FORM 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 31, 2007
Electro-Optical Sciences, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction
of incorporation)
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000-51481
(Commission
File Number)
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13-3986004
(IRS Employer
Identification No.) |
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3 West Main Street, Suite 201,
Irvington, New York
(Address of principal executive offices)
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10533
(Zip Code) |
Registrants telephone number, including area code (914) 591-3783
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instructions
A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On July 31, 2007 Electro-Optical Sciences, Inc. (the Company) entered into a securities
purchase agreement and a registration rights agreement with certain accredited investors for the
private placement of 2,000,178 shares of its common stock at a price of $5.75 per share, and
warrants to purchase up to 500,041 shares of its common stock at an exercise price of $8.00 per
share, for aggregate gross proceeds of approximately
$11.5 million. The warrants will expire five years from their
date of issuance. The private placement will be completed pursuant to an exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder. Pursuant to the terms of the registration rights agreement, the Company
has agreed to cause a resale registration statement covering the shares, including the shares
issuable upon exercise of the warrants, to be filed within 30 days after closing. Cowen and
Company, LLC acted as lead placement agent and ThinkEquity Partners LLC acted as co-placement agent
for the private placement. The transaction is further described in the press release issued by the
Company on August 1, 2007, a copy of which is filed herewith as Exhibit 99.1.
The foregoing description is only a summary and is qualified in its entirety by reference to the
aforementioned transaction documents contained in Exhibits 4.1, 10.1, 10.2 and 99.1, each of which
is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities
The information set forth under Item 1.01 of this current report on Form 8-K is hereby
incorporated by reference into this Item 3.02.
Item 9.01 Financial Statements and Exhibits
(b) Exhibits.
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Exhibit |
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Number |
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Description |
4.1
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Form of Warrant |
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10.1
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Securities Purchase Agreement among the Company and the
purchasers identified on the signature pages thereto, dated as
of July 31, 2007 |
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10.2
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Registration Rights Agreement among the Company and the
purchasers identified on the signature pages thereto, dated as
of July 31, 2007 |
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99.1
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Press Release of the Company dated August 1, 2007 titled
Electro-Optical Sciences Announces $11.5 Million Private
Placement |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Electro-Optical Sciences, Inc.
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Date: August 1, 2007 |
By: |
/s/ Joseph V. Gulfo
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President & Chief Executive Officer |
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(Principal Executive Officer) |
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EXHIBIT INDEX
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EXHIBIT NO. |
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DESCRIPTION |
4.1
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Form of Warrant |
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10.1
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Securities Purchase Agreement among the Company and the
purchasers identified on the signature pages thereto,
dated as of July 31, 2007 |
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10.2
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Registration Rights Agreement among the Company and the
purchasers identified on the signature pages thereto,
dated as of July 31, 2007 |
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99.1
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Press Release of the Company dated August 1, 2007 titled
Electro-Optical Sciences Announces $11.5 Million Private
Placement |
3
EX-4.1
Exhibit 4.1
[FORM OF WARRANT]
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
INTO WHICH THESE SECURITIES ARE EXERCISABLE 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 OPINION OF COUNSEL (WHICH
COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
ELECTRO-OPTICAL SCIENCES, INC.
Warrant To Purchase Common Stock
Warrant No.:
Number of Shares of Common Stock:
Date of Issuance: August , 2007 (Issuance Date)
Electro-Optical Sciences, Inc., a corporation organized under the laws of Delaware (the
Company), hereby certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, [BUYERS], the registered holder hereof or its permitted assigns
(the Holder), is entitled, subject to the terms set forth below, to purchase from the Company, at
the Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase
Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or
replacement hereof, the Warrant), at any time or times on or after one hundred and eighty days
(180) from the date hereof, but not after 11:59 p.m., New York time, on the Expiration Date (as
defined below), ___(___)1 fully paid nonassessable shares of
Common Stock (as defined below) (the Warrant Shares). Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth in Section 16. This Warrant is
one of the Warrants to purchase Common Stock (the SPA Warrants) issued pursuant to Section 1 of
that certain Securities Purchase Agreement, dated as of July 31, 2007 (the Subscription Date), by
and among the Company and the investors (the Buyers) referred to therein (the Securities
Purchase Agreement).
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1 |
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Insert number of shares equal to 25% of the
number of Common Stock purchased under the Securities Purchase Agreement
rounded down to the nearest whole number. |
1. EXERCISE OF WARRANT.
(a) Mechanics of Exercise. Subject to the terms and conditions hereof (including,
without limitation, the limitations set forth in Section 1(f)), this Warrant may be exercised by
the Holder on any day on or after one hundred and eighty days (180) from the date hereof to and
including the Expiration Date, in whole or in part, by (i) delivery of a written notice, in the
form attached hereto as Exhibit A (the Exercise Notice), of the Holders election to
exercise this Warrant and (ii) (A) payment to the Company of an amount equal to the applicable
Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being
exercised (the Aggregate Exercise Price) in cash or by wire transfer of immediately available
funds or (B) by notifying the Company that this Warrant is being exercised pursuant to a Cashless
Exercise (as defined in Section 1(d)). At 11:59 P.M., New York City time on the Expiration Date,
the portion of this Warrant not exercised prior thereto shall be and become void and of no value.
The Holder shall not be required to deliver the original Warrant in order to effect an exercise
hereunder. Execution and delivery of the Exercise Notice with respect to less than all of the
Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a
new Warrant evidencing the right to purchase the remaining number of Warrant Shares. On or before
the second (2nd) Business Day following the date on which the Company has received each of the
Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless Exercise) (the Exercise
Delivery Documents), the Company shall transmit by facsimile an acknowledgment of confirmation of
receipt of the Exercise Delivery Documents to the Holder and the Companys transfer agent (the
Transfer Agent). On or before the third (3rd) Business Day following the date on
which the Company has received all of the Exercise Delivery Documents (the Share Delivery Date),
the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust
Company (DTC) Fast Automated Securities Transfer Program and the Warrant Shares may be issued
without any restrictive legends in accordance with Section 2(g) of the Securities Purchase
Agreement, upon the request of the Holder, credit such aggregate number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the Holders or its designees balance account
with DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the Transfer Agent is
not participating in the DTC Fast Automated Securities Transfer Program, issue and dispatch by
overnight courier to the address as specified in the Exercise Notice, a certificate, registered in
the Companys share register in the name of the Holder or its designee, for the number of shares of
Common Stock to which the Holder is entitled pursuant to such exercise, which certificate shall
bear any legends required in accordance with Section 2(g) of the Securities Purchase Agreement.
Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares with respect to which this
Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the
Holders DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as
the case may be. If this Warrant is submitted in connection with any exercise pursuant to this
Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is
greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall
as soon as practicable issue a new Warrant (in accordance with Section 7(d)) representing the right
to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No
fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather
the number of shares of Common Stock to be issued shall be rounded
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up to the nearest whole number. The Company shall pay any and all taxes which may be payable
with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.
(b) Exercise Price. For purposes of this Warrant, Exercise Price means $8.00,
subject to adjustment as provided herein.
(c) Companys Failure to Timely Deliver Securities. If the Company shall fail for any
reason or for no reason to issue to the Holder within three (3) Business Days of receipt of the
Exercise Delivery Documents, a certificate for the number of shares of Common Stock to which the
Holder is entitled and register such shares of Common Stock on the Companys share register or to
credit the Holders balance account with DTC for such number of shares of Common Stock to which the
Holder is entitled upon the Holders exercise of this Warrant or if the Company fails to deliver to
the Holder a certificate or certificates representing the applicable Warrant Shares within three
(3) Trading Days after its obligation to do so under clause (ii) below, and if on or after such
Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon
such exercise or receipt that the Holder anticipated receiving from the Company (a Buy-In), then
the Company shall, within three (3) Business Days after the Holders request and in the Holders
discretion, either (i) pay cash to the Holder in an amount equal to the Holders total purchase
price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the
Buy-In Price), at which point the Companys obligation to deliver such certificate (and to issue
such Warrant Shares) shall terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such Warrant Shares and pay cash to the Holder in
an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock, times (B) the Closing Bid Price on the date of exercise.
(d) Cashless Exercise. Notwithstanding anything contained herein to the contrary, if
a Registration Statement (as defined in the Registration Rights Agreement) covering the Warrant
Shares that are the subject of the Exercise Notice (the Unavailable Warrant Shares) is not
available for the resale of such Unavailable Warrant Shares, the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate
Exercise Price, elect instead to receive upon such exercise the Net Number of shares of Common
Stock determined according to the following formula (a Cashless Exercise):
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Net Number
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=
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(A x B) - (A x C)
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B |
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For purposes of the foregoing formula:
A = |
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the total number of shares with respect to which
this Warrant is then being exercised. |
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the Closing Sale Price of the shares of Common
Stock (as reported by Bloomberg) on the date immediately preceding
the date of the Exercise Notice. |
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C = |
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the Exercise Price then in effect for
the applicable Warrant Shares at the time of such
exercise. |
(e) Limitations on Exercises; Beneficial Ownership. The Company shall not effect the
exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the
extent that after giving effect to such exercise, such Holder (together with such Holders
affiliates, and any other Persons whose beneficial ownership of Common Stock would be aggregated
with such Holders for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended
(the Exchange Act)) would beneficially own in excess of 4.99% of the shares of Common Stock
outstanding immediately after giving effect to such exercise. For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by such Holder and its
affiliates shall include the number of shares of Common Stock issuable upon exercise of this
Warrant with respect to which the determination of such sentence is being made, but shall exclude
shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by such Holder and its affiliates and (ii) exercise or
conversion of the unexercised or unconverted portion of any other securities of the Company
beneficially owned by such Person and its affiliates (including, without limitation, any
convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion
or exercise analogous to the limitation contained herein. Except as set forth in the preceding
sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this
Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (1) the Companys most recent Form
10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange
Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any
other notice by the Company or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the
Company shall within two (2) Business Days confirm orally and in writing to the Holder the number
of shares of Common Stock then outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the conversion or exercise of securities of
the Company, including the SPA Warrants, by the Holder and its affiliates since the date as of
which such number of outstanding shares of Common Stock was reported. By written notice to the
Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other
percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase
will not be effective until the sixty-first (61st) day after such notice is delivered to
the Company, and (ii) any such increase or decrease will apply only to the Holder and not to any
other holder of SPA Warrants.
