Document:

Unassociated Document

 

COMMON STOCK PURCHASE AGREEMENT

 

COMMON STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of March 28, 2011, by and among Patient Safety Technologies, Inc., a Delaware corporation (the “Company”), and each buyer identified on the signature pages hereto (each, including its successors and assigns, a “Buyer” and collectively, the “Buyers”).

 

WHEREAS:

 

A.           The Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Shares Act of 1933, as amended (the “1933 Act”).

 

B.           The Buyers wish to subscribe for, and the Company wishes to issue to the Buyers, certain shares of the Company’s authorized but unissued common stock, par value $0.33 per share (the “Common Stock”).

 

C.           Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering an Amended and Restated Registration Rights Agreement, in the form attached hereto as Exhibit A (the “Registration Rights Agreement”), pursuant to which the Company will agree to provide certain registration rights with respect to the Registrable Shares (as defined in the Registration Rights Agreement) under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws.

 

NOW, THEREFORE, in consideration for the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Company and each Buyer hereby agree as follows:

 

ARTICLE I

 

PURCHASE AND SALE OF COMMON SHARES

 

1.1           Purchase of Shares.     Subject to the terms and conditions of this Agreement, each Buyer agrees to purchase at the Closing and the Company agrees to sell and issue to each Buyer, severally and not jointly, at the Closing that number of shares of Common Stock, set forth opposite each Buyer’s name on Schedule A hereto, at a purchase price of $0.75 per share (the aggregate purchase price for a particular Buyer being the “Purchase Price”).  The shares of Common Stock issued to the Buyers pursuant to this Agreement shall be referred to in this Agreement as the “Shares.”  There is no minimum number of Shares that the Company must sell in order to sell Shares to any one or more Buyer, nor any maximum number that the Company may issue to any one or more Buyer.

 

1.2           Closing; Delivery.

 

(a)           The purchase and sale of the Shares shall take place remotely via the exchange of documents and signatures, at 10:00 a.m., Los Angeles time, on or about March 29 2011, or at such other time and place as the Company and each Buyer mutually agree upon, orally or in writing (which time and place are designated as the “Closing”).

 

  

  

  

 

(b)           At the Closing, (i) the Buyer shall pay its Purchase Price to the Company for the Shares to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Company’s written wire instructions, and (ii) upon confirmation of receipt of such wire, unless otherwise requested by the Buyer and agreed to by the Company, the Shares purchased by the Buyer will be (A) delivered by electronic book-entry at The Depository Trust Company (“DTC”), registered in the Buyer’s name and address, and pursuant to the Company’s irrevocable delivery instructions to the transfer agent, as set forth on the Buyer’s signature page hereto and (B) released by the Company’s transfer agent (the “Transfer Agent”), to the Buyer. After the execution of this Agreement by the Buyer, the Buyer shall direct the broker-dealer at which the account or accounts to be credited with the Shares are maintained to set up a deposit/withdrawal at custodian instructing the Transfer Agent to credit such account or accounts with the Shares. The Shares shall bear a restrictive securities legend as provided herein.

 

(c)           The Company may reject any subscription for any reason (regardless of whether any check or wire transfer relating to such subscription is deposited in a bank or trust account), and will promptly return the funds delivered herewith, without interest, and without deduction of any expenses, in the event this subscription is rejected.  The Company will send to the Buyer a copy of this Agreement, countersigned, if the Buyer’s subscription is accepted.  The Company has no obligation to issue any of the Shares to any person who is a resident of a jurisdiction in which the issuance of the Shares would constitute a violation of the securities laws.  This Agreement is and shall be irrevocable, except that the Buyer shall have no obligations hereunder to the extent that this Agreement is rejected by the Company.

 

(d)           At the Closing, the Company shall deliver or cause to be delivered to each Buyer the following:

 

(i)           a legal opinion of Company Counsel, in substantially the form of Exhibit B, executed by such counsel and delivered to the Buyers;

 

(ii)           a certificate of the Secretary of the Company, dated as of the Closing Date, (a) certifying the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Securities, (b) certifying the current versions of the certificate of incorporation, as amended and by-laws of the Company and (c) certifying as to the signatures and authority of persons signing the Transaction Documents and related documents on behalf of the Company;

(iii)           the Shares purchased by such Buyer, as provided in Section 1.2(b); and

 

(iv)           an executed copy of the Registration Rights Agreement.

 

(e)           At the Closing, each Buyer shall deliver or cause to be delivered to the Company (i) the purchase price set forth on such Buyer’s signature page to this Agreement in United States dollars and in immediately available funds, by wire transfer to an account designated in writing to such Buyer by the Company for such purpose and (ii) an executed copy of the Registration Rights Agreement.

 

  

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ARTICLE II

 

BUYER’S REPRESENTATIONS AND WARRANTIES

 

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

 

2.1           Distribution.  Such Buyer is acquiring the Shares for investment purposes for its own account and not with any current view towards a distribution of the Shares, provided, however, that by making the representations herein, such Buyer does not agree to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act.

 

2.2           Accredited Investor Status.  At the time such Buyer was offered the Shares, it was, and as of the date hereof, it is, an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.

 

2.3           Reliance on Exemptions; No General Solicitation.  Such Buyer understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Shares.  The Buyer has not received any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Shares.

 

2.4           Information.  Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Shares that have been requested by such Buyer and that such Buyer deems necessary and appropriate to enable Buyer to evaluate the financial risk inherent in making the investment in the Shares.  Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its management.  Such Buyer has reviewed the SEC Documents (as defined in Section 3.8 below), including without limitation, the risk factor disclosure contained therein, and understands that its investment in the Shares involves a high degree of risk and is, at the present time, able to afford a complete loss of such investment.  Subject to the truth and accuracy of the representations and warranties made by the Company hereunder, such Buyer 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 Shares.  The Buyer understands that no federal or state agency has made any finding or determination as to the fairness of this offering for investment, or any recommendation or endorsement of the Shares.  Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained herein.

 

  

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2.5           Transfer or Resale.  Such Buyer understands that except as provided in the Registration Rights Agreement:

 

(a)           the Shares have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (i) subsequently registered thereunder or (ii) such Shares are sold, assigned or transferred pursuant to an exemption from such registration under the 1933 Act, including without limitation pursuant to Rule 144 promulgated under the 1933 Act, as amended, (or a successor rule thereto) (“Rule 144”);

 

(b)           any sale of the Shares made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Shares under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act and the rules and regulations of the SEC thereunder.  “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof; and

 

(c)           neither the Company nor any other Person is under any obligation to register the Shares under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

 

2.6           Legends.  Such Buyer agrees that all certificates or other instruments representing the Shares shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE 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 APPLICABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT, INCLUDING PURSUANT TO RULE 144 UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN LOAN OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

  

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The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Shares upon which it is stamped, if, unless otherwise required by state securities laws, (i) the resale of such Shares is covered by an effective registration statement under the 1933 Act (whether pursuant to the Registration Rights Agreement or otherwise), (ii) the Shares are eligible for resale without restriction under Rule 144, or (iii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of a law firm reasonably acceptable to the Company and its transfer agent, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Shares may be made without registration under the applicable requirements of the 1933 Act.

 

If within three trading days after receipt by the Company or its transfer agent of a legended certificate and the other documents as specified in and complying with the immediately preceding paragraph, the Company shall fail to cause to be issued and delivered to such Buyer a certificate representing such Shares that is free from the legends set forth above, and if on or after such trading day the Buyer purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Buyer of shares of Common Stock that the Buyer anticipated receiving from the Company without any restrictive legend (the “Covering Shares”), then the Company shall, within three trading days after the Buyer’s request, pay cash to the Buyer in an amount equal to the excess (if any) of the Buyer’s total purchase price (including brokerage commissions, if any) for the Covering Shares, over the product of (A) the number of Covering Shares, times (B) the closing bid price on the date of delivery of such certificate and the other documents as specified in and complying with the paragraph immediately above.

2.7           Validity; Enforcement.  This Agreement and the Registration Rights Agreement, and the consummation by such Buyer of the transactions contemplated hereby and thereby, have been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

2.8           No Conflicts.  The execution, delivery and performance by such Buyer of this Agreement and the Registration Rights Agreement and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party or by which any property or asset of such Buyer is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and regulations) of any court or governmental authority applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder or thereunder.

