such a manner as to qualify as a
passive foreign investment company, as defined in Section 1297 of the Code.

 

 
19

--------------------------------------------------------------------------------

 

 

Section 5.26.     Insurance. The Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for, and neither the Company nor any such
Subsidiary has any reason to believe that it will be unable 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 at a cost that would not have a Material Adverse Effect.

 

Section 5.27.     U.S. Real Property Holding Corporation. Neither the Company
nor any of its Subsidiaries is, or has ever been, and so long as any of the
Securities are held by any Investor, shall become a U.S. real property holding
corporation within the meaning of Section 897 of the Code.

 

Section 5.28.     Exemption from Registration; Valid Issuances. Subject to, and
in reliance on, the representations, warranties and covenants made herein by
each Investor, the offer and sale of the Securities in accordance with the terms
and conditions of this Agreement is exempt from the registration requirements of
the Securities Act pursuant to Section 4(a)(2) and Rule 506 of Regulation D;
provided, however, that after the Effective Date at the request of and with the
express agreement of each of the Investors, the Shares will be delivered to each
Investor via book entry through DTC and will not bear legends noting
restrictions as to resale of such securities under federal or state securities
laws, nor will any such securities be subject to stop transfer instructions.
Neither the offer or sale of the Securities pursuant to, nor the Company’s
performance of its obligations under, the Transaction Documents to which it is a
party shall (i) result in the creation or imposition of any liens, charges,
claims or other encumbrances upon the Securities, or (ii) entitle the holders of
any outstanding shares of capital stock of the Company to preemptive or other
rights to subscribe to or acquire the shares of Common Stock or other securities
of the Company.

 

Section 5.29.     No General Solicitation or Advertising. Neither the Company,
nor any of its Subsidiaries or Affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of the
Securities.

 

Section 5.30.     No Integrated Offering. None of the Company, its Subsidiaries
or any of their Affiliates, nor any Person acting on their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any offers
to buy any security, under circumstances that would require registration of the
issuance of any of the Securities under the Securities Act, whether through
integration with prior offerings or otherwise, or cause this offering of the
Securities to require approval of stockholders of the Company under any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of the Trading Market. None of the Company, its
Subsidiaries, their Affiliates nor any Person acting on their behalf will take
any action or steps referred to in the preceding sentence that would require
registration of the issuance of any of the Securities under the Securities Act
or cause the offering of any of the Securities to be integrated with other
offerings.

 

 
20

--------------------------------------------------------------------------------

 

 

Section 5.31.     Dilutive Effect. The Company is aware and acknowledges that
issuance of the Securities could cause dilution to existing stockholders and
could significantly increase the outstanding number of shares of Common Stock.
The Company further acknowledges that its obligation to issue Shares pursuant to
the terms of a Draw Down in accordance with this Agreement is, in each case,
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the Company.

 

Section 5.32.     Manipulation of Price. Neither the Company nor any of its
officers, directors or Affiliates has, and, to the Knowledge of the Company, no
Person acting on their behalf has, (i) taken, directly or indirectly, any action
designed or intended to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
any of the Securities, or (ii) sold, bid for, purchased, or paid any
compensation for soliciting purchases of, any of the Securities. Neither the
Company nor any of its officers, directors or Affiliates will during the term of
this Agreement, and, to the Knowledge of the Company, no Person acting on their
behalf will during the term of this Agreement, take any of the actions referred
to in the immediately preceding sentence.

 

Section 5.33.     Securities Act. The Company has complied and shall comply with
all applicable federal and state securities laws in connection with the offer,
issuance and sale of the Securities hereunder, including, without limitation,
the applicable requirements of the Securities Act. The Registration Statement,
upon filing with the Commission and at the time it is declared effective by the
Commission, shall satisfy all of the requirements of the Securities Act to
register the resale of the Registrable Securities by the Investors in accordance
with the Registration Rights Agreement on a delayed or continuous basis under
Rule 415 under the Securities Act at then-prevailing market prices, and not
fixed prices. The Company is not, and has not previously been at any time, an
issuer identified in, or subject to, Rule 144(i).

 

Section 5.34.     Listing and Maintenance Requirements; DTC Eligibility. The
Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its Knowledge
is likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act, nor has the Company received any notification that
the Commission is contemplating terminating such registration. The Company has
not, in the 12 months preceding the Closing Date, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. As of the Closing Date, the Company is in
compliance with all such listing and maintenance requirements. The Common Stock
may be issued and transferred electronically to third parties via DTC through
its Deposit/Withdrawal at Custodian (DWAC) system. The Company has not received
notice from DTC to the effect that a suspension of, or restriction on, accepting
additional deposits of the Common Stock, electronic trading or book-entry
services by DTC with respect to the Common Stock is being imposed or is
contemplated.

 

Section 5.35.     Application of Takeover Protections. The Company and its Board
of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s Charter or the laws of its state of
incorporation that is or could become applicable to any of the Investors as a
result of the Investors and the Company fulfilling their respective obligations
or exercising their respective rights under the Transaction Documents (as
applicable), including, without limitation, as a result of the Company’s
issuance of the Securities and the Investors’ ownership of the Securities.

 

 
21

--------------------------------------------------------------------------------

 

 

Section 5.36.     Foreign Corrupt Practices Act. None of the Company, any
Subsidiary or, to the Knowledge of the Company, any director, officer, agent,
employee, affiliate or other Person acting on behalf of the Company or any of
its Subsidiaries, is aware of or has taken any action, directly or indirectly,
that would result in a violation by such Persons of the Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations thereunder
(collectively, the “FCPA”), including, without limitation, making use of the
mails or any means or instrumentality of interstate commerce corruptly in
furtherance of an offer, payment, promise to pay or authorization of the payment
of any money, or other property, gift, promise to give, or authorization of the
giving of anything of value to any “foreign official” (as such term is defined
in the FCPA) or any foreign political party or official thereof or any candidate
for foreign political office, in contravention of the FCPA. The Company and the
Subsidiaries have conducted their respective businesses in compliance with the
FCPA and have instituted and maintain policies and procedures designed to
ensure, and which are reasonably expected to continue to ensure, continued
compliance therewith.

 

Section 5.37.     Money Laundering Laws. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”)
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
Subsidiaries with respect to the Money Laundering Laws is pending or, to the
Knowledge of the Company, threatened.

 

Section 5.38.     OFAC. None of the Company, any Subsidiary or, to the Knowledge
of the Company, any director, officer, agent, employee, affiliate or Person
acting on behalf of the Company or any of its Subsidiaries is currently subject
to any U.S. sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department (“OFAC”); and the Company will not directly or
indirectly use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other
Person, for the purpose of financing the activities of any Person currently
subject to any U.S. sanctions administered by OFAC.

 

Section 5.39.     No Disqualification Events. None of the Company, any of its
predecessors, any affiliated issuer, any director, executive officer, other
officer of the Company participating in the offering contemplated hereby, any
beneficial owner of 20% or more of the Company's outstanding voting equity
securities, calculated on the basis of voting power, nor any promoter (as that
term is defined in Rule 405 under the Securities Act) connected with the Company
in any capacity at the time of sale (each, an “Issuer Covered Person”) is
subject to any of the “Bad Actor” disqualifications described in Rule
506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under
the Securities Act. The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification Event.

 

 
22

--------------------------------------------------------------------------------

 

 

Section 5.40.     Acknowledgement Regarding Investors’ Acquisition of
Securities. The Company acknowledges and agrees that each of the Investors is
acting solely in the capacity of an arm’s length purchaser with respect to this
Agreement and the transactions contemplated by the Transaction Documents. The
Company further acknowledges that none of the Investors is acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
this Agreement and the transactions contemplated by the Transaction Documents,
and any advice given by any of the Investors or any of their respective
representatives or agents in connection therewith is merely incidental to such
Investor’s acquisition of the Securities. The Company further represents to each
of the Investors that the Company’s decision to enter into the Transaction
Documents to which it is a party has been based solely on the independent
evaluation of the transactions contemplated thereby by the Company and its
representatives. The Company acknowledges and agrees that none of the Investors
has made and none of the Investors make any representations or warranties with
respect to the transactions contemplated by the Transaction Documents other than
those specifically set forth in Article IV of this Agreement.

 

Article VI
ADDITIONAL COVENANTS

 

The Company covenants with each of the Investors (which covenants of the Company
are for the benefit of each of the Investors), and each Investor, severally and
not jointly, covenants with the Company with respect to only itself (which
covenants of any one Investor are for the benefit of the Company only), as
follows:

 

Section 6.1.     Securities Compliance. The Company shall notify the Commission
and the Trading Market, if and as applicable, in accordance with their
respective rules and regulations, of the transactions contemplated by the
Transaction Documents, and shall take all necessary action, undertake all
proceedings and obtain all registrations, permits, consents and approvals for
the legal and valid issuance of the Securities to each of the Investors in
accordance with the terms of the Transaction Documents, as applicable.

 

Section 6.2.     Reservation of Common Stock. The Company has available and the
Company shall reserve and keep available at all times, free of preemptive and
other similar rights of stockholders, the requisite aggregate number of
authorized but unissued shares of Common Stock to enable the Company to timely
effect the issuance, sale and delivery in full to each of the Investors of all
Securities to be issued and delivered to such Investors under this Agreement, in
any case prior to the issuance to the Investors of such Securities. The number
of shares of Common Stock so reserved from time to time, as theretofore
increased or reduced as hereinafter provided, may be reduced by the number of
shares of Common Stock actually delivered pursuant to this Agreement.

 

Section 6.3.     Registration and Listing. The Company shall take all action
necessary to cause the Common Stock to continue to be registered as a class of
securities under Sections 12(b) or 12(g) of the Exchange Act, shall comply with
its reporting and filing obligations under the Exchange Act, and shall not take
any action or file any document (whether or not permitted by the Securities Act
or the Exchange Act) to terminate or suspend such registration or to terminate
or suspend its reporting and filing obligations under the Exchange Act or
Securities Act, except as permitted herein. The Company shall use its reasonable
best efforts to continue the listing and trading of its Common Stock and the
listing of the Securities purchased or acquired by the Investors hereunder on
the Trading Market and to comply with the Company’s reporting, filing and other
obligations under the bylaws, listed securities maintenance standards and other
rules and regulations of the Trading Market. The Company shall not take any
action which could be reasonably expected to result in the delisting or
suspension of the Common Stock on the Trading Market. If the Company receives
any final and non-appealable notice that the listing or quotation of the Common
Stock on the Trading Market shall be terminated on a date certain, the Company
shall promptly (and in any case within 48 hours) notify each of the Investors of
such fact in writing and shall use its reasonable best efforts to cause the
Common Stock to be listed or quoted on another Trading Market prior to such date
certain.

 

 
23

--------------------------------------------------------------------------------

 

 

Section 6.4.     Compliance with Laws.

 

(i)     The Company shall comply, and cause each Subsidiary to comply, (a) with
all laws, rules, regulations and orders applicable to the business and
operations of the Company and its Subsidiaries, except as would not have a
Material Adverse Effect and (b) with all applicable provisions of the Securities
Act and the Exchange Act and the rules and regulations of the Trading Market.
Without limiting the foregoing, neither the Company, nor any of its
Subsidiaries, nor to the Knowledge of the Company, any of their respective
directors, officers, agents, employees or any other Persons acting on their
behalf shall, in connection with the operation of the Company’s and its
Subsidiaries’ respective businesses, (1) use any corporate funds for unlawful
contributions, payments, gifts or entertainment or to make any unlawful
expenditures relating to political activity to government officials, candidates
or members of political parties or organizations, (2) pay, accept or receive any
unlawful contributions, payments, expenditures or gifts, or (3) violate or
operate in noncompliance with any export restrictions, anti-boycott regulations,
embargo regulations or other applicable domestic or foreign laws and
regulations, including, without limitation, the FCPA and the Money Laundering
Laws.

 

(ii)     Each Investor shall comply with all laws, rules, regulations and orders
applicable to the performance by it of its obligations under this Agreement and
its investment in the Securities, except as would not, individually or in the
aggregate, prohibit or otherwise interfere with the ability of such Investor to
enter into and perform its obligations under this Agreement in any material
respect. Without limiting the foregoing, each Investor shall comply with all
applicable provisions of the Securities Act and the Exchange Act, including
Regulation M thereunder, and any applicable securities laws of any non-U.S.
jurisdictions.

 

Section 6.5.     Keeping of Records and Books of Account; Due Diligence.

 

(i)     The Company shall keep and cause each Subsidiary to keep adequate
records and books of account, in which complete entries shall be made in
accordance with GAAP consistently applied, reflecting all financial transactions
of the Company and its Subsidiaries, and in which, for each fiscal year, all
proper reserves for depreciation, depletion, obsolescence, amortization, taxes,
bad debts and other purposes in connection with its business shall be made. The
Company shall maintain a system of internal accounting controls that (a) pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the Company; (b)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company; and (c) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Company’s
assets that could have a material effect on the Company’s financial statements
(it being acknowledged and agreed that the identification by the Company and/or
its independent registered public accounting firm of any “significant
deficiencies” or “material weaknesses” (each as defined by the Public Company
Accounting Oversight Board) in the Company’s internal controls over its
financial reporting shall not, in and of itself, constitute a breach of this
Section 6.5(i)).

 

 
24

--------------------------------------------------------------------------------

 

 

(ii)     Subject to the requirements of Section 6.16 of this Agreement, from
time to time from and after the Closing Date, the Company shall make available
for inspection and review by any of the Investors during normal business hours
and after reasonable notice, customary documentation reasonably requested by
such Investor and/or its appointed counsel or advisors to conduct due diligence;
provided, however, that after the Closing Date, the Investors’ continued due
diligence shall not be a condition to the issuance of any Draw Down Notice or
the settlement of any Draw Down.

 

Section 6.6.     Limitations on Holdings and Issuances. The Company shall not
issue, and the Investors shall not purchase, any shares of Common Stock which
would cause the aggregate number of shares of Common Stock then beneficially
owned (as calculated pursuant to Section 13(d) of the Exchange Act and Rule
13d-3 promulgated thereunder) collectively by all of the Investors and their
respective Affiliates to exceed the Ownership Limitation. Promptly following any
request by the Company, each Investor shall inform the Company of the number of
shares of Common Stock then beneficially owned by such Investor and its
Affiliates.

 

Section 6.7.     Other Agreements and Alternate Transactions.

 

(i)     The Company shall not enter into, announce or recommend to its
stockholders any agreement, plan, arrangement or transaction in or of which the
terms thereof would restrict, materially delay, conflict with or impair the
ability or right of the Company to perform its obligations under the Transaction
Documents to which it is a party, including, without limitation, the obligation
of the Company to deliver to each of the Investors such Investor’s Pro Rata
Amount of (i) the Commitment Shares not later than 4:00 p.m. (New York time) on
the second Trading Day immediately following the Closing Date and (ii) the
Shares in respect of a Draw Down on the applicable Settlement Date. For the
avoidance of doubt, nothing in this Section 6.7(i) shall in any way limit the
Company’s right to terminate this Agreement in accordance with Section 8.1
(subject in all cases to Section 8.3).

 

(ii)     If the Company enters into any agreement, plan, arrangement or
transaction with a third party or seeks to utilize any existing agreement, plan
or arrangement with a third party, in each case the principal purpose of which
is to implement, effect or consummate, at any time during the period beginning
on the first Trading Day of any Pricing Period and ending on the second Trading
Day next following the applicable Settlement Date (the “Reference Period”), an
Alternate Transaction that does not constitute an Acceptable Transaction, the
Company shall provide prompt notice thereof (an “Alternate Transaction Notice”)
to each of the Investors; provided, however, that such Alternate Transaction
Notice must be received by each of the Investors not later than the earlier of
(a) 48 hours after the Company’s execution of any agreement, plan, arrangement
or transaction relating to such Alternate Transaction (or, with respect to any
existing agreement, plan or arrangement, 48 hours after the Company has
determined to utilize any such existing agreement, plan or arrangement to
implement, effect or consummate such Other Financing) and (b) the second Trading
Day immediately preceding the applicable Settlement Date with respect to the
applicable Draw Down Notice. If required under applicable law, including,
without limitation, Regulation FD promulgated by the Commission, or under the
applicable rules and regulations of the Trading Market, the Company shall
simultaneously publicly disclose the information included in any Alternate
Transaction Notice in accordance with Regulation FD and the applicable rules and
regulations of the Trading Market. For purposes of this Section 6.7(ii), any
press release issued by, or Commission Document filed by, the Company shall
constitute sufficient notice, provided that it is issued or filed, as the case
may be, within the time requirements set forth in the first sentence (including
the provisos thereto) of this Section 6.7(ii) for an Alternate Transaction
Notice. With respect to any Reference Period for which the Company is required
to provide an Alternate Transaction Notice pursuant to the first sentence of
this Section 6.7(ii), each Investor shall purchase such Investor’s Pro Rata
Amount of the Shares subject to the applicable Draw Down at the lower of (x) the
price therefor in accordance with the terms of this Agreement or (y) the third
party’s per share purchase price (or exercise or conversion price, as the case
may be) in connection with the Alternate Transaction, net of such third party’s
discounts, Warrant Value and fees. Subject to the rights of the Investors in
this paragraph, nothing set forth in this agreement or the other Transaction
Documents shall preclude the Company from engaging in an Alternate Transaction.

 

 
25

--------------------------------------------------------------------------------

 

 

(iii)     For all purposes of this Agreement, an “Alternate Transaction” shall
mean (w) the issuance of Common Stock for a purchase price less than, or the
issuance of securities convertible into, or exercisable or exchangeable for,
Common Stock at a conversion, exercise or exchange price (as the case may be)
less than, the then Current Market Price of the Common Stock (including, without
limitation, pursuant to any “equity line” or other financing that is
substantially similar to the financing provided for under this Agreement, or
pursuant to any other transaction in which the purchase, conversion, exercise or
exchange price for such Common Stock is determined using a floating discount or
other post-issuance adjustable discount to the then Current Market Price (any
such transaction, a “Similar Financing”)), in each case, after all fees,
discounts, Warrant Value and commissions associated with the transaction (a
“Below Market Offering”); (x) an “at-the-market” offering of Common Stock or
securities convertible into or exchangeable for Common Stock pursuant to Rule
415(a)(4) under the Securities Act (an “ATM”); (y) the implementation by the
Company of any mechanism in respect of any securities convertible into, or
exercisable or exchangeable for, Common Stock for the reset of the purchase
price of the Common Stock to below the then Current Market Price of the Common
Stock (including, without limitation, any antidilution or similar adjustment
provisions in respect of any Company securities, but specifically excluding
customary antidilution adjustments for stock splits, stock dividends, stock
combinations, recapitalizations, reclassifications and similar events) (a “Price
Reset Provision”); or (z) the issuance of options, warrants or similar rights of
subscription or the issuance of convertible equity or debt securities, in each
case not constituting an Acceptable Transaction. For all purposes of this
Agreement, an “Acceptable Transaction” shall mean the issuance by the Company
of: (1) debt securities or any class or series of preferred stock of the
Company, in each case that are not convertible into, or exercisable or
exchangeable for, Common Stock or securities convertible into or exchangeable
for Common Stock; (2) shares of Common Stock or securities convertible into, or
exercisable or exchangeable for, Common Stock other than in connection with a
Below Market Offering or an ATM, and the issuance of shares of Common Stock upon
the conversion, exercise or exchange thereof; (3) shares of Common Stock or
securities convertible into, or exercisable or exchangeable for, Common Stock in
connection with an underwritten public offering of equity securities of the
Company or a registered direct public offering of equity securities of the
Company, in each case where the price per share of such Common Stock (or the
conversion, exercise or exchange price of such securities, as applicable) is
fixed concurrently with the execution of definitive documentation relating to
such offering, and the issuance of shares of Common Stock upon the conversion,
exercise or exchange thereof; (4) shares of Common Stock or securities
convertible into, or exercisable or exchangeable for, Common Stock in connection
with awards under the Company’s benefit and equity plans and arrangements or
shareholder rights plan (as applicable), and the issuance of shares of Common
Stock upon the conversion, exercise or exchange thereof; (5) shares of Common
Stock issuable upon the conversion, exercise or exchange of equity awards or
convertible, exercisable or exchangeable securities outstanding as of the
Closing Date; (6) shares of Common Stock in connection with stock splits, stock
dividends, stock combinations, recapitalizations, reclassifications and similar
events; (7) shares of Common Stock or securities convertible into or exercisable
or exchangeable for Common Stock issued in connection with the acquisition,
license or sale of one or more other companies, equipment, technologies, other
assets or lines of business, and the issuance of shares of Common Stock upon the
conversion, exercise or exchange thereof; (8) shares of Common Stock or
securities convertible into or exercisable or exchangeable for Common Stock or
similar rights to subscribe for the purchase of shares of Common Stock in
connection with technology sharing, collaboration, partnering, licensing,
research and joint development agreements (or amendments thereto) with third
parties, and the issuance of shares of Common Stock upon the conversion,
exercise or exchange thereof; (9) shares of Common Stock or securities
convertible into, or exercisable or exchangeable for, Common Stock to employees,
consultants and/or advisors as consideration for services rendered or to be
rendered, and the issuance of shares of Common Stock upon the conversion,
exercise or exchange thereof; and (10) shares of Common Stock or securities
convertible into, or exercisable or exchangeable for, Common Stock issued in
connection with capital or equipment financings and/or real property lease
arrangements, and the issuance of shares of Common Stock upon the conversion,
exercise or exchange thereof.

 

 
26

--------------------------------------------------------------------------------

 

 

Section 6.8.     Corporate Existence. The Company shall take all steps necessary
to preserve and continue the corporate existence of the Company; provided,
however, that, except as provided in Section 6.9, nothing in this Agreement
shall be deemed to prohibit the Company from engaging in any Fundamental
Transaction with another Person. For the avoidance of doubt, nothing in this
Section 6.8 shall in any way limit the Company’s right to terminate this
Agreement in accordance with Section 8.1 (subject in all cases to Section 8.3).