(f) Insufficient Authorized Shares. If at any time while any of the Warrants remain
outstanding the Company does not have a sufficient number of authorized and unreserved shares of
Common Stock to satisfy its obligation to reserve for issuance upon exercise of the Warrants at
least a number of shares of Common Stock equal to 100% (the
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Required Reserve Amount) of the number of shares of Common Stock as shall from time to time
be necessary to effect the exercise of all of the Warrants then outstanding, then the Company shall
immediately take all action necessary to increase the Companys authorized shares of Common Stock
to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the
Warrants then outstanding.
2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. If the Company, at any
time while this Warrant is outstanding, subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such subdivision will
be proportionately reduced and the number of Warrant Shares will be proportionately increased. If
the Company, at any time while this Warrant is outstanding, combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares will be proportionately decreased. Any
adjustment under this Section 2 shall become effective at the close of business on the date the
subdivision or combination becomes effective.
3. RIGHTS UPON DISTRIBUTION OF ASSETS. If the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares
of Common Stock (which dividend or other distribution has not already been given to the Holders of
the Warrants), by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or options by way of a dividend, spin
off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a Distribution), at any time after the issuance of this Warrant and prior to the Expiration
Date, then, in each such case:
(a) any Exercise Price in effect immediately prior to the close of business on the record date
fixed for the determination of holders of shares of Common Stock entitled to receive the
Distribution shall be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Exercise Price by a fraction of which (i) the numerator shall
be the Closing Bid Price of the shares of Common Stock on the Trading Day immediately preceding
such record date minus the value of the Distribution (as determined in good faith by the Companys
Board of Directors) applicable to one share of shares of Common Stock, and (ii) the denominator
shall be the Closing Bid Price of the shares of Common Stock on the Trading Day immediately
preceding such record date; and
(b) the number of Warrant Shares shall be increased to a number of shares equal to the number
of shares of Common Stock obtainable immediately prior to the close of business on the record date
fixed for the determination of holders of shares of Common Stock entitled to receive the
Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding
paragraph (a); provided that in the event that the Distribution is of shares of Common Stock (or
common stock) (
Other Shares of Common Stock) of a company whose common shares are traded on a
national securities exchange or a national automated quotation system, then the Holder may elect to
receive a warrant to purchase Other Shares of Common Stock in lieu of an increase in the number of
Warrant Shares, the terms of which shall
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be identical to those of this Warrant, except that such warrant shall be exercisable into the
number of shares of Other Shares of Common Stock that would have been payable to the Holder
pursuant to the Distribution had the Holder exercised this Warrant immediately prior to such record
date and with an aggregate exercise price equal to the product of the amount by which the exercise
price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the
immediately preceding paragraph (a) and the number of Warrant Shares calculated in accordance with
the first part of this paragraph (b).
4. FUNDAMENTAL TRANSACTIONS. If, at any time while this Warrant is outstanding there
is a Fundamental Transaction, then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the same amount and kind of securities, cash or property as it would have
been entitled to receive upon the occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the Holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the Alternate Consideration). For purposes of
any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of Common Stock are
given any choice as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental Transaction. Any successor
to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new
warrant substantially in the form of this Warrant and consistent with the foregoing provisions and
evidencing the Holders right to purchase the Alternate Consideration for the aggregate Exercise
Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or surviving entity to
comply with the provisions of this paragraph (b) and insuring that the Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction.
5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will
not, except and to the extent as waived or consented to by the Holder, by amendment of its
Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of
this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and
take all action as may be required to protect the rights of the Holder. Without limiting the
generality of the foregoing, the Company (i) shall not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect,
(ii) shall take all such actions as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of
this Warrant, and (iii) shall, so long as any of the SPA Warrants are outstanding, take all action
necessary to reserve and keep available out of its authorized and unissued shares of Common Stock,
solely for the purpose of effecting the exercise of the SPA Warrants, 100% of the number of shares
of Common Stock as shall from time to time be
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necessary to effect the exercise of the SPA Warrants then outstanding (without regard to any
limitations on exercise).
6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in such Persons capacity as a holder of this Warrant, shall not be
entitled to vote or receive dividends or be deemed the holder of share capital of the Company for
any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder,
solely in such Persons capacity as the Holder of this Warrant, any of the rights of a shareholder
of the Company or any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise,
prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to
receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant
shall be construed as imposing any liabilities on the Holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities
are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the
Company shall provide the Holder with copies of the same notices and other information given to the
shareholders of the Company generally, contemporaneously with the giving thereof to the
shareholders.
7. REISSUANCE OF WARRANTS.
(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, together with a written assignment of this Warrant duly
executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer, if any, whereupon the Company will forthwith issue and
deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as
the Holder may request, representing the right to purchase the number of Warrant Shares being
transferred by the Holder and, if less than the total number of Warrant Shares then underlying this
Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder
representing the right to purchase the number of Warrant Shares not being transferred.
(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company reasonably satisfactory to the Company and, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a
new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares
then underlying this Warrant.
(c)
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new Warrant or
Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the
right to purchase such portion of such Warrant Shares as is designated in writing by the Holder at
the time of such surrender; provided, however, that no
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Warrants for fractional shares of Common Stock shall be given.
(d) Issuance of New Warrants. Whenever the Company is required to issue a new Warrant
pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this
Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase
the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued
pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when
added to the number of shares of Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is
the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.
8. COMPANY OPTIONAL EXERCISE. (a) If at any time following the date the Registration
Statement is declared effective and from and after the two (2) year anniversary of the Issuance
Date (the Optional Exercise Eligibility Date), the Closing Sale Price of the Common Stock of the
Company is no less than one hundred fifty percent (150%) of the Exercise Price for any ten (10)
consecutive Trading Days (an Optional Exercise Measuring Period) and the Company has not failed
to satisfy all of the Equity Conditions during the period commencing on the Optional Exercise
Notice Date (as defined below) and ending on the Optional Exercise Date (as defined below), the
Company shall have the right to require the Holder to exercise all or any portion of this Warrant
as designated in an Optional Exercise Notice (as defined below), as of the Optional Exercise Date
(as defined below) (an Optional Exercise). The Company may exercise its right to require
exercise of this Warrant under this Section 8(a) by delivering a written notice thereof by
facsimile and overnight courier to the Holder and the Transfer Agent (the Optional Exercise
Notice and the date all of the holders received such notice is referred to as the Optional
Exercise Notice Date) no later than ten (10) Trading Days after the applicable Optional Exercise
Measuring Period. The Optional Exercise Notice delivered shall be irrevocable and shall state (A)
the date on which the Optional Exercise shall occur (the Optional Exercise Date) which date shall
be the twentieth (20th) Trading Day after the Optional Exercise Notice Date, and (B) the
aggregate number of Warrant Shares of which the Company has elected to be subject to Optional
Exercise from all of the Buyers pursuant to this Section 8.
(b)
Pro Rata Redemption Requirement. If the Company elects to cause an Optional
Exercise pursuant to Section 8(a), then it must simultaneously take the same action with respect to
the other SPA Warrants. If the Company elects to cause an Optional Exercise pursuant to Section
8(a) (or similar provisions under the other SPA Warrants) with respect to less than all of the
Warrant Shares underlying the SPA Warrants then outstanding, then the Company shall require
exercise of the Warrant Shares from each of the holders of the SPA Warrants equal to the product of
(i) the aggregate number of Warrant Shares which the Company has elected to cause to be exercised
pursuant to Section 8(a), multiplied by (ii) a fraction, the numerator of which is the sum of the
aggregate number of Warrant Shares underlying the SPA Warrants issued to such holder pursuant to
the Securities Purchase Agreement and the denominator of which is the sum of the aggregate number
of Warrant Shares underlying the SPA Warrants issued to all holders pursuant to the Securities
Purchase Agreement (such fraction with respect to each holder is referred to as its
Exercise
Allocation Percentage, and such amount with respect to each holder is referred to as its
Pro Rata
Exercise Amount). In the event that
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the initial holder of any SPA Warrants shall sell or otherwise transfer any of such holders
SPA Warrants, the transferee shall be allocated a pro rata portion of such holders Exercise
Allocation Percentage and Pro Rata Exercise Amount.
9. NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the
Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of
all actions taken pursuant to this Warrant, including in reasonable detail a description of such
action and the reason therefore. Without limiting the generality of the foregoing, the Company
will give written notice to the Holder (i) promptly upon any adjustment of the Exercise Price,
setting forth in reasonable detail, the calculation of such adjustment and (ii) at least fifteen
days prior to the date on which the Company closes its books or takes a record (A) with respect to
any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants,
issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property to holders of shares of Common Stock or (C) for determining rights to
vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case
that such information shall be made known to the public prior to or in conjunction with such notice
being provided to the Holder.
10. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this
Warrant may be amended and the Company may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if the Company has obtained the written consent
of the Required Holders; provided that no such action may increase the exercise price of any SPA
Warrant or decrease the number of shares or class of stock obtainable upon exercise of any SPA
Warrant without the written consent of the Holder. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the SPA Warrants then outstanding.
11. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in
accordance with, and all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.
12. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the
Company and all the Buyers and shall not be construed against any person as the drafter hereof.
The headings of this Warrant are for convenience of reference and shall not form part of, or affect
the interpretation of, this Warrant.
13. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within two Business Days of
receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If
the Holder and the Company are unable to agree upon such determination or calculation of the
Exercise Price or the Warrant Shares within three Business Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall, within two
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Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and approved by the Holder or (b)
the disputed arithmetic calculation of the Warrant Shares to the Companys independent, outside
accountant. The Company shall cause at its expense the investment bank or the accountant, as the
case may be, to perform the determinations or calculations and notify the Company and the Holder of
the results no later than ten Business Days from the time it receives the disputed determinations
or calculations. Such investment banks or accountants determination or calculation, as the case
may be, shall be binding upon all parties absent demonstrable error.
14. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies
provided in this Warrant shall be cumulative and in addition to all other remedies available under
this Warrant and the other Transaction Documents, at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall limit the right of
the Holder to pursue actual damages for any failure by the Company to comply with the terms of this
Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened breach, the holder
of this Warrant shall be entitled to seek, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic loss and without any
bond or other security being required.
15. TRANSFER. Subject to applicable law, this Warrant may be offered for sale, sold,
transferred or assigned without the consent of the Company, except as may otherwise be required by
Section 2(f) of the Securities Purchase Agreement.
16. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have
the following meanings:
(a) Bloomberg means Bloomberg Financial Markets.
(b) 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.
(c)
Closing Bid Price and
Closing Sale Price means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the closing trade price, as
the case may be, then the last bid price or last trade price, respectively, of such security prior
to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the
principal securities exchange or trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for
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such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of
any market makers for such security as reported in the pink sheets by Pink Sheets LLC (formerly
the National Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price
or the Closing Sale Price, as the case may be, of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such dispute shall be
resolved pursuant to Section 13. All such determinations to be appropriately adjusted for any
stock dividend, stock split, stock combination or other similar transaction during the applicable
calculation period.
(d) Common Stock means (i) the Companys shares of Common Stock, par value $0.001 per share,
and (ii) any share capital into which such Common Stock shall have been changed or any share
capital resulting from a reclassification of such Common Stock.
(e) Convertible Securities means any stock or securities (other than Options) directly or
indirectly convertible into or exercisable or exchangeable for shares of Common Stock.
(f) Dollar, US Dollar and $ each mean the lawful money of the United States.
(g) Eligible Market means the Principal Market, The New York Stock Exchange, Inc., the
American Stock Exchange, The NASDAQ Global Market or The NASDAQ Global Select Market.
(h) Equity Conditions means each of the following conditions: (i) the Warrant Shares are
either registered for resale pursuant to an effective registration statement naming the Holder as a
selling stockholder thereunder (and the prospectus thereunder is available for use by the Holder as
to all Warrant Shares) or freely transferable without volume restrictions pursuant Rule 144(k)
promulgated under the 1933 Act, as determined by counsel to the Company pursuant to a written
opinion letter addressed and in form and substance reasonably acceptable to the Holder, (ii) the
Company shall have been in material compliance with and shall not have materially breached any
provision, covenant, representation or warranty of any Transaction Document and (iii) the Common
Stock shall at all times be listed or quoted on an Eligible Market.
(i) Expiration Date means the date 60 months from the Closing Date or, if such date falls on
a day other than a Business Day or on which trading does not take place on the Principal Market (a
Holiday), the next date that is not a Holiday.
(j)
Fundamental Transaction means that the Company shall, directly or indirectly, in one or
more related transactions, (i) consolidate or merge with or into (whether or not the Company is the
surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose
of all or substantially all of the properties or assets of the Company to another Person, or (iii)
allow another Person to make a purchase, tender or exchange offer that is accepted by the holders
of more than the 50% of the outstanding shares of Common
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Stock (not including any shares of Common Stock held by the Person or Persons making or party
to, or associated or affiliated with the Persons making or party to, such purchase, tender or
exchange offer), or (iv) consummate a stock purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person whereby such other Person acquires more than the 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the other
Person or other Persons making or party to, or associated or affiliated with the other Persons
making or party to, such stock purchase agreement or other business combination), (v) reorganize,
recapitalize or reclassify its Common Stock, or (vi) any person or group (as these terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock..
(k) Options means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.
(l) Person means an individual, a limited liability company, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.
(m) Principal Market means The NASDAQ Capital Market.
(n) Registration Rights Agreement means that certain registration rights agreement by and
among the Company and the Buyers.
(o) Required Holders means the holders of the SPA Warrants representing at least a majority
of shares of Common Stock underlying the SPA Warrants then outstanding.
(p) Trading Day means any day on which the Common Stock is traded on the Principal Market,
or, if the Principal Market is not the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the Common Stock is then traded;
provided that Trading Day shall not include any day on which the Common Stock is scheduled to
trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is
suspended from trading during the final hour of trading on such exchange or market (or if such
exchange or market does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York time).
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly
executed as of the Issuance Date set out above.
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ELECTRO-OPTICAL SCIENCES, INC.
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EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
ELECTRO-OPTICAL SCIENCES, INC.
The undersigned holder hereby exercises the right to purchase ___ of the
shares of Common Stock (Warrant Shares) of Electro-Optical Sciences, Inc., a corporation
organized under the laws of Delaware (the Company), evidenced by the attached Warrant to
Purchase Common Stock (the Warrant). Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be
made as:
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a Cash Exercise with respect to Warrant Shares; and/or |
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a Cashless Exercise with respect to Warrant Shares. |
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2. Payment of Exercise Price. In the event that the holder has elected a Cash Exercise with
respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the
Aggregate Exercise Price in the sum of $ to the Company in accordance with the
terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to the holder Warrant
Shares in accordance with the terms of the Warrant.
Date: ,
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Name of Registered Holder
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ACKNOWLEDGMENT
The Company hereby acknowledges this Exercise Notice and hereby directs American Stock
Transfer & Trust Company to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated ___, 2007 from the Company and
acknowledged and agreed to by American Stock Transfer & Trust Company.
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ELECTRO-OPTICAL SCIENCES, INC.
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EX-10.1
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the Agreement), dated as of July 31, 2007, by and among
Electro-Optical Sciences, Inc., a Delaware corporation, with its principal offices 3 West Main
Street, Suite 201, Irvington, New York 10533 (the Company), and the investors listed on the
Schedule of Buyers attached hereto (individually, 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 Securities Act of
1933, as amended (the 1933 Act), and Rule 506 of Regulation D (Regulation D) as promulgated by
the United States Securities and Exchange Commission (the SEC) under the 1933 Act.
B. Each Buyer wishes to purchase on a several and not joint basis, and the Company
wishes to sell, upon the terms and conditions stated in this Agreement, (i) that aggregate number
of shares of the Common Stock, par value $0.001 per share, of the Company (the Common Stock), set
forth on such Buyers signature page to this Agreement (which aggregate amount for all Buyers
together with the Other Buyers (as defined below) shall be 2,000,178 shares of Common Stock and
shall collectively be referred to herein as the Common Shares), and (ii) a warrant to acquire up
to that number of additional shares of Common Stock set forth on such Buyers signature page to
this Agreement (collectively, the Warrant Shares), in substantially the form attached hereto as
Exhibit A (each a Warrant and, collectively, the Warrants).
C. Contemporaneously with the execution and delivery of this Agreement, the parties
hereto are executing and delivering a Registration Rights Agreement, substantially in the form
attached hereto as Exhibit B (the Registration Rights Agreement) pursuant to which the
Company has agreed to provide certain registration rights with respect to the Common Shares, and
the Warrant Shares under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.
D. The Common Shares, the Warrants and the Warrant Shares collectively are referred
to herein as the Securities.
NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF COMMON SHARES AND WARRANTS
(a) Purchase of Common Shares and Warrants.
Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, shall
purchase from the Company on the Closing Date (as defined below), the number of Common Shares as is
set forth on such Buyers signature page to this Agreement, along with a Warrant to acquire up to
that number of Warrant Shares as is set forth on Buyers signature page to this Agreement (the
Closing).
(i) Closing. The date and time of the Closing (the Closing Date) shall be 10:00
a.m., New York City time, on August 3, 2007 (or such later date as is mutually agreed to by the
Company and the Buyers) after notification of satisfaction (or waiver) of the conditions to the
Closing set forth in Sections 6 and 7 below at the offices of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304 or such other location as
is mutually agreed by the Company and the Buyers of a majority in interest of the Securities.
(ii) Purchase Price. The aggregate purchase price for the Common Shares and the
Warrants to be purchased by each such Buyer at the Closing (the Purchase Price) shall be the
amount set forth on such Buyers signature page to this Agreement.