 

  

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2.9           Short Sales and Confidentiality Prior To The Date Hereof.  Other than consummating the transactions contemplated hereunder, such Buyer has not, nor has any Person acting on behalf of or pursuant to any understanding with such Buyer, directly or indirectly executed any purchases or sales, including short sales, of the securities of the Company during the period commencing from the time that such Buyer first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder until the date hereof.  Notwithstanding the foregoing, in the case of a Buyer that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Buyer’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Buyer’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Shares covered by this Agreement.  Except as otherwise explicitly set forth in this Agreement, the Company acknowledges and agrees that the representations contained in this Article II shall not modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated hereby or thereby.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the Disclosure Schedule (which Disclosure Schedule sets forth items the disclosure of which is necessary or appropriate as an exception to one or more representations or warranties contained in this Article III; provided, however, that the disclosure in any Section of the Disclosure Schedule shall apply only to the indicated Section of this Agreement except to the extent that it is reasonably apparent that such disclosure is relevant to another Section of this Agreement), the Company represents and warrants (which representations and warranties shall be deemed to apply, where appropriate, to each Subsidiary of the Company) to each of the Buyers that:

 

3.1           Organization and Qualification.  The Company and its “Subsidiary” (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar interest) are entities duly organized and validly existing and, to the extent legally applicable, in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted.  Each of the Company and its Subsidiary is duly qualified as a foreign entity to do business and, to the extent legally applicable, is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect.  As used in this Agreement, “Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiary, taken as a whole, or on the transactions contemplated hereby and the other Transaction Documents or by the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents.  The Company has no Subsidiaries except as set forth on Schedule 3.1.  The Company has furnished to the Buyers true, correct and complete copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”), and the Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”).  The Company owns 100% of the capital stock of its Subsidiary.

 

  

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3.2           Authorization; Enforcement; Validity.  The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Registration Rights Agreement and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the “Transaction Documents”) and to issue the Shares in accordance with the terms hereof.  The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Shares, have been duly authorized by the Company’s Board of Directors and no approval by the Company’s stockholders is required, and other than as set forth in Section 3.5, no further filing, consent or authorization is required by the Company, its Board of Directors or its stockholders in connection herewith or therewith.  This Agreement and the other Transaction Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

3.3           Issuance of Shares.  The issuance of the Shares is duly authorized and, when issued and paid for in accordance with this Agreement, the Shares will be validly issued, fully paid and nonassessable and free from all preemptive rights or similar rights (other than as set forth on Section 3.3 of the Disclosure Schedule), taxes, liens and charges with respect to the issue thereof.  Assuming the accuracy of each of the representations and warranties of each Buyer set forth in Article II of this Agreement, the offer and issuance by the Company of the Shares is exempt from registration under the 1933 Act.

 

3.4           No Piggyback on Registrations.  Except as set forth on Section 3.4 of the Disclosure Schedule or in the Registration Rights Agreement, neither the Company nor any of its security holders (other than the Buyers in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable Securities.

 

3.5           No Conflicts.  The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Shares) will not (i) result in a violation of any certificate of incorporation, articles of incorporation, or any certificate of designations of the Company or its Subsidiary, or bylaws of the Company or its Subsidiary or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or its Subsidiary is a party or by which any property or asset of the Company or its Subsidiary is bound or affected, or (iii) other than as set forth in Section 3.4 of the Disclosure Schedule, result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and regulations) of any court or governmental authority applicable to the Company or its Subsidiary; except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

  

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3.6           Compliance.  Except as would not, individually or in the aggregate, reasonably be expected to have or result in a Material Adverse Effect, (i)  neither the Company nor any Subsidiary is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received written notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (unless such default or violation has been duly waived), (ii) neither the Company nor any Subsidiary is in violation of any order of any court, arbitrator or governmental body, or (iii)  neither the Company nor any Subsidiary is or has been in violation of any statute, rule or regulation of any governmental authority.

 

3.7           Consents.  Neither the Company nor its Subsidiary is required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof, except for the following consents, authorizations, orders, filings and registrations (none of which is required to be filed or obtained before the Closing):  (i) the filing with the Securities and Exchange Commission (the “SEC”) of a current report on Form 8-K disclosing the material terms of the transactions contemplated hereby and thereby and attaching the Transaction Documents as exhibits thereto, (ii) the filing of a Form D with the SEC and such filings as are required to be made under applicable state securities laws, and (iii) the filing with the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement.

 

3.8           No General Solicitation; Placement Agent.  Neither the Company, nor any of its 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 Shares.  The Company reserves the right to retain and compensate Roth Capital as a placement agent and/or advisor (or such other placement agent or advisor in lieu of Roth in its sole discretion) on such terms and conditions as the Company deems appropriate.  Subject to the preceding sentence, neither the Company nor its Subsidiary has engaged any placement agent, financial advisor, broker or other agent in connection with the transactions contemplated by the Transaction Documents, including, without limitation, the sale of the Shares.  The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commission relating to or arising out of the issuance of the Shares pursuant to this Agreement.  The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorney's fees and out-of-pocket expenses) arising in connection with any claim for such fees arising out of the issuance of the Shares pursuant to this Agreement.

 

  

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3.9           No Integrated Offering.  None of the Company, its Subsidiary, any of their affiliates, and 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 cause this offering of the Shares to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed, quoted or designated.  None of the Company, its Subsidiary, any of their affiliates, and 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 Shares under the 1933 Act or cause the offering of the Shares to be integrated with other offerings for purposes of any such applicable stockholder approval provisions.

 

3.10           SEC Documents; Financial Statements.  During the one (1) year prior to the date hereof, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Shares Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements, schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”).  As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto in effect at the time of filing.  Such financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), consistently applied, 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 exclude notes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

  

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3.11           Capitalization.  As of March 14, 2011, the authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, par value $0.33 per share, and 1,000,000 shares of Preferred Stock, par value $1.00 per share.  As of March 14, 2011, (i) 24,031,063 shares of Common Stock are issued and outstanding, (ii) 10,950 shares of Series A Preferred Stock and 62,634 shares of Series B Convertible Preferred Stock are issued and outstanding, (iii) 7,294,919 shares of Common Stock are subject to issuance upon exercise of outstanding warrants, (iv) 8,351,200 shares of Common Stock are subject to issuance upon conversion of the Series B Preferred Stock and (v) 7,966,116 shares of Common Stock are subject to issuance upon exercise of options granted under the Company’s 2005 and 2009 Stock Option Plans and pursuant to non-plan grants to executives and directors.  All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable.  Except as disclosed in Schedule 3.11:  (i) none of the Company’s capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; and (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock or other securities of the Company or its Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or its Subsidiary is or may become bound to issue additional capital stock of the Company or its Subsidiary or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock or other securities of the Company or its Subsidiary.

 

3.12           Absence of Litigation.  Except as disclosed in the SEC Documents, there is no action, suit, claim, or Proceeding (defined as an action, claim, suit, investigation or proceeding (including, without limitation, a partial proceeding, such as a deposition), whether commenced or threatened in writing), or, to the Company's knowledge, inquiry or investigation, before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary that could, individually or in the aggregate, to have a Material Adverse Effect.

 

3.13           Material Changes; Undisclosed Events, Liabilities or Developments.   Since the date of the latest audited financial statements included within the SEC Documents, except as disclosed in the SEC Documents or in Schedule 3.13 hereto, (i) there has been no event, occurrence or development that, individually or in the aggregate, has had or that would result in a Material Adverse Effect, (ii) the Company has not incurred any material liabilities other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company's financial statements pursuant to GAAP or required to be disclosed in filings made with the SEC,  (iii) the Company has not altered its method of accounting or changed its auditors, except as disclosed in its SEC Documents, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders, in their capacities as such, or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock (other than pursuant to the terms of the Company’s outstanding Series A Preferred Stock and Series B Preferred Stock), and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans or non-plan grants approved by the Board.

 

3.14           Investment Company.  The Company is not, and is not an affiliate of, and immediately after receipt of payment for the Shares, will not be or be an affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

  

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3.15           Manipulation of Price.  The Company has not, and to the Knowledge of the Company, no one acting on its behalf has, (i) taken, directly or indirectly, any action designed 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 Shares, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Shares, or (iii) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company.

 

3.16           Insolvency.  The Company is not as of the date hereof, and immediately following the Closing and after giving effect to the transactions contemplated by this Agreement and the other Transaction Documents, the Company will not (i) be insolvent (either because its financial condition is such that the sum of its debts, including contingent and unliquidated debts, is greater than its assets, at a fair valuation, or because the present fair saleable value of its assets is less than the amount required to pay its probable liability on its existing debts, including contingent and unliquidated debts, as they become absolute and matured), (ii) have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted, or (iii) have incurred debts beyond its ability to pay them as they become due.