 

Section 6.9.     Fundamental Transaction. If a Draw Down Notice has been
delivered to the Investors and the transactions contemplated therein have not
yet been fully settled in accordance with the terms and conditions of this
Agreement, the Company shall not effect any Fundamental Transaction until the
expiration of two Trading Days following the Settlement Date with respect to
such Draw Down Notice.

 

 
27

--------------------------------------------------------------------------------

 

 

Section 6.10.     Delivery of Registration Statement and Prospectus; Subsequent
Changes. In accordance with the Registration Rights Agreement, the Company shall
deliver or make available to each of the Investors and their counsel, without
charge, an electronic copy of the Registration Statement, the Prospectus and all
amendments and supplements to the Registration Statement or Prospectus that are
filed with the Commission during any period in which a Prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Securities Act) is
required by the Securities Act to be delivered in connection with resales of the
Registrable Securities, in each case as soon as reasonably practicable after the
filing thereof with the Commission. The Company shall provide each of the
Investors a reasonable opportunity to comment on a draft of each such document
and shall give due consideration to all such comments. The Company consents to
the use of the Prospectus (and of any Prospectus Supplement thereto) in
accordance with the provisions of the Securities Act and with the securities or
“Blue Sky” laws of the jurisdictions in which the Registrable Securities may be
sold by the Investors, in connection with the resale of the Registrable
Securities and for such period of time thereafter as the Prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Securities Act) is
required by the Securities Act to be delivered in connection with resales of the
Registrable Securities. If during such period of time any event shall occur that
in the reasonable judgment of the Company and its counsel is required to be set
forth in the Registration Statement, the Prospectus or any Prospectus Supplement
or should be set forth therein in order to make the statements made therein (in
the case of the Prospectus or any Prospectus Supplement, in light of the
circumstances under which they were made) not misleading, or if it is necessary
to amend the Registration Statement or supplement or amend the Prospectus or any
Prospectus Supplement to comply with the Securities Act or any other applicable
law or regulation, the Company shall forthwith (i) notify each of the Investors
to suspend the resale of Registrable Securities during such period and (ii)
prepare and file with the Commission an appropriate amendment to the
Registration Statement or Prospectus Supplement to the Prospectus, and shall
expeditiously furnish or make available to each of the Investors an electronic
copy thereof, so as to correct such statement or omission or effect such
compliance.

 

Section 6.11.     Amendments to the Registration Statement; Prospectus
Supplements. Except as provided in this Agreement and other than periodic
reports required to be filed pursuant to the Exchange Act, the Company shall not
file with the Commission any amendment to the Registration Statement that
relates to any of the Investors, the Transaction Documents or the transactions
contemplated thereby or file with the Commission any Prospectus Supplement that
relates to any of the Investors, the Transaction Documents or the transactions
contemplated thereby with respect to which (a) any Investor shall not previously
have been advised, or (b) the Company shall not have given due consideration to
any comments thereon received from each of the Investors or their counsel,
unless it is necessary to amend the Registration Statement or make any
supplement to the Prospectus to comply with the Securities Act or any other
applicable law or regulation, in which case the Company shall promptly so inform
each of the Investors, each of the Investors shall be provided with a reasonable
opportunity to review and comment upon any disclosure relating to the Investors
and the Company shall expeditiously furnish to each of the Investors an
electronic copy thereof. In addition, for so long as, in the reasonable opinion
of counsel for the Investors, the Prospectus (or in lieu thereof, the notice
referred to in Rule 173(a) under the Securities Act) is required to be delivered
in connection with any sales of Registrable Securities by the Investors, the
Company shall not file any Prospectus Supplement without delivering or making
available a copy of such Prospectus Supplement to each of the Investors
promptly.

 

 
28

--------------------------------------------------------------------------------

 

 

Section 6.12.     Stop Orders. The Company shall notify each of the Investors as
soon as possible (but in no event later than 24 hours), and confirm in writing,
upon its becoming aware of the occurrence of any of the following events in
respect of the Registration Statement or related Prospectus or Prospectus
Supplement relating to an offering of Registrable Securities: (i) receipt of any
request by the Commission or any other federal or state governmental authority
for any additional information relating to the Registration Statement, the
Prospectus or any Prospectus Supplement, or for any amendment of or supplement
to the Registration Statement, the Prospectus, or any Prospectus Supplement;
(ii) the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Registration
Statement or prohibiting or suspending the use of the Prospectus or any
Prospectus Supplement, or of the suspension of qualification or exemption from
qualification of the Securities for offering or sale in any jurisdiction, or the
initiation or contemplated initiation of any proceeding for such purpose; and
(iii) any event or the existence of any condition or state of facts, which makes
any statement of a material fact made in the Registration Statement, the
Prospectus or any Prospectus Supplement untrue or which requires the making of
any additions to or changes to the statements then made in the Registration
Statement, the Prospectus or any Prospectus Supplement in order to state a
material fact required by the Securities Act to be stated therein or necessary
in order to make the statements then made therein (in the case of the Prospectus
or any Prospectus Supplement, in light of the circumstances under which they
were made) not misleading, or which requires an amendment to the Registration
Statement or a supplement to the Prospectus or any Prospectus Supplement to
comply with the Securities Act or any other law (other than the transactions
contemplated by any Draw Down Notice and the settlement thereof). The Company
shall not be required to disclose to the Investors the substance or specific
reasons of any of the events set forth in clauses (i) through (iii) of the
immediately preceding sentence, but rather, shall only be required to disclose
that the event has occurred. The Company shall not issue any Draw Down during
the continuation of any of the foregoing events. If at any time the Commission
or any other federal or state governmental authority shall issue any stop order
suspending the effectiveness of the Registration Statement or prohibiting or
suspending the use of the Prospectus or any Prospectus Supplement, the Company
shall use commercially reasonable efforts to obtain the withdrawal of such order
at the earliest possible time.

 

Section 6.13.     Selling Restrictions.

 

(i)     Except as expressly set forth below, each of the Investors covenants
that from and after the Closing Date through and including the Trading Day next
following the expiration or termination of this Agreement (the “Restricted
Period”), neither such Investor nor any of its Affiliates nor any entity managed
or controlled by such Investor (collectively, the “Restricted Persons” and each
of the foregoing is referred to herein as a “Restricted Person”) shall, directly
or indirectly, (x) engage in any Short Sales involving the Company’s securities
or (y) grant any option to purchase, or acquire any right to dispose of or
otherwise dispose for value of, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for any shares of Common Stock,
or enter into any swap, hedge or other similar agreement that transfers, in
whole or in part, the economic risk of ownership of the Common Stock.
Notwithstanding the foregoing, it is expressly understood and agreed that
nothing contained herein shall (without implication that the contrary would
otherwise be true) prohibit any Restricted Person during the Restricted Period
from: (1) selling “long” (as defined under Rule 200 promulgated under Regulation
SHO) the Securities; (2) selling a number of shares of Common Stock equal to the
number of Shares that such Restricted Person is or may be obligated to purchase
under a pending Draw Down Notice but has not yet taken possession of so long as
such Restricted Person (or the Broker-Dealer, as applicable) delivers the Shares
purchased pursuant to such Draw Down Notice to the purchaser thereof or the
applicable Broker-Dealer; provided, however, such Restricted Person (or the
applicable Broker-Dealer, as applicable) shall not be required to so deliver any
such Shares subject to such Draw Down Notice if the Company fails for any reason
to deliver such Shares to such Investor on the applicable Settlement Date upon
the terms and subject to the provisions of this Agreement; or (3) executing one
or more transactions of any kind or nature from time to time and at any time so
long as such transaction or transactions (as the case may be) do not result, at
any one time during the Restricted Period, in a then-outstanding aggregate open
“short” position (within the meaning of Rule 200 under Regulation SHO) and open
“put equivalent positions” (within the meaning of Section 16 of the Exchange Act
and the rules and regulations promulgated thereunder) (without duplication) in a
number of shares of Common Stock that exceeds the number of shares of Common
Stock for which any warrants to purchase Common Stock held by such Restricted
Person as of the date of this Agreement is then exercisable (as adjusted for
stock dividends, splits, combinations and other similar events after the date
hereof) (it being understood and agreed that clause (2) above shall not be taken
into account in making determinations under this clause (3)).

 

 
29

--------------------------------------------------------------------------------

 

 

(ii)     In addition to the foregoing, in connection with any sale of Securities
(including any sale permitted by paragraph (i) above), each of the Investors
shall comply in all respects with all applicable laws, rules, regulations and
orders, including, without limitation, the requirements of the Securities Act
and the Exchange Act.

 

Section 6.14.     Effective Registration Statement. During the Investment
Period, the Company shall use its commercially reasonable efforts to maintain
the continuous effectiveness of the Registration Statement under the Securities
Act.

 

Section 6.15.     Blue Sky. The Company shall take such action, if any, as is
necessary in order to obtain an exemption for or to qualify the Securities for
issuance and sale to each of the Investors pursuant to the Transaction
Documents, at the request of any Investor, and the subsequent resale of
Registrable Securities by the Investors, in each case, under applicable state
securities or “Blue Sky” laws and shall provide evidence of any such action so
taken to the applicable Investor from time to time following the Closing Date;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 6.15, (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction.

 

Section 6.16.     Non-Public Information. Neither the Company or any of its
Subsidiaries, nor any of their respective directors, officers, employees or
agents shall disclose any material non-public information about the Company to
any of the Investors, unless a simultaneous public announcement thereof is made
by the Company in the manner contemplated by Regulation FD. In the event of a
breach of the foregoing covenant by the Company or any of its Subsidiaries, or
any of their respective directors, officers, employees and agents (as determined
in the reasonable good faith judgment of any of the Investors), (i) the
applicable Investor(s) shall promptly provide written notice of such breach to
the Company and (ii) after such notice has been provided to the Company and in
addition to any other remedy provided herein or in the other Transaction
Documents, such Investor(s) shall have the right to make a public disclosure, in
the form of a press release, public advertisement or otherwise, of such
material, non-public information without the prior approval by the Company, any
of its Subsidiaries, or any of their respective directors, officers, employees
or agents; provided that the Company shall have failed to publicly disclose such
material, non-public information within 24 hours following demand therefor by
such Investor(s). Such Investor(s) shall not have any liability to the Company,
any of its Subsidiaries, or any of their respective directors, officers,
employees, stockholders or agents, for any such disclosure.

 

 
30

--------------------------------------------------------------------------------

 

 

Section 6.17.     Broker/Dealer. Each of the Investors shall use one or more
broker-dealers to effectuate all sales, if any, of Securities that it may
purchase or otherwise acquire from the Company pursuant to the Transaction
Documents, as applicable, which (or whom) shall be unaffiliated with such
Investor and not then currently engaged or used by the Company (collectively,
the “Broker-Dealer”). Each of the Investors shall, from time to time, provide
the Company with all information regarding its Broker-Dealer reasonably
requested by the Company. Each of the Investors shall be solely responsible for
all fees and commissions of its Broker-Dealer, which shall not exceed customary
brokerage fees and commissions.

 

Section 6.18.     Disclosure Schedule.

 

(i)     The Company may, from time to time, update the Disclosure Schedule as
may be required to satisfy the condition set forth in Section 7.2(i). For
purposes of this Section 6.18, any disclosure made in a schedule to the
Compliance Certificate substantially in the form attached hereto as Exhibit D
shall be deemed to be an update of the Disclosure Schedule. Notwithstanding
anything in this Agreement to the contrary, no update to the Disclosure Schedule
pursuant to this Section 6.18 shall cure any breach of a representation or
warranty of the Company contained in this Agreement and made prior to the update
and shall not affect any of the Investors’ rights or remedies with respect
thereto.

 

(ii)     Notwithstanding anything to the contrary contained in the Disclosure
Schedule or in this Agreement, the information and disclosure contained in any
Schedule of the Disclosure Schedule shall be deemed to be disclosed and
incorporated by reference in any other Schedule of the Disclosure Schedule as
though fully set forth in such Schedule for which applicability of such
information and disclosure is readily apparent on its face. The fact that any
item of information is disclosed in the Disclosure Schedule shall not be
construed to mean that such information is required to be disclosed by this
Agreement. Except as expressly set forth in this Agreement, such information and
the thresholds (whether based on quantity, qualitative characterization, dollar
amounts or otherwise) set forth herein shall not be used as a basis for
interpreting the terms “material” or “Material Adverse Effect” or other similar
terms in this Agreement.

 

 
31

--------------------------------------------------------------------------------

 

 

Article VII
CONDITIONS TO CLOSING AND CONDITIONS TO THE SALE AND
PURCHASE OF THE SHARES

 

Section 7.1.     Conditions Precedent to Closing. The Closing is subject to the
satisfaction of each of the conditions set forth in this Section 7.1.

 

(i)     Accuracy of the Investors’ Representations and Warranties. The
representations and warranties of each of the Investors contained in this
Agreement (a) that are not qualified by “materiality” shall be true and correct
in all material respects as of the Closing Date, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material
respects as of such other date and (b) that are qualified by “materiality” shall
be true and correct as of the Closing Date, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct as of such other date.

 

(ii)     Accuracy of the Company’s Representations and Warranties. The
representations and warranties of the Company contained in this Agreement (a)
that are not qualified by “materiality” or “Material Adverse Effect” shall be
true and correct in all material respects as of the Closing Date, except to the
extent such representations and warranties are as of another date, in which
case, such representations and warranties shall be true and correct in all
material respects as of such other date and (b) that are qualified by
“materiality” or “Material Adverse Effect” shall be true and correct as of the
Closing Date, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct as of such other date.

 

(iii)     Issuance of Commitment Shares. On the Closing Date, the Company shall
deliver irrevocable instructions to its transfer agent to issue to the Investor,
not later than 4:00 p.m. (New York City time) on the second Trading Day
immediately following the Closing Date, certificates representing each
Investor’s Pro Rata Amount of the Commitment Shares in the names of the
Investors or their designee (in which case such designee name shall have been
provided to the Company prior to the Closing Date), in consideration for the
Investors’ execution and delivery of this Agreement. Such certificates shall be
delivered to the Investors by overnight courier at their respective addresses
set forth in Section 10.4 hereof. For the avoidance of doubt, all of the
Commitment Shares shall be fully earned as of the Closing Date regardless of
whether any Draw Downs are issued by the Company or settled hereunder.

 

(iv)     Closing Deliverables. At the Closing, counterpart signature pages of
this Agreement and the Registration Rights Agreement executed by each of the
parties hereto shall be delivered as provided in Section 2.2. Simultaneously
with the execution and delivery of this Agreement and the Registration Rights
Agreement, the Investors’ counsel shall have received (a) an opinion of outside
counsel to the Company, dated the Closing Date, addressed to each of the
Investors in the form mutually agreed to by the parties hereto prior to the date
hereof, (b) a certificate from the Company, dated the Closing Date, in the form
of Exhibit C hereto, and (c) a copy of the irrevocable instructions to the
Company’s transfer agent regarding the issuance to the Investors of certificates
representing each Investor’s Pro Rata Amount of the Commitment Shares.

 

 
32

--------------------------------------------------------------------------------

 

 

Section 7.2.     Conditions Precedent to a Draw Down. The right of the Company
to deliver a Draw Down Notice and the obligation of each of the Investors to
accept a Draw Down Notice and to acquire and pay for its Pro Rata Amount of the
Shares in accordance therewith is subject to the satisfaction, at each Draw Down
Exercise Date and at each Settlement Date (except as otherwise expressly set
forth below), of each of the conditions set forth in this Section 7.2.

 

(i)     Accuracy of the Company’s Representations and Warranties. The
representations and warranties of the Company contained in this Agreement (a)
that are not qualified by “materiality” or “Material Adverse Effect” shall have
been true and correct in all material respects when made and shall be true and
correct in all material respects as of the applicable Draw Down Exercise Date
and the applicable Settlement Date with the same force and effect as if made on
such dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct in all material respects as of such other date and (b) that are
qualified by “materiality” or “Material Adverse Effect” shall have been true and
correct when made and shall be true and correct as of the applicable Draw Down
Exercise Date and the applicable Settlement Date with the same force and effect
as if made on such dates, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties shall be true and correct as of such other date.

 

(ii)     Performance of the Company. The Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement and the Registration Rights Agreement to
be performed, satisfied or complied with by the Company at or prior to the
applicable Draw Down Exercise Date and the applicable Settlement Date. The
Company shall have delivered to each of the Investors on the applicable
Settlement Date the Compliance Certificate substantially in the form attached
hereto as Exhibit D.

 

(iii)     Registration Statement Effective. The Registration Statement covering
the resale by the Investors of the Registrable Securities shall have been
declared effective under the Securities Act by the Commission and shall remain
effective, and the Investors shall be permitted to utilize the Prospectus
therein to resell (a) all of the Commitment Shares, (b) all of the Shares issued
pursuant to all prior Draw Down Notices, and (c) all of the Shares issuable
pursuant to the applicable Draw Down Notice.

 

(iv)     No Material Notices. None of the following events shall have occurred
and be continuing: (a) receipt of any request by the Commission or any other
federal or state governmental authority for any additional information relating
to the Registration Statement, the Prospectus or any Prospectus Supplement, or
for any amendment of or supplement to the Registration Statement, the
Prospectus, or any Prospectus Supplement; (b) the issuance by the Commission or
any other federal or state governmental authority of any stop order suspending
the effectiveness of the Registration Statement or prohibiting or suspending the
use of the Prospectus or any Prospectus Supplement, or of the suspension of
qualification or exemption from qualification of the Securities for offering or
sale in any jurisdiction, or the initiation or contemplated initiation of any
proceeding for such purpose; or (c) the occurrence of any event or the existence
of any condition or state of facts, which makes any statement of a material fact
made in the Registration Statement, the Prospectus or any Prospectus Supplement
untrue or which requires the making of any additions to or changes to the
statements then made in the Registration Statement, the Prospectus or any
Prospectus Supplement in order to state a material fact required by the
Securities Act to be stated therein or necessary in order to make the statements
then made therein (in the case of the Prospectus or any Prospectus Supplement,
in light of the circumstances under which they were made) not misleading, or
which requires an amendment to the Registration Statement or a supplement to the
Prospectus or any Prospectus Supplement to comply with the Securities Act or any
other law (other than the transactions contemplated by the applicable Draw Down
Notice and the settlement thereof). The Company shall have no Knowledge of any
event that could reasonably be expected to have the effect of causing the
suspension of the effectiveness of the Registration Statement or the prohibition
or suspension of the use of the Prospectus or any Prospectus Supplement in
connection with the resale of the Registrable Securities by the Investors.

 

 
33

--------------------------------------------------------------------------------

 

 

(v)     Other Commission Filings. The Current Report and the Form D shall have
been filed with the Commission as required pursuant to Section 2.3, and the
final Prospectus and all other Prospectus Supplements required to have been
filed with the Commission pursuant to Section 2.3 and pursuant to the
Registration Rights Agreement shall have been filed with the Commission in
accordance with Section 2.3 and the Registration Rights Agreement. All reports,
schedules, registrations, forms, statements, information and other documents
required to have been filed by the Company with the Commission pursuant to the
reporting requirements of the Exchange Act, including all material required to
have been filed pursuant to Section 13(a) or 15(d) of the Exchange Act, shall
have been filed with the Commission and, if any Registrable Securities are
covered by a Registration Statement on Form S-3, such filings shall have been
made within the applicable time period prescribed for such filing under the
Exchange Act.

 

(vi)     No Suspension of Trading in or Notice of Delisting of Common Stock.
Trading in the Common Stock shall not have been suspended by the Commission, the
Trading Market or the FINRA (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be terminated prior to
the applicable Draw Down Exercise Date), the Company shall not have received any
final and non-appealable notice that the listing or quotation of the Common
Stock on the Trading Market shall be terminated on a date certain (unless, prior
to such date certain, the Common Stock is listed or quoted on any other Trading
Market), trading in securities generally as reported on the Trading Market shall
not have been suspended or limited, nor shall a banking moratorium have been
declared either by the U.S. or New York State authorities (except for any
suspension, limitation or moratorium which shall be terminated prior to the
applicable Draw Down Exercise Date), there shall not have been imposed any
suspension of, or restriction on, accepting additional deposits of the Common
Stock, electronic trading or book-entry services by DTC with respect to the
Common Stock that is continuing, the Company shall not have received any notice
from DTC to the effect that a suspension of, or restriction on, accepting
additional deposits of the Common Stock, electronic trading or book-entry
services by DTC with respect to the Common Stock is being imposed or is
contemplated (unless, prior to such suspension or restriction, DTC shall have
notified the Company in writing that DTC has determined not to impose any such
suspension or restriction), nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international calamity or
crisis that has had or would reasonably be expected to have a material adverse
change in any U.S. financial, credit or securities market that is continuing.

 

 
34

--------------------------------------------------------------------------------

 

 

(vii)     Compliance with Laws. The Company shall have complied with all
applicable federal, state and local governmental laws, rules, regulations and
ordinances in connection with the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, the Company shall have obtained all permits and
qualifications required by any applicable state securities or “Blue Sky” laws
for the offer and sale of the Securities by the Company to the Investors and the
subsequent resale of the Registrable Securities by the Investors (or shall have
the availability of exemptions therefrom).

 

(viii)     No Injunction. No statute, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by the Transaction Documents.

 

(ix)       No Proceedings or Litigation. No action, suit or proceeding before
any arbitrator or any court or governmental authority shall have been commenced
or threatened, and no inquiry or investigation by any governmental authority
shall have been commenced or threatened, against the Company or any Subsidiary,
or any of the officers, directors or affiliates of the Company or any
Subsidiary, seeking to restrain, prevent or change the transactions contemplated
by the Transaction Documents, or seeking material damages in connection with
such transactions.

 

(x)       Aggregate Limit. The issuance and sale of the Shares issuable pursuant
to such Draw Down Notice shall not violate Sections 3.1, 3.7, 3.9 and 6.6
hereof.

 

(xi)       Securities Authorized and Delivered. The Shares issuable pursuant to
such Draw Down Notice shall have been duly authorized by all necessary corporate
action of the Company. The Company shall have delivered all Shares relating to
all prior Draw Down Notices, as applicable.

 

(xii)      Listing of Securities. All of the Securities that may be issued
pursuant to this Agreement shall have been approved for listing or quotation on
the Trading Market as of the Closing Date, subject only to notice of issuance.