(b) Form of Payment. On the Closing Date, (i) immediately after each Buyer is
delivered the Securities contemplated in clause (ii) below, each such Buyer shall pay its Purchase
Price to the Company for the Common Shares and the Warrants to be issued and sold to such Buyer at
the Closing, by wire transfer of immediately available funds in accordance with the Companys
written wire instructions and (ii) the Company shall deliver to each Buyer certificates
representing the Common Shares (allocated in the amounts as such Buyer shall request) which such
Buyer is then purchasing hereunder along with certificates representing the Warrants (allocated in
the amounts as such Buyer shall request) which such Buyer is purchasing, in each case duly executed
on behalf of the Company and registered in the name of such Buyer or its designee.
2. BUYERS REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
(a) No Public Sale or Distribution. Such Buyer is acquiring the Common Shares and the
Warrants, and upon exercise of the Warrants will acquire the Warrant Shares issuable upon exercise
of the Warrants, for its own account and not with a view towards, or for resale in connection with,
the public sale or distribution thereof, except pursuant to sales registered or exempted under the
1933 Act; provided, however, that by making the representations herein, such Buyer does not agree
to hold any of the Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance
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with or pursuant to a registration statement or an exemption under the 1933 Act and pursuant
to the applicable terms of the Transaction Documents (as defined in Section 3(b)). Such Buyer is
acquiring the Securities hereunder in the ordinary course of its business. Such Buyer does not
presently have any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities. Such Buyer is not a broker-dealer registered with the SEC under
the 1934 Act or an entity engaged in a business that would require it to be so registered as a
broker-dealer.
(b) Accredited Investor Status. At the time such Buyer was offered the Securities,
it was, and at the date hereof it is, and on each date on which it exercises any Warrants, it will
be an accredited investor as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(5), (a)(6), (a)(7) or
(a)(8) under the 1933 Act.
(c) Reliance on Exemptions. Such Buyer understands that the Securities 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 upon the truth and
accuracy of, and such Buyers 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 Securities.
(d) 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 Securities that have been requested by such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the Company. 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 Buyers right to rely on the
Companys representations and warranties contained herein. Such Buyer understands that its
investment in the Securities involves a high degree of risk and is able to afford a complete loss
of such investment. 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
Securities. Such Buyer has not relied on any information or advice furnished by or on behalf of
the Agents (as defined below) or by counsel to the Company in connection with the transactions
contemplated hereby.
(e) No Governmental Review. Such Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Securities.
(f) Transfer or Resale. Such Buyer understands that except as provided in the
Registration Rights Agreement: (i) the Securities 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
-3-
transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered
to the Company an opinion of counsel, in form, scope and substance reasonably acceptable to the
Company, to the effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides
the Company with reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule
thereto) (collectively, Rule 144); (ii) any sale of the Securities 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 Securities under circumstances in which the seller (or the Person (as
defined in Section 3(q)) 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 or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other
Person is under any obligation to register the Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption thereunder. The
Securities may be pledged in connection with a bona fide margin account or other loan or financing
arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of
Securities shall be required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined in
Section 3(b)), including, without limitation, this Section 2(f).
(g) Legends. Such Buyer understands that the certificates or other instruments
representing the Common Shares and the Warrants and, until such time as the resale of the Common
Shares and the Warrant Shares have been registered under the 1933 Act as contemplated by the
Registration Rights Agreement, the stock certificates representing the Warrant Shares, except as
set forth below, 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 NOR
THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN][THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO
THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
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OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
The legend set forth above shall be removed and the Company shall issue a certificate without such
legend to the holder of the Securities, if, unless otherwise required by state securities laws, (i)
such Securities are registered for resale under the 1933 Act, (ii) in connection with a sale,
assignment or other transfer, such holder provides the Company with an opinion of a law firm
reasonably acceptable to the Company, in form, scope and substance reasonably acceptable to the
Company, to the effect that such sale, assignment or transfer of the Securities may be made without
registration under the applicable requirements of the 1933 Act, or (iii) such holder provides the
Company with reasonable assurance that the Securities can be sold, assigned or transferred pursuant
to Rule 144 or Rule 144A.
(h) Validity; Enforcement. Each Buyer is duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation, and has all requisite power and authority
to enter into this Agreement and consummate the transactions contemplated hereby. This Agreement
and the Registration Rights Agreement 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.
(i) 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
which with notice or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities laws) applicable to
such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which 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.
(j) Residency. Such Buyer is a resident of that jurisdiction specified below its
address on the Schedule of Buyers.
(k) General Solicitation. Such Buyer is not purchasing the Securities as a result of
any advertisement, article, notice or other communication regarding the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any general advertisement.
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(l) Experience of Such Buyer. Such Buyer, either alone or together with its
representatives, has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment. Such Buyer is able to
bear the economic risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.
(m) Brokers and Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim against or upon the
Company or a Buyer for any commission, fee or other compensation pursuant to any agreement,
arrangement or understanding with a placement agent entered into by or on behalf of such Buyer.
(n) Prohibited Transactions. Since the time when such Buyer was first contacted by the
Company or the Agents regarding the transactions contemplated hereby, neither such Buyer nor any
Person acting on behalf of or pursuant to any understanding with such Buyer (collectively, Trading
Affiliates) nor, to such Buyers knowledge, any Affiliate of such Buyer, has, directly or
indirectly, effected or agreed to effect any short sale, whether or not against the box,
established any put equivalent position (as defined in Rule 16a-1(h) under the 1934 Act) with
respect to the Common Stock, granted any other right (including without limitation, any put or call
option) with respect to the Common Stock or with respect to any security that includes, relates to
or derived any significant part of its value from the Common Stock or otherwise sought to hedge its
position in the Securities (each, a Prohibited Transaction), and neither such Buyer nor its
Trading Affiliates will enter into a Prohibited Transaction after the date hereof until the
transactions contemplated hereby are announced pursuant to the 8-K Filing set forth in Section 4(i)
hereof.
(o) Acknowledgement. Such Buyer acknowledges and agrees that the foregoing
representations, warranties, covenants and acknowledgments are made by it with the intention that
they may be relied upon by the Company and its agents and legal counsel in determining its
eligibility or (if applicable) the eligibility of others on whose behalf it is contracting
hereunder to purchase the Securities under the applicable securities legislation. Such Buyer
further agrees that by accepting delivery of the Securities at the Closing Date, it shall be
representing and warranting that the foregoing representations and warranties are true and correct
as at the Closing Date with the same force and effect as if they had been made by such Buyer at the
Closing Date and that they shall survive the purchase by such Buyer of the Securities and still
continue in full force and effect notwithstanding any subsequent disposition by such Buyer of the
Securities. The Company and its counsel shall be entitled to rely on the representations and
warranties of such Buyer contained in this paragraph.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that, except as set forth in its SEC
Documents:
(a) Organization and Qualification. The Company is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction in which it is incorporated,
and has the requisite corporate power and authorization to own its properties and to carry on its
business as now being conducted. The Company is duly qualified as a foreign corporation to do
business and 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 reasonably be expected to 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, 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 (as defined below). The Company has no
subsidiaries (which for purposes of this Agreement means any entity (i) in which the Company,
directly or indirectly, owns capital stock or holds an equity or similar interest and (ii) which
has operations and material assets).
(b) 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, the Irrevocable Transfer Agent Instructions (as defined in Section
5), the Warrants 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 Securities in accordance with the terms hereof and thereof. 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
Common Shares and the Warrants and the reservation for issuance and the issuance of the Warrant
Shares issuable upon exercise of the Warrant have been duly authorized by the Companys Board of
Directors and no further filing, consent or authorization is required by the Company, its Board of
Directors or its stockholders. 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.
(c) Issuance of Securities. The Common Shares and the Warrants are duly authorized
and, when issued and paid for in accordance with the terms hereof, shall be validly issued and free
from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof
and the Common Shares shall be fully paid and nonassessable with the holders
-7-
being entitled to all rights accorded to a holder of Common Stock. As of the Closing, a
number of shares of Common Stock shall have been duly authorized and reserved for issuance which
equals or exceeds 100% of the aggregate of the maximum number of shares of Common Stock issuable
upon exercise of the Warrants. Upon exercise in accordance with the Warrants, the Warrant Shares
will be validly issued, fully paid and nonassessable and free from all preemptive or similar
rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled
to all rights accorded to a holder of Common Stock. Assuming the accuracy of each of the
representations and warranties set forth in Section 2 of this Agreement, the offer and issuance by
the Company of the Securities is exempt from registration under the 1933 Act.
(d) 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 Common Shares and Warrants
and reservation for issuance and issuance of the Warrant Shares) will not (i) result in a violation
of the certificate of incorporation, or bylaws of the Company or (ii) conflict with, or constitute
a default (or an event which 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 is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and
state securities laws and regulations and the rules and regulations of The NASDAQ Capital Market
(the Principal Market) applicable to the Company or by which any property or asset of the Company
is bound or affected, except for any such violation set forth in clauses (ii) or (iii) above as
could not reasonably be expected to result in Material Adverse Effect.
(e) Consents. The Company is not 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 other than such as have been made or obtained, and except for the
registration of the Securities under the 1933 Act pursuant to the Registration Rights Agreement,
the filing of Form D, any filings required to be made under state securities laws, and any required
filings or notifications regarding the issuance or listing of additional securities with the
Principal Market. The Company has no knowledge of any facts or circumstances that might prevent
the Company from obtaining or effecting any of the registration, application or filings pursuant to
the preceding sentence. The Company is not in violation of the listing requirements of the
Principal Market and has no knowledge of any facts that would reasonably lead to delisting or
suspension of the Common Stock in the foreseeable future. As used herein, knowledge shall mean
actual knowledge of the executive officers (as defined in Rule 405 under the 1933 Act) of the
Company after due inquiry.