 

3.17           Patents and Trademarks.  The Company and/or each Subsidiary owns, or possesses adequate rights or licenses to use, all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights (“Intellectual Property Rights”) necessary to conduct their respective businesses as now conducted.  Except as set forth on Section 3.17 of the Disclosure Schedule, none of the Company’s or any Subsidiary’s Intellectual Property Rights consisting of registered intellectual property have expired or terminated, or are expected to expire or terminate within three years from the date of this Agreement.  Except as set forth on Section 3.17 of the Disclosure Schedule, the Company does not have any knowledge of any infringement by the Company or any Subsidiary of Intellectual Property Rights of others.  Except as disclosed in the SEC Documents, there is no claim, action or proceeding being made or brought, or to the knowledge of the Company, being threatened, against the Company or any Subsidiary regarding its Intellectual Property Rights.

 

3.18           Insurance.  To the Company’s Knowledge: the Company and each Subsidiary is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses and locations in which the Company and each Subsidiary is engaged.

 

3.19           Regulatory Permits.  The Company and each Subsidiary possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as presently conducted and described in the SEC Documents (“Material Permits”), except where the failure to possess such permits does not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary has received any written notice of proceedings relating to the revocation or modification of any Material Permit.

 

  

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3.20           Internal Accounting Controls.  Except as disclosed in the SEC Documents, the Company and each Subsidiary maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

3.21           Labor Matters.  The Company and each Subsidiary is in compliance in all material respects with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

3.22           Environmental Laws.  The Company and each Subsidiary (i) is in compliance in all material respects with any and all Environmental Laws (as hereinafter defined), (ii) has received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) is in compliance in all material respects with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.  The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

3.23           Tax Status.  The Company and each Subsidiary (i) has made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) to the extent required by GAAP, has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction.

 

  

12

  

 

ARTICLE IV

 

COVENANTS

 

4.1           Form D and Blue Sky.  The Company agrees to file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof to each Buyer promptly after such filing.  The Company shall make all filings and reports relating to the offer and sale of the Shares required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date and shall provide evidence of any such action so taken to the Buyers.

 

4.2           Use of Proceeds.  The Company will use the proceeds from the sale of the Shares for general corporate purposes, including the payment of the accounts receivable owed to A Plus International (an affiliate of board member Wayne Lin).  If applicable, the Company may also use the proceeds from the sale of the Shares to pay fees to any placement agent and/or advisor used in connection with this Agreement.

 

4.3           Fees.  The Company and each Buyer shall bear all of its own respective fees and expenses incurred in connection with the transaction contemplated by the Transaction Documents and the negotiations related thereto (including all reasonable legal fees and disbursements in connection therewith, documentation and implementation of the transactions contemplated by the Transaction Documents and due diligence in connection therewith).

 

4.4           Disclosure of Transactions and Other Material Information.  The Company shall, by 9:00 a.m. (New York City time) on or before the second Business Day immediately following the date hereof, issue a press release, disclosing the material terms of the transactions contemplated hereby.  The Buyer shall not issue any press release or make any other public announcement relating to this Agreement unless the content thereof is mutually agreed to by the Company and the Buyer. The Buyer will timely make all required filings and disclosures relating to the Buyer purchase of the Shares as may be required under the 1934 Act, if any.  The Buyer agrees that Company will file a Current Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching the Transaction Documents (including, without limitation, this Agreement and the form of the Registration Rights Agreement) as exhibits to such filing.  For purposes of this Agreement, “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.  Except as herein provided, neither the Company nor any Subsidiary shall publicly disclose the name of any Buyer, or include the name of any Buyer in any press release without the prior written consent of such Buyer (which consent shall not be unreasonably withheld or delayed), unless otherwise required by law, regulatory authority or trading market (it being understood that the Form 8-K may include such information to the extent required by such Form).

 

4.5           Integration.  The Company shall not, and shall use its commercially reasonable efforts to ensure that no affiliate of the Company thereof shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Shares in a manner that would require the registration under the Securities Act of the sale of the Shares to the Buyers or that would be integrated with the offer or sale of the Shares for purposes of the rules and regulations of any trading market.

 

  

13

  

 

ARTICLE V

 

MISCELLANEOUS

 

5.1           Governing Law; Jurisdiction.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof.  Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of Los Angeles (the “Los Angeles Courts”).  Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Los Angeles Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), 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 such Los Angeles Courts, or such Los Angeles Courts are improper or inconvenient venue for such proceeding.  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 via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law.  Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.  If any party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

5.2           Counterparts.  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; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.

 

5.3           Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

5.4           Severability.  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.

 

  

14

  

 

5.5           Entire Agreement; Amendments.  This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the party against whom enforcement of any such waived or amended provision is sought.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

5.6           Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of:  (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Business Day, (ii) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business Day, (iii) the second (2nd) Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.7           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Buyer (other than by merger, sale of substantially all assets or other transaction, as reasonably determined by the Company, having substantially similar effect).  Any Buyer may assign any or all of its rights under this Agreement to any Person to whom such Buyer assigns or transfers any Shares in accordance with the terms of this Agreement, provided that such transferee agrees in writing to be bound, with respect to the transferred Shares, by the provisions of the Transaction Documents that apply to the “Buyers.”

 

5.8           No Third Party Beneficiaries.  This Agreement is intended 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.

 

  

15

  

 

5.9           Survival.  All representations, warranties, covenants and agreements made by the Company and the Buyers in this Agreement or in any certificate or other instrument delivered pursuant hereto shall survive the Closing and the delivery of the Shares and any investigation and discovery by the Company or by the Buyers, as the case may be, made at any time with respect thereto.  Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

 

5.10           Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as 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.

 

5.11           No Strict Construction.  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.

 

5.12           Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Buyers and the Company will be entitled to specific performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

5.13           Independent Nature of Buyers’ Obligations and Rights.  The obligations of each Buyer under any Transaction Document are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document.  Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Buyers are in any way acting in concert or as a group, and the Company will not assert any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents and the Company acknowledges that the Buyers are not acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.  The Company acknowledges and each Buyer confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors.  Each Buyer 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 Buyer to be joined as an additional party in any proceeding for such purpose.

 

5.14           Knowledge of the Company.  The phrase “Knowledge of the Company” shall mean the actual knowledge of all executive officers and directors of the Company.

 

5.15           Certain Waivers.                                Each Buyer, on behalf of itself and all of its Affiliates, hereby waives any and all of the following rights that it held prior to the date hereof, whether under contract, the terms of securities or otherwise: (i) notice rights, (ii) preemptive or participation rights, (iii) veto or consent rights, (iv) anti-dilution rights, (v) rights of first refusal, (vi) piggy back rights and (vii) any other rights that is inconsistent with the Transaction Documents.

 

  

16

  

 

5.16           Waiver of Conflicts.  Each party to this Agreement acknowledges that Manatt, Phelps & Phillips, LLP, counsel for the Company, may in the past performed and may continue to perform legal services for certain of the Buyers in matters unrelated to the transactions described in this Agreement, including the representation of such Buyers in venture capital financings and other matters, including in connection with the June 24, 2010 transactions.  Accordingly, each party to this Agreement hereby (a) acknowledges that they have had an opportunity to ask for information relevant to this disclosure; (b) gives its informed consent to Manatt, Phelps & Phillips’s representation of certain of the Buyers in such unrelated matters and to such counsel’s representation of the Company in connection with this Agreement and the transactions contemplated hereby; and (c) if requested will provide a separate written confirmation requested by Manatt in the form of its standard waiver letter.

 

5.17           Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option owed to such Buyer by the Company under a Transaction Document and the Company does not timely perform, in all material respects, its related obligations within the periods (and any permitted cure periods) therein provided, then, prior to the performance by the Company of the Company's related obligation, such Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

 

5.18           Adjustments in Share Numbers and Prices.  In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurring after the date hereof, each reference in any Transaction Document to a number of shares or a price per share shall be amended to appropriately account for such event.

 

5.19.           Survival and Indemnification.

(a)            Survival.  The representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing of the transactions contemplated by this Agreement.

(b)            Indemnification.  The Company agrees to indemnify and hold harmless each Buyer and its affiliates and their respective directors, officers, trustees, members, managers, employees and agents, and their respective successors and assigns, from and against any and all losses, claims, damages, liabilities and expenses (including without limitation reasonable attorney fees and disbursements and other expenses incurred in connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement thereof) (collectively, “Losses”) to which such Person may become subject as a result of any breach of representation, warranty, covenant or agreement made by or to be performed on the part of the Company under this Agreement or the Registration Rights Agreement, and will reimburse any such Person for all such amounts as they are incurred by such Person.  