 

(xiii)     No Material Adverse Effect. No condition, occurrence, state of facts
or event constituting a Material Adverse Effect shall have occurred after the
date of this Agreement and be continuing.

 

(xiv)     No Restrictive Legends. If requested by any Investor from and after
the Effective Date, the Company shall have either (i) issued and delivered (or
caused to be issued and delivered) to such Investor a certificate representing
such Investor’s Pro Rata Amount of the Commitment Shares that is free from all
restrictive and other legends or (ii) caused the Company’s transfer agent to
credit such Investor’s or its designee’s account at DTC through its
Deposit/Withdrawal at Custodian (DWAC) system with a number of shares of Common
Stock equal to the number of Commitment Shares represented by the certificate
delivered by the Investor to the Company in accordance with Section 10.1(iv) of
this Agreement.

 

 
35

--------------------------------------------------------------------------------

 

 

(xv)     Opinion of Counsel; Bring-Down. Prior to the first Draw Down Exercise
Date, each Investor shall have received an opinion from outside counsel to the
Company, in the form mutually agreed to by the parties hereto prior to the date
hereof. On each Settlement Date, each Investor shall have received an opinion
“bring down” from outside counsel to the Company, dated the applicable
Settlement Date, in the form mutually agreed to by the parties hereto prior to
the date hereof.

 

Article VIII
TERMINATION

 

Section 8.1.     Termination. Unless earlier terminated as provided hereunder,
this Agreement shall terminate automatically on the earliest to occur of (i) the
first day of the month next following the 36-month anniversary of the Effective
Date, (ii) the date on which the Investor shall have purchased or acquired
shares of Common Stock pursuant to this Agreement equal to the Aggregate Limit
and (iii) the date on which the Common Stock shall have failed to be listed or
quoted on a Trading Market. Subject to Section 8.3, the Company may terminate
this Agreement effective upon one Trading Day’s prior written notice to each
Investor in accordance with Section 10.4; provided, however, that (A) the
Company shall have issued all Commitment Shares owed to the Investors pursuant
to Section 10.1 of this Agreement prior to such termination, and (B) prior to
issuing any press release, or making any public statement or announcement, with
respect to such termination, the Company shall consult with each of the
Investors and their counsel on the form and substance of, and shall give due
consideration to all comments of each of the Investors and their counsel on,
such press release or other disclosure. In addition to the foregoing and not in
limitation thereof, subject to Section 8.3, this Agreement may be terminated at
any time by the mutual written consent of the parties, effective as of the date
of such mutual written consent unless otherwise provided in such written
consent.

 

Section 8.2.     Other Termination. Subject to Section 8.3, each of the
Investors shall have the right to terminate this Agreement effective upon one
Trading Day’s prior written notice to the Company and each of the other
Investors in accordance with Section 10.4, if: (i) any condition, occurrence,
state of facts or event constituting a Material Adverse Effect has occurred
after the date of this Agreement and is continuing; (ii) the Company shall have
entered into any agreement, plan, arrangement or transaction with a third party
or shall have determined to utilize any existing agreement, plan or arrangement
with a third party, in each case the principal purpose of which is to implement,
effect or consummate at any time during the Investment Period a Similar
Financing, an ATM or a Price Reset Provision; (iii) a Fundamental Transaction
shall have occurred; (iv) (A) the Registration Statement is not filed by the
Filing Deadline (as defined in the Registration Rights Agreement) or declared
effective by the Effectiveness Deadline (as defined in the Registration Rights
Agreement), or (B) the Company is otherwise in breach or default in any material
respect under any of the other provisions of the Registration Rights Agreement,
and in the case of this clause (B), if such failure, breach or default is
capable of being cured, such failure, breach or default is not cured within 20
days after notice of such failure, breach or default is delivered to the Company
pursuant to Section 10.4; (v) while the Registration Statement is required to be
maintained effective pursuant to the terms of the Registration Rights Agreement
and the Investors hold any Registrable Securities, the effectiveness of the
Registration Statement lapses for any reason (including, without limitation, the
issuance of a stop order) or the Registration Statement, the Prospectus or any
Prospectus Supplement is otherwise unavailable to the Investors for the resale
of all of the Registrable Securities in accordance with the terms of the
Registration Rights Agreement, and such lapse or unavailability continues for a
period of 20 consecutive Trading Days or for more than an aggregate of 60
Trading Days in any 365-day period, other than due to acts of any Investor; (vi)
trading in the Common Stock on the Trading Market shall have been suspended and
such suspension continues for a period of five consecutive Trading Days or for
more than an aggregate of 20 Trading Days in any 365-day period; (vii) the
Company has filed for and/or is subject to any bankruptcy, insolvency,
reorganization or liquidation proceedings or other proceedings for relief under
any bankruptcy law or any law for the relief of debtors instituted by or against
the Company or (viii) the Company is in material breach or default of this
Agreement, and, if such breach or default is capable of being cured, such breach
or default is not cured within 20 days after notice of such breach or default is
delivered to the Company pursuant to Section 10.4. Unless notification thereof
is required elsewhere in this Agreement (in which case such notification shall
be provided in accordance with such other provision), the Company shall promptly
(but in no event later than 24 hours) notify each of the Investors (and, if
required under applicable law, including, without limitation, Regulation FD
promulgated by the Commission, or under the applicable rules and regulations of
the Trading Market, the Company shall publicly disclose such information in
accordance with Regulation FD and the applicable rules and regulations of the
Trading Market) upon becoming aware of any of the events set forth in the
immediately preceding sentence.

 

 
36

--------------------------------------------------------------------------------

 

 

Section 8.3.     Effect of Termination. In the event of termination by the
Company or any of the Investors pursuant to Section 8.1 or 8.2, as applicable,
written notice thereof shall forthwith be given to the other parties as provided
in Section 10.4 and the transactions contemplated by this Agreement shall be
terminated without further action by the parties. If this Agreement is
terminated as provided in Section 8.1 or 8.2 herein, this Agreement shall become
void and of no further force and effect, except that (i) the provisions of
Article V (Representations, Warranties and Covenants of the Company), Article IX
(Indemnification), Article X (Miscellaneous) and this Article VIII (Termination)
shall remain in full force and effect indefinitely notwithstanding such
termination, and, (ii) so long as any of the Investors owns any Securities, the
covenants and agreements of the Company contained in Article VI (Additional
Covenants) shall remain in full force and notwithstanding such termination for a
period of six months following such termination. Notwithstanding anything in
this Agreement to the contrary, no termination of this Agreement by any party
shall (i) become effective prior to the first Trading Day immediately following
the Settlement Date related to any pending Draw Down Notice that has not been
fully settled in accordance with the terms and conditions of this Agreement (it
being hereby acknowledged and agreed that no termination of this Agreement shall
limit, alter, modify, change or otherwise affect any of the Company’s or the
Investors’ rights or obligations under the Transaction Documents with respect to
any pending Draw Down, and that the parties shall fully perform their respective
obligations with respect to any such pending Draw Down under the Transaction
Documents, provided all of the conditions to the settlement thereof set forth in
Article VII are timely satisfied), (ii) limit, alter, modify, change or
otherwise affect the Company’s or the Investors’ rights or obligations under the
Registration Rights Agreement, all of which shall survive any such termination
or (iii) affect any Commitment Shares previously issued or delivered, or any
rights of any holder thereof (it being hereby acknowledged and agreed that all
of the Commitment Shares shall be fully earned as of the Closing Date,
regardless of whether any Draw Downs are issued by the Company or settled
hereunder). Nothing in this Section 8.3 shall be deemed to release the Company
or any Investor from any liability for any breach or default under this
Agreement or any of the other Transaction Documents to which it is a party, or
to impair the rights of (A) the Company to compel specific performance by each
Investor of its obligations under the Transaction Documents to which it is a
party or (B) each Investor to compel specific performance by the Company of its
obligations under the Transaction Documents to which it is a party.

 

 
37

--------------------------------------------------------------------------------

 

 

Article IX
INDEMNIFICATION

 

Section 9.1.     Indemnification of Investors. In consideration of the
Investors’ execution and delivery of this Agreement and acquiring the Shares
hereunder and in addition to all of the Company’s other obligations under the
Transaction Documents to which it is a party, subject to the provisions of this
Section 9.1, the Company shall indemnify and hold harmless each of the
Investors, each of such Investor’s directors, officers, shareholders, members,
partners, employees, representatives, agents and advisors (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding the lack of such title or any other title), each Person, if any,
who controls such Investor (within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act), and the respective directors,
officers, shareholders, members, partners, employees, representatives, agents
and advisors (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding the lack of such title or any other
title) of such controlling Persons (each, an “Investor Party”), from and against
all losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses (including all judgments, amounts paid in settlement, court costs,
reasonable attorneys’ fees and costs of defense and investigation)
(collectively, “Damages”) that any Investor Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents to which it is a party or (b) any action, suit,
claim or proceeding (including for these purposes a derivative action brought on
behalf of the Company) instituted against such Investor Party arising out of or
resulting from the execution, delivery, performance or enforcement of the
Transaction Documents, other than claims for indemnification within the scope of
Section 6 of the Registration Rights Agreement; provided, however, that (x) the
foregoing indemnity shall not apply to any Damages to the extent, but only to
the extent, that such Damages resulted directly and primarily from a breach of
any of such Investor’s representations, warranties, covenants or agreements
contained in this Agreement or the Registration Rights Agreement, and (y) the
Company shall not be liable under subsection (b) of this Section 9.1 to the
extent, but only to the extent, that a court of competent jurisdiction shall
have determined by a final judgment (from which no further appeals are
available) that such Damages resulted directly and primarily from any acts or
failures to act, undertaken or omitted to be taken by such Investor Party
through its fraud, bad faith, gross negligence, or willful or reckless
misconduct.

 

The Company shall reimburse any Investor Party promptly upon demand (with
accompanying presentation of documentary evidence) for all legal and other costs
and expenses reasonably incurred by such Investor Party in connection with (i)
any action, suit, claim or proceeding, whether at law or in equity, to enforce
compliance by the Company with any provision of the Transaction Documents or
(ii) any other any action, suit, claim or proceeding, whether at law or in
equity, with respect to which it is entitled to indemnification under this
Section 9.1; provided that the applicable Investor shall promptly reimburse the
Company for all such legal and other costs and expenses to the extent a court of
competent jurisdiction determines that any Investor Party was not entitled to
such reimbursement.

 

 
38

--------------------------------------------------------------------------------

 

 

An Investor Party’s right to indemnification or other remedies based upon the
representations, warranties, covenants and agreements of the Company set forth
in the Transaction Documents shall not in any way be affected by any
investigation or knowledge of such Investor Party. Such representations,
warranties, covenants and agreements shall not be affected or deemed waived by
reason of the fact that an Investor Party knew or should have known that any
representation or warranty might be inaccurate or that the Company failed to
comply with any agreement or covenant. Any investigation by such Investor Party
shall be for its own protection only and shall not affect or impair any right or
remedy hereunder.

 

To the extent that the foregoing undertakings by the Company set forth in this
Section 9.1 may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Damages
which is permissible under applicable law.

 

Section 9.2.     Indemnification Procedures. Promptly after an Investor Party
receives notice of a claim or the commencement of an action for which the
Investor Party intends to seek indemnification under Section 9.1, the Investor
Party will notify the Company in writing of the claim or commencement of the
action, suit or proceeding; provided, however, that failure to notify the
Company will not relieve the Company from liability under Section 9.1, except to
the extent it has been materially prejudiced by the failure to give notice. The
Company will be entitled to participate in the defense of any claim, action,
suit or proceeding as to which indemnification is being sought, and if the
Company acknowledges in writing the obligation to indemnify the Investor Party
against whom the claim or action is brought, the Company may (but will not be
required to) assume the defense against the claim, action, suit or proceeding
with counsel satisfactory to it. After the Company notifies the Investor Party
that the Company wishes to assume the defense of a claim, action, suit or
proceeding, the Company will not be liable for any further legal or other
expenses incurred by the Investor Party in connection with the defense against
the claim, action, suit or proceeding except that if, in the opinion of counsel
to the Investor Party, it would be inappropriate under the applicable rules of
professional responsibility for the same counsel to represent both the Company
and such Investor Party. In such event, the Company will pay the reasonable fees
and expenses of no more than one separate counsel for all such Investor Parties
promptly as such fees and expenses are incurred. Each Investor Party, as a
condition to receiving indemnification as provided in Section 9.1, will
cooperate in all reasonable respects with the Company in the defense of any
action or claim as to which indemnification is sought. The Company will not be
liable for any settlement of any action effected without its prior written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned. The Company will not, without the prior written consent of the
Investor Party, effect any settlement of a pending or threatened action with
respect to which an Investor Party is, or is informed that it may be, made a
party and for which it would be entitled to indemnification, unless the
settlement includes an unconditional release of the Investor Party from all
liability and claims which are the subject matter of the pending or threatened
action.

 

 
39

--------------------------------------------------------------------------------

 

 

The remedies provided for in this Article IX are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any Investor
Party at law or in equity.

 

Article X
MISCELLANEOUS

 

Section 10.1.     Fees and Expenses; Commitment Shares.

 

(i)         Fees and Expenses. Each party shall bear its own fees and expenses
related to the transactions contemplated by this Agreement. The Company shall
pay all U.S. federal, state and local stamp and other similar transfer and other
taxes and duties levied in connection with issuance of the Securities pursuant
hereto.

 

(ii)        Commitment Shares. In consideration for the Investors’ execution and
delivery of this Agreement, concurrently with the execution and delivery of this
Agreement on the Closing Date, the Company shall deliver irrevocable
instructions to its transfer agent to issue to each of the Investors, not later
than 4:00 p.m. (New York City time) on the second Trading Day immediately
following the Closing Date, a certificate representing such Investor’s Pro Rata
Amount of the Commitment Shares in the name of such Investor or its designee (in
which case such designee name shall have been provided to the Company prior to
the Closing Date). Such certificates shall be delivered to the Investors by
overnight courier at their respective addresses set forth in Section 10.4
hereof. For the avoidance of doubt, all of the Commitment Shares shall be fully
earned as of the Closing Date regardless of whether any Draw Downs are issued by
the Company or settled hereunder. Upon issuance, the Commitment Shares shall
constitute “restricted securities” as such term is defined in Rule 144(a)(3)
under the Securities Act and, subject to the provisions of subsection (iv) of
this Section 10.1, the certificates representing the Commitment Shares shall
bear the restrictive legend set forth below in subsection (iii) of this Section
10.1. The Commitment Shares shall constitute Registrable Securities and shall be
included in the Registration Statement in accordance with the terms of the
Registration Rights Agreement.

 

(iii)       Legends. The certificates representing the Commitment Shares issued
prior to the Effective Date, except as set forth below, shall bear a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of such stock certificates):

 

THE OFFER AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 UNDER
SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.

 

 
40

--------------------------------------------------------------------------------

 

 

Notwithstanding the foregoing and for the avoidance of doubt, all Shares to be
issued in respect of any Draw Down Notice delivered to the Investors pursuant to
this Agreement shall be issued to the Investors in accordance with Section 3.5
by crediting each Investor’s or its designees’ account at DTC through its
Deposit/Withdrawal at Custodian (DWAC) system, and all such Shares shall be
freely tradable and transferable and without restriction on resale (and no
stop-transfer order shall be placed against transfer thereof), and the Company
shall not take any action or give instructions to any transfer agent of the
Company otherwise.

 

(iv)     Removal of Legend. From and after the Effective Date, the Company
shall, no later than two Trading Days following the delivery by any Investor to
the Company or the Company’s transfer agent (with notice to the Company) of a
legended certificate representing Commitment Shares (endorsed or with stock
powers attached, signatures guaranteed, and otherwise in form necessary to
affect the reissuance and/or transfer, if applicable), as directed by such
Investor, either: (A) issue and deliver (or cause to be issued and delivered) to
such Investor a certificate representing such Commitment Shares that is free
from all restrictive and other legends or (B) cause the Company’s transfer agent
to credit such Investor’s or its designee’s account at DTC through its
Deposit/Withdrawal at Custodian (DWAC) system with a number of shares of Common
Stock equal to the number of Commitment Shares represented by the certificate so
delivered by such Investor (the date by which such certificate is required to be
delivered to such Investor or such credit is so required to be made to the
account of such Investor or its designee at DTC pursuant to the foregoing is
referred to herein as the “Required Delivery Date”). If the Company fails on or
prior to the Required Delivery Date to either (i) issue and deliver (or cause to
be issued and delivered) to such Investor a certificate representing such
Commitment Shares that is free from all restrictive and other legends or (ii)
cause the Company’s transfer agent to credit the balance account of such
Investor or its designee at DTC through its Deposit/Withdrawal at Custodian
(DWAC) system with a number of shares of Common Stock equal to the number of
Commitment Shares represented by the certificate delivered by such Investor
pursuant hereto, then, in addition to all other remedies available to such
Investor, the Company shall pay in cash to such Investor on each day after the
Required Delivery Date that the issuance or credit of such shares is not timely
effected an amount equal to 2.0% of the product of (A) the sum of the number of
Commitment Shares not issued to such Investor on a timely basis and to which
such Investor is entitled and (B) the VWAP for the five Trading Day period
immediately preceding the Required Delivery Date. In addition to the foregoing,
if the Company fails to so properly deliver such unlegended certificates or so
properly credit the account of such Investor or its designee at DTC by the
Required Delivery Date, and if on or after the Required Delivery Date such
Investor purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by such Investor of shares of Common
Stock that such Investor anticipated receiving from the Company without any
restrictive legend, then the Company shall, within three Trading Days after such
Investor’s request, pay cash to such Investor in an amount equal to such
Investor’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased, at which point the Company’s obligation
to deliver a certificate or credit such Investor’s or its designee’s account at
DTC for such shares of Common Stock shall terminate and such shares shall be
cancelled.

 

 
41

--------------------------------------------------------------------------------

 

 

Section 10.2.     Specific Enforcement, Consent to Jurisdiction, Waiver of Jury
Trial.

 

(i)        The Company and the Investors acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that (i) the Company shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement by any of the Investors and to enforce specifically the terms and
provisions hereof (without the necessity of showing economic loss and without
any bond or other security being required) , this being in addition to any other
remedy to which the Company may be entitled by law or equity, and (ii) each of
the Investors shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of this Agreement by the Company and to enforce
specifically the terms and provisions hereof (without the necessity of showing
economic loss and without any bond or other security being required), this being
in addition to any other remedy to which such Investor may be entitled by law or
equity.

 

(ii)        Each of the Company and the Investors (a) hereby irrevocably submits
to the jurisdiction of the U.S. District Court and other courts of the United
States sitting in the State of New York for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement, and (b) hereby waives,
and agrees not to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the
Investors consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section 10.2 shall affect or limit any right to serve process in any other
manner permitted by law.

 

(iii)       EACH OF THE COMPANY AND THE INVESTORS HEREBY WAIVES TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
DISPUTES RELATING HERETO. EACH OF THE COMPANY AND THE INVESTORS (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.2.

 

Section 10.3.     Entire Agreement; Amendment. The Transaction Documents set
forth the entire agreement and understanding of the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
negotiations and understandings between the parties, both oral and written, with
respect to such matters. There are no promises, undertakings, representations or
warranties by either party relative to subject matter hereof not expressly set
forth in the Transaction Documents. No provision of this Agreement may be
amended by the parties from and after the date that is one Trading Day
immediately preceding the initial filing of the Registration Statement with the
Commission. Subject to the immediately preceding sentence, no provision of this
Agreement may be amended other than by a written instrument signed by both
parties hereto. The Disclosure Schedule and all exhibits to this Agreement are
hereby incorporated by reference in, and made a part of, this Agreement as if
set forth in full herein.

 

 
42

--------------------------------------------------------------------------------

 

 

Section 10.4.     Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery, email (with electronic
confirmation of delivery received) or facsimile (with facsimile machine
confirmation of delivery received) at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The address for
such communications shall be:

 

If to the Company:

 

Liquidmetal Technologies, Inc.
30452 Esperanza
Rancho Santa Margarita, CA 92688
Telephone Number: (949) 635-2100
Fax: (949) 635-2108

Email: tony.chung@liquidmetal.com
Attention: Tony Chung, Chief Financial Officer

 

With a copy (which shall not constitute notice) to:

 

Foley & Lardner LLP
100 North Tampa Street, Suite 2700
Tampa, Florida 33602
Telephone Number: (813) 229-2300
Fax: (813) 221-4210

Email: CCreely@foley.com
Attention: Curt P. Creely

 

 
43

--------------------------------------------------------------------------------

 

 

If to the Investors:

 

Kingsbrook Opportunities Master Fund LP

c/o Kingsbrook Partners LP

689 Fifth Avenue, 12th Floor
New York, New York 10022
Telephone Number: (212) 600-8240
Fax: (212) 600-8290

Email: investments@kingsbrookpartners.com
Attention: Ari J. Storch and Adam Chill

 

and

 

Tech Opportunities LLC

777 Third Avenue, 30th Floor
New York, NY 10017
Telephone Number: (212) 571-1274
Fax: (212) 571-1325

Email: To email address provided after Closing

Attention: Direct Investments

 

and

 

Iroquois Master Fund Ltd.
c/o Iroquois Capital Management, LLC
641 Lexington Avenue
26th Floor
New York, NY 10022
Telephone Number: 212-974-3070
Fax: 646-274-1728

Email: jsilverman@icfunds.com
Attention: Joshua Silverman

 

With a copy (which shall not constitute notice) to:

 

Greenberg Traurig, LLP
The MetLife Building
200 Park Avenue
New York, NY 10166
Telephone Number: (212) 801-9200
Fax: (212) 801-6400

Email: marsicoa@gtlaw.com

            adelsteinm@gtlaw.com     
Attention: Anthony J. Marsico

                    Michael A. Adelstein

 

Either party hereto may from time to time change its address for notices by
giving at least 10 days advance written notice of such changed address to the
other party hereto.