(f) Acknowledgment Regarding Buyers Purchase of Securities. The Company acknowledges
and agrees that each Buyer is acting solely in the capacity of an arms length purchaser with
respect to the Transaction Documents and the transactions contemplated
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hereby and thereby and that no Buyer is acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or
agents in connection with the Transaction Documents and the transactions contemplated hereby and
thereby is merely incidental to such Buyers purchase of the Securities. The Company further
represents to each Buyer that the Companys decision to enter into the Transaction Documents has
been based solely on the independent evaluation by the Company and its representatives.
(g) No General Solicitation; Placement Agents Fees. 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 Securities. The Company shall be responsible for the payment of any placement
agents fees, financial advisory fees, or brokers commissions (other than for persons engaged by
any Buyer or its investment advisor) relating to or arising out of the transactions contemplated
hereby. The Company acknowledges that it has engaged Cowen and Company, LLC, as lead placement
agent, and ThinkEquity Partners LLC, as co-placement agent (collectively, the Agents) in
connection with the sale of the Securities. Other than the Agents, the Company has not engaged any
placement agent or other agent in connection with the sale of the Securities.
(h) No Integrated Offering. Assuming the accuracy of the Buyers representations and
warranties set forth in Section 2 hereof, none of the Company, 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 require registration of
the issuance of any of the Securities under the 1933 Act, whether through integration with prior
offerings or otherwise, or cause this offering of the Securities to require approval of
stockholders of the Company for purposes of 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 or designated. None of
the Company, 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
Securities under the 1933 Act or cause the offering of the Securities to be integrated with other
offerings for purposes of any such applicable stockholder approval provisions.
(i) Application of Takeover Protections; Rights Agreement. The Company and its board
of directors have taken all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Certificate of Incorporation (as
defined in Section 3(p)) or the laws of the State of Delaware which is or could become applicable
to any Buyer as a result of the transactions contemplated by this Agreement, including, without
limitation, the Companys issuance of the Securities and any Buyers ownership of the Securities.
The Company and its board of directors have taken all necessary
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action, if any, in order to render inapplicable any stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of Common Stock or a change in
control of the Company.
(j) SEC Documents; Financial Statements. Since October 28, 2005 (the Reporting
Period), the Company has timely 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
1934 Act (all of the foregoing filed during the Reporting Period or prior to the date of the
Closing and all exhibits included therein and financial statements, notes and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the SEC Documents).
The Company has delivered to the Buyers or their respective representatives true, correct and
complete copies of the SEC Documents not available on the EDGAR system, if any. As of their
respective filing dates, the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, 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 filing 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. Such financial statements have been prepared in accordance with generally
accepted accounting principles, 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 footnotes 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).
No other information provided by or on behalf of the Company to the Buyers which is not included in
the SEC Documents, including, without limitation, information referred to in Section 2(d) of this
Agreement or in any disclosure schedules, contains any untrue statement of a material fact or omits
to state any material fact necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made not misleading.
(k) Absence of Certain Changes. Since March 31, 2007, there has been no material
adverse change and no material adverse development in the business, properties, operations,
condition (financial or otherwise), or results of operations or prospects of the Company. Since
March 31, 2007, the Company has not declared or paid any dividends. The Company has not taken any
steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or
reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any
actual knowledge of any fact that would reasonably lead a creditor to do so. The Company is not as
of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the
Closing, will not be Insolvent (as defined below). For purposes of this Section 3(k), Insolvent
means, with respect to any Person (as defined in Section 3(q)), (i) the present fair saleable value
of such Persons assets is less than the
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amount required to pay such Persons total Indebtedness (as defined in Section 3(q)), (ii)
such Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured, (iii) such Person intends to incur or
believes that it will incur debts that would be beyond its ability to pay as such debts mature or
(iv) such Person has unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is currently proposed to be conducted.
(l) Conduct of Business; Regulatory Permits. The Company is not in violation of any
term of or in default under its Certificate of Incorporation, any certificate of designations of
any outstanding series of preferred stock of the Company or the Bylaws. The Company is not in
violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable
to the Company, and the Company will not conduct its business in violation of any of the foregoing,
except for possible violations which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, the
Company is not in violation of any of the rules, regulations or requirements of the Principal
Market and has no knowledge of any facts or circumstances that would reasonably lead to delisting
or suspension of the Common Stock by the Principal Market in the foreseeable future. Since October
28, 2005, (i) the Common Stock has been designated for quotation or included for listing on the
Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the
Principal Market and (iii) the Company has received no communication, written or oral, from the SEC
or the Principal Market regarding the suspension or delisting of the Common Stock from the
Principal Market. The Company possess all certificates, authorizations and permits issued by the
appropriate regulatory authorities necessary to its business, except where the failure to possess
such certificates, authorizations or permits could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and the Company has not received any
notice of proceedings relating to the revocation or modification of any such certificate,
authorization or permit.
(m) Foreign Corrupt Practices. Neither the Company nor any director, officer, agent,
employee or other Person acting on behalf of the Company has, in the course of its actions for, or
on behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or employee from corporate
funds; (iii) violated or is in violation in any material respect of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic government
official or employee.
(n) Sarbanes-Oxley Act. The Company is in material compliance with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof,
and any and all applicable rules and regulations promulgated by the SEC thereunder that are
effective as of the date hereof.
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(o) Transactions With Affiliates. Except as set forth in the SEC Documents and as set
forth in Schedule 3(o) hereof, none of the officers, or directors, and to the knowledge of
the Company , none of the employees of the Company is presently a party to any transaction with the
Company (other than for ordinary course services as employees, consultants, officers or directors),
including any contract, agreement or other arrangement providing for the furnishing of services to
or by, providing for rental of real or personal property to or from, or otherwise requiring
payments to or from any such officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer, director, or employee
has a substantial interest or is an officer, director, trustee or partner.
(p) Equity Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of (x) 30,000,000 shares of Common Stock, of which as of the date hereof,
13,401,704 shares are issued and outstanding, 2,301,171 shares are reserved for issuance pursuant
to the Companys employee incentive plan and other options and warrants outstanding and no shares
are reserved for issuance pursuant to securities (other than the Warrants) exercisable or
exchangeable for, or convertible into, shares of Common Stock, and (y) 10,000,000 shares of
preferred stock, of which as of the date hereof, none are issued and outstanding. All of such
outstanding shares have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as set forth above in this Section 3(p): (i) none of the Companys 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 of the Company,
or contracts, commitments, understandings or arrangements by which the Company is or may become
bound to issue additional capital stock of the Company or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of the Company; (iii) there
are no outstanding debt securities, notes, credit agreements, credit facilities or other
agreements, documents or instruments evidencing Indebtedness of the Company or by which the Company
is or may become bound; (iv) there are no financing statements securing obligations in any material
amounts, either singly or in the aggregate, filed in connection with the Company; (v) there are no
agreements or arrangements under which the Company is obligated to register the sale of any of its
securities under the 1933 Act (except pursuant to the Registration Rights Agreement); (vi) there
are no outstanding securities or instruments of the Company which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or arrangements by which the
Company is or may become bound to redeem a security of the Company; (vii) there are no securities
or instruments containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; (viii) the Company does not have any stock appreciation rights or
phantom stock plans or agreements or any similar plan or agreement; and (ix) the Company has no
liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed in
the SEC Documents, other than those incurred in the ordinary course of the Companys business and
which, individually or in the aggregate, do not or would not have a Material Adverse Effect. The
Company has furnished or made available to the Buyers true, correct and complete copies of the
Companys Certificate of Incorporation, as amended and as in effect on the date hereof (the
Certificate of Incorporation), and the Companys Bylaws, as amended and as in effect on the
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date hereof (the Bylaws), and the terms of all securities convertible into, or exercisable
or exchangeable for, shares of Common Stock and the material rights of the holders thereof in
respect thereto.
(q) Indebtedness and Other Contracts. The Company (i) does not have any outstanding
Indebtedness (as defined below), (ii) is not a party to any contract, agreement or instrument, the
violation of which, or default under which, by the other party(ies) to such contract, agreement or
instrument could reasonably be expected to result in a Material Adverse Effect, (iii) is not in
violation of any term of or in default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not result, individually or in the
aggregate, in a Material Adverse Effect, or (iv) is not a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the judgment of the Companys
officers, has or is expected to have a Material Adverse Effect. For purposes of this Agreement:
(x) Indebtedness of any Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property
or services, including (without limitation) capital leases in accordance with generally accepted
accounting principles (other than trade payables entered into in the ordinary course of business),
(C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and
other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses, (E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either case with respect to any
property or assets acquired with the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with generally accepted accounting principles, consistently
applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness
referred to in clauses (A) through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien,
pledge, charge, security interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which owns such assets or
property has not assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to
in clauses (A) through (G) above; (y) Contingent Obligation means, as to any Person, any direct
or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness,
lease, dividend or other obligation of another Person if the primary purpose or intent of the
Person incurring such liability, or the primary effect thereof, is to provide assurance to the
obligee of such liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability will be protected (in
whole or in part) against loss with respect thereto; and (z) 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.