  

17

  

 

(c)           Make-Whole.  Without limiting the foregoing, the Company agrees that, in the event that any of the representations and warranties in Section 3.2, 3.3, 3.5, 3.7 or 3.11 are not true and correct in all respects, notwithstanding anything set forth in the Disclosure Schedule relating to such representations and warranties, and as a result the Company pays any monetary damages or issues any additional securities to any party to a prior agreement with the Company or whose consent is otherwise required for the Company to enter into and perform this Agreement and the Registration Rights Agreement, then the Losses to which a Buyer is subject shall be grossed-up so as to preserve the economic substance of this Agreement (as of the Closing) as if such monetary damages or issuances of additional securities had not occurred, including by the Company shall taking appropriate action to ensure that a Buyer has not been diluted, directly or indirectly, by any issuance of additional securities contemplated by this Subsection (c), and ensuring that a Buyer does not bear the portion of such monetary damages that corresponds to its ownership percentage as of the Closing.

(d)           Conduct of Indemnification Proceedings.  Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation.  It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties.  No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of judgment with respect to any pending or threatened action or any claim whatsoever, in respect of which indemnification or contribution could be sought under this Section 5.19 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party in form and substance reasonably satisfactory to such indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.  No indemnifying party shall be liable for settlement of any pending or threatened action or any claim whatsoever that is effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with its written consent, if its consent has been unreasonably withheld or delayed or if there be a judgment for the plaintiff in any such matter, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment.

 

 

 [Signature Pages Follows]

 

  

18

  

 

IN WITNESS WHEREOF, each Buyer, severally and not jointly, and the Company, have caused their respective signature page to this Common Stock Purchase Agreement to be duly executed as of the date first written above.

 

	 	COMPANY:	 
	 	 	 
	 	PATIENT SAFETY TECHNOLOGIES, INC.	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name: 	 
	 	 	Title: 	 
	 	 	 	 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOR BUYERS TO FOLLOW]

 

  

19

  

 

[BUYER SIGNATURE PAGE TO COMMON STOCK

PURCHASE AGREEMENT]

 

Name of Buyer:                                                                           

 

Signature of Authorized Signatory of Buyer:                                                                                                                     

 

Name of Authorized Signatory:                                                                                                           

 

Title of Authorized Signatory:                                                                                                           

 

Number of Shares of Common Stock Subscribed For: See Schedule A opposite name of Buyer

 

Delivery and Notice Information:  See below.

 

	
1.

	  	
The exact name that your Shares are to be registered in. You may use a nominee if appropriate:

	  	  	  
	
2.

	  	
The relationship between the Buyer and the registered holder listed in response to item 1 above (if not the same person):

	  	  	  
	
3.

	  	
The mailing address of the registered holder listed in response to item 1 above:

	  	  	
 Mailing:

	  	  	
 Fax:

	  	  	
 Email:

	 	 	 
	
4.

	  	
The Social Security Number or Tax Identification Number of the registered holder listed in response to item 1 above:

	  	  	  
	  	  	  
	
5.

	  	
Name of DTC Participant (broker-dealer at which the account or accounts to be credited with the Shares are maintained); please include the name and telephone number of the contact person at the broker-dealer:

	  	  	  
	  	  	  
	
6.

	  	
DTC Participant Number:

	  	  	  
	  	  	  
	
7.

	  	
Name of Account at DTC Participant being credited with the Shares:

	  	  	  

  

20

  

 

SCHEDULE A

SCHEDULE OF BUYERS

[Omitted.]

 

  

21

  

 

EXHIBIT A

FORM OF AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

  

22

  

 

EXHIBIT B

FORM OF ISSUER’S COUNSEL OPINION

[Omitted]

  

23Unassociated Document

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

This AMENDED AND REGISTRATION RIGHTS AGREEMENT, dated as of March 28, 2011, is entered into by and among Patient Safety Technologies, Inc., a Delaware corporation (the “Company”), and the persons identified as Holders on the signature pages hereto (individually, a “Holder” and collectively, the “Holders”).

 

RECITALS:

 

A.           The Company, on the one hand, and Catalysis Partners, A Plus International, Inc. and JMR Capital Limited, on the other hand, are parties to a Convertible Preferred Stock Purchase Agreement dated as of June 24, 2010 (the “Original Purchase Agreement”) and such parties, together with Kenneth Traub, are parties to a Registration Rights Agreement dated as of June 24, 2010 (the “Original Registration Rights Agreement”).

 

B.           The Company, on the one hand, and Kinderhook Partners, A Plus International, Inc., and certain other investors, on the other hand, are parties to a Common Stock Purchase Agreement dated as of the date hereof (the “Purchase Agreement”), pursuant to which the Company will sell, and the Holders will buy, the Shares (as defined in the Purchase Agreement).

 

C.           The Original Registration Rights Agreement permits its amendment and restatement if the Majority Holders (for purposes solely of this Recital C, as defined under the Original Registration Rights Agreement) (the “Original Majority”) and the Company approve.

 

D.           The Company and the Original Majority, who are a subset of the Holders hereunder, wish to amend and restate the Original Registration Rights Agreement, and all of the Holders (including the Holders who constitute the Original Majority) wish to enter into this Agreement with the Company, as so amended and restated.

 

E.           It is a condition precedent to the consummation of the transactions contemplated by the Purchase Agreement that the Company provide for the rights set forth in this Agreement.

 

F.           Certain other parties not participating in the offering of the Shares also wish to join this Agreement on the terms set forth herein, be deemed Holders hereunder, and amend and restate their registration rights agreements with the Company (“Other Registration Agreements”) on the terms set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound, the Company and the Original Majority hereby amend, restate and supersede the Original Registration Rights Agreement in its entirety to be as follows, and all the parties hereto hereby agree as follows:

 

  

1

  

 

ARTICLE I

 

DEFINITIONS

 

1.1           “Affiliate” means any Person that directly or indirectly controls, or is under control with, or is controlled by such Person.  As used in this definition, “control” (including with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

 

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

 

1.3           “Closing Date” means the date first written above.

 

1.4           “Common Stock” means the common stock, par value $0.33 per share, of the Company.

 

1.5           “Company” has the meaning set forth in the preamble.

 

1.6           “Consulting Agreement” means that certain consulting agreement between the Company and Kenneth Traub, dated as of May 19, 2010.

 

1.7           “Consulting Shares” means the shares of Common Stock issued to Kenneth Traub in connection with the Consulting Agreement.

 

1.8           “Conversion Shares” has the meaning set forth in the Original Purchase Agreement.

 

1.9           “Designated Holder” means a holder of Registrable Securities.

 

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

 

1.11           “Holder(s)” has the meaning set forth in the preamble.

 

1.12            “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, of a natural person referred to herein.

 

1.13           “Indemnified Party” has the meaning set forth in Section 2.9.

 

1.14           “Losses” has the meaning set forth in Section 2.9.

 

  

2

  

 

1.15           “Majority Holders” means holders of a majority (by number of shares) of the Registrable Securities.

 

1.16           “Original Agreement” has the meaning set forth in the recitals.

 

1.17           “Original Purchase Agreement” has the meaning set forth in the recitals.

 

1.18           “Original Registration Rights Agreement” has the meaning set forth in the recitals.

 

1.19           “Person” means any individual, company, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, governmental body or other entity.

 

1.20           “Piggyback Registration” has the meaning set forth in Section 2.4.

 

1.21           “Purchase Agreement” has the meaning set forth in the recitals.

 

1.22           “Registration Period” means the three (3) years, plus any additional periods required by the second paragraph of Section 2.1, during which the Registration Statement contemplated by Section 2.1 is required to remain effective.

 

1.23           “Registrable Securities” means:

 

(a)           the Shares, the Conversion Shares, the Consulting Shares and any other shares of Common Stock held by a Holder as of the date of this Agreement (including shares that are defined as “Registrable Securities” under Other Registration Agreements);

 

(b)           any shares of Common Stock or other securities issued or issuable, directly or indirectly in respect of the Shares, Conversion Shares, Consulting Shares or Common Stock or other shares referenced in clause (a) above by way of a spin-off, split-off, dividend, distribution or stock split or in connection with a combination of shares, reclassification, merger, consolidation or reorganization; and

 

(c)           any securities issued in replacement of or exchange for any securities described in clause (a) or (b) above.

 

As to any particular Registrable Securities, such securities shall cease to be Registrable Securities (w) when sold pursuant to an effective registration statement under the Securities Act, (x) when such securities may be sold pursuant to Rule 144 (or any similar provision then in force) under the Securities Act without limitation thereunder on volume or manner of sale, (y) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all transfer restrictions and restrictive legends with respect to such securities are removed upon the consummation of such sale and the seller and purchaser of such securities receive an opinion of counsel for the Company, which shall be in form and content reasonably satisfactory to the seller and purchaser and their respective counsel, to the effect that such securities in the hands of the purchaser are freely transferable without restriction or registration under the Securities Act in any public or private transaction, or (z) when such securities cease to be outstanding.