 

Section 10.5.     Waivers. No provision of this Agreement may be waived by the
parties from and after the date that is one Trading Day immediately preceding
the initial filing of the Registration Statement with the Commission. Subject to
the immediately preceding sentence, no provision of this Agreement may be waived
other than in a written instrument signed by the party against whom enforcement
of such waiver is sought. No failure or delay in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercises thereof or of any other right, power or privilege.

 

 
44

--------------------------------------------------------------------------------

 

 

Section 10.6.     Headings. The article, section and subsection headings in this
Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof. Unless the context clearly indicates otherwise, each
pronoun herein shall be deemed to include the masculine, feminine, neuter,
singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words
“without limitation.” The terms “herein,” “hereunder,” “hereof” and words of
like import refer to this entire Agreement instead of just the provision in
which they are found.

 

Section 10.7.     Construction. The parties agree that each of them and their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents. In addition, each and every
reference to share prices (including the Floor Prices) and shares of Common
Stock in any Transaction Document shall be subject to adjustment for any stock
splits, stock combinations, stock dividends, recapitalizations and other similar
transactions that occur on or after the date of this Agreement. Any reference in
this Agreement to “Dollars” or “$” shall mean the lawful currency of the United
States of America.

 

Section 10.8.     Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder to any Person without the prior written consent of each of the
Investors, which may be withheld or delayed in each Investor’s sole discretion,
including by any Fundamental Transaction. None of the Investors may assign its
rights or obligations under this Agreement.

 

Section 10.9.     No Third Party Beneficiaries. Except as expressly provided in
Article IX, this Agreement is intended only for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

 

Section 10.10.     Governing Law. This Agreement shall be governed by and
construed in accordance with the internal procedural and substantive laws of the
State of New York, without giving effect to the choice of law provisions of such
state that would cause the application of the laws of any other jurisdiction.

 

Section 10.11.     Survival. The representations, warranties, covenants and
agreements of the Company and the Investors contained in this Agreement shall
survive the execution and delivery hereof until the termination of this
Agreement; provided, however, that (i) the provisions of Article V
(Representations, Warranties and Covenants of the Company), Article VIII
(Termination), Article IX (Indemnification) and this Article X (Miscellaneous)
shall remain in full force and effect indefinitely notwithstanding such
termination, and, (ii) so long as any of the Investors owns any Securities, the
covenants and agreements of the Company contained in Article VI (Additional
Covenants), shall remain in full force and effect notwithstanding such
termination for a period of six months following such termination.

 

 
45

--------------------------------------------------------------------------------

 

 

Section 10.12.     Counterparts. This Agreement may be executed in counterparts,
all of which taken together shall constitute one and the same original and
binding instrument and shall become effective when all counterparts have been
signed by each party and delivered to the other parties hereto, it being
understood that all parties hereto need not sign the same counterpart. In the
event any signature is delivered by facsimile, digital or electronic
transmission, such transmission shall constitute delivery of the manually
executed original and the party using such means of delivery shall thereafter
cause four additional executed signature pages to be physically delivered to the
other parties within five days of the execution and delivery hereof. Failure to
provide or delay in the delivery of such additional executed signature pages
shall not adversely affect the efficacy of the original delivery.

 

Section 10.13.     Publicity. The Company shall afford each of the Investors and
their counsel with a reasonable opportunity to review and comment upon, shall
consult with each of the Investors and their counsel on the form and substance
of, and shall give due consideration to all such comments from each of the
Investors or their counsel on, any press release, Commission filing or any other
public disclosure made by or on behalf of the Company relating to any of the
Investors, its purchases hereunder or any aspect of the Transaction Documents or
the transactions contemplated thereby, prior to the issuance, filing or public
disclosure thereof. For the avoidance of doubt, the Company shall not be
required to submit for review any such disclosure (i) contained in periodic
reports filed with the Commission under the Exchange Act if it shall have
previously provided the same disclosure for review in connection with a previous
filing or (ii) any Prospectus Supplement if it contains disclosure that does not
reference any of the Investors, its purchases hereunder or any aspect of the
Transaction Documents or the transactions contemplated thereby.

 

Section 10.14.     Severability. The provisions of this Agreement are severable
and, in the event that any court of competent jurisdiction shall determine that
any one or more of the provisions or part of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement, and this Agreement
shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of such provision, had never been contained herein, so that
such provisions would be valid, legal and enforceable to the maximum extent
possible.

 

Section 10.15.     Further Assurances. From and after the Closing Date, upon the
request of any of the Investors or the Company, each of the Company and the
Investors shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.

 

 

 
46

--------------------------------------------------------------------------------

 

 

Section 10.16.      Independent Nature of Investors’ Obligations and Rights. The
obligations of each Investor under the Transaction Documents are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Investor pursuant hereto
or thereto, shall be deemed to constitute the Investors as, and the Company
acknowledges that the Investors do not so constitute, a partnership, an
association, a joint venture or any other kind of group or entity, or create a
presumption that the Investors are in any way acting in concert or as a group or
entity with respect to such obligations or the transactions contemplated by the
Transaction Documents or any matters, and the Company acknowledges that the
Investors are not acting in concert or as a group, and the Company shall not
assert any such claim, with respect to such obligations or the transactions
contemplated by the Transaction Documents. The decision of each Investor to
purchase Securities pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Each Investor acknowledges that no
other Investor has acted as agent for such Investor in connection with such
Investor making its investment hereunder and that no other Investor will be
acting as agent of such Investor in connection with monitoring such Investor’s
investment in the Securities or enforcing its rights under the Transaction
Documents. The Company and each Investor confirms that each Investor has
independently participated with the Company in the negotiation of the
transaction contemplated hereby with the advice of its counsel and advisors.
Each Investor shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out
of any other Transaction Documents, and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such purpose.
The use of a single agreement to effectuate the purchase and sale of the
Securities contemplated hereby was solely in the control of the Company, not the
action or decision of any Investor, and was done solely for the convenience of
the Company and not because it was required or requested to do so by any
Investor. It is expressly understood and agreed that each provision contained in
this Agreement and in each other Transaction Document is between the Company and
an Investor, solely, and not between the Company and the Investors collectively
and not between and among the Investors.

 

 

 

[Signature Page Follows]

 

 
47

--------------------------------------------------------------------------------

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officer as of the date first above
written.

 

LIQUIDMETAL TECHNOLOGIES, INC.:

 

 

By:/s/ Tony Chung
Name: Tony Chung
Title: Chief Financial Officer

 

KINGSBROOK OPPORTUNITIES MASTER FUND LP:

 

By: KINGSBROOK OPPORTUNITIES GP LLC, its general partner

 

By: /s/ Adam J. Chill
Name: Adam J. Chill
Title: Managing Member

 

TECH OPPORTUNITIES LLC:

 

By: /s/ George Antonopoulos

       George Antonopoulos,

       Authorized Signatory

 

IROQUOIS MASTER FUND LTD.:

 

By: /s/ Joshua Silverman
Name: Joshua Silverman
Title: Authorized Signatory

 

 
48

--------------------------------------------------------------------------------

 

 

ANNEX I TO THE
COMMON STOCK PURCHASE AGREEMENT
DEFINITIONS

 

“Acceptable Transaction” shall have the meaning assigned to such term in Section
6.7(iii) hereof.

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with a
Person, as such terms are used in and construed under Rule 144. With respect to
any Investor, without limitation, any Person owning, owned by, or under common
ownership with such Investor, and any investment fund or managed account that is
managed on a discretionary basis by the same investment manager as such Investor
will be deemed to be an Affiliate.

 

“Aggregate Limit” shall have the meaning assigned to such term in Section 2.1
hereof.

 

“Agreement” shall have the meaning assigned to such term in the preamble hereof.

 

“Alternate Transaction” shall have the meaning assigned to such term in Section
6.7(iii) hereof.

 

“Alternate Transaction Notice” shall have the meaning assigned to such term in
Section 6.7(ii) hereof.

 

“Announcement Date” shall have the meaning assigned to such term in Section 3.8
hereof.

 

“ATM” shall have the meaning assigned to such term in Section 6.7(iii) hereof.

 

“Average Trading Volume” means the average daily trading volume of the Common
Stock (expressed in number of shares) on the Trading Market for the 10 Trading
Days immediately prior to the applicable Draw Down Exercise Date.

 

“Below Market Offering” shall have the meaning assigned to such term in Section
6.7(iii) hereof.

 

“Broker-Dealer” shall have the meaning assigned to such term in Section 6.17
hereof.

 

“Bylaws” shall have the meaning assigned to such term in Section 5.3 hereof.

 

“Charter” shall have the meaning assigned to such term in Section 5.3 hereof.

 

“Closing” shall have the meaning assigned to such term in Section 2.2 hereof.

 

“Closing Date” means the date of this Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

 
i

--------------------------------------------------------------------------------

 

 

“Commission” means the U.S. Securities and Exchange Commission or any successor
entity.

 

“Commission Documents” shall mean (1) all reports, schedules, registrations,
forms, statements, information and other documents filed with or furnished to
the Commission by the Company pursuant to the reporting requirements of the
Exchange Act, including all material filed or furnished pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, since December 31, 2012,
including, without limitation, the Annual Report on Form 10-K filed by the
Company for its fiscal year ended December 31, 2012 (the “2012 Form 10-K”), and
which hereafter shall be filed with or furnished to the Commission by the
Company, including, without limitation, the Current Report, (2) the Registration
Statement, as the same may be amended from time to time, the Prospectus and each
Prospectus Supplement and (3) all information contained in such filings and all
documents and disclosures that have been and heretofore shall be incorporated by
reference therein.

 

“Commitment Shares” means an aggregate of 2,666,667 shares of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock which,
concurrently with the execution and delivery of this Agreement on the Closing
Date, the Company has caused its transfer agent to issue and deliver to the
Investors not later than 4:00 p.m. (New York City time) on the second Trading
Day immediately following the Closing Date.

 

“Common Stock” shall have the meaning assigned to such term in the recitals
hereof.

 

“Company” shall have the meaning assigned to such term in the preamble hereof.

 

“Current Market Price” means, with respect to any particular measurement date,
the closing trade price of a share of Common Stock on the Trading Market for the
Trading Day immediately preceding such measurement date, as reported by
Bloomberg, L.P.

 

“Current Report” shall have the meaning assigned to such term in Section 2.3
hereof.

 

“Damages” shall have the meaning assigned to such term in Section 9.1 hereof.

 

“Disclosure Schedule” shall have the meaning assigned to such term in the
preamble to Article V hereof.

 

“Disqualification Event” shall have the meaning assigned to such term in Section
5.39 hereof.

 

“Draw Down” means the transactions contemplated in Article III of this Agreement
with respect to any Draw Down Notice delivered by the Company in accordance with
Article III of this Agreement.

 

“Draw Down Amount” means the actual amount of proceeds received by the Company
pursuant to a Draw Down under this Agreement.

 

 
ii

--------------------------------------------------------------------------------

 

 

“Draw Down Amount Requested” shall mean the specific amount of shares of Common
Stock requested by the Company in a Draw Down Notice delivered pursuant to
Section 3.1, up to the Maximum Draw Down Amount Requested.

 

“Draw Down Exercise Date” shall have the meaning assigned to such term in
Section 3.1 hereof.

 

“Draw Down Notice” shall have the meaning assigned to such term in Section 3.1
hereof.

 

“DTC” means The Depository Trust Company, a subsidiary of The Depository Trust &
Clearing Corporation, or any successor thereto.

 

“Earnings Announcement” shall have the meaning assigned to such term in Section
3.8 hereof.

 

“Earnings 8-K” shall have the meaning assigned to such term in Section 3.8
hereof.

 

“EDGAR” means the Commission’s Electronic Data Gathering, Analysis and Retrieval
System.

 

“Effective Date” means the first Trading Day immediately following the date on
which the initial Registration Statement filed pursuant to Section 2(a) of the
Registration Rights Agreement is declared effective by the Commission.

 

“Environmental Laws” shall have the meaning assigned to such term in Section
5.18 hereof.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder.

 

“FCPA” shall have the meaning assigned to such term in Section 5.36 hereof.

 

“Filing Time” shall have the meaning assigned to such term in Section 3.8
hereof.

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“Floor Price” means the product of (i) 0.775 and (ii) the Reference Price, in
all cases which shall be appropriately adjusted for any stock splits, stock
combinations, stock dividends, recapitalizations and other similar transactions;
provided, however, that in no event shall the Floor Price be less than $0.03875,
which shall be appropriately adjusted for any stock splits, stock combinations,
stock dividends, recapitalizations and other similar transactions.

 

 
iii

--------------------------------------------------------------------------------

 

 

“Fundamental Transaction” means that (i) the Company shall, directly or
indirectly, in one or more related transactions, (1) consolidate or merge with
or into (whether or not the Company is the surviving corporation) another
Person, with the result that the holders of the Company’s capital stock
immediately prior to such consolidation or merger together beneficially own less
than 50% of the outstanding voting power of the surviving or resulting
corporation, or (2) sell, lease, license, assign, transfer, convey or otherwise
dispose of all or substantially all of the properties or assets of the Company
to another Person, or (3) take action to facilitate a purchase, tender or
exchange offer by another Person that is accepted by the holders of more than
50% of the outstanding shares of Common Stock (not including any shares of
Common Stock held by the Person or Persons making or party to, or associated or
affiliated with the Persons making or party to, such purchase, tender or
exchange offer), or (4) consummate a stock or share purchase agreement or other
business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby
such other Person acquires more than 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement or other
business combination), or (5) reorganize, recapitalize or reclassify its Common
Stock, or (ii) any “person” or “group” (as these terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock.

 

“GAAP” shall mean generally accepted accounting principles in the United States
of America as applied by the Company.

 

“Governmental Licenses” shall have the meaning assigned to such term in Section
5.17 hereof.

 

“Indebtedness” shall have the meaning assigned to such term in Section 5.11
hereof.

 

“Intellectual Property” shall have the meaning assigned to such term in Section
5.17(b) hereof.

 

“Investment Period” means the period commencing on the Effective Date and
expiring on the date this Agreement is terminated pursuant to Article VIII
hereof.

 

“Investor” and “Investors” shall have the meanings assigned to such terms in the
preamble hereof.

 

“Investor Party” shall have the meaning assigned to such term in Section 9.1
hereof.

 

“Issuer Covered Person” shall have the meaning assigned to such term in Section
5.39 hereof.

 

“Knowledge” means the actual knowledge of the Company’s Chief Executive Officer
or Chief Financial Officer, after reasonable inquiry of all officers, directors
and employees of the Company who could reasonably be expected to have knowledge
or information with respect to the matter in question.

 

 
iv

--------------------------------------------------------------------------------

 

 

“Make Whole Amount” shall have the meaning assigned to such term in Section 3.6
hereof.

 

“Material Adverse Effect” means (i) any condition, occurrence, state of facts or
event having, or insofar as reasonably can be foreseen would likely have, any
material adverse effect on the legality, validity or enforceability of the
Transaction Documents or the transactions contemplated thereby, (ii) any
condition, occurrence, state of facts or event having, or insofar as reasonably
can be foreseen would likely have, any effect on the business, operations,
properties or financial condition of the Company that is material and adverse to
the Company and its Subsidiaries, taken as a whole, and/or (iii) any condition,
occurrence, state of facts or event that would, or insofar as reasonably can be
foreseen would likely, prohibit or otherwise materially interfere with or delay
the ability of the Company to perform any of its obligations under any of the
Transaction Documents to which it is a party; provided, however, that none of
the following, individually or in the aggregate, shall be taken into account in
determining whether a Material Adverse Effect has occurred or insofar as
reasonably can be foreseen would likely occur: (a) changes in conditions in the
U.S. or global capital, credit or financial markets generally, including changes
in the availability of capital or currency exchange rates, provided such changes
shall not have affected the Company in a materially disproportionate manner as
compared to other similarly situated companies; (b) any changes in GAAP or in
any applicable laws, rules, or regulations or the interpretation thereof; (c)
any act of terrorism, war (whether or not declared), national disaster or any
national or international calamity affecting the United States; (d) any change
in the price or trading volume of the Company Common Stock in and of itself
(provided that the underlying causes of such change may constitute or be taken
into account in determining whether there has been, or would be, a Material
Adverse Effect); (e) changes generally affecting the industries in which the
Company and its subsidiaries operate, provided such changes shall not have
affected the Company in a materially disproportionate manner as compared to
other similarly situated companies; (f) any effect of the announcement of, or
the consummation of the transactions contemplated by, this Agreement and the
other Transaction Documents or the effect of any breach by an Investor of any
provision of this Agreement or another Transaction Document; (g) the receipt of
any notice that the Common Stock may be ineligible to continue listing or
quotation on the Trading Market, other than a final and non-appealable notice
that the listing or quotation of the Common Stock on the Trading Market shall be
terminated on a date certain (unless, prior to such date certain, the Common
Stock is listed or quoted on any other Trading Market); and (h) changes or
effects arising out of any action taken or omitted to be taken at the request or
with the consent of an Investor.

 

“Material Agreements” shall have the meaning assigned to such term in Section
5.19 hereof.

 

“Maximum Draw Down Amount Requested” means, with respect to any single Draw Down
Notice, the lesser of (i) a dollar amount equal to the product of (A) 300% of
the Average Trading Volume and (B) the Reference Price, and (ii) (A) $250,000,
if the Reference Price as of the applicable Draw Down Exercise Date is equal to
or greater than $0.05 and less than $0.06, (B) $300,000, if the Reference Price
as of the applicable Draw Down Exercise Date is equal to or greater than $0.06
and less than $0.07, (C) $350,000, if the Reference Price as of the applicable
Draw Down Exercise Date is equal to or greater than $0.07 and less than $0.08,
(D) $400,000, if the Reference Price as of the applicable Draw Down Exercise
Date is equal to or greater than $0.08 and less than $0.09, (E) $450,000, if the
Reference Price as of the applicable Draw Down Exercise Date is equal to or
greater than $0.09 and less than $0.10, (F) $500,000, if the Reference Price as
of the applicable Draw Down Exercise Date is equal to or greater than $0.10 and
less than $0.15, (G) $750,000, if the Reference Price as of the applicable Draw
Down Exercise Date is equal to or greater than $0.15 and less than $0.20, (H)
$1,000,000, if the Reference Price as of the applicable Draw Down Exercise Date
is equal to or greater than $0.20 and less than $0.25, (I) $1,500,000, if the
Reference Price as of the applicable Draw Down Exercise Date is equal to or
greater than $0.25 and less than $0.30, (J) $2,000,000, if the Reference Price
as of the applicable Draw Down Exercise Date is equal to or greater than $0.30
and less than $0.35, (K) $2,750,000, if the Reference Price as of the applicable
Draw Down Exercise Date is equal to or greater than $0.35 and less than $0.40,
(L) $3,500,000, if the Reference Price as of the applicable Draw Down Exercise
Date is equal to or greater than $0.40 and less than $0.45, (M) $4,250,000, if
the Reference Price as of the applicable Draw Down Exercise Date is equal to or
greater than $0.45 and less than $0.50, and (N) $5,000,000, if the Reference
Price as of the applicable Draw Down Exercise Date is equal to or greater than
$0.50, in all cases which shall be appropriately adjusted for any stock splits,
stock combinations, stock dividends, recapitalizations and other similar
transactions.

 

 
v

--------------------------------------------------------------------------------

 

 

“Money Laundering Laws” shall have the meaning assigned to such term in Section
5.37 hereof.

 

“OFAC” shall have the meaning assigned to such term in Section 5.38 hereof.

 

“Ownership Limitation” shall have the meaning assigned to such term in Section
3.7 hereof.

 

“Person” means any person or entity, whether a natural person, trustee,
corporation, partnership, limited partnership, limited liability company, trust,
unincorporated organization, business association, firm, joint venture,
governmental agency or authority.

 

“Plan” shall have the meaning assigned to such term in Section 5.24 hereof.

 

“Press Release” shall have the meaning assigned to such term in Section 2.3
hereof.

 

“Price Reset Provision” shall have the meaning assigned to such term in Section
6.7(iii) hereof.

 

“Pricing Period” shall mean, with respect to each Draw Down, a period of five
(5) consecutive Trading Days commencing on the Pricing Period start date set
forth in the Draw Down Notice in accordance with Section 3.1 hereof.

 

“Pro Rata Amount” shall mean (i) with respect to Kingsbrook, (A) 1,066,667
Commitment Shares and (B) 40.0% of the Shares to be purchased by the Investors
under this Agreement pursuant to any Draw Down, (ii) with respect to Tech
Opportunities, (A) 800,000 Commitment Shares and (B) 30.0% of the Shares to be
purchased by the Investors under this Agreement pursuant to any Draw Down, and
(iii) with respect to Iroquois, (A) 800,000 Commitment Shares and (B) 30.0% of
the Shares to be purchased by the Investors under this Agreement pursuant to any
Draw Down.

 

 
vi

--------------------------------------------------------------------------------

 

 

“Prospectus” means the prospectus in the form included in the Registration
Statement, as supplemented from time to time by any Prospectus Supplement,
including the documents incorporated by reference therein.

 

“Prospectus Supplement” means any prospectus supplement to the Prospectus filed
with the Commission from time to time pursuant to Rule 424(b) under the
Securities Act, including the documents incorporated by reference therein.

 

“Purchase Price” means a price equal to the product of (i) the lowest daily VWAP
that equals or exceeds the applicable Floor Price during the applicable Pricing
Period and (ii) 0.90, in all cases which shall be appropriately adjusted for any
stock splits, stock combinations, stock dividends, recapitalizations and other
similar transactions.

 

“Reference Period” shall have the meaning assigned to such term in Section
6.7(ii) hereof.

 

“Reference Price” means the lower of (i) the Current Market Price as of the
applicable Draw Down Exercise Date and (ii) the average of the closing trade
prices of a share of Common Stock on the Trading Market for the three (3)
Trading Days immediately preceding the applicable Draw Down Exercise Date, in
all cases which shall be appropriately adjusted for any stock splits, stock
combinations, stock dividends, recapitalizations and other similar transactions

 

“Registrable Securities” shall have the meaning assigned to such term in the
Registration Rights Agreement.

 

“Registration Rights Agreement” shall have the meaning assigned to such term in
the recitals hereof.