(r) Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by the Principal Market, any court, public board, government agency,
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self-regulatory organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company, the Common Stock or any of the Companys officers or directors,
whether of a civil or criminal nature or otherwise that if adversely determined would reasonably be
expected to have a Material Adverse Effect.
(s) Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the Company is engaged. The
Company has not been refused any insurance coverage sought or applied for and the Company does not
have any reason to believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse Effect.
(t) Employee Relations.
(i) The Company is not a party to any collective bargaining agreement or employs any member of
a union. No executive officer of the Company has notified the Company that such officer intends to
leave the Company or otherwise terminate such officers employment with the Company. No executive
officer of the Company is in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any
other contract or agreement or any restrictive covenant, and the continued employment of each such
executive officer does not subject the Company to any liability with respect to any of the
foregoing matters.
(ii) The Company, to its knowledge, is in compliance 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.
(u) Title. The Company has good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them which is material to
the business of the Company, in each case free and clear of all liens, encumbrances and defects
except such as do not materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company. Any real property and facilities
held under lease by the Company are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company.
(v) Intellectual Property Rights. The Company owns or possesses adequate rights or
licenses to use all trademarks, service marks and all applications and registrations therefor,
trade names, patents, patent rights, copyrights, original works of authorship, inventions, trade
secrets and other intellectual property rights (Intellectual Property Rights) necessary to
-14-
conduct its business as conducted on the date of this Agreement, except for such Intellectual
Property Rights, the inability to use would not have a Material Adverse Effect. To the knowledge
of the Company, no product or service of the Company infringes the Intellectual Property Rights of
others which could reasonably be expected to result in a Material Adverse Effect. There is no
claim, action or proceeding being made or brought, or to the knowledge of the Company, being
threatened, against the Company regarding (i) its Intellectual Property Rights, or (ii) that the
products or services of the Company infringe the Intellectual Property Rights of others. The
Company has taken reasonable security measures to protect the secrecy, confidentiality and value of
all of its Intellectual Property Rights.
(w) Environmental Laws. The Company (i) is in compliance 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 its business and (iii) is
in compliance 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 could 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.
(x) Tax Status. Except for matters that would not, individually or in the aggregate,
have or reasonably be expected to have a Material Adverse Effect, the Company (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) 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, and the officers of
the Company know of no basis for any such claim.
(y) Internal Accounting and Disclosure Controls. Except as described in the SEC
Documents, the Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with managements 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 and liability accountability, (iii) access to assets or incurrence of liabilities
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is permitted only in accordance with managements general or specific authorization and (iv)
the recorded accountability for assets and liabilities is compared with the existing assets and
liabilities at reasonable intervals and appropriate action is taken with respect to any difference.
Except as disclosed in the SEC Documents, the Company maintains disclosure controls and procedures
(as such term is defined in Rule 13a-14 under the 1934 Act) that are effective in ensuring that are
designed to ensure that information required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is recorded, processed, summarized and reported, within the
time periods specified in the rules and forms of the SEC including, without limitation, controls
and procedures designed in to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the 1934 Act is accumulated and communicated to the
Companys management, including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions regarding required
disclosure.
(z) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance sheet entity that is
required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that
otherwise would be reasonably likely to have a Material Adverse Effect.
(aa) Investment Company Status. The Company is not, and upon consummation of the sale
of the Securities will not be, an investment company, a company controlled by an investment
company or an affiliated person of, or promoter or principal underwriter for, an investment
company as such terms are defined in the Investment Company Act of 1940, as amended.
(bb) Form S-3 Eligibility. The Company is eligible to register the Common Shares and
the Warrant Shares for resale by the Buyers using Form S-3 promulgated under the 1933 Act.
(cc) Manipulation of Price. The Company has not, and to its knowledge 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 Securities, (ii) other than the Agents, sold, bid for, purchased, or
paid any compensation for soliciting purchases of, any of the Securities, or (iii) other than the
Agents, paid or agreed to pay to any person any compensation for soliciting another to purchase any
other securities of the Company.
(dd) Disclosure. The Company confirms that neither it nor any other Person acting on
its behalf has provided any of the Buyers or their agents or counsel with any information that
constitutes or could reasonably be expected to constitute material, nonpublic information other
than the terms of, and the existence of, the transactions contemplated hereby. The Company
understands and confirms that each of the Buyers will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to
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the Buyers regarding the Company, its business and the transactions contemplated hereby,
including the Schedules to this Agreement, furnished by or on behalf of the Company is true and
correct and does not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or its business, properties, prospects, operations or financial
conditions, which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or disclosed.
(ee) U.S. Real Property Holding Corporation. The Company is not, nor has it ever
been, a U.S. real property holding corporation within the meaning of Section 897 of the Internal
Revenue Code of 1986, as amended, and the Company shall so certify upon any Buyers request.
4. COVENANTS.
(a) Best Efforts. Each party shall use its reasonable best efforts timely to satisfy
each of the covenants and conditions to be satisfied by it as provided in Sections 6 and 7 of this
Agreement.
(b) Form D and Blue Sky. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to each Buyer promptly
after such filing. The Company, on or before the Closing Date, shall take such action as the
Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify
the Securities for sale to the Buyers at the Closing pursuant to this Agreement under applicable
securities or Blue Sky laws of the states of the United States (or to obtain an exemption from
such qualification), and shall provide evidence of any such action so taken to the Buyers on or
prior to the Closing Date. The Company shall make all filings and reports relating to the offer
and sale of the Securities required under applicable securities or Blue Sky laws of the states of
the United States following the Closing Date.
(c) Reporting Status. Until the date on which the Investors (as defined in the
Registration Rights Agreement) shall have sold all the Common Shares and Warrant Shares and none of
the Warrants is outstanding (the Relevant Period), the Company shall timely file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would otherwise permit such termination.
(d) Use of Proceeds. The Company will use the proceeds from the sale of the
Securities for general corporate purposes, and not for (A) the repayment of any outstanding
Indebtedness of the Company or (B) redemption or repurchase of any of its equity securities.
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(e) Financial Information. The Company agrees to send the following to each Investor
(as defined in the Registration Rights Agreement) during the Relevant Period (i) unless the
following are filed with the SEC through EDGAR and are available to the public through the EDGAR
system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual
Reports and Quarterly Reports on Form 10-K, 10-Q, any interim reports or any consolidated balance
sheets, income statements, stockholders equity statements and/or cash flow statements for any
period other than annual, any Current Reports on Form 8-K and any registration statements (other
than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on the same day as the release
thereof, facsimile or e-mailed copies of all press releases issued by the Company, and (iii) copies
of any notices and other information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the stockholders. As
used herein, 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.
(f) Listing. The Company shall promptly secure the listing of all of the Registrable
Securities (as defined in the Registration Rights Agreement), once they have been issued, upon each
national securities exchange and automated quotation system, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Registrable Securities from
time to time issuable under the terms of the Transaction Documents. The Company shall maintain the
Common Stocks authorization for quotation on the Principal Market. The Company shall not take any
action which would be reasonably expected to result in the delisting or suspension of the Common
Stock on the Principal Market. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(f).
(g) Fees. The Company shall be responsible for the payment of any placement agents
fees, financial advisory fees, or brokers commissions (other than for Persons engaged by any
Buyer) relating to or arising out of the transactions contemplated hereby, including, without
limitation, any fees or commissions payable to the Agents. Except as otherwise set forth in the
Transaction Documents, each party to this Agreement shall bear its own expenses in connection with
the sale of the Securities to the Buyers.
(h) Pledge of Securities. The Company acknowledges and agrees that the Securities may
be pledged by an Investor (as defined in the Registration Rights Agreement) in connection with a
bona fide margin agreement or other loan or financing arrangement that is secured by the
Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of
the Securities hereunder, and no Investor effecting a pledge of Securities shall be required to
provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant
to this Agreement or any other Transaction Document, including, without limitation, Section 2(f) of
this Agreement; provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 2(f) of this Agreement in order to effect a sale, transfer or assignment of
Securities to such pledgee. The Company hereby agrees to execute and
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deliver such documentation as a pledgee of the Securities may reasonably request in connection
with a pledge of the Securities to such pledgee by an Investor.
(i) Disclosure of Transactions and Other Material Information. On or before 8:30
a.m., New York City time, on the first Business Day following the date of this Agreement, the
Company shall issue a press release and 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 material Transaction Documents (including, without limitation, this Agreement, the
form of Warrant and the form of the Registration Rights Agreement) as exhibits to such filing
(including all attachments, the 8-K Filing). From and after the filing of the 8-K Filing with
the SEC, no Buyer shall be in possession of any material, nonpublic information received from the
Company or any of its officers, directors, employees or agents, that is not disclosed in the 8-K
Filing. The Company shall not, and shall cause its officers, directors, employees and agents, not
to, provide any Buyer with any material, nonpublic information regarding the Company from and after
the filing of the 8-K Filing with the SEC without the express written consent of such Buyer. If a
Buyer has, or believes it has, received any such material, nonpublic information regarding the
Company, it shall provide the Company with written notice thereof. The Company shall, within five
(5) Trading Days (as defined in the Warrants) of receipt of such notice, make public disclosure of
such material, nonpublic information. Neither the Company nor any Buyer shall issue any press
releases or any other public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior approval of any Buyer, to
make any press release or other public disclosure with respect to such transactions (i) in
substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required
by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release or other public disclosure prior
to its release). Without the prior written consent of any applicable Buyer, neither the Company
nor any affiliates shall disclose the name of such Buyer in any filing, announcement, release or
otherwise other than in connection with the Registration Statement, as contemplated pursuant to the
Registration Rights Agreement, unless such disclosure is required by law, regulation or the
Principal Market.