 

  

3

  

 

1.24           “Registration Statement” means a registration statement on Form S-1 or Form S-3 (or such other form as the Company is then eligible to use) filed by the Company under the Securities Act that covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference in such registration statement, which shall permit the Designated Holders to offer and sell, on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, the Registrable Securities.

 

1.25           “Representatives” has the meaning set forth in Section 2.9.

 

1.26           “Required Filing Date” has the meaning set forth in Section 2.1.

 

1.27           “Required Registration Statement” has the meaning set forth in Section 2.1.

 

1.28           “SEC” means the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

 

1.29           “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

1.30           “Shares” means the shares of Common Stock sold pursuant to the Purchase Agreement.

 

ARTICLE II

 

REGISTRATION RIGHTS

 

2.1           Required Registration.  i) The Company shall use its reasonable best efforts to prepare and as promptly as possible after the date hereof, but in any event, not later than forty five (45) days from the Closing Date (or, if such 45th day is not a Business Day, by the first Business Day thereafter) (the “Required Filing Date”) file a Registration Statement with respect to the Registrable Securities with the SEC (the “Required Registration Statement”) and shall use its reasonable best efforts to cause the Required Registration Statement to be declared effective under the Securities Act within 150 days after the Closing Date (or, if such 150th day is not a Business Day, by the first Business Day thereafter).  If the Required Registration Statement is not filed with the SEC by the Required Filing Date, other than due to failure by a Designated Holder to furnish information or consents required (as provided in Section 2.7 hereof or as reasonably determined necessary by the Company after consultation with counsel) to be included in such Required Registration Statement, the Company shall pay each Designated Holder in cash an amount per month equal to one and one-half percent (1.5%) of the amount paid by such Designated Holder for the Registrable Securities pursuant to the Purchase Agreement, which amount shall be payable by the tenth (10th) day after the end of each such month and shall be the Designated Holders’ sole remedy for such failure (other than any equitable remedies available to such Holder, such as specific performance).  The amounts payable to each Designated Holder pursuant to this Section shall bear interest at a rate of the lesser of twelve percent (12%) per annum, compounded annually, or the maximum rate then permitted by applicable law.

 

  

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(b)           The Company shall use its reasonable best efforts to keep the Required Registration Statement continuously effective for a period of three years after the Registration Statement first becomes effective, plus the number of days during which such Registration Statement was not effective or usable pursuant to Sections 2.5(b), 2.6(e) or 2.6(i) hereof, or such shorter period as will terminate when all of the Registrable Securities covered by the Required Registration Statement have been disposed of in accordance with the Required Registration Statement or have otherwise ceased to be Registrable Securities.  In the event the Company shall give any notice pursuant to Sections 2.6(e) or 2.6(i) hereof, the additional time period mentioned in this Section 2.1 during which the Required Registration Statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Sections 2.6(e) or 2.6(i) to and including the date when each seller of a Registrable Security covered by the Registration Statement shall have received the copies of the supplemented or amended prospectus contemplated by Sections 2.6(e).

 

(c)           The Company may include in any registration filed pursuant to this Section 2.1, such additional securities as it may be obligated to include pursuant to any contractual obligations entered into by the Company, and, subject to any restrictions contained elsewhere in this Agreement, such securities as the Company may elect to register for its own account.

 

2.2           Current Public Information.  The Company covenants that it will use its reasonable best efforts to (a) make and keep public information available, as those terms are understood and defined in Rule 144(c)(1) under the Securities Act or any similar or analogous rule promulgated under the Securities Act, (b) file with the SEC, in a timely manner, all reports and other documents required to be filed by it under the Exchange Act and the rules and regulations adopted by the SEC thereunder, and (c) take such further action as the Designated Holders may reasonably request, in each case to the extent required to enable the holders of Registrable Securities to sell Registrable Securities pursuant to Rule 144 or Rule 144A adopted by the SEC under the Securities Act or any similar rule or regulation hereafter adopted by the SEC.

 

2.3           Demand Registration.

 

(a)           Subject to Section 2.3(g), upon the written request of the Majority Holders requesting that the Company effect the registration under the Securities Act of all or part of such Designated Holders’ Registrable Securities and specifying the intended method of disposition thereof, the Company will promptly give written notice of such requested registration to all Designated Holders, and thereafter the Company will use its reasonable best efforts to effect as expeditiously as possible the registration under the Securities Act of the following:

 

(i)           the Registrable Securities that the Company has been so requested to be registered by such Designated Holders for disposition in accordance with the intended method of disposition stated in such request;

 

  

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(ii)           all other Registrable Securities the holders of which shall have made a written request to the Company for registration thereof within 30 days after the giving of such written notice by the Company (which request shall specify the intended method of disposition of such Registrable Securities); and

 

(iii)           all shares of Common Stock that the Company or Persons entitled to exercise “piggy-back” registration rights pursuant to contractual commitments of the Company may elect to register in connection with the offering of Registrable Securities pursuant to this Section 2.3 or otherwise;

 

all to the extent requisite to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities and the additional shares of Common Stock, if any, so to be registered; provided, that, the provisions of this Section 2.3 shall not require the Company to effect more than two registrations of Registrable Securities in addition to the Required Registration Statement contemplated by Section 2.1.

 

(b)           The registrations under this Section 2.3 shall be on an appropriate form for a Registration Statement that permits the disposition of such Registrable Securities in accordance with the intended methods of distribution specified by the Majority Holders in their request for registration.  The Company agrees to include in any such Registration Statement all information that Designated Holders of Registrable Securities being registered therein shall reasonably request so as to allow them to sell their Registrable Securities by the method of distribution selected by them.

 

(c)           A registration requested pursuant to this Section 2.3 shall not be deemed to have been effected (i) unless a Registration Statement with respect thereto has become effective; provided, that a Registration Statement that does not become effective after the Company has filed a Registration Statement with respect thereto solely by reason of the refusal to proceed of the Majority Holders (other than a refusal to proceed based upon the advice of counsel relating to a matter with respect to the Company) shall be deemed to have been effected by the Company at the request of the Majority Holders unless the Designated Holders electing to have Registrable Securities registered pursuant to such Registration Statement shall have elected to pay all fees and expenses otherwise payable by the Company in connection with such registration pursuant to Section 2.8, (ii) if, after it has become effective, such registration is withdrawn by the Company (other than at the request of the Majority Holders) or interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason prior to the expiration of a 180 day period following such Registration Statement’s effectiveness, or (iii) if the conditions to closing specified in any purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied, other than due solely to some act or omission by the Designated Holders electing to have Registrable Securities registered pursuant to such Registration Statement.

 

(d)           If a requested registration pursuant to this Section 2.3 involves an underwritten offering, the underwriter or underwriters thereof shall be selected by the holders of a majority (by number of shares) of the Registrable Securities requested to be included in such Registration Statement and shall be reasonably acceptable to the Company.

 

  

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(e)           If (i) a requested registration pursuant to this Section 2.3 involves an underwritten offering, and the managing underwriter shall advise the Company that, in its opinion, the number of securities requested to be included in such registration (including securities of the Company or any other Person that are not Registrable Securities) exceeds the number that can be sold in such offering in an orderly manner within a price range reasonably acceptable to the Company and to the holders of a majority (by number of shares) of the Registrable Securities requested to be included in such Registration Statement or (ii) if any requirement of the form on which the Registration Statement is filed or rule promulgated by the SEC or if any written interpretation or written guidance of the Staff of the SEC sets forth a limitation on the number of securities permitted to be registered on a particular Registration Statement (and notwithstanding that the Company used diligent efforts to advocate with the SEC for the registration of all or a greater portion of the securities), the Company will include in such registration, to the extent of the number that the Company is so advised can be sold in such offering, (i) first, any shares of Common Stock or other securities as to which the Company has granted registration rights prior to the date of this Agreement that by their terms require priority over the rights granted under this Section 2.3, (ii) second, the Registrable Securities that have been requested to be included in such registration by the Designated Holders pursuant to this Agreement (pro rata based on the amount of Registrable Securities sought to be registered by such persons), (iii) third, provided that no securities sought to be included by the Designated Holders have been excluded from such registration, the securities of other persons entitled to exercise “piggy-back” registration rights pursuant to other contractual commitments of the Company (pro rata based on the amount of securities sought to be registered by such persons) and (iv) fourth, securities the Company proposes to register for its own account.