 

“Registration Statement” shall have the meaning assigned to such term in the
Registration Rights Agreement.

 

“Regulation D” shall have the meaning assigned to such term in the recitals
hereof.

 

“Required Delivery Date” shall have the meaning assigned to such term in Section
10.1(iv) hereto.

 

“Restricted Period” shall have the meaning assigned to such term in Section
6.13(i) hereof.

 

“Restricted Person” shall have the meaning assigned to such term in Section
6.13(i) hereof.

 

“Restricted Persons” shall have the meaning assigned to such term in Section
6.13(i) hereof.

 

 
vii

--------------------------------------------------------------------------------

 

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect.

 

“Section 4(a)(2)” shall have the meaning assigned to such term in the recitals
hereof.

 

“Securities” means, collectively, the Shares and the Commitment Shares.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.

 

“Settlement Date” shall have the meaning assigned to such term in Section 3.5
hereof.

 

“Shares” shall mean the whole shares of Common Stock that are and/or may be
purchased by the Investors under this Agreement pursuant to one or more Draw
Downs, and not the Commitment Shares.

 

“Short Sales” shall mean “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act.

 

“Significant Subsidiary” means any Subsidiary of the Company that would
constitute a Significant Subsidiary of the Company within the meaning of Rule
1-02 of Regulation S-X of the Commission.

 

“Similar Financing” shall have the meaning assigned to such term in Section
6.7(iii) hereof.

 

“SOXA” shall mean the Sarbanes-Oxley Act of 2002 and the rules and regulations
of the Commission thereunder.

 

“Subsidiary” shall mean any corporation or other entity of which at least a
majority of the securities or other ownership interest having ordinary voting
power for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company and/or any
of its other Subsidiaries.

 

“Total Commitment” shall have the meaning assigned to such term in Section 2.1
hereof.

 

“Trading Day” shall mean a full trading day (beginning at 9:30 a.m., New York
City time, and ending at 4:00 p.m., New York City time) on the Trading Market.

 

“Trading Market” means the OTCQB Marketplace operated by OTC Markets Group Inc.
provided, however, that in the event the Common Stock is ever listed or quoted
on the NASDAQ Global Market, the NASDAQ Global Select Market, the NASDAQ Capital
Market, the New York Stock Exchange, NYSE Arca, the NYSE MKT, the OTC Bulletin
Board, or the OTCQX Marketplace operated by OTC Markets Group Inc., than the
“Trading Market” shall mean such other market or exchange or any successor to
the foregoing on which the Common Stock is then listed or quoted.

 

 
viii

--------------------------------------------------------------------------------

 

 

“Transaction Documents” means, collectively, this Agreement (as qualified by the
Disclosure Schedule) and the exhibits hereto, the Registration Rights Agreement
and each of the other agreements, documents, certificates and instruments
entered into or furnished by the parties hereto in connection with the
transactions contemplated hereby and thereby.

 

“VWAP” means the volume weighted average price (the aggregate sales price of all
trades of Common Stock during a Trading Day divided by the total number of
shares of Common Stock traded during such Trading Day) of the Common Stock
during a Trading Day as reported by Bloomberg L.P. using the AQR function.

 

“Warrant Value” shall mean the fair value of all warrants, options and other
similar rights issued to a third party in connection with an Alternate
Transaction, determined by using a standard Black-Scholes option-pricing model
using a reasonable and appropriate expected volatility percentage based on
applicable volatility data from an investment banking firm of nationally
recognized reputation.

 

 
ix

--------------------------------------------------------------------------------

 

 

EXHIBIT A TO THE
COMMON STOCK PURCHASE AGREEMENT
FORM OF REGISTRATION RIGHTS AGREEMENT

 

 

 

--------------------------------------------------------------------------------

 

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of November 8,
2013, is by and between Liquidmetal Technologies, Inc., a Delaware corporation
(the “Company”), and Kingsbrook Opportunities Master Fund LP, a Cayman Islands
exempted limited partnership (“Kingsbrook”), Tech Opportunities LLC, a Delaware
limited liability company (“Tech Opportunities”), and Iroquois Master Fund Ltd.,
a Cayman Islands exempted company (“Iroquois”). Kingsbrook, Tech Opportunities,
and Iroquois are sometimes hereinafter referred to individually as an “Investor”
and collectively as the “Investors”.

 

RECITALS

 

A.     The Company and each of the Investors have entered into that certain
Common Stock Purchase Agreement, dated as of the date hereof (the “Purchase
Agreement”), pursuant to which the Company may issue and sell to each of the
Investors, from time to time, such Investor’s Pro Rata Amount (as defined in the
Purchase Agreement) of up to $20,000,000 of newly issued shares of the Company’s
common stock, $0.001 par value (“Common Stock”), as provided for therein.

 

B.     Pursuant to the terms of, and in consideration for the Investors entering
into, the Purchase Agreement, the Company has issued to each of the Investors
its Pro Rata Amount of the Commitment Shares (as defined in the Purchase
Agreement) in accordance with the terms of the Purchase Agreement.

 

C.     Pursuant to the terms of, and in consideration for the Investors entering
into, the Purchase Agreement, and to induce the Investors to execute and deliver
the Purchase Agreement, the Company has agreed to provide each of the Investors
with certain registration rights with respect to the Registrable Securities (as
defined herein) as set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein and in the Purchase
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be legally bound
hereby, the Company and each of the Investors hereby agree as follows:

 

1.

Definitions.

 

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:

 

(a)     “Business Day” means any day other than Saturday, Sunday or any other
day on which commercial banks in New York, New York are authorized or required
by law to remain closed.

 

(b)     “Closing Date” shall mean the date of this Agreement.

 

 
A-1

--------------------------------------------------------------------------------

 

 

(c)     “Effective Date” means the date that the applicable Registration
Statement has been declared effective by the SEC.

 

(d)     “Effectiveness Deadline” means (i) with respect to the initial
Registration Statement required to be filed to pursuant to Section 2(a), the
earlier of (A) the 90th calendar day after the earlier of (1) the Filing
Deadline and (2) the date on which such initial Registration Statement is filed
with the SEC and (B) the fifth Business Day after the date the Company is
notified (orally or in writing, whichever is earlier) by the SEC that such
Registration Statement will not be reviewed or will not be subject to further
review and (ii) with respect to any additional Registration Statements that may
be required to be filed by the Company pursuant to this Agreement, the earlier
of (A) the 90th calendar day following the date on which the Company was
required to file such additional Registration Statement and (B) the fifth
Business Day after the date the Company is notified (orally or in writing,
whichever is earlier) by the SEC that such Registration Statement will not be
reviewed or will not be subject to further review.

 

(e)     “Filing Deadline” means (i) with respect to the initial Registration
Statement required to be filed to pursuant to Section 2(a), December 23, 2013
and (ii) with respect to any additional Registration Statements that may be
required to be filed by the Company pursuant to this Agreement, the later of (A)
the 60th calendar day following the sale of substantially all of the Registrable
Securities included in the initial Registration Statement or the most recent
prior additional Registration Statement, as applicable, and (B) six months
following the Effective Date of the initial Registration Statement or the most
recent prior additional Registration Statement, as applicable, or such earlier
date as permitted by the SEC.

 

(f)     “Person” means any person or entity, whether a natural person, trustee,
corporation, partnership, limited partnership, limited liability company, trust,
unincorporated organization, business association, firm, joint venture,
governmental agency or authority.

 

(g)     “register,” “registered,” and “registration” refer to a registration
effected by preparing and filing one or more Registration Statements in
compliance with the Securities Act and pursuant to Rule 415 and the declaration
of effectiveness of such Registration Statement(s) by the SEC.

 

(h)     “Registrable Securities” means all of (i) the Shares, (ii) the
Commitment Shares, and (iii) any capital stock of the Company issued or issuable
with respect to such Shares or Commitment Shares, including, without limitation,
(1) as a result of any stock split, stock dividend, recapitalization, exchange
or similar event or otherwise and (2) shares of capital stock of the Company
into which the shares of Common Stock are converted or exchanged and shares of
capital stock of a successor entity into which the shares of Common Stock are
converted or exchanged; provided, however, that all such securities shall cease
to be Registrable Securities at such time as they have been sold under a
Registration Statement or pursuant to Rule 144 or otherwise or at such time as
they are eligible to be sold pursuant to Rule 144 without restriction
(including, without limitation, volume restrictions and the need for current
public information required by Rule 144(c)(1) or rule 144 (i)(2), if
applicable).

 

(i)     “Registration Statement” means a registration statement or registration
statements of the Company filed under the Securities Act covering the resale by
the Investor of Registrable Securities, as such registration statement or
registration statements may be amended and supplemented from time to time
(including pursuant to Rule 462(b) under the Securities Act), including all
documents filed as part thereof or incorporated by reference therein.

 

 
A-2

--------------------------------------------------------------------------------

 

 

(j)     “Rule 144” means Rule 144 promulgated by the SEC under the Securities
Act, as such rule may be amended from time to time, or any other similar or
successor rule or regulation of the SEC that may at any time permit the Investor
to sell securities of the Company to the public without registration.

 

(k)     “Rule 415” means Rule 415 promulgated by the SEC under the Securities
Act, as such rule may be amended from time to time, or any other similar or
successor rule or regulation of the SEC providing for offering securities on a
delayed or continuous basis.

 

(l)     “SEC” means the U.S. Securities and Exchange Commission or any successor
entity.

 

2.

Registration.

 

(a)     Mandatory Registration. The Company shall prepare and, as soon as
practicable, but in no event later than the Filing Deadline, file with the SEC
an initial Registration Statement on Form S-1, or such other form reasonably
acceptable to the Investor and Legal Counsel, covering the resale by the
Investor of Registrable Securities in an amount equal to 96,555,893 (or, if
less, one-third of the number of outstanding shares of Common Stock held by
non-Affiliates of the Company on the date the Registration Statement is filed
less 5,468,750) shares of Common Stock, 2,666,667 of which shares of Common
Stock shall be registered as Commitment Shares, and the balance of which shares
of Common Stock shall be registered as Shares. Such initial Registration
Statement shall contain (except if otherwise directed by the Investor) the
“Selling Stockholder” and “Plan of Distribution” sections in substantially the
form attached hereto as Exhibit B. The Company shall use its commercially
reasonable efforts to have such initial Registration Statement, and each other
Registration Statement required to be filed pursuant to the terms hereof,
declared effective by the SEC as soon as practicable, but in no event later than
the applicable Effectiveness Deadline.

 

(b)     Legal Counsel. Subject to Section 5 hereof, each of the Investors shall
have the right to select one legal counsel to review and oversee, solely on its
behalf, any registration pursuant to this Section 2 (“Legal Counsel”), which
shall be Greenberg Traurig, LLP or such other counsel as thereafter designated
by the Investors. The Company shall have no obligation to reimburse any Investor
for any legal fees and expenses of the Legal Counsel incurred in connection with
the transactions contemplated hereby.

 

(c)     Prior Registration Rights Agreement. Each of the Investors hereby agrees
that the Company shall have no further obligation to register any Warrant Shares
or other Registrable Securities held by the Investors under the Registration
Rights Agreement, dated as of July 2, 2012, by and among the Company and the
Investors (the “Prior Registration Rights Agreement”). For this purpose,
“Warrant Shares” shall have the meaning in the Prior Registration Rights
Agreement, and solely for purposes of this paragraph and not any other provision
of this Agreement “Registrable Securities” shall have the meaning ascribed
thereto in the Prior Registration Rights Agreement. The Investors hereby waive
and release the Company from any damages, expenses, or other liabilities
resulting from any failure to register any Warrant Shares or other remaining
Registrable Securities under the Prior Registration Rights Agreement. For
purposes of clarification, the Company shall have no further obligations under
the Prior Registration Rights Agreement to the Investors other than the
indemnification obligations under Section 6 thereof with respect to Registrable
Securities that have actually been registered by the Company prior to the date
of this Agreement. Notwithstanding anything to the contrary set forth in this
Agreement or the Purchase Agreement, the Investors acknowledge and agree that
the Company will register on the initial Registration Statement the 5,468,750
Warrant Shares held by Empery Asset Master Ltd. and Hartz Capital Investment,
LLC.

 

 
A-3

--------------------------------------------------------------------------------

 

 

(d)     Sufficient Number of Shares Registered. If at any time all Registrable
Securities are not covered by the initial Registration Statement filed pursuant
to Section 2(a) as a result of Section 2(g) or otherwise, the Company shall file
with the SEC one or more additional Registration Statements (on the short form
available therefor, if applicable), so as to cover all of the Registrable
Securities not covered by such initial Registration Statement, in each case, as
soon as practicable, but in no event later than the applicable Filing Deadline
for such additional Registration Statement(s) (in each case taking into account
any Staff position with respect to date on which the Staff will permit such
additional Registration Statement(s) to be filed with the SEC). The Company
shall use its commercially reasonable efforts to cause such additional
Registration Statement(s) to become effective as soon as practicable following
the filing thereof with the SEC, but in no event later than the applicable
Effectiveness Deadline for such Registration Statement.

 

(e)     Piggyback Registrations. Without limiting any of the Company’s
obligations hereunder or under the Purchase Agreement, if there is not an
effective Registration Statement covering all of the Registrable Securities and
the Company shall determine to prepare and file with the SEC a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities (other than on Form S-4
or Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with the Company’s stock option or other employee benefit plans),
then the Company shall deliver to each of the Investors a written notice of such
determination and, if within five (5) days after the date of the delivery of
such notice, any Investor shall so request in writing, the Company shall include
in such registration statement all or any part of such Registrable Securities
the offer and sale of which any such Investor requests to be registered;
provided, however, the Company shall not be required to register the offer and
sale of any Registrable Securities pursuant to this Section 2(e) that are
eligible for resale pursuant to Rule 144 without restriction (including, without
limitation, volume restrictions) and without the need for current public
information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or
that are the subject of a then-effective Registration Statement.

 

(f)     No Inclusion of Other Securities. In no event shall the Company include
any securities other than Registrable Securities on any Registration Statement
pursuant to Section 2(a) or 2(d) without the prior written consent of each of
the Investors. Subject to the proviso in Section 2(e), in connection with any
offering involving an underwriting of shares, the Company shall not be required
under this Section 2 or otherwise to include the Registrable Securities of any
Investor therein unless such Investor accepts and agrees to the terms of the
underwriting, which shall be reasonable and customary, as agreed upon between
the Company and the underwriters selected by the Company.

 

 
A-4

--------------------------------------------------------------------------------

 

 

(g)     Offering. If the staff of the SEC (the “Staff”) or the SEC seeks to
characterize any offering pursuant to a Registration Statement filed pursuant to
this Agreement as constituting an offering of securities that does not permit
such Registration Statement to become effective and be used for resales by the
Investors on a delayed or continuous basis under Rule 415 at then-prevailing
market prices (and not fixed prices) (or as otherwise may be acceptable to each
of the Investors), or if after the filing of the initial Registration Statement
with the SEC pursuant to Section 2(a), the Company is otherwise required by the
Staff or the SEC to reduce the number of Registrable Securities included in such
initial Registration Statement, then the Company shall reduce the number of
Registrable Securities to be included in such initial Registration Statement
(with the prior consent of each of the Investors and Legal Counsel as to the
specific Registrable Securities to be removed therefrom) until such time as the
Staff and the SEC shall so permit such Registration Statement to become
effective and be used as aforesaid. Notwithstanding anything in this Agreement
to the contrary, if after giving effect to the actions referred to in the
immediately preceding sentence, the Staff or the SEC does not permit such
Registration Statement to become effective and be used for resales by the
Investors on a delayed or continuous basis under Rule 415 at then-prevailing
market prices (and not fixed prices) (or as otherwise may be acceptable to each
of the Investors), the Company shall not request acceleration of the Effective
Date of such Registration Statement, the Company shall promptly (but in no event
later than 48 hours) request the withdrawal of such Registration Statement
pursuant to Rule 477 under the Securities Act, and the Effectiveness Deadline
shall automatically be deemed to have elapsed with respect to such Registration
Statement at such time as the Staff or the SEC has made a final and
non-appealable determination that the SEC will not permit such Registration
Statement to be so utilized (unless prior to such time the Company and the
Investors have received assurances from the Staff or the SEC reasonably
acceptable to Legal Counsel that a new Registration Statement filed by the
Company with the SEC promptly thereafter may be so utilized). In the event of
any reduction in Registrable Securities pursuant to this paragraph, the Company
shall file additional Registration Statements in accordance with Section 2(d)
until such time as all Registrable Securities have been included in Registration
Statements that have been declared effective and the prospectus contained
therein is available for use by the Investors.

 

3.

Related Obligations.

 

The Company shall use its commercially reasonable efforts to effect the
registration of the Registrable Securities in accordance with the intended
method of disposition thereof, and, pursuant thereto, the Company shall have the
following obligations:

 

(a)     The Company shall promptly prepare and file with the SEC a Registration
Statement with respect to the Registrable Securities (but in no event later than
the applicable Filing Deadline) and use its commercially reasonable efforts to
cause such Registration Statement to become effective as soon as practicable
after such filing (but in no event later than the applicable Effectiveness
Deadline). Subject to Allowable Grace Periods, the Company shall keep each
Registration Statement effective (and the prospectus contained therein available
for use) pursuant to Rule 415 for resales by the Investors on a delayed or
continuous basis at then-prevailing market prices (and not fixed prices) at all
times until the earlier of (i) the date as of which each of the Investors may
sell all of the Registrable Securities required to be covered by such
Registration Statement (disregarding any reduction pursuant to Section 2(g))
without restriction pursuant to Rule 144 and without the need for current public
information as required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) and
(ii) the date on which each of the Investors shall have sold all of the
Registrable Securities covered by such Registration Statement (the “Registration
Period”). Notwithstanding anything to the contrary contained in this Agreement
(but subject to the provisions of Section 3(q) hereof), the Company shall ensure
that, when filed and at all times while effective, each Registration Statement
(including, without limitation, all amendments and supplements thereto) and the
prospectus (including, without limitation, all amendments and supplements
thereto) used in connection with such Registration Statement shall not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein (in
the case of prospectuses, in the light of the circumstances in which they were
made) not misleading. The Company shall submit to the SEC, within two (2)
Business Days after the later of the date that (i) the Company learns that no
review of a particular Registration Statement will be made by the Staff or that
the Staff has no further comments on a particular Registration Statement (as the
case may be) and (ii) the approval of Legal Counsel is obtained pursuant to
Section 3(c) (which approval shall be promptly sought), a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than forty-eight (48) hours after the submission of such request.

 

 
A-5

--------------------------------------------------------------------------------

 

 

(b)     Subject to Section 3(q) of this Agreement, the Company shall prepare and
file with the SEC such amendments (including, without limitation, post-effective
amendments) and supplements to each Registration Statement and the prospectus
used in connection with each such Registration Statement, which prospectus is to
be filed pursuant to Rule 424 promulgated under the Securities Act, as may be
necessary to keep each such Registration Statement effective (and the prospectus
contained therein current and available for use) at all times during the
Registration Period for such Registration Statement, and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company required to be covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement. Without limiting the generality of the foregoing, the Company
covenants and agrees that (i) at or before 8:30 a.m. (New York City time) on the
Trading Day immediately following each Effective Date, the Company shall file
with the SEC in accordance with Rule 424(b) under the Securities Act the final
prospectus to be used in connection with sales pursuant to the applicable
Registration Statement, and (ii) if the transactions contemplated by any Draw
Down (as defined in the Purchase Agreement) are material to the Company
(individually or collectively with all other prior Draw Downs, the consummation
of which have not previously been reported in any prospectus supplement filed
with the SEC under Rule 424(b) under the Securities Act or in any periodic
report filed by the Company with the SEC under the Securities Exchange Act of
1934, as amended (the “Exchange Act”)), or if otherwise required under the
Securities Act, in each case as reasonably determined by the Company or any of
the Investors, then, on the first Trading Day immediately following the last
Trading Day of the Pricing Period with respect to such Draw Down, the Company
shall file with the SEC a prospectus supplement pursuant to Rule 424(b) under
the Securities Act with respect to the applicable Draw Down(s), disclosing the
total Draw Down Amount Requested pursuant to such Draw Down(s), the total number
of Shares that have been (or are to be) issued and sold to the Investors
pursuant to such Draw Down(s), the applicable Purchase Price(s) for the Shares
subject to such Draw Down(s) and the net proceeds that are to be (and, if
applicable, have been) received by the Company from the sale of such Shares. To
the extent not previously disclosed in the prospectus or a prospectus
supplement, the Company shall disclose in its Quarterly Reports on Form 10-Q and
in its Annual Reports on Form 10-K the information described in the immediately
preceding sentence relating to any Draw Down(s) consummated during the relevant
fiscal quarter. In the case of amendments and supplements to any Registration
Statement or prospectus which are required to be filed pursuant to this
Agreement (including, without limitation, pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 8-K, Form 10-Q or Form 10-K or any
analogous report under the Exchange Act, the Company shall have incorporated
such report by reference into such Registration Statement and prospectus, if
applicable, or shall file such amendments or supplements to the Registration
Statement or prospectus with the SEC on the same day on which the Exchange Act
report is filed which created the requirement for the Company to amend or
supplement such Registration Statement or prospectus, for the purpose of
including or incorporating such report into such Registration Statement and
prospectus. The Company consents to the use of the prospectus (including,
without limitation, any supplement thereto) included in each Registration
Statement in accordance with the provisions of the Securities Act and with the
securities or “Blue Sky” laws of the jurisdictions in which the Registrable
Securities may be sold by the Investor, in connection with the resale of the
Registrable Securities and for such period of time thereafter as such prospectus
(including, without limitation, any supplement thereto) (or in lieu thereof, the
notice referred to in Rule 173(a) under the Securities Act) is required by the
Securities Act to be delivered in connection with resales of Registrable
Securities.