(j) Reservation of Shares. The Company shall take all action necessary to at all
times have authorized, and reserved for the purpose of issuance, no less than 100% of the number of
shares of Common Stock issuable upon exercise of the Warrants issued at the Closing (without taking
into account any limitations on exercise of the Warrants set forth in the Warrants).
(k) Conduct of Business. The business of the Company shall not be conducted in
violation of any law, ordinance or regulation of any governmental entity, except where such
violations would not result, either individually or in the aggregate, in a Material Adverse Effect.
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(l) Participation Rights. For a period of 24 months from the Closing Date, the
Company hereby grants to each Buyer the right to purchase its Pro Rata Share (as defined below) of
any equity securities sold by the Company in a private placement transaction to one or more
institutional investors (a Private Placement). In the event that the Company proposes to
undertake a Private Placement, it shall give each Buyer written notice of its intention, describing
the price and the general terms of the Private Placement. Each Investor shall have 2 days from the
date of any such notice to elect to participate in such Private Placement by giving written notice
to the Company, and thereafter at the closing of the Private Placement such Buyer shall purchase
equity securities in the Private Placement on the same terms and conditions as the other investors
in such Private Placement. The Company shall have 60 days after the 2-day period described above
to complete such Private Placement. In the event the Company has not completed the proposed
Private Placement within such 60 day period, then the Company shall comply with the terms of this
Section 4(l) with respect to a Private Placement proposed to be completed after such 60 day period.
Notwithstanding the foregoing, a Buyer will not be entitled to the participation rights set forth
above in any transaction in which the participation of such Buyer would require approval by the
shareholders of the Company. Notwithstanding anything contained herein, no Buyer shall have any
obligation to participate in any Private Placement unless and until such Buyer has executed the
definitive agreements for such Private Placement. Pro Rata Share means, for purposes of this
right of participation, the ratio of the number of shares of Common Stock owned by such Buyer
immediately prior to the consummation of the Private Placement to the total number of shares of
Common Stock outstanding immediately prior to the consummation of the Private Placement.
5. REGISTER; TRANSFER AGENT INSTRUCTIONS.
(a) Register. The Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice to each holder of Securities),
a register for the Warrants in which the Company shall record the name and address of the Person in
whose name the Warrants have been issued (including the name and address of each transferee) and
the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The
Company shall keep the register open and available at all times during business hours for
inspection of any Buyer or its legal representatives.
(b) Transfer Agent Instructions. The Company shall issue irrevocable instructions to
its transfer agent, and any subsequent transfer agent, to issue certificates or credit shares to
the applicable balance accounts at The Depository Trust Company (DTC), registered in the name of
each Buyer or its respective nominee(s), for the Warrant Shares in such amounts as specified from
time to time by each Buyer to the Company upon exercise of the Warrants in the form of Exhibit
C attached hereto (the Irrevocable Transfer Agent Instructions). The Company represents and
warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in
this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof, will be given
by the Company to its transfer agent with respect to the Securities, and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction Documents. If a Buyer effects a sale,
assignment or transfer of the Securities in accordance with Section 2(f),
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the Company shall permit the transfer and shall promptly instruct its transfer agent to issue
one or more certificates or credit shares to the applicable balance accounts at DTC in such name
and in such denominations as specified by such Buyer to effect such sale, transfer or assignment.
In the event that such sale, assignment or transfer involves Warrant Shares sold, assigned or
transferred pursuant to an effective registration statement or pursuant to Rule 144, the transfer
agent shall issue such Securities to the Buyer, assignee or transferee, as the case may be, without
any restrictive legend.
(c) Breach. The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the remedy at
law for a breach of its obligations under this Section 5 will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this Section 5, that a
Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.
(d) Additional Relief. If the Company shall fail for any reason or for no reason to
issue to such holder unlegended certificates within three (3) Business Days of (x) receipt of
documents necessary for the removal of legend set forth above or (y) the date of its obligation to
deliver the shares of Common Stock as contemplated pursuant to clause (ii) below (the Deadline
Date), then, in addition to all other remedies available to the holder, if on or after the Trading
Day (as defined in the Warrants) immediately following such three Business Day period, the holder
purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the holder of shares of Common Stock that the holder anticipated
receiving from the Company (a Buy-In), then the Company shall, within three Business Days after
the holders request and in the holders discretion, either (i) pay cash to the holder in an amount
equal to the holders total purchase price (including brokerage commissions, if any) for the shares
of Common Stock so purchased (the Buy-In Price), at which point the Companys obligation to
deliver such certificate (and to issue such shares of Common Stock) shall terminate, or (ii)
promptly honor its obligation to deliver to the holder a certificate or certificates representing
such shares of Common Stock and pay cash to the holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the
Closing Bid Price on the Deadline Date. Closing Bid Price means, for any security as of any
date, the last closing price for such security on the Principal Market, as reported by Bloomberg,
or, if the Principal Market begins to operate on an extended hours basis and does not designate the
closing bid price then the last bid price of such security prior to 4:00:00 p.m., New York Time, as
reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or
trading market for such security, the last closing price of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing price of such security in the
over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the average of
the bid prices of any market makers for such security as reported in the pink sheets by Pink
Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price cannot be
calculated for a security on a particular date on any of the foregoing bases, the
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Closing Bid Price of such security on such date shall be the fair market value as mutually
determined by the Company and the holder. If the Company and the holder are unable to agree upon
the fair market value of such security, then such dispute shall be resolved pursuant to Section 13
of the Warrants. All such determinations to be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during the applicable calculation
period.
6. CONDITIONS TO THE COMPANYS OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Common Shares and the related
Warrants to each Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are for the Companys
sole benefit and may be waived by the Company at any time in its sole discretion by providing each
Buyer with prior written notice thereof:
(a) Such Buyer shall have executed each of the Transaction Documents to which it is a party
and delivered the same to the Company.
(b) Such Buyer shall have delivered to the Company the Purchase Price for the Common Shares
and the related Warrants being purchased by such Buyer and each other Buyer at the Closing by wire
transfer of immediately available funds pursuant to the wire instructions provided by the Company.
(c) The representations and warranties of such Buyer shall be true and correct in all material
respects (except for those representations and warranties that are qualified by materiality or
Material Adverse Effect, which shall be true and correct in all respects) as of the date when made
and as of the Closing Date as though made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct as of such specified date), and
such Buyer shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed, satisfied or
complied with by such Buyer at or prior to the Closing Date.
(d) Absence of Litigation. No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the
Closing, shall have been instituted or be pending before any court, arbitrator, governmental body,
agency or official.
(e) No Governmental Prohibition. The sale of the Securities by the Company shall not
be prohibited by any law or governmental order or regulation.
-22-
7. CONDITIONS TO EACH BUYERS OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Common Shares and the related Warrants
at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for each Buyers sole benefit and may be
waived by such Buyer at any time in its sole discretion by providing the Company with prior written
notice thereof:
(i) The Company shall have duly executed and delivered to such Buyer (i) each of the
Transaction Documents and (ii) the Common Shares (in such amounts as such Buyer shall request) and
the related Warrants (in such amounts as such Buyer shall request) being purchased by such Buyer at
the Closing pursuant to this Agreement.
(ii) Such Buyer shall have received the opinion of Dreier LLP, counsel for the Company
(Company Counsel), dated as of the Closing Date, in substantially the form of Exhibit D
attached hereto.
(iii) The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent
Instructions, in the form of Exhibit C attached hereto, which instructions shall have been
delivered to and acknowledged in writing by the Companys transfer agent.
(iv) The Company shall have delivered to such Buyer a certificate evidencing the incorporation
and good standing of the Company in the Companys state of incorporation issued by the Secretary of
State as of a date within 10 days of the Closing Date.
(v) The Common Stock (I) shall be listed on the Principal Market and (II) shall not have been
suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal
Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the
Closing Date, either (A) in writing by the SEC or the Principal Market or (B) by falling below the
minimum listing maintenance requirements of the Principal Market.
(vi) The Company shall have delivered to such Buyer a certificate, executed by the Secretary
of the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section
3(b) as adopted by the Companys Board of Directors in a form reasonably acceptable to such Buyer,
(ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at the Closing, in
the form attached hereto as Exhibit E.
(vii) The representations and warranties of the Company shall be true and correct in all
material respects (except for those representations and warranties that are qualified by
materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the
date when made and as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date, which shall be true and correct as of such
specified date) and the Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer
shall have received a certificate, executed by the Chief
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Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as
to such other matters as may be reasonably requested by such Buyer in the form attached hereto as
Exhibit F.
(viii) The Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Common Shares and the Warrants.
(ix) The Company shall have delivered to such Buyer such other documents relating to the
transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
8. TERMINATION. In the event that the Closing shall not have occurred with respect to
a Buyer on or before five (5) Business Days from the date hereof due to the Companys or such
Buyers failure to satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching
partys failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement with respect to such breaching party at the close of business on
such date without liability of any party to any other party.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of New York. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in The City of New York, Borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding
is improper. Each party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy thereof to such party
at the address for such notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL
FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) 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;
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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.
(c) Headings. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
(d) 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.