 

(f)           The Company shall use its reasonable best efforts to keep any Registration Statement filed pursuant to this Section 2.3 continuously effective (i) for a period of three (3) years after the Registration Statement first becomes effective, plus the number of days during which such Registration Statement was not effective or usable pursuant to Sections 2.5(b), 2.6(e) or 2.6(i); (ii) if such Registration Statement related to an underwritten offering, for such period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer, or (iii) for such shorter period as will terminate when all of the Registrable Securities covered by such Registration Statement have been disposed of in accordance with such Registration Statement or have otherwise ceased to be Registrable Securities.  In the event the Company shall give any notice pursuant to Sections 2.6(e) or 2.6(i), the additional time period mentioned in Section 2.3(f)(i) during which the Required Registration Statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Sections 2.6(e) or 2.6(i) to and including the date when each seller of a Registrable Security covered by the Registration Statement shall have received the copies of the supplemented or amended prospectus contemplated by Sections 2.6(e).

 

(g)           The right of Designated Holders to have Registrable Securities registered pursuant to this Section 2.3 is only exercisable following the expiration of the Registration Period or, if, prior to the expiration of the Registration Period, the Company becomes ineligible to register the Registrable Securities on the Registration Statement contemplated by Section 2.1 or such Registration Statement otherwise becomes unusable or ineffective and the Company is not able to correct the misstatements, have the applicable stop order rescinded or otherwise restore the effectiveness of the Registration Statement as contemplated by this Agreement.

 

  

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2.4           Piggyback Registration.

 

(a)           Whenever the Company proposes to register any of its common stock under the Securities Act (other than pursuant to a registration pursuant to Section 2.1, Section 2.3 or a registration on Form S-4 or S-8 or any successor or similar forms or a registration of shares in connection with an acquisition) and the registration form to be used may be used for the registration of Registrable Securities, whether or not for sale for its own account, the Company will give prompt written notice to all Designated Holders, and such notice shall describe the proposed registration and distribution and offer to all Designated Holders the opportunity to register the number of Registrable Securities as each such Designated Holder may request.  The Company will include in such registration statement all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the Designated Holders’ receipt of the Company’s notice (a “Piggyback Registration”).

 

(b)           The Company shall use its reasonable efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggyback Registration to be included on the same terms and conditions as any similar securities of the Company or any other security holder included therein and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method of distribution thereof.

 

(c)           Any Designated Holder shall have the right to withdraw its request for inclusion of its Registrable Securities in any Registration Statement pursuant to this Section 2.4 by giving written notice to the Company of its request to withdraw; provided, that in the event of such withdrawal (other than pursuant to Section 2.4(e) hereof), the Company shall not be required to reimburse such holder for the fees and expenses referred to in Section 2.8 hereof incurred by such Designated Holder prior to such withdrawal, unless such withdrawal was due to a material adverse change to the Company.  The Company may withdraw a Piggyback Registration at any time prior to the time it becomes effective.

 

  

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(d)           If (i) a Piggyback Registration involves an underwritten offering of the securities being registered, whether or not for sale for the account of the Company, to be distributed (on a firm commitment basis) by or through one or more underwriters of recognized standing under underwriting terms appropriate for such a transaction, and the managing underwriter of such underwritten offering shall advise the Company that, in its opinion, the number of securities requested to be included in such offering (including securities of the Company or any other Person which are not Registrable Securities) exceeds the number which can be sold in such offering in an orderly manner within a price range reasonably acceptable to the Company and, if registration of such offering is pursuant to a contractual commitment of the Company to holders of its securities, holders of a majority (by number of shares) of such securities, or (ii) if any requirement of the form on which the Registration Statement is filed or rule promulgated by the SEC or if any written interpretation or written guidance of the Staff of the SEC sets forth a limitation on the number of securities permitted to be registered on a particular Registration Statement (and notwithstanding that the Company used diligent efforts to advocate with the SEC for the registration of all or a greater portion of the securities), then the Company will be required to include in such registration only the amount of securities that it is so advised should be included in such registration.  In such event:  (x) in cases initially involving the registration for sale of securities for the Company’s own account, securities shall be registered in such offering in the following order of priority:  (i) first, the securities that the Company proposes to register, (ii) second, any shares of Common Stock or other securities as to which the Company has granted registration rights prior to the date of this Agreement that by their terms require priority over the rights granted under this Section 2.4, (iii) third, Registrable Securities and securities that have been requested to be included in such registration by other Persons entitled to exercise “piggy-back” registration rights pursuant to contractual commitments of the Company (pro rata based on the amount of securities sought to be registered by Designated Holders and such other Persons); and (y) in cases not initially involving the registration for sale of securities for the Company’s own account, securities shall be registered in such offering in the following order of priority:  (i) first, the securities of any Person whose exercise of a “demand” registration right pursuant to a contractual commitment of the Company is the basis for the registration, (ii) second, Registrable Securities and securities that have been requested to be included in such registration by Persons entitled to exercise “piggy-back” registration rights pursuant to contractual commitments of the Company (pro rata based on the amount of securities sought to be registered by Designated Holders and such other Persons), and (iii) third, the securities that the Company proposes to register for its own account.

 

(e)           If, as a result of the proration provisions of this Section 2.4, any Designated Holders shall not be entitled to include all Registrable Securities in a Piggyback Registration that such Designated Holders has requested to be included, such holder may elect to withdraw its request to include Registrable Securities in such registration.

 

(f)           The right of the Designated Holders to register Registrable Securities pursuant to this Section 2.4 is only exercisable with respect to Registrable Securities not then covered by an effective Registration Statement contemplated by Section 2.1 or Section 2.3.  The rights of the Designated Holders under this Section 2.4 shall survive the expiration of the Registration Period.

 

2.5           Holdback Agreements.

 

(a)           To the extent not inconsistent with applicable law, in connection with a public offering of securities of the Company, upon the request of the Company or the underwriter, in the case of an underwritten public offering of the Company’s securities, each Designated Holder will not effect any public sale or distribution (other than those included in the registration statement being filed with respect to such public offering) of any securities of the Company, or any securities, options or rights convertible into or exchangeable or exercisable for such securities during the 14 days prior to and the 90-day period beginning on such effective date, unless (in the case of an underwritten public offering) the managing underwriters otherwise agree to a shorter period of time.  Notwithstanding the foregoing, no Designated Holder shall be required to enter into any such “lock up” agreement unless and until all of the Company’s executive officers and directors execute substantially similar “lock up” agreements.  Neither the Company nor the underwriter shall amend, terminate or waive a “lock up” agreement unless each “lock up” agreement with a Designated Holder is also amended or waived in a similar manner or terminated, as the case may be.

 

  

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(b)           The Company shall have the right at any time, to suspend the filing of a Registration Statement under Section 2.3 or require that the Designated Holders of Registrable Securities suspend further open market offers and sales of Registrable Securities pursuant to a Registration Statement filed hereunder for a period not to exceed an aggregate of 45 days in any six consecutive month period or an aggregate of 90 days in any twelve consecutive month period for valid business reasons (not including avoidance of their obligations hereunder) (i) to avoid premature public disclosure of a pending corporate transaction, including pending acquisitions or divestitures of assets, mergers and combinations and similar events; and (ii) upon the occurrence of any of the events specified in Sections 2.6(e) or 2.6(i).

 

2.6           Registration Procedures.  The Company will use its reasonable best efforts to effect the registration of Registrable Securities pursuant to this Agreement in accordance with the intended methods of disposition thereof, and pursuant thereto the Company will as expeditiously as possible:

 

(a)           at least three (3) Business Days before filing the Registration Statement, the Company will furnish to counsel of any seller of Registrable Securities included in the Registration Statement (assuming the Company has been timely notified as to the identity and contact information for such counsel), a copy of such Registration Statement, and will provide such counsel with all correspondence with the SEC regarding the Registration Statement;

 

(b)           prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for the period provided for in Section 2.1 or Section 2.3, or the periods contemplated by the Company or the Persons requesting any Registration Statement filed pursuant to Section 2.4;

 

(c)           furnish to each seller of Registrable Securities included in the Registration Statement such number of copies of such Registration Statement, each amendment and supplement thereto, the prospectus included in the Registration Statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

 

(d)           use its reasonable best efforts to register or qualify such Registrable Securities under such state securities or blue sky laws as any Designated Holder reasonably requests, and do any and all other acts and things that may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller and to keep each such registration or qualification (or exemption therefrom) effective during the period that the Registration Statement is required to be kept effective (provided, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction;

 

  

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(e)           notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in the Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, at the request of any such seller, the Company will as soon as possible prepare and furnish to such seller a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made;

 

(f)           cause all such Registrable Securities to be listed on each national securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be approved for trading on any automated quotation system of a national securities association on which similar securities of the Company are then quoted and shall use reasonable best efforts to maintain such listing or quotation;

 

(g)           provide a transfer agent and registrar for all Registrable Securities included in the Registration Statement not later than the effective date of such Registration Statement;

 

(h)           enter into such customary agreements (including underwriting agreements) and take all other customary and appropriate actions as the holders of a majority of the Registrable Securities being registered or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;

 