 

 
A-6

--------------------------------------------------------------------------------

 

 

(c)     The Company shall permit Legal Counsel to review and comment upon (i)
each Registration Statement at least five (5) Business Days prior to its filing
with the SEC (or such shorter period as may be agreed to by the Investor and
Legal Counsel) and (ii) all amendments and supplements to each Registration
Statement (including, without limitation, the prospectus contained therein)
(except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and any similar or successor reports or prospectus
supplements the contents of which is limited to that set forth in such reports)
within a reasonable number of days prior to their filing with the SEC, and (B)
shall give due consideration to all comments of each of the Investors and Legal
Counsel on any such Registration Statement or amendment or supplement thereto or
to any prospectus contained therein. The Company shall promptly furnish to Legal
Counsel, without charge, (i) electronic copies of any correspondence from the
SEC or the Staff to the Company or its representatives relating to each
Registration Statement (which correspondence shall be redacted to exclude any
material, non-public information regarding the Company or any of its
Subsidiaries), (ii) after the same is prepared and filed with the SEC, one (1)
electronic copy of each Registration Statement and any amendment(s) and
supplement(s) thereto, including, without limitation, financial statements and
schedules, all documents incorporated therein by reference, if requested by any
of the Investors, and all exhibits and (iii) upon the effectiveness of each
Registration Statement, one (1) electronic copy of the prospectus included in
such Registration Statement and all amendments and supplements thereto. The
Company shall reasonably cooperate with Legal Counsel in performing the
Company’s obligations pursuant to this Section 3.

 

 
A-7

--------------------------------------------------------------------------------

 

 

(d)     Without limiting any obligation of the Company under the Purchase
Agreement, the Company shall promptly furnish to each of the Investors, without
charge, (i) after the same is prepared and filed with the SEC, at least one (1)
electronic copy of each Registration Statement and any amendment(s) and
supplement(s) thereto, including, without limitation, financial statements and
schedules, all documents incorporated therein by reference, if requested by the
Investor, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of each Registration Statement, one (1) electronic copy of the
prospectus included in such Registration Statement and all amendments and
supplements thereto (or such other number of copies as the Investor may
reasonably request from time to time) and (iii) such other documents, including,
without limitation, copies of any preliminary or final prospectus, as the
Investor may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by the Investors.

 

(e)     The Company shall take such action as is necessary to (i) register and
qualify, unless an exemption from registration and qualification applies, the
resale by the Investors of the Registrable Securities covered by a Registration
Statement under such other securities or “Blue Sky” laws of all applicable
jurisdictions in the United States, (ii) prepare and file in those
jurisdictions, such amendments (including, without limitation, post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period, and
(iv) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, the
Company shall not be required in connection therewith or as a condition thereto
to (x) qualify to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(e), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify Legal
Counsel and each of the Investors of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or “Blue Sky”
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threatening of any proceeding for such purpose.

 

(f)     The Company shall notify Legal Counsel and each of the Investors in
writing of the happening of any event, as promptly as practicable after becoming
aware of such event, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or 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 (provided that in no event shall such
notice contain any material, non-public information regarding the Company or any
of its Subsidiaries), and, subject to Section 3(q), promptly prepare a
supplement or amendment to such Registration Statement and such prospectus
contained therein to correct such untrue statement or omission and deliver one
(1) electronic copy of such supplement or amendment to Legal Counsel and each of
the Investors (or such other number of copies as Legal Counsel or the Investor
may reasonably request). The Company shall also promptly notify Legal Counsel
and each of the Investors in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, when a Registration
Statement or any post-effective amendment has become effective (notification of
such effectiveness shall be delivered to Legal Counsel and each of the Investors
by facsimile or e-mail on the same day of such effectiveness and by overnight
mail), and when the Company receives written notice from the SEC that a
Registration Statement or any post-effective amendment will be reviewed by the
SEC, (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information, (iii) of
the Company’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate and (iv) of the receipt of any
request by the SEC or any other federal or state governmental authority for any
additional information relating to the Registration Statement or any amendment
or supplement thereto or any related prospectus. The Company shall respond as
promptly as practicable to any comments received from the SEC with respect to a
Registration Statement or any amendment thereto. Nothing in this Section 3(f)
shall limit any obligation of the Company under the Purchase Agreement.

 

 
A-8

--------------------------------------------------------------------------------

 

 

(g)     The Company shall (i) use its reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement or the use of any prospectus contained therein, or the
suspension of the qualification, or the loss of an exemption from qualification,
of any of the Registrable Securities for sale in any jurisdiction and, if such
an order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible time and (ii) notify Legal Counsel and each
of the Investors of the issuance of such order and the resolution thereof or its
receipt of actual notice of the initiation or threat of any proceeding for such
purpose.

 

(h)     Upon the written request of any of the Investors, the Company shall make
available for inspection during normal business hours by (i) such Investor, (ii)
Legal Counsel and (iii) one (1) firm of accountants or other agents retained by
such Investor (collectively, the “Inspectors”), all pertinent financial and
other records, and pertinent corporate documents and properties of the Company
(collectively, the “Records”), as shall be reasonably deemed necessary by each
Inspector, and cause the Company’s officers, directors and employees to supply
all information which any Inspector may reasonably request; provided, however,
each Inspector shall agree in writing to hold in strict confidence and not to
make any disclosure (except to the Investor) or use of any Record or other
information which the Company’s board of directors determines in good faith to
be confidential, and of which determination the Inspectors are so notified,
unless (a) subject to Section 3(q) the disclosure of such Records is necessary
to avoid or correct a misstatement or omission in any Registration Statement or
is otherwise required under the Securities Act, (b) the release of such Records
is ordered pursuant to a final, non-appealable subpoena or order from a court or
government body of competent jurisdiction, or (c) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this Agreement or any other Transaction Document (as defined in
the Purchase Agreement). Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement between
the Company and the Investor, if any) shall be deemed to limit any Investor’s
ability to sell Registrable Securities in a manner which is otherwise consistent
with applicable laws and regulations.

 

 
A-9

--------------------------------------------------------------------------------

 

 

(i)     The Company shall hold in confidence and not make any disclosure of
information concerning any of the Investors provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement or is
otherwise required to be disclosed in such Registration Statement pursuant to
the Securities Act, (iii) the release of such information is ordered pursuant to
a subpoena or other final, non-appealable order from a court or governmental
body of competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this Agreement
or any other Transaction Document. The Company agrees that it shall, upon
learning that disclosure of such information concerning any of the Investors is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to the applicable Investor and
allow such Investor, at such Investor’s expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, such information.

 

(j)     Without limiting any obligation of the Company under the Purchase
Agreement, the Company shall use its reasonable best efforts either to (i) cause
all of the Registrable Securities covered by each Registration Statement to be
listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange or
(ii) secure designation and quotation of all of the Registrable Securities
covered by each Registration Statement on another Trading Market, or (iii) if,
despite the Company’s reasonable best efforts to satisfy the preceding clauses
(i) or (ii) the Company is unsuccessful in satisfying the preceding clauses (i)
or (ii), without limiting the generality of the foregoing, to use its reasonable
best efforts to arrange for at least two market makers to register with the
Financial Industry Regulatory Authority (f/k/a the National Association of
Securities Dealers, Inc.) (“FINRA”) as such with respect to such Registrable
Securities. In addition, the Company shall cooperate with each of the Investors
and any Broker-Dealer through which such Investor proposes to sell its
Registrable Securities in effecting a filing with FINRA pursuant to FINRA Rule
5110 as requested by such Investor. The Company shall pay all fees and expenses
in connection with satisfying its obligation under this Section 3(j).

 

(k)     The Company shall cooperate with each of the Investors and, to the
extent applicable, facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts (as the case may be) as such
Investor may reasonably request from time to time and registered in such names
as such Investor may request. Certificates for Registrable Securities free from
all restrictive legends may be transmitted by the transfer agent to such
Investor by crediting an account at DTC as directed by such Investor.

 

(l)     If requested by any of the Investors, the Company shall as soon as
practicable after receipt of notice from such Investor and subject to Section
3(q) hereof, (i) incorporate in a prospectus supplement or post-effective
amendment such information as such Investor reasonably requests to be included
therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of
Registrable Securities being offered or sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities to be
sold in such offering; (ii) make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any Registration Statement or prospectus
contained therein if reasonably requested by such Investor.

 

 
A-10

--------------------------------------------------------------------------------

 

 

(m)     The Company shall use its reasonable best efforts to cause the
Registrable Securities covered by a Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.

 

(n)     The Company shall make generally available to its security holders as
soon as practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with, and in
the manner provided by, the provisions of Rule 158 under the Securities Act)
covering a twelve-month period beginning not later than the first day of the
Company’s fiscal quarter next following the applicable Effective Date of each
Registration Statement.

 

(o)     The Company shall otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the SEC in connection with any
registration hereunder.

 

(p)     Within one (1) Business Day after each Registration Statement which
covers Registrable Securities is declared effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to each of the
Investors) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.

 

(q)     Notwithstanding anything to the contrary herein (but subject to the last
sentence of this Section 3(q)), at any time after the Effective Date of a
particular Registration Statement, the Company may delay the disclosure of
material, non-public information concerning the Company or any of its
Subsidiaries the disclosure of which at the time is not, in the good faith
opinion of the board of directors of the Company, in the best interest of the
Company and, in the opinion of counsel to the Company, otherwise required (a
“Grace Period”), provided that the Company shall promptly, but in no event later
than 9:30 a.m. (New York City time) on the second Trading Day immediately prior
to the commencement of any Grace Period (except for such case where it is
impossible to provide such two-Trading Day advance notice, in which case the
Company shall provide such notice as soon as possible), notify each of the
Investors in writing of the (i) existence of material, non-public information
giving rise to a Grace Period (provided that in each such notice the Company
shall not disclose the content of such material, non-public information to any
of the Investors) and the date on which such Grace Period will begin and
(ii) date on which such Grace Period ends, provided further that (I) no Grace
Period shall exceed 20 consecutive Trading Days and during any 365-day period
all such Grace Periods shall not exceed an aggregate of 60 Trading Days;
provided, further, that the Company shall not register any securities for the
account of itself or any other stockholder during any such Grace Period (other
than pursuant to a registration statement on Form S-4 or S-8), (II) the first
day of any Grace Period must be at least three Trading Days (or such shorter
period as may be agreed by the parties) after the last day of any prior Grace
Period and (III) no Grace Period may exist during (A) the first 10 consecutive
Trading Days after the Effective Date of the particular Registration Statement
or (B) the five-Trading Day period following each Settlement Date (each, an
“Allowable Grace Period”). For purposes of determining the length of a Grace
Period above, such Grace Period shall begin on and include the date set forth in
the notice referred to in clause (i) above, provided that such notice is
received by each of the Investors not later than 9:30 a.m. (New York City time)
on the second Trading Day immediately prior to such commencement date (except
for such case where it is impossible to provide such two-Trading Day advance
notice, in which case the Company shall provide such notice as soon as possible)
and shall end on and include the later of the date each of the Investors
receives the notice referred to in clause (ii) above and the date referred to in
such notice. The provisions of Section 3(l) hereof shall not be applicable
during the period of any Allowable Grace Period. Upon expiration of each Grace
Period, the Company shall again be bound by the first sentence of Section 3(f)
with respect to the information giving rise thereto unless such material,
non-public information is no longer applicable. Notwithstanding anything to the
contrary contained in this Section 3(q), the Company shall cause its transfer
agent to deliver unlegended shares of Common Stock to a transferee of an
Investor in accordance with the terms of the Purchase Agreement in connection
with any sale of Registrable Securities with respect to which such Investor has
entered into a contract for sale, and delivered a copy of the prospectus
included as part of the particular Registration Statement to the extent
applicable, prior to such Investor’s receipt of the notice of a Grace Period and
for which such Investor has not yet settled.

 

 
A-11

--------------------------------------------------------------------------------

 

 

(r)     The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by each of the Investors of its Registrable
Securities pursuant to each Registration Statement.

 

4.

Obligations of the Investors.

 

(a)     At least five Business Days prior to the first anticipated filing date
of each Registration Statement (or such shorter period to which the parties
agree), the Company shall notify each of the Investors in writing of the
information the Company requires from such Investor with respect to such
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of such Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable Securities
held by it, as shall be reasonably required to effect and maintain the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.

 

(b)     Each of the Investors, by its acceptance of the Registrable Securities,
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of each Registration Statement
hereunder, unless such Investor has notified the Company in writing of such
Investor’s election to exclude all of such Investor’s Registrable Securities
from such Registration Statement.

 

(c)     Each of the Investors agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor’s receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(g) or the
first sentence of Section 3(f) or receipt of notice that no supplement or
amendment is required. Notwithstanding anything to the contrary in this Section
4(c), the Company shall cause its transfer agent to deliver unlegended shares of
Common Stock to a transferee of such Investor in accordance with the terms of
the Purchase Agreement in connection with any sale of Registrable Securities
with respect to which such Investor has entered into a contract for sale prior
to such Investor’s receipt of a notice from the Company of the happening of any
event of the kind described in Section 3(g), Section 3(q) or the first sentence
of Section 3(f) and for which such Investor has not yet settled.

 

 
A-12

--------------------------------------------------------------------------------

 

 

(d)     Each of the Investors covenants and agrees that it will comply with the
prospectus delivery and other requirements of the Securities Act as applicable
to it in connection with sales of Registrable Securities pursuant to a
Registration Statement.

 

5.

Expenses of Registration.

 

All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, FINRA filing fees (if any)
and fees and disbursements of counsel for the Company shall be paid by the
Company.

 

6.

Indemnification.

 

(a)     In the event any Registrable Securities are included in any Registration
Statement under this Agreement, to the fullest extent permitted by law, the
Company will, and hereby does, indemnify, hold harmless and defend each of the
Investors, each of such Investor’s directors, officers, shareholders, members,
partners, employees, agents, advisors, representatives (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding the lack of such title or any other title) and each Person, if
any, who controls such Investor within the meaning of the Securities Act or the
Exchange Act and each of the directors, officers, shareholders, members,
partners, employees, agents, advisors, representatives (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding the lack of such title or any other title) of such controlling
Persons (each, an “Investor Party” and collectively, the “Investor Parties”),
against any losses, obligations, claims, damages, liabilities, contingencies,
judgments, fines, penalties, charges, costs (including, without limitation,
court costs, reasonable attorneys’ fees, costs of defense and investigation),
amounts paid in settlement or expenses, joint or several, (collectively,
“Claims”) incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an Investor Party
is or may be a party thereto (“Indemnified Damages”), to which any of them may
become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other “Blue Sky” laws of any jurisdiction in which Registrable Securities are
offered (“Blue Sky Filing”), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any prospectus (as amended or supplemented) or
in any prospectus supplement or the omission or alleged omission to state
therein any material fact necessary to make the statements made therein, in the
light of the circumstances under which the statements therein were made, not
misleading (the matters in the foregoing clauses (i) and (ii) being,
collectively, “Violations”). Subject to Section 6(c), the Company shall
reimburse the Investor Parties, promptly as such expenses are incurred and are
due and payable, for any legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim by an
Investor Party arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company by
such Investor or on behalf of such Investor expressly for use in connection with
the preparation of such Registration Statement, prospectus or prospectus
supplement or any such amendment thereof or supplement thereto; (ii) shall not
be available to any Investor to the extent such Claim is based on a failure of
such Investor to deliver or to cause to be delivered the prospectus (as amended
or supplemented) made available by the Company (to the extent applicable),
including, without limitation, a corrected prospectus, if such prospectus (as
amended or supplemented) or corrected prospectus was timely made available by
the Company pursuant to Section 3(d) and then only if, and to the extent that,
following the receipt of the corrected prospectus no grounds for such Claim
would have existed; and (iii) shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld or delayed. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Investor Party and shall survive the transfer of any
of the Registrable Securities by the Investor pursuant to Section 9.

 

 
A-13

--------------------------------------------------------------------------------

 

 

(b)     In connection with any Registration Statement in which any Investor is
participating, such Investor agrees to severally and not jointly indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act (each, an
“Company Party”), against any Claim or Indemnified Damages to which any of them
may become subject, under the Securities Act, the Exchange Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case, to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
relating to such Investor furnished to the Company by such Investor or on behalf
of such Investor expressly for use in connection with such Registration
Statement; and, subject to Section 6(c) and the below provisos in this Section
6(b), such Investor will reimburse a Company Party any legal or other expenses
reasonably incurred by such Company Party in connection with investigating or
defending any such Claim; provided, however, the indemnity agreement contained
in this Section 6(b) and the agreement with respect to contribution contained in
Section 7 shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld or delayed, provided further that
such Investor shall be liable under this Section 6(b) for only that amount of a
Claim or Indemnified Damages as does not exceed the net proceeds to such
Investor as a result of the applicable sale of Registrable Securities pursuant
to such Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Company
Party and shall survive the transfer of any of the Registrable Securities by
such Investor pursuant to Section 9.

 

 
A-14

--------------------------------------------------------------------------------

 

 

(c)     Promptly after receipt by an Investor Party or Company Party (as the
case may be) under this Section 6 of notice of the commencement of any action or
proceeding (including, without limitation, any governmental action or
proceeding) involving a Claim, such Investor Party or Company Party (as the case
may be) shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Investor Party or the Company Party (as the case may
be); provided, however, an Investor Party or Company Party (as the case may be)
shall have the right to retain its own counsel with the fees and expenses of
such counsel to be paid by the indemnifying party if: (i) the indemnifying party
has agreed in writing to pay such fees and expenses; (ii) the indemnifying party
shall have failed promptly to assume the defense of such Claim and to employ
counsel reasonably satisfactory to such Investor Party or Company Party (as the
case may be) in any such Claim; or (iii) the named parties to any such Claim
(including, without limitation, any impleaded parties) include both such
Investor Party or Company Party (as the case may be) and the indemnifying party,
and such Investor Party or such Company Party (as the case may be) shall have
been advised by counsel that a conflict of interest is likely to exist if the
same counsel were to represent such Investor Party or such Company Party and the
indemnifying party (in which case, if such Investor Party or such Company Party
(as the case may be) notifies the indemnifying party in writing that it elects
to employ separate counsel at the expense of the indemnifying party, then the
indemnifying party shall not have the right to assume the defense thereof on
behalf of the indemnified party and such counsel shall be at the expense of the
indemnifying party, provided further that in the case of clauses (ii) and (iii)
above the indemnifying party shall not be responsible for the reasonable fees
and expenses of more than one (1) separate legal counsel for all Investor
Parties or Company Parties (as the case may be). The Company Party or Investor
Party (as the case may be) shall reasonably cooperate with the indemnifying
party in connection with any negotiation or defense of any such action or Claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Company Party or Investor Party (as the
case may be) which relates to such action or Claim. The indemnifying party shall
keep the Company Party or Investor Party (as the case may be) reasonably
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior written
consent; provided, however, the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the prior written consent of the Company Party or Investor Party (as the case
may be), consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Company Party or Investor Party (as the case
may be) of a release from all liability in respect to such Claim or litigation,
and such settlement shall not include any admission as to fault on the part of
the Company Party. For the avoidance of doubt, the immediately preceding
sentence shall apply to Sections 6(a) and 6(b) hereof. Following indemnification
as provided for hereunder, the indemnifying party shall be subrogated to all
rights of the Company Party or Investor Party (as the case may be) with respect
to all third parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Investor Party or Company Party (as the case may be) under this Section 6,
except to the extent that the indemnifying party is materially and adversely
prejudiced in its ability to defend such action.

 

 
A-15

--------------------------------------------------------------------------------

 

 

(d)     No Person involved in the sale of Registrable Securities who is guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) in connection with such sale shall be entitled to
indemnification from any Person involved in such sale of Registrable Securities
who is not guilty of fraudulent misrepresentation.

 

(e)     The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are incurred;
provided that to the extent a court of competent jurisdiction determines that
any Investor Party was not entitled to such payments, such Investor Party shall
promptly reimburse the Company for all such payments.

 

(f)     The indemnity and contribution agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Company Party or
Investor Party against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

 

7.

Contribution.

 

To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however: (i) no contribution
shall be made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6 of this
Agreement, (ii) no Person involved in the sale of Registrable Securities which
Person is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) in connection with such sale shall be entitled to
contribution from any Person involved in such sale of Registrable Securities who
was not guilty of fraudulent misrepresentation; and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the amount of net
proceeds received by such seller from the applicable sale of such Registrable
Securities pursuant to such Registration Statement. Notwithstanding the
provisions of this Section 7, no Investor shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the net proceeds
actually received by such Investor from the applicable sale of the Registrable
Securities subject to the Claim exceeds the amount of any damages that such
Investor has otherwise been required to pay, or would otherwise be required to
pay under Section 6(b), by reason of such untrue or alleged untrue statement or
omission or alleged omission.

 

 
A-16

--------------------------------------------------------------------------------

 

 

8.

Reports Under the Exchange Act.

 

With a view to making available to the Investor the benefits of Rule 144, the
Company agrees to:

 

(a)     use its reasonable best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144;

 

(b)     use its reasonable best efforts to 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 so long as the Company remains subject to such requirements
(it being understood that nothing herein shall limit any of the Company’s
obligations under the Purchase Agreement) and the filing of such reports and
other documents is required for the applicable provisions of Rule 144;

 

(c)     furnish to each of the Investors so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company, if true, that it has complied with the reporting, submission and
posting requirements of Rule 144 and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company with the SEC if such reports are not publicly
available via EDGAR, and (iii) such other information as may be reasonably
requested to permit such Investor to sell such securities pursuant to Rule 144
without registration; and

 

(d)     take such additional action as is reasonably requested by any of the
Investors to enable such Investor to sell the Registrable Securities pursuant to
Rule 144, including, without limitation, delivering all such legal opinions,
consents, certificates, resolutions and instructions to the Company’s Transfer
Agent as may be reasonably requested from time to time by the Investor and
otherwise fully cooperate with such Investor and such Investor’s broker to
effect such sale of securities pursuant to Rule 144.

 

9.

Assignment of Registration Rights.

 

The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of each of the Investors. None of
the Investors may assign its rights under this Agreement other than to an
affiliate of such Investor.

 

10.

Amendment or Waiver.