(e) 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 amended other than by an instrument in writing signed by the
Company and the holders of Common Shares representing at least a majority of the amount of the
Common Shares, or, if prior to the Closing Date, the Buyers listed on the Schedule of Buyers as
being obligated to purchase at least a majority of the amount of the Common Shares. No provision
hereof may be waived other than by an instrument in writing signed by the party against whom
enforcement is sought. No such amendment shall be effective to the extent that it applies to less
than all of the holders of the Common Shares then outstanding. No consideration shall be offered
or paid to any Person to amend or consent to a waiver or modification of any provision of any of
the Transaction Documents unless the same consideration also is offered to all of the parties to
the Transaction Documents, holders of Common Shares or holders of the Warrants, as the case may be.
The Company has not, directly or indirectly, made any agreements with any Buyers relating to the
terms or conditions of the transactions contemplated by the Transaction Documents except as set
forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that,
except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other
obligation to provide any financing to the Company or otherwise.
(f) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:
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If to the Company:
Electro-Optical Sciences, Inc.
3 West Main Street, Suite 201
Irvington, New York 10533
Telephone: (914) 591-3783
Facsimile: (914) 591-3701
Attention: Chief Financial Officer
with a copy (for informational purposes only) to:
Dreier LLP
499 Park Avenue
New York, NY 10022
Telephone: (212) 328-6100
Facsimile: (212) 328-6101
Attention: Valerie Price
If to the Agents:
Cowen and Company, LLC
1221 Avenue of the Americas
New York, NY 10020
Telephone: (646) 562-1835
Facsimile: (646) 562-1269
Attention: Gregg Smith
ThinkEquity Partners LLC
600 Montgomery Street, 8th Floor
San Francisco, CA 94111
Telephone: (415) 249-6383
Facsimile: (415) 249-0975
Attention: Brian Pasdach
With a copy (for informational purposes only; provided that failure to deliver notice to the
following will not result in a breach by any party hereto) to:
Wilson Sonsini Goodrich & Rosati, Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Telephone: (650) 493-9300
Facsimile: (650) 493-6811
Attention: David Saul, Esq.
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If to a Buyer, to its address and facsimile number set forth on such Buyers signature page, with
copies to such Buyers representatives as set forth on the such Buyers signature page, or to such
other address and/or facsimile number and/or to the attention of such other Person as the recipient
party has specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or electronically generated by the
senders facsimile machine containing the time, date, recipient facsimile number and an image of
the first page of such transmission or (C) provided by an overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including any purchasers of the
Common Shares or the Warrants. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the holders of at least a majority of
the aggregate number of Registrable Securities issued and issuable hereunder, including by way of a
Fundamental Transaction. A Buyer may assign some or all of its rights hereunder without the
consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with
respect to such assigned rights. A merger or sale of the Company shall not be deemed to be an
assignment for the purposes of this section.
(h) 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, except that the Agents may rely
upon the representations and warranties contained in Section 2 hereof.
(i) Survival. Unless this Agreement is terminated under Section 8, the
representations and warranties of the Company and the Buyers in Sections 2 and 3 shall survive the
Closing until the twenty-four-month anniversary of the Closing Date (except for the representations
and warranties of the Company made pursuant to Section 3(c), which shall survive indefinitely), and
the agreements and covenants set forth in Sections 4, 5 and 9 shall survive the Closing until the
expiration of the applicable statute of limitations. Each Buyer shall be responsible
only for its own representations, warranties, agreements and covenants hereunder.
(j) 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.
(k) Indemnification. In consideration of each Buyers execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to all of the
Companys other obligations under the Transaction Documents, the Company shall defend,
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protect, indemnify and hold harmless each Buyer and each other holder of the Securities and
all of their stockholders, partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by this Agreement)
(collectively, the Indemnitees) from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys fees and disbursements
(the Indemnified Liabilities), incurred by any Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or document contemplated
hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document contemplated hereby
or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a
third party (including for these purposes a derivative action brought on behalf of the Company) and
arising out of or resulting from (i) the execution, delivery, performance or enforcement of the
Transaction Documents or any other certificate, instrument or document contemplated hereby or
thereby, (ii) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of such Buyer
or holder of the Securities as an investor in the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 9(k) shall be the same as
those set forth in Section 6 of the Registration Rights Agreement.
(l) 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.
(m) Remedies. Each Buyer and each holder of the Securities shall have all rights and
remedies set forth in the Transaction Documents and all rights and remedies which such holders have
been granted at any time under any other agreement or contract and all of the rights which such
holders have under any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. Furthermore, the Company recognizes that in the event that it fails
to perform, observe, or discharge any or all of its obligations under the Transaction Documents,
any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees
that the Buyers shall be entitled to seek temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages and without posting a bond or other security.
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(n) Payment Set Aside. To the extent that the Company makes a payment or payments to
the Buyers hereunder or pursuant to any of the other Transaction Documents or the Buyers enforce or
exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or
otherwise restored to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, foreign, state or federal law, common law or
equitable cause of action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not occurred.
(o) 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, 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 with
respect to such obligations or the transactions contemplated by the Transaction Documents. 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.
[Signature Page Follows]
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IN WITNESS WHEREOF, each Buyer and the Company have caused its respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.
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ELECTRO-OPTICAL SCIENCES, INC. |
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Signature page to Securities Purchase Agreement]
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Buyer Signature Page
By its execution and delivery of this signature page, the undersigned Buyer hereby joins in
and agrees to be bound by the terms and conditions of the Securities Purchase Agreement dated as of
July 31, 2007 (the Purchase Agreement) by and among Electro-Optical Sciences, Inc. and the Buyers
(as defined therein), as to the number of Common Shares (as defined therein) and Warrant Shares (as
defined therein) set forth below, and authorizes this signature page to be attached to the Purchase
Agreement or counterparts thereof.
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Aggregate Purchase Price: $ |
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-31-
EXHIBITS
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Exhibit A
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Form of Warrant |
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Exhibit B
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Form of Registration Rights Agreement |
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Exhibit C
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Form of Irrevocable Transfer Agent Instructions |
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Exhibit D
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Exhibit E
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Form of Secretarys Certificate |
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Exhibit F
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Form of Officers Certificate |
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EX-10.2
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this Agreement), dated as of July 31, 2007, by and among
Electro-Optical Sciences, Inc., a corporation organized under the laws of Delaware, with its
principal offices at 3 West Main Street, Suite 201, Irvington, New York 10533 (the Company), and
the undersigned buyers (each, a Buyer, and collectively, the Buyers).
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among the parties hereto of
even date herewith (the Securities Purchase Agreement), the Company has agreed, upon the terms
and subject to the conditions of the Securities Purchase Agreement, to issue and sell on the date
hereof to each Buyer (i) shares (the Common Shares) of the Companys common stock, par value
$0.001 per share (the Common Stock), and (ii) warrants (the Warrants), which will be
exercisable to purchase shares of Common Stock (as exercised collectively, the Warrant Shares).
B. To induce the Buyers to execute and deliver the Securities Purchase Agreement, the Company
has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute (collectively, the 1933
Act), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each of the Buyers hereby agree as follows:
1. Definitions.
Capitalized terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement. As used in this Agreement, the following
terms shall have the following meanings:
a. Business Day means any day other than Saturday, Sunday or any other day on which
commercial banks in the City of New York are authorized or required by law to remain closed.
b. Closing Date shall have the meaning set forth in the Securities Purchase Agreement.
c. Effective Date means the date the Registration Statement has been declared effective by
the SEC.
d. Effectiveness Deadline means the date which is the earliest of (i) if the Registration
Statement does not become subject to review by the SEC, the earlier of (a)
ninety (90) days after the Closing Date or (b) five (5) Trading Days after the Company
receives
notification from the SEC that the Registration Statement will not become subject to
review and the Company fails to request to accelerate the effectiveness of the Registration
Statement, or (ii) if the Registration Statement becomes subject to review by the SEC, one hundred
and twenty (120) days after the Closing Date.
e. Filing Deadline means the date that is 30 days after the Closing Date.
f. Investor means a Buyer or any transferee or assignee thereof to whom a Buyer assigns its
rights under this Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 and any transferee or assignee thereof to whom a transferee or assignee
assigns its rights under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.
g. 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.
h. register, registered, and registration refer to a registration effected by preparing
and filing one or more Registration Statements (as defined below) in compliance with the 1933 Act
and pursuant to Rule 415 and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.
i. Registrable Securities means (i) the Common Shares, (ii) the Warrant Shares issued or
issuable upon exercise of the Warrants and (iii) any shares of capital stock issued or issuable
with respect to the Common Shares, the Warrant Shares or the Warrants as a result of any stock
split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to
any limitations on exercise of the Warrants.
j. Registration Statement means a registration statement or registration statements of the
Company filed under the 1933 Act covering the Registrable Securities.
k. Required Holders means the holders of at least a majority of the Registrable Securities.
l. Rule 415 means Rule 415 promulgated under the 1933 Act or any successor rule providing
for offering securities on a continuous or delayed basis.
m. SEC means the United States Securities and Exchange Commission.
2. Registration.
a. Mandatory Registration. The Company shall prepare, and, as soon as practicable but
in no event later than the Filing Deadline, use its reasonable best efforts to file with the SEC
the Registration Statement on Form S-3 covering the resale of all of the Registrable
Securities. In the event that Form S-3 is unavailable for such a registration, the Company
shall
-2-
use such other form as is available for such a registration on another appropriate form
reasonably acceptable to the Required Holders, subject to the provisions of Section 2(d). The
Registration Statement shall contain (except if otherwise directed by the Required Holders) the
Selling