(i)           notify each seller of Registrable Securities of any stop order issued or threatened by the SEC;

 

(j)           in the event of the issuance of any stop order suspending the effectiveness of a Registration Statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any securities included in such Registration Statement for sale in any jurisdiction, the Company will use its reasonable efforts to promptly obtain the withdrawal of such order;

 

(k)           if requested by the holders of a majority of the Registrable Securities being registered, obtain one or more comfort letters, dated the effective date of the Registration Statement (and, if such registration includes an underwritten offering, dated the date of the closing under the underwriting agreement), signed by the Company’s independent public accountants in customary form and covering such matter of the type customarily covered by such accountant comfort letters;

 

(l)           if requested by the holders of a majority of the Registrable Securities being registered, provide a legal opinion of the Company’s outside counsel, dated the effective date of such Registration Statement (and, if such registration includes an underwritten offering, dated the date of the closing under the underwriting agreement), with respect to the Registration Statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature;

 

  

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(m)           subject to execution and delivery of mutually satisfactory confidentiality agreements, make available at reasonable times for inspection by any seller of Registrable Securities, any managing underwriter participating in any disposition of such Registrable Securities pursuant to the Registration Statement, and any attorney, accountant or other agent retained by such seller or any managing underwriter, during normal business hours of the Company at the Company’s corporate office and without unreasonable disruption of the Company’s business or unreasonable expense to the Company and solely for the purpose of due diligence with respect to the Registration Statement, legally disclosable, financial and other records and pertinent corporate documents of the Company and its subsidiaries reasonably requested by such persons, and cause the Company’s employees and independent accountants to supply all similar information reasonably requested by any such seller, managing underwriter, attorney, accountant or agent in connection with the Registration Statement, as shall be reasonably necessary to enable them to exercise their due diligence responsibility under applicable securities laws;

 

(n)           cooperate with each seller of Registrable Securities and each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers; and

 

(o)           take all other steps reasonably necessary to effect the registration of the Registrable Securities contemplated hereby.

 

2.7           Conditions Precedent to Company’s Obligations Pursuant to this  Agreement.  It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement that each of the Designated Holders whose Registrable Securities are to be registered pursuant to this Agreement shall furnish such Designated Holder’s written agreement to be bound by the terms and conditions of this Agreement prior to performance by the Company of its obligations under this Agreement.  By executing and delivering this Agreement, each Designated Holder represents and warrants that the information concerning, and representations and warranties by, such Designated Holder, including information concerning the securities of the Company held, beneficially or of record, by such Designated Holder, furnished to the Company pursuant to the Purchase Agreement or otherwise, are true and correct as if the same were represented and warranted on the date any Registration Statement required pursuant to this Agreement is filed with the SEC or the date of filing with the SEC of any amendment thereto, and each Designated Holder covenants to immediately notify the Company in writing of any change in any such information, representation or warranty and to refrain from offering or disposing of any securities pursuant to any Registration Statement until the Company has reflected such change in such Registration Statement.  By executing and delivering this Agreement, each Designated Holder further agrees to furnish any additional information or consents as the Company may reasonably request in connection with any action to be taken by the Company pursuant to this Agreement, and to pay such Designated Holder’s expenses that are not required to be paid by the Company pursuant to this Agreement.

 

  

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2.8           Fees and Expenses.  All expenses incident to the Company’s performance of or compliance with this Agreement including, without limitation, all registration and filing fees payable by the Company, fees and expenses of compliance by the Company with securities or blue sky laws, printing expenses of the Company, messenger and delivery expenses of the Company, and fees and disbursements of counsel for the Company and all independent certified public accountants of the Company, and other Persons retained by the Company will be borne by the Company, and the Company will pay its internal expenses (including, without limitation, all salaries and expenses of the Company’s employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance of the Company and the expenses and fees for listing or approval for trading of the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on any automated quotation system of a national securities association on which similar securities of the Company are quoted.  In connection with any Registration Statement filed hereunder, the Company will pay the reasonable fees and expenses of a single counsel retained by the Designated Holders of a majority (by number of shares) of the Registrable Securities requested to be included in such Registration Statement.  The Company shall have no obligation to pay any underwriting discounts or commissions attributable to the sale of Registrable Securities and any of the expenses incurred by any Designated Holder that are not specifically payable by the Company as described above, such costs to be borne by such Designated Holder or Holders, including, without limitation, the following:  underwriting fees, discounts and expenses, if any, applicable to any Designated Holder’s Registrable Securities; fees and disbursements of counsel or other professionals that any Designated Holder may choose to retain in connection with a Registration Statement filed pursuant to this Agreement (except as otherwise provided herein); selling commissions or stock transfer taxes applicable to the Registrable Securities registered on behalf of any Designated Holder; any other expenses incurred by or on behalf of such Designated Holder in connection with the offer and sale of such Designated Holder’s Registrable Securities other than expenses that the Company is expressly obligated to pay pursuant to this Agreement.

 

  

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2.9           Indemnification.

 

(a)           The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each Designated Holder and its general or limited partners, officers, directors, members, managers, employees, advisors, representatives, agents and Affiliates (collectively, the “Representatives”) from and against any loss, claim, damage, liability, attorney’s fees, cost or expense and costs and expenses of investigating and defending any such claim (collectively, the “Losses”), joint or several, and any action in respect thereof to which such Designated Holder or its Representatives may become subject under the Securities Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereto) arise out of or are based upon or caused by (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, prospectus or preliminary or summary prospectus or any amendment or supplement thereto or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse such Designated Holder and its Representatives for any legal or any other expenses incurred by them in connection with investigating or defending or preparing to defend against any such Loss, action or proceeding; provided, however, that the Company shall not be liable to any such Designated Holder or other indemnitee in any such case to the extent, and only to the extent, that any such Loss (or action or proceeding, whether commenced or threatened, in respect thereof) arises out of or is based upon (x) an untrue statement or alleged untrue statement or omission or alleged omission, made in such Registration Statement, any such prospectus or preliminary or summary prospectus or any amendment or supplement thereto, in reliance upon, and in conformity with, written information prepared and furnished to the Company by such Designated Holder or its Affiliates or Representatives expressly for use therein or (y) use of a Registration Statement or the related prospectus during a period when a stop order has been issued in respect of such Registration Statement or any proceedings for that purpose have been initiated or use of a prospectus when use of such prospectus has been suspended pursuant to Sections 2.5(b), 2.6(e); provided that in each case, that such Holder was given prior written notice in accordance with Section 3.6 hereof of such stop order, initiation of proceedings or suspension from the Company.  In no event, however, shall the Company be liable for indirect, incidental or consequential or special damages of any kind, even if the Company was aware of or specifically advised as to the possibility of such damages.  In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Designated Holders if requested in connection with any Registration Statement.

 

(b)           In connection with the filing of the Registration Statement by the Company pursuant to this Agreement, the Designated Holders will furnish to the Company in writing such information as the Company reasonably requests for use in connection with such Registration Statement and the related prospectus and, to the fullest extent permitted by law, each such Designated Holder will indemnify and hold harmless the Company and its Representatives from and against any Losses, severally but not jointly, and any action in respect thereof to which the Company and its Representatives may become subject under the Securities Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) the purchase or sale of Registrable Securities during a suspension as set forth in Sections 2.5(b), 2.6(e) or 2.6(i) hereof, in each case after written notice of such suspension was given to the Designated Holder pursuant to the terms of Section 3.6 hereof, (ii) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, prospectus or preliminary or summary prospectus or any amendment or supplement thereto, or (iii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but, with respect to clauses (ii) and (iii) above, only to the extent that such untrue statement or omission is made in such Registration Statement, any such prospectus or preliminary or summary prospectus or any amendment or supplement thereto, in reliance upon and in conformity with written information prepared and furnished to the Company by such Designated Holder expressly for use therein or by failure of such Designated Holder to deliver a copy of the Registration Statement or prospectus or any amendments or supplements thereto, and such Designated Holder will reimburse the Company and each Representative for any legal or any other expenses incurred by them in connection with investigating or defending or preparing to defend against any such Loss, action or proceeding; provided, however, that such Designated Holder shall not be liable in any such case to the extent that prior to the filing of any such Registration Statement or prospectus or amendment or supplement thereto, such Designated Holder has furnished in writing to the Company information expressly for use in such Registration Statement or prospectus or any amendment or supplement thereto that corrected or made not misleading information previously furnished to the Company.  In no event, however, shall any Designated Holder be liable for indirect, incidental or consequential or special damages of any kind, even if the Designated Holder was aware of or specifically advised as to the possibility of such damages.  In no event shall the liability of any Designated Holder hereunder be greater than the dollar amount of the net proceeds received by such Designated Holder upon the sale of the Registrable Securities or other securities pursuant to the Registration Statement.