 

No provision of this Agreement may be amended or waived by the parties from and
after the date that is one Trading Day immediately preceding the initial filing
of the Registration Statement with the SEC. Subject to the immediately preceding
sentence, no provision of this Agreement may be (i) amended other than by a
written instrument signed by all of the parties hereto or (ii) waived other than
in a written instrument signed by the party against whom enforcement of such
waiver is sought. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.

 

11.

Miscellaneous.

 

(a)     Solely for purposes of this Agreement, a Person is deemed to be a holder
of Registrable Securities whenever such Person owns or is deemed to own of
record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more Persons with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from such record owner of such
Registrable Securities.

 

 
A-17

--------------------------------------------------------------------------------

 

 

(b)     Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement shall be given in
accordance with Section 10.4 of the Purchase Agreement.

 

(c)     Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof. The Company and the Investors acknowledge
and agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that (i) the
Company shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement by any of the Investors and to
enforce specifically the terms and provisions hereof (without the necessity of
showing economic loss and without any bond or other security being required) ,
this being in addition to any other remedy to which the Company may be entitled
by law or equity, and (ii) each of the Investors shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement by the Company and to enforce specifically the terms and provisions
hereof (without the necessity of showing economic loss and without any bond or
other security being required), this being in addition to any other remedy to
which such Investor may be entitled by law or equity.

 

(d)     All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, 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 brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party 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 to such party at the address for such 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.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

 
A-18

--------------------------------------------------------------------------------

 

 

(e)     The Transaction Documents set forth the entire agreement and
understanding of the parties solely with respect to the subject matter thereof
and supersedes all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written, solely with respect
to such matters. There are no promises, undertakings, representations or
warranties by any party relative to subject matter hereof not expressly set
forth in the Transaction Documents. Notwithstanding anything in this Agreement
to the contrary and without implication that the contrary would otherwise be
true, nothing contained in this Agreement shall limit, modify or affect in any
manner whatsoever (i) the conditions precedent to a Draw Down contained in
Article VII of the Purchase Agreement, including, without limitation, the
condition precedent contained in Section 7.2(iii) thereof or (ii) any of the
Company’s obligations under the Purchase Agreement.

 

(f)     Subject to compliance with Section 9, this Agreement shall inure to the
benefit of and be binding upon the permitted successors and assigns of each of
the parties hereto. This Agreement is not for the benefit of, nor may any
provision hereof be enforced by, any Person, other than the parties hereto,
their respective permitted successors and assigns and the Persons referred to in
Sections 6 and 7 hereof.

 

(g)     The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof. Unless the context
clearly indicates otherwise, each pronoun herein shall be deemed to include the
masculine, feminine, neuter, singular and plural forms thereof. The terms
“including,” “includes,” “include” and words of like import shall be construed
broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement
instead of just the provision in which they are found.

 

(h)     This Agreement may be executed in two or more identical counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. If any signature is delivered by facsimile transmission or by an
e-mail which contains a portable document format (.pdf) file of an executed
signature page, such signature page shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such signature page were an original thereof.

 

(i)     Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents as any other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

 

(j)     The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent and no rules of strict
construction will be applied against any party.

 

 
A-19

--------------------------------------------------------------------------------

 

 

(k)     The obligations of each Investor under the Transaction Documents are
several and not joint with the obligations of any other Investor, and no
Investor shall be responsible in any way for the performance of the obligations
of any other Investor under any Transaction Document. Nothing contained herein
or in any other Transaction Document, and no action taken by any Investor
pursuant hereto or thereto, shall be deemed to constitute the Investors as, and
the Company acknowledges that the Investors do not so constitute, a partnership,
an association, a joint venture or any other kind of group or entity, or create
a presumption that the Investors are in any way acting in concert or as a group
or entity with respect to such obligations or the transactions contemplated by
the Transaction Documents or any matters, and the Company acknowledges that the
Investors are not acting in concert or as a group, and the Company shall not
assert any such claim, with respect to such obligations or the transactions
contemplated by the Transaction Documents. The decision of each Investor to
purchase Securities pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Each Investor acknowledges that no
other Investor has acted as agent for such Investor in connection with such
Investor making its investment hereunder and that no other Investor will be
acting as agent of such Investor in connection with monitoring such Investor’s
investment in the Securities or enforcing its rights under the Transaction
Documents. The Company and each Investor confirms that each Investor has
independently participated with the Company in the negotiation of the
transaction contemplated hereby with the advice of its counsel and advisors.
Each Investor shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out
of any other Transaction Documents, and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such purpose.
The use of a single agreement to effectuate the purchase and sale of the
Securities contemplated hereby was solely in the control of the Company, not the
action or decision of any Investor, and was done solely for the convenience of
the Company and not because it was required or requested to do so by any
Investor. It is expressly understood and agreed that each provision contained in
this Agreement and in each other Transaction Document is between the Company and
an Investor, solely, and not between the Company and the Investors collectively
and not between and among the Investors.

 

[signature pages follow]

 

 
A-20

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, each of the Investors and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

 

 

 

COMPANY:

         

LIQUIDMETAL TECHNOLOGIES, INC.

                     By:       Name:       Title:  

 

 
A-21

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, each of the Investors and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

 

 

  INVESTORS:          

KINGSBROOK OPPORTUNITIES MASTER FUND LP:

         

By: KINGSBROOK OPPORTUNITIES GP LLC, its general partner

             By:     Name: Adam J. Chill     Title: Managing Member            
    TECH OPPORTUNITIES LLC:              By:              Name:              
Title:                     IROQUOIS MASTER FUND LTD.:              By:     Name:
Joshua Silverman     Title: Authorized Signatory  

 

 
A-22

--------------------------------------------------------------------------------

 

 

EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT

 

American Stock Transfer and Trust

6201 15th Avenue

Brooklyn, NY 11219

Telephone:            (718) 921-8360

Facsimile:               (718) 765-8719

Attention:              Marienela Patterson

 

Re:     Liquidmetal Technologies, Inc.

 

Ladies and Gentlemen:

 

[We are][I am] counsel to Liquidmetal Technologies, Inc., a Delaware corporation
(the “Company”), and have represented the Company in connection with that
certain Common Stock Purchase Agreement, dated November 8, 2013 (the “Purchase
Agreement”), entered into by and among the Company and the Investors named
therein (the “Holders”) pursuant to which the Company will issue to the Holders
from time to time shares of the Company’s common stock, $0.001 par value per
share (the ”Common Stock”). Pursuant to the Purchase Agreement, the Company also
has entered into a Registration Rights Agreement with the Holders (the
“Registration Rights Agreement”) pursuant to which the Company agreed, among
other things, to register the offer and sale of the Registrable Securities (as
defined in the Registration Rights Agreement) under the Securities Act of 1933,
as amended (the “Securities Act”). In connection with the Company’s obligations
under the Registration Rights Agreement, on ____________ ___, 20__, the Company
filed a Registration Statement on Form S-[3][1] (File No. 333-_____________)
(the “Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the Registrable Securities which names the Holders as
underwriters and selling stockholders thereunder.

 

In connection with the foregoing, based solely upon oral advice from the staff
of the SEC, (i) the Registration Statement was declared effective under the
Securities Act on [ENTER DATE OF EFFECTIVENESS], and (ii) no stop order
suspending its effectiveness has been issued and no proceedings for that purpose
have been instituted or overtly threatened.

 

This letter shall serve as our standing instruction to you that the shares of
Common Stock are freely transferable by the Holders pursuant to the Registration
Statement, provided the Registration Statement remains effective.

 

Very truly yours,

 

[ISSUER’S COUNSEL]

 

By:_____________________

CC:     [LIST NAMES OF HOLDERS]

 

 
A-23

--------------------------------------------------------------------------------

 

 

 

EXHIBIT B

 

SELLING STOCKHOLDERS

 

This prospectus relates to the possible resale from time to time by the selling
stockholders of any or all of the shares of common stock that have been or may
be issued by us to the Investors under the Purchase Agreement. For additional
information regarding the issuance of common stock covered by this prospectus,
see “______________” elsewhere in this prospectus. We are registering the shares
of common stock pursuant to the provisions of the Registration Rights Agreement
we entered into with the Investors on _______, 20__ in order to permit the
selling stockholders to offer the shares for resale from time to time. Except
for (i) [INCLUDE INFORMATION REGARDING JULY 2012 TRANSACTION] and (ii) the
transactions contemplated by the Purchase Agreement and the Registration Rights
Agreement, none of the Investors has had any material relationship with us
within the past three years.

 

The table below presents information regarding the selling stockholders and the
shares of common stock that they may offer from time to time under this
prospectus. This table is prepared based on information supplied to us by the
selling stockholders, and reflects holdings as of _________, 20__. As used in
this prospectus, the term “selling stockholders” means the Investors. The number
of shares in the column “Maximum Number of Shares of Common Stock to be Offered
Pursuant to this Prospectus” represents all of the shares of common stock that
the selling stockholders may offer under this prospectus. The selling
stockholders may sell some, all or none of their shares in this offering. We do
not know how long the selling stockholders will hold the shares before selling
them, and we currently have no agreements, arrangements or understandings with
the selling stockholders regarding the sale of any of the shares.

 

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated
by the SEC under the Exchange Act, and includes shares of common stock with
respect to which the selling stockholders have voting and investment power. The
percentage of shares of common stock beneficially owned by a selling stockholder
prior to the offering shown in the table below is based on an aggregate of
____________ shares of our common stock outstanding on ___________, 20__.
Because the purchase price of the shares of common stock issuable under the
Purchase Agreement is determined on each settlement date, the number of shares
that may actually be sold by the Company under the Purchase Agreement may be
fewer than the number of shares being offered by this prospectus. The fourth
column assumes the sale of all of the shares offered by the selling stockholders
pursuant to this prospectus.

 

 

 

 
A-24

--------------------------------------------------------------------------------

 

 

 

 

 

Name of Selling Stockholder

Number of Shares of Common Stock Owned Prior to Offering

Maximum Number of Shares of Common Stock to be Offered Pursuant to this
Prospectus

Number of Shares of Common Stock Owned After Offering

             

Number(1)

Percent(2)

 

Number(3)

Percent(2)

           

--------------------------------------------------------------------------------

 

*

Represents beneficial ownership of less than one percent of the outstanding
shares of our common stock.

 

(1)

This number represents the shares of common stock we issued to the Investor on
[__________], 2013 as its Pro Rata Amount of Commitment Shares in consideration
for entering into the Purchase Agreement with us. In accordance with Rule
13d-3(d) under the Exchange Act, we have excluded from the number of shares
beneficially owned prior to the offering all of the shares that the Investors
may be required to purchase pursuant to draw downs under the Purchase Agreement,
because the issuance of such shares is solely at our discretion and is subject
to certain conditions, the satisfaction of all of which are outside of the
Investors’ control, including the registration statement of which this
prospectus is a part becoming and remaining effective. Also, under the terms of
the Purchase Agreement, we may not issue shares of our common stock to the
Investors to the extent that the Investors or any of their affiliates would, at
any time, beneficially own more than 9.99% of our outstanding common stock.

 

(2)

Applicable percentage ownership is based on [______________] shares of our
common stock outstanding as of __________, 2013.

 

(3)

Assumes the sale of all shares being offered pursuant to this prospectus.

 

(4)

[INCLUDE BUSINESS ADDRESS OF EACH INVESTOR] We have been advised that none of
the Investors is a member of the Financial Industry Regulatory Authority, or
FINRA, or an independent broker-dealer, and that neither any Investor nor any of
its affiliates is an affiliate or an associated person of any FINRA member or
independent broker-dealer. [INCLUDE INFORMATION ON ULTIMATE BENEFICIAL OWNERSHIP
OF EACH INVESTOR]

 

 
A-25

--------------------------------------------------------------------------------

 

 

PLAN OF DISTRIBUTION

 

We are registering shares of common stock that have been or may be issued by us
from time to time to the Investors under the Purchase Agreement to permit the
resale of these shares of common stock after the issuance thereof by the selling
stockholders from time to time after the date of this prospectus. We will not
receive any of the proceeds from the sale by the selling stockholders of the
shares of common stock. We will bear all fees and expenses incident to our
obligation to register the shares of common stock.

 

The selling stockholders may decide not to sell any shares of common stock. Each
selling stockholder may sell all or a portion of the shares of common stock
beneficially owned by it and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholder and/or the purchasers of the shares of common stock for whom
they may act as agent. In effecting sales, broker-dealers that are engaged by
any of the selling stockholders may arrange for other broker-dealers to
participate. Each of the selling stockholders is an “underwriter” within the
meaning of the Securities Act. Any brokers, dealers or agents who participate in
the distribution of the shares of common stock by the selling stockholders may
also be deemed to be “underwriters,” and any profits on the sale of the shares
of common stock by them and any discounts, commissions or concessions received
by any such brokers, dealers or agents may be deemed to be underwriting
discounts and commissions under the Securities Act. Each of the Investors has
advised us that it will use an unaffiliated broker-dealer to effectuate all
resales of our common stock. To our knowledge, none of the Investors has entered
into any agreement, arrangement or understanding with any particular
broker-dealer or market maker with respect to the shares of common stock offered
hereby, nor do we know the identity of the broker-dealers or market makers that
may participate in the resale of the shares. Because each of the selling
stockholders is, and any other selling stockholder, broker, dealer or agent may
be deemed to be, an “underwriter” within the meaning of the Securities Act, the
selling stockholders will (and any other selling stockholder, broker, dealer or
agent may) be subject to the prospectus delivery requirements of the Securities
Act and may be subject to certain statutory liabilities of the Securities Act
(including, without limitation, Sections 11, 12 and 17 thereof) and Rule 10b-5
under the Exchange Act.

 

The selling stockholders will act independently of us in making decisions with
respect to the timing, manner and size of each sale. The shares of common stock
may be sold in one or more transactions at fixed prices, at prevailing market
prices at the time of the sale, at varying prices determined at the time of
sale, or at negotiated prices. These sales may be effected in transactions,
which may involve crosses or block transactions, pursuant to one or more of the
following methods:

 

 

●

on any national securities exchange or quotation service on which the securities
may be listed or quoted at the time of sale;

 

 

●

in the over-the-counter market in accordance with the rules of NASDAQ;

 

 
A-26

--------------------------------------------------------------------------------

 

 

 

●

in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;

 

 

●

through the writing or settlement of options, whether such options are listed on
an options exchange or otherwise;

 

 

●

ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 

 

●

block trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction;

 

 

●

purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

 

 

●

an exchange distribution in accordance with the rules of the applicable
exchange;

 

 

●

privately negotiated transactions;

 

 

●

broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;

 

 

●

a combination of any such methods of sale; and

 

 

●

any other method permitted pursuant to applicable law.

 

In addition, the selling stockholders may transfer the shares of common stock by
other means not described in this prospectus.

 

Any broker-dealer participating in such transactions as agent may receive
commissions from the selling stockholders (and, if they act as agent for the
purchaser of such shares, from such purchaser). Each of the Investors has
informed us that each such broker-dealer will receive commissions from such
Investor which will not exceed customary brokerage commissions. Broker-dealers
may agree with the selling stockholders to sell a specified number of shares at
a stipulated price per share, and, to the extent such a broker-dealer is unable
to do so acting as agent for the selling stockholders, to purchase as principal
any unsold shares at the price required to fulfill the broker-dealer commitment
to the selling stockholders. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in one or more transactions
(which may involve crosses and block transactions and which may involve sales to
and through other broker-dealers, including transactions of the nature described
above and pursuant to the one or more of the methods described above) at fixed
prices, at prevailing market prices at the time of the sale, at varying prices
determined at the time of sale, or at negotiated prices, and in connection with
such resales may pay to or receive from the purchasers of such shares
commissions computed as described above. To the extent required under the
Securities Act, an amendment to this prospectus or a supplemental prospectus
will be filed, disclosing:

 

 

●

the name of any such broker-dealers;

 

 
A-27

--------------------------------------------------------------------------------

 

 

 

●

the number of shares involved;

 

 

●

the price at which such shares are to be sold;

 

 

●

the commission paid or discounts or concessions allowed to such broker-dealers,
where applicable;

 

 

●

that such broker-dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus, as
supplemented; and

 

 

●

other facts material to the transaction.

 

Each of the Investors has informed us that it does not have any written or oral
agreement or understanding, directly or indirectly, with any person to
distribute the common stock.

 

Under the securities laws of some states, the shares of common stock may be sold
in such states only through registered or licensed brokers or dealers. In
addition, in some states the shares of common stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.

 

There can be no assurance that any of the selling stockholders will sell any or
all of the shares of common stock registered pursuant to the registration
statement, of which this prospectus forms a part.

 

Underwriters and purchasers that are deemed underwriters under the Securities
Act may engage in transactions that stabilize, maintain or otherwise affect the
price of the common stock, including the entry of stabilizing bids or syndicate
covering transactions or the imposition of penalty bids. The selling
stockholders and any other person participating in the sale or distribution of
the shares of common stock will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder (including, without
limitation, Regulation M of the Exchange Act), which may restrict certain
activities of, and limit the timing of purchases and sales of any of the shares
of common stock by, the selling stockholders and any other participating person.
To the extent applicable, Regulation M may also restrict the ability of any
person engaged in the distribution of the shares of common stock to engage in
market-making and certain other activities with respect to the shares of common
stock. In addition, the anti-manipulation rules under the Exchange Act may apply
to sales of the shares of common stock in the market. All of the foregoing may
affect the marketability of the shares of common stock and the ability of any
person or entity to engage in market-making activities with respect to the
shares of common stock.

 

We have agreed to pay all expenses of the registration of the shares of common
stock pursuant to the registration rights agreement, estimated to be $[     ] in
total, including, without limitation, Securities and Exchange Commission filing
fees and expenses of compliance with state securities or “Blue Sky” laws;
provided, however, the Investors will pay all selling commissions, concessions
and discounts, and other amounts payable to underwriters, dealers or agents, if
any, as well as transfer taxes and certain other expenses associated with the
sale of the shares of common stock. We have agreed to indemnify each of the
Investors and certain other persons against certain liabilities in connection
with the offering of shares of common stock offered hereby, including
liabilities arising under the Securities Act or, if such indemnity is
unavailable, to contribute amounts required to be paid in respect of such
liabilities. Each of the Investors has agreed to indemnify us against
liabilities under the Securities Act that may arise from any written information
furnished to us by such Investor specifically for use in this prospectus or, if
such indemnity is unavailable, to contribute amounts required to be paid in
respect of such liabilities.

 

 
A-28

--------------------------------------------------------------------------------

 

 

At any time a particular offer of the shares of common stock is made by a
selling stockholder, a revised prospectus or prospectus supplement, if required,
will be distributed. Such prospectus supplement or post-effective amendment will
be filed with the Securities and Exchange Commission to reflect the disclosure
of any required additional information with respect to the distribution of the
shares of common stock. We may suspend the sale of shares by the selling
stockholders pursuant to this prospectus for certain periods of time for certain
reasons, including if the prospectus is required to be supplemented or amended
to include additional material information.

 

 
A-29

--------------------------------------------------------------------------------

 

 

EXHIBIT B TO THE
COMMON STOCK PURCHASE AGREEMENT
FORM OF DRAW DOWN NOTICE

 

Reference is made to the Common Stock Purchase Agreement dated as of November 8,
2013 (the “Purchase Agreement”) between Liquidmetal Technologies, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
“Company”), and Kingsbrook Opportunities Master Fund LP, a Cayman Islands
exempted limited partnership, Tech Opportunities LLC, a Delaware limited
liability company,and Iroquois Master Fund Ltd., Cayman Islands exempted company
(collectively, the “Investors”). Capitalized terms used and not otherwise
defined herein shall have the meanings given such terms in the Purchase
Agreement. In accordance with and pursuant to Section 3.1 of the Purchase
Agreement, the Company hereby issues this Draw Down Notice to exercise a Draw
Down for the Draw Down Amount Requested indicated below.

 

Draw Down Amount Requested:

 

Pricing Period start date:

 

Pricing Period end date:

 

Floor Price (calculated per Floor Price definition):

 

Settlement Date:

 

 

On behalf of the Company, the undersigned hereby certifies to each of the
Investors that (i) the above Draw Down Amount Requested does not exceed the
Maximum Draw Down Amount Requested, (ii) the sale of Shares pursuant to this
Draw Down Notice shall not cause the Company to sell or the Investors to
purchase shares of Common Stock which, when aggregated with all purchases made
by the Investors pursuant to all prior Draw Down Notices issued under the
Purchase Agreement, would exceed the Aggregate Limit, (iii) to the Company’s
Knowledge, the sale of Shares pursuant to this Draw Down Notice shall not cause
the Company to sell or the Investors to purchase shares of Common Stock which
would cause the aggregate number of shares of Common Stock then beneficially
owned (as calculated pursuant to Section 13(d) of the Exchange Act and Rule
13d-3 promulgated thereunder) collectively by all of the Investors and their
respective Affiliates to exceed the Ownership Limitation, (iv) as of the date
hereof, the Company does not possess any material non-public information, and
(v) the Company has performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Purchase Agreement
and the Registration Rights Agreement to be performed, satisfied or complied
with by the Company at or prior to the date hereof and shall perform, satisfy
and comply in all material respects with all covenants, agreements and
conditions required by the Purchase Agreement and the Registration Rights
Agreement to be performed, satisfied or complied with by the Company at or prior
to the applicable settlement date, including without limitation, delivery of all
certificates and bring down opinions required to be delivered by the Purchase
Agreement.

 

         Dated: By:     Name:        Title:               Address:    

Facsimile No.