 

  

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(c)           Promptly after receipt by any Person in respect of which indemnity may be sought pursuant to Section 2.9(a) or 2.9(b) (an “Indemnified Party”) of notice of any claim or the commencement of any action, the Indemnified Party shall, if a claim in respect thereof is to be made against the Person against whom such indemnity may be sought (an “Indemnifying Party”), promptly notify the Indemnifying Party in writing of the claim or the commencement of such action; provided, that the failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that it may have to an Indemnified Party under Section 2.9(a) or 2.9(b) except to the extent of any actual prejudice resulting therefrom.  If any such claim or action shall be brought against an Indemnified Party, and it shall notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled to participate therein, and, to the extent that it wishes, jointly with any other similarly notified Indemnifying Party, to assume the defense thereof with counsel reasonably satisfactory to the Indemnified Party.  After notice from the Indemnifying Party to the Indemnified Party of its election to assume the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided, that the Indemnified Party shall have the right to employ separate counsel to represent the Indemnified Party and its Representatives who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, but the fees and expenses of such counsel shall be for the account of and shall be paid by such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) in the written opinion of counsel to such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interest between them, it being understood, however, that the Indemnifying Party shall not, in connection with any one such claim or action or separate but substantially similar or related claims or actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all Indemnified Parties.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding other than the payment of monetary damages by the Indemnifying Party on behalf of the Indemnified Party.  Whether or not the defense of any claim or action is assumed by the Indemnifying Party, such Indemnifying Party will not be subject to any liability for any settlement made without its consent, which consent will not be unreasonably withheld.

 

  

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(d)           If the indemnification provided for in this Section 2.9 is unavailable to the Indemnified Parties in respect of any Losses referred to herein, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Designated Holders on the other from the offering of the Registrable Securities, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of the Company on the one hand and the Designated Holders on the other in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations.  The relative fault of the Company on the one hand and of each Designated Holder on the other shall be determined by reference to, among other things, whether any action taken, including any untrue or alleged untrue statement of a material fact, or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

The Company and the Designated Holders agree that it would not be just and equitable if contribution pursuant to this Section 2.9(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph.  The amount paid or payable by an Indemnified Party as a result of the Losses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 2.9, no Designated Holder shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities of such Designated Holder were offered to the public.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  Each Designated Holder’s obligations to contribute pursuant to this Section 2.9 is several in the proportion that the proceeds of the offering received by such Designated Holder bears to the total proceeds of the offering received by all the Designated Holders.  The indemnification provided by this Section 2.9 shall be a continuing right to indemnification with respect to sales of Registrable Securities and shall survive the registration and sale of any Registrable Securities by any Designated Holder and the expiration or termination of this Agreement.  The indemnity and contribution agreements contained herein are in addition to any liability that any Indemnifying Party might have to any Indemnified Party.

 

2.10           Participation in Registrations.

 

(a)           No Person may participate in any registration hereunder that is underwritten unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and this Agreement.

 

  

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(b)           Each Person that is participating in any registration under this Agreement agrees that, upon receipt of any notice in accordance with the terms of Section 3.6 hereof from the Company of the happening of any event of the kind described in Section 2.6(e) or 2.6(i) above, such Person will forthwith discontinue any further disposition of its Registrable Securities pursuant to the Registration Statement and all use of the Registration Statement or any prospectus or related document until such Person receives copies of a supplemented or amended prospectus as contemplated by such Section 2.6(e) and, if so directed by the Company, will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Designated Holder’s possession, of such documents at the time of receipt of such notice.  Furthermore, each Designated Holder agrees that it will comply with the prospectus delivery requirements of the Securities Act applicable to it in connection with any sale of Registrable Securities pursuant to a Registration Statement and if such Designated Holder uses a prospectus in connection with the offering and sale of any of the Registrable Securities, the Designated Holder will use only the latest version of such prospectus provided to the Designated Holder by the Company prior to the time at which a sale of Registrable Securities has been made.

 

ARTICLE III

 

MISCELLANEOUS

 

3.1           Waiver of Prior Defaults.  All defaults or alleged defaults by the Company, including failures to timely file and/or have declared effective any Registration Statement, under or in connection with the Original Registration Rights Agreement or any other registration rights agreement (including Other Registration Agreements) to which the Holder is party with the Company, and all monetary or other penalties, damages or compensation arising from such defaults or failures, including, specifically, but without limitation, the amounts required by Section 2.1(a), are hereby irrevocably waived, released and extinguished, and no such amounts are accrued nor will accrue and the claims related thereto are terminated.  The Original Registration Rights Agreement and all such other registration rights agreements (including Other Registration Agreements) are hereby terminated without fault or liability, and this Agreement is the only registration rights agreement between the parties.

 

3.2           Limitations on Subsequent Registration Rights.  From and after the date of this Agreement, the Company shall not, without the prior written consent of the Majority Holders then outstanding, not to be unreasonably withheld or delayed, enter into any agreement with any holder or prospective holder of any securities of the Company that would provide to such holder the right to include securities in any registration on other than either a pro rata basis with respect to the Registrable Securities or on a subordinate basis after all Holders have had the opportunity to include in the registration and offering all shares of Registrable Securities that they wish to so include; provided that this limitation shall not apply to any additional Holder who becomes a party to this Agreement in accordance with Section 3.15.

 

3.3           Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the Majority Holders; and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party.  The Company shall give reasonably prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver.  Any amendment, termination, or waiver effected in accordance with this Section 3.3 shall be binding on all parties hereto, regardless of whether any such party has consented thereto.

 

  

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3.4           Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be held to be prohibited by or invalid wider applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

3.5           Counterparts.  This Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

3.6           Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement.

 

3.7           Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Purchase Agreement.

 

3.8           Captions.  The captions, headings and arrangements used in this Agreement are for convenience only and do not in any way limit or amplify the terms and provisions hereof.

 

3.9           No Prejudice.  The terms of this Agreement shall not be construed in favor of or against any party on account of its participation in the preparation hereof.

 

3.10           Remedy for Breach.  The Company hereby acknowledges that in the event of any breach or threatened breach by the Company of any of the provisions of this Agreement, the Designated Holders would have no adequate remedy at law and could suffer substantial and irreparable damage.  Accordingly, the Company hereby agrees that, in such event, the Designated Holders shall be entitled, and notwithstanding any election by any Designated Holder to claim damages, to obtain a temporary and/or permanent injunction to restrain any such breach or threatened breach or to obtain specific performance of any such provisions, all without prejudice to any and all other remedies that any Designated Holders may have at law or in equity.

 

  

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3.11           Successors and Assigns.  The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; or (iii) after such transfer, holds at least $500,000 in aggregate amount of shares of Registrable Securities (based on the price per share in the Purchase Agreement) (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations); provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to all of the terms and conditions of this Agreement.  For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided further that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement.  The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

3.12           Entire Agreement.  This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.  Upon the effectiveness of this Agreement, the Original Registration Rights Agreement shall be deemed amended and restated and superseded and replaced in its entirety by this Agreement, and shall be of no further force or effect.

 

3.13           Confidentiality.  Each Designated Holder agrees to keep confidential and not to disclose to or use for the benefit of any third party any information that at any time is communicated by the Company or its Representatives as being confidential without the prior written approval of the Company; provided, however, that this provision shall not apply to information the Designated Holder proves is already part of the public domain (except by breach of this Agreement) or is required to be disclosed by law, provided that Designated Holder provides the Company with advance notice of such disclosure and cooperates with the Company to prevent or limit the scope of such disclosure.

 

3.14           Independent Nature of Holders’ Obligations and Rights.  The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder.  Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement.  Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose.

 

3.15           Additional Holders.  Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of its capital stock (common stock or preferred stock convertible into common stock) after the date hereof, whether pursuant to the Purchase Agreement or otherwise, any purchaser of such shares may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, and thereafter shall be deemed an “Holder” for all purposes hereunder.  No action or consent by the Holders shall be required for such joinder to this Agreement by such additional Holder, so long as such additional Holder has agreed in writing to be bound by all of the obligations as an “Holder” hereunder.

 

  

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3.16           Other Agreements.  Notwithstanding anything to the contrary contained herein, all Holders acknowledge that the Company has entered other registration agreements as disclosed in the disclosure schedules to the Purchase Agreement.

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Registration Rights Agreement to be duly executed as of the date and year first written above.

 

	 	 
PATIENT SAFETY TECHNOLOGIES, INC.

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	Title: 	 	 
	 	 	 	 

 

Name of Holder:                                                                          

 

Signature of Authorized Signatory of Holder:                                                                                                                    

 

Name of Authorized Signatory:                                                                                               

 

Title of Authorized Signatory:                                                                                              

 

  

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