 

 

 
B-1

--------------------------------------------------------------------------------

 

 

 

EXHIBIT C TO THE
COMMON STOCK PURCHASE AGREEMENT
CERTiFICATE OF THE COMPANY

 

CLOSING CERTIFICATE

 

November 8, 2013

 

The undersigned, the Chief Financial Officer of Liquidmetal Technologies, Inc.,
a corporation organized and existing under the laws of the State of Delaware
(the “Company”), delivers this certificate in connection with the Common Stock
Purchase Agreement, dated as of November 8, 2013 (the “Agreement”), by and among
the Company and Kingsbrook Opportunities Master Fund LP, a Cayman Islands
exempted limited partnership (“Kingsbrook”), Tech Opportunities LLC, a Delaware
limited liability company (“Tech Opportunities”), and Iroquois Master Fund Ltd.,
a Cayman Islands exempted company (“Iroquois”) (collectively, the “Investors”),
and hereby certifies on the date hereof that (capitalized terms used herein
without definition have the meanings assigned to them in the Agreement):

 

1.     Attached hereto as Exhibit A is a true, complete and correct copy of the
Certificate of Incorporation of the Company as filed with the Secretary of State
of the State of Delaware. The Certificate of Incorporation of the Company has
not been further amended or restated, and no document with respect to any
amendment to the Certificate of Incorporation of the Company has been filed in
the office of the Secretary of State of the State of Delaware since the date
shown on the face of the state certification relating to the Company’s
Certificate of Incorporation, which is in full force and effect on the date
hereof, and no action has been taken by the Company in contemplation of any such
amendment or the dissolution, merger or consolidation of the Company.

 

2.     Attached hereto as Exhibit B is a true and complete copy of the Bylaws of
the Company, as amended and restated through, and as in full force and effect
on, the date hereof, and no proposal for any amendment, repeal or other
modification to the Bylaws of the Company has been taken or is currently pending
before the Board of Directors or stockholders of the Company.

 

3.     The Board of Directors of the Company has approved the transactions
contemplated by the Transaction Documents; said approval has not been amended,
rescinded or modified and remains in full force and effect as of the date
hereof.

 

4.     Each person who, as an officer of the Company, or as attorney-in-fact of
an officer of the Company, signed the Transaction Documents to which the Company
is a party, was duly elected, qualified and acting as such officer or duly
appointed and acting as such attorney-in-fact, and the signature of each such
person appearing on any such document is his genuine signature.

 

 
C-1

--------------------------------------------------------------------------------

 

 

 

IN WITNESS WHEREOF, I have signed my name as of the date first above written.

 

 

     

Name: Tony Chung

   

Title: Chief Financial Officer

 

 

 
C-2

--------------------------------------------------------------------------------

 

 

EXHIBIT D TO THE
COMMON STOCK PURCHASE AGREEMENT
COMPLIANCE CERTIFICATE

 

In connection with the issuance of shares of common stock of Liquidmetal
Technologies, Inc., a corporation organized and existing under the laws of the
State of Delaware (the “Company”), pursuant to the Draw Down Notice, dated
[_____________], delivered by the Company to each of Kingsbrook Opportunities
Master Fund LP, a Cayman Islands exempted limited partnership, Tech
Opportunities LLC, a Delaware limited liability company, and Iroquois Master
Fund Ltd., a Cayman Islands exempted company (collectively, the “Investors”)
pursuant to Article III of the Common Stock Purchase Agreement, dated November
8, 2013, by and among the Company and the Investors (the “Agreement”), the
undersigned hereby certifies to each of the Investors as follows:

 

1.     The undersigned is the duly appointed [_____________] of the Company.

 

2.     Except as set forth in the attached Disclosure Schedule, the
representations and warranties of the Company set forth in Article V of the
Agreement (i) that are not qualified by “materiality” or “Material Adverse
Effect” are true and correct in all material respects as of [insert Draw Down
Exercise Date] and as of the date hereof with the same force and effect as if
made on such dates, except to the extent such representations and warranties are
as of another date, in which case, such representations and warranties are true
and correct in all material respects as of such other date and (ii) that are
qualified by “materiality” or “Material Adverse Effect” are true and correct as
of [insert Draw Down Exercise Date] and as of the date hereof with the same
force and effect as if made on such dates, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties are true and correct as of such other date.

 

3.     The Company has performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the Agreement
and the Registration Rights Agreement to be performed, satisfied or complied
with by the Company at or prior to [insert Draw Down Exercise Date] and the date
hereof.

 

4.     The Shares issuable on the date hereof in respect of the Draw Down Notice
referenced above shall be delivered electronically by crediting each Investor’s
or its designees’ account at DTC through its Deposit/Withdrawal at Custodian
(DWAC) system, and shall be freely tradable and transferable and without
restriction on resale. To the extent requested by any Investor pursuant to
Section 10.1(iv) under the Agreement, the legend set forth in Section 10.1(iii)
of the Agreement has been removed from the certificate representing such
Investor’s Pro Rata Amount of the Commitment Shares in accordance with Section
10.1(iv) of the Agreement.

 

5.     As of [insert Draw Down Exercise Date] and the date hereof, the Company
did not and does not possess any material non-public information.

 

Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to them in the Agreement.

 

The undersigned has executed this Certificate this [___] day of [___________],
20[__].

 

 
D-1

--------------------------------------------------------------------------------

 

 

  By:             Name:                Title:    

 

 
D-2

--------------------------------------------------------------------------------

 

 

DISCLOSURE SCHEDULE
RELATING TO THE COMMON STOCK
PURCHASE AGREEMENT, DATED AS OF NOVEMBER 8, 2013,
AMONG LIQUIDMETAL TECHNOLOGIES, INC.

AND THE INVESTORS NAMED THEREIN

 

This disclosure schedule is made and given pursuant to Article V of the Common
Stock Purchase Agreement, dated as of November 8, 2013 (the “Agreement”), by and
among Liquidmetal Technologies, Inc., a Delaware corporation (the “Company”),
and Kingsbrook Opportunities Master Fund LP, a Cayman Islands exempted limited
partnership, Tech Opportunities LLC, a Delaware limited liability company, and
Iroquois Master Fund Ltd., a Cayman Islands exempted company (collectively, the
“Investors”). Unless the context otherwise requires, all capitalized terms are
used herein as defined in the Agreement. The numbers below correspond to the
section numbers of representations and warranties in the Agreement most directly
modified by the below exceptions. The information and disclosure contained in
any Schedule of the Disclosure Schedule shall be deemed to be disclosed and
incorporated by reference in any other Schedule of the Disclosure Schedule as
though fully set forth in such Schedule for which applicability of such
information and disclosure is readily apparent on its face.

 

Section 5.3

 

Pursuant to a Registration Rights Agreement, dated July 2, 2012 (the “Prior
Registration Rights Agreement”), the Company will include in the initial
Registration Statement to be filed under the Registration Rights Agreement
attached hereto an aggregate of 5,468,750 Warrant Shares (as defined in the
Prior Registration Rights Agreement) held by Empery Asset Master Ltd. and Hartz
Capital Investment, LLC.

 

Section 5.13

 

In November 2013, the Company and Visser Precision Cast, LLC entered into
arbitration proceedings with the Judicial Arbiter Group in Denver, CO. Both
parties have filed claims alleging breaches of various obligations under the
Visser MTA Agreement entered into on June 1, 2012. In general, the Company has
filed claims for damages from VPC for fraudulently inducing the Company to enter
into the Visser Master Transaction Agreement (“MTA Agreement”) and harm
inflicted on the Company for its failure to perform under the manufacturing
component of the Visser MTA Agreement. In addition, the Company is seeking
reformation and/or termination of parts of the Visser MTA Agreement in order to
free the Company from the exclusive manufacturing arrangement with VPC and allow
the Company to seek other manufacturing partners. Visser has filed claims for
damages against the Company alleging several violations of the Visser MTA
Agreement including fraudulent contract inducement and securities fraud through
alleged misrepresentations regarding the future capitalization of the Company,
breach of several components of the Visser MTA Agreement through alleged
inappropriate sharing of intellectual property with other business partners, as
well as the lack of a qualified sales force in marketing the Company’s
technology and related production efforts of Visser. Visser also requests
equitable relief in the form of orders increasing its stock ownership in the
Company and requiring the Company to honor its asserted rights of first refusal
with respect to the Company’s technology.

 

 
D-3

--------------------------------------------------------------------------------

 

 

FORM OF OPINION OF OUTSIDE COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 7.1(iv) OF THE COMMON STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 8, 2013 AMONG LIQUIDMETAL TECHNOLOGIES, INC. AND THE
INVESTORS NAMED THEREIN

 

[Company Counsel’s Letterhead]

 

1.

The Company has been duly incorporated and is validly existing and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to own its properties and to conduct its business as described in the
Registration Statement and the Prospectus.

 

2.

The Company has the requisite corporate power and authority to execute, deliver
and perform its obligations under the Transaction Documents to which it is a
party and to issue the Securities in accordance with the terms thereof. The
execution and delivery by the Company of the Transaction Documents to which it
is a party, and the consummation by the Company of the transactions contemplated
thereby (including, without limitation, the issuance of the Securities) have
been duly and validly authorized by all necessary corporate action and, except
for any consent or authorization of the Company’s Board of Directors or a
committee thereof in connection with the delivery of a Draw Down Notice to the
Investor, no further consent or authorization of the Company, its Board of
Directors or its stockholders is required.

 

3.

Each of the Transaction Documents to which the Company is a party has been duly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).

 

4.

The execution, delivery and performance by the Company of the Transaction
Documents to which it is a party and the consummation by the Company of the
transactions contemplated thereby (including, without limitation, the issuance
of the Securities) do not and will not: (i) violate the Company’s certificate of
incorporation or bylaws (the “Governing Documents”); (ii) violate the general
corporation law of the State of Delaware, or any federal statute, rule or
regulation applicable to the Company which , in our experience is normally
applicable to transactions of the type contemplated by the Transaction Documents
without having made any special investigation as to the applicability or any
other specific statute, law, rule, or regulation; (iii) require any consents,
approvals, or authorizations to be obtained by the Company, or, except for the
Company’s filing with the Commission of a Form D pursuant to Regulation D
promulgated by the Commission pursuant to the Securities Act, any registrations,
declarations or filings to be made by the Company, in each case, under the
general corporation law of the State of Delaware or any federal statute, rule or
regulation applicable to the Company which , in our experience is normally
applicable to transactions of the type contemplated by the Transaction Documents
without having made any special investigation as to the applicability or any
other specific statute, law, rule, or regulation; (iv) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any Recently Filed Agreement or, to
our knowledge without any independent investigation, any material agreement,
mortgage, deed of trust, indenture, note, bond, license, lease agreement,
instrument or obligation to which the Company is a party or is bound that has
been filed as an exhibit to the 2012 Form 10-K or any other Commission Document
filed after the 2012 Form 10-K; (v) create or impose a lien, charge or
encumbrance on any property of the Company under any Recently Filed Agreement
or, to our knowledge without independent investigation, any agreement or
commitment to which the Company is a party or is bound that has been filed as an
exhibit to the 2012 Form 10-K or any other Commission Document filed after the
2012 Form 10-K; or (vi) to our knowledge, result in a violation of any federal
or state order, judgment or decree applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries are bound or affected. The term “Recently Filed Agreement” means
the Change of Control Agreement filed as Exhibit 10.1 to the Form 8-K filed by
the Company on September 17, 2013.

 

 
D-4

--------------------------------------------------------------------------------

 

 

5.

Assuming the accuracy of the representations and warranties made by you in the
Purchase Agreement and your compliance with the covenants made by you in the
Purchase Agreement and the Registration Rights Agreement, the offering, sale and
issuance of the Securities in accordance with the Transaction Documents is
exempt from the registration requirements of the Securities Act of 1933, as
amended (the “Securities Act”).

 

6.

When issued in accordance with the Purchase Agreement, the Commitment Shares
will be duly authorized and validly issued, fully paid and nonassessable, free
and clear of all liens, charges, taxes, security interests, encumbrances, rights
of first refusal, preemptive or similar rights and other encumbrances under the
Company’s Governing Documents, the Delaware General Corporation Law, any
Recently Filed Agreement, or, to our knowledge without independent
investigation, any material agreement, mortgage, deed of trust, indenture, note,
bond, license, lease agreement, instrument or obligation to which the Company is
a party or is bound that has been filed as an exhibit to the 2012 Form 10-K or
any other Commission Document filed after the 2012 Form 10-K. When issued and
paid for in accordance with the Purchase Agreement, the Shares will be duly
authorized and validly issued, fully paid and nonassessable, free and clear of
all liens, charges, taxes, security interests, encumbrances, rights of first
refusal, preemptive or similar rights and other encumbrances under the Company’s
Governing Documents, the Delaware General Corporation Law, any Recently Filed
Agreement, or, to our knowledge without any independent investigation, any
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company is a party or is
bound that has been filed as an exhibit to the 2012 Form 10-K or any other
Commission Document filed after the 2012 Form 10-K. To our knowledge, the
execution and delivery of the Registration Rights Agreement do not, and the
performance by the Company of its obligations thereunder shall not, give rise to
any rights of any other person for the registration under the Securities Act of
any shares of Common Stock or other securities of the Company which have not
been waived.

 

 
D-5

--------------------------------------------------------------------------------

 

 

7.

To our knowledge, there is no action, suit, claim, investigation or proceeding
pending or threatened against the Company or any Subsidiary which questions the
validity of any of the Transaction Documents or the transactions contemplated
thereby or any action taken or to be taken pursuant thereto. Except as set forth
in the Commission Documents or the Disclosure Schedule, to our knowledge, there
is no action, suit, claim, investigation or proceeding pending or threatened
against or involving the Company, any Subsidiary or any of their respective
properties or assets.

 

8.

The Company is not an “investment company” or any entity controlled by an
“investment company,” as such term is defined in the Investment Company Act of
1940, as amended.

 

 
D-6

--------------------------------------------------------------------------------

 

 

FORM OF OPINION OF OUTSIDE COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 7.2(xv) OF THE COMMON STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 8, 2013 AMONG LIQUIDMETAL TECHNOLOGIES, INC. AND THE
INVESTORS NAMED THEREIN

 

[Company Counsel’s Letterhead]

 

1.

The Registration Statement has become effective under the Securities Act. With
your consent, based solely on a telephonic confirmation by a member of the Staff
of the Commission on [__________], 2013, no stop order suspending the
effectiveness of the Registration Statement has been issued under the Securities
Act and no proceedings therefor have been initiated or, to our knowledge
threatened, by the Commission. Any required filing of the Prospectus and a
Prospectus Supplement pursuant to Rule 424 under the Securities Act has been
made in accordance with Rule 424 under the Securities Act.

 

2.

The Registration Statement, as of the date it became effective, and the
Prospectus and each Prospectus Supplement, as of its date, complied as to form
in all material respects with the requirements for registration statements on
Form S-[3][1] under the Act; it being understood, however, that we express no
opinion with respect to Regulation S-T or the financial statements, the notes
thereto, and schedules or other financial and statistical data included in or
incorporated by reference in or omitted from the Registration Statement, the
Prospectus or any Prospectus Supplement. For purposes of this paragraph, we have
assumed that the statements made in the Registration Statement, the Prospectus
and each Prospectus Supplement are correct and complete.

 

[The following to be set forth in a separate letter from Company Counsel]

 

 

 

We have acted as counsel to Liquidmetal Technologies, Inc., a Delaware
corporation (the “Company”) in connection with the issuance and sale of up to
$20.0 million of shares of the Company’s common stock, par value $0.001 per
share (the “Common Stock”), pursuant to the Common Stock Purchase Agreement,
dated as of November 8, 2013, among you, the Company and certain other investors
named therein (the “Purchase Agreement”).

 

We refer to (i) the Registration Statement on Form S-3 (Registration No. 333-[
]) filed by the Company with the Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the “Securities
Act”), including the exhibits thereto, the documents incorporated by reference
therein under the rules and regulations of the Commission and the documents
otherwise deemed to be part thereof or included therein by the rules and
regulations of the Commission, as the “Registration Statement” and (ii) the
final prospectus, dated [ ], including the documents incorporated by reference
therein under the rules and regulations of the Commission, in the form filed by
the Company with the Commission pursuant to Rule 424(b) of the Securities Act,
as the “Prospectus.”

 

 
D-7

--------------------------------------------------------------------------------

 

 

The purpose of our professional engagement was not to establish or confirm
factual matters or financial or quantitative information set forth in the
Registration Statement and Prospectus. Moreover, many of the determinations
required to be made in the preparation of the Registration Statement and the
Prospectus involve matters of a non-legal nature. Therefore, we are not passing
upon, and do not take any responsibility for, the accuracy, completeness, or
fairness of the statements contained in, or incorporated by reference in, the
Registration Statement, the Prospectus, or any exhibits to the Registration
Statement or Prospectus and have not made an independent check or verification
thereof. As counsel to the Company, we have, however, reviewed the Registration
Statement and the Prospectus and participated in conferences with officers and
other representatives of the Company and representatives of the Company’s
independent registered public accounting firm regarding the contents of the
Registration Statement and the Prospectus and related matters.

 

For purposes of this letter, the phrases “our attention” and “caused us to
believe” refer to the actual knowledge of the individual lawyers at this firm
who have participated directly and substantively in the specific transaction to
which this letter relates.

 

Subject to the foregoing and solely on the basis of the information we gained in
the course of performing the services referred to above, nothing came to our
attention that caused us to believe that (i) the Registration Statement at the
time the Registration Statement became effective contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or (ii) the
Prospectus as of its date and as of the date hereof contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that in each case we
express no belief with respect to any financial statements or related notes,
financial schedules or other financial, statistical or accounting data or
information, or assessments of or reports on the effectiveness of internal
controls over financial reporting, or exhibits contained or incorporated by
reference in or omitted from the Registration Statement or the Prospectus.

 

This letter is furnished solely to you and for your benefit in your capacity as
an underwriter of Common Stock pursuant to the Purchase Agreement and may not be
relied upon by you for any other purpose. This letter may not be assigned,
quoted, furnished or circulated to, or relied upon for any purpose by, any other
person or entity (including any person or entity purchasing any of the Common
Stock from you) or filed with or furnished to any governmental agency without
our prior written consent, which may be granted or withheld in our sole
discretion.

 

 
D-8

--------------------------------------------------------------------------------

 

 

FORM OF OPINION “BRING DOWN” OF OUTSIDE COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 7.2(xv) OF THE COMMON STOCK PURCHASE AGREEMENT DATED AS OF NOVEMBER
[____], 2013 AMONG LIQUIDMETAL TECHNOLOGIES, INC. AND THE INVESTORS NAMED
THEREIN

 

[Company Counsel’s Letterhead]

 

1.

The Registration Statement has become effective under the Securities Act. With
your consent, based solely on a telephonic confirmation by a member of the Staff
of the Commission on [_____] [___], 20[_], no stop order suspending the
effectiveness of the Registration Statement has been issued under the Securities
Act and no proceedings therefor have been initiated or, to our knowledge
threatened, by the Commission. Any required filing of the Prospectus and a
Prospectus Supplement pursuant to Rule 424 under the Securities Act has been
made in accordance with Rule 424 under the Securities Act.

 

2.

Based on our inquiry of the Company’s [______________], no facts have come to
our attention that cause us to believe that any of the opinions expressed in our
opinion letter to you dated [_______], 2013 are not true and correct as of the
date hereof.

 

3.

Based on our inquiry of the Company’s [______________], no facts have come to
our attention that cause us to believe that the opinion expressed in paragraph 2
of our opinion letter to you dated [_______], 20[__] is not true and correct as
of the date hereof; provided that the statements shall be deemed to relate to
the Registration Statement and Prospectus as amended or supplements as of the
date hereof.

 

[The following to be set forth in a separate letter from Company Counsel]

 

 

 

We have acted as counsel to Liquidmetal Technologies, Inc., a Delaware
corporation (the “Company”) in connection with the issuance and sale of up to
$20.0 million of shares of the Company’s common stock, par value $0.001 per
share (the “Common Stock”), pursuant to the Common Stock Purchase Agreement,
dated as of November [ ], 2013, among you, the Company and certain other
investors named therein (the “Purchase Agreement”).

 

We refer to (i) the Registration Statement on Form S-3 (Registration No. 333-[
]) filed by the Company with the Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the “Securities
Act”), including the exhibits thereto, the documents incorporated by reference
therein under the rules and regulations of the Commission and the documents
otherwise deemed to be part thereof or included therein by the rules and
regulations of the Commission, as the “Registration Statement” and (ii) the
final prospectus, dated [ ], including the documents incorporated by reference
therein under the rules and regulations of the Commission, in the form filed by
the Company with the Commission pursuant to Rule 424(b) of the Securities Act,
as the “Prospectus.”

 

 
D-9

--------------------------------------------------------------------------------

 

 

The purpose of our professional engagement was not to establish or confirm
factual matters or financial or quantitative information set forth in the
Registration Statement and Prospectus. Moreover, many of the determinations
required to be made in the preparation of the Registration Statement and the
Prospectus involve matters of a non-legal nature. Therefore, we are not passing
upon, and do not take any responsibility for, the accuracy, completeness, or
fairness of the statements contained in, or incorporated by reference in, the
Registration Statement, the Prospectus, or any exhibits to the Registration
Statement or Prospectus and have not made an independent check or verification
thereof. As counsel to the Company, we have, however, reviewed the Registration
Statement and the Prospectus and participated in conferences with officers and
other representatives of the Company and representatives of the Company’s
independent registered public accounting firm regarding the contents of the
Registration Statement and the Prospectus and related matters.

 

For purposes of this letter, the phrases “our attention” and “caused us to
believe” refer to the actual knowledge of the individual lawyers at this firm
who have participated directly and substantively in the specific transaction to
which this letter relates.

 

Subject to the foregoing and solely on the basis of the information we gained in
the course of performing the services referred to above, nothing came to our
attention that caused us to believe that (i) the Registration Statement at the
time the Registration Statement became effective contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or (ii) the
Prospectus as of its date and as of the date hereof contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that in each case we
express no belief with respect to any financial statements or related notes,
financial schedules or other financial, statistical or accounting data or
information, or assessments of or reports on the effectiveness of internal
controls over financial reporting, or exhibits contained or incorporated by
reference in or omitted from the Registration Statement or the Prospectus.

 

This letter is furnished solely to you and for your benefit in your capacity as
an underwriter of Common Stock pursuant to the Purchase Agreement and may not be
relied upon by you for any other purpose. This letter may not be assigned,
quoted, furnished or circulated to, or relied upon for any purpose by, any other
person or entity (including any person or entity purchasing any of the Common
Stock from you) or filed with or furnished to any governmental agency without
our prior written consent, which may be granted or withheld in our sole
discretion.

 

D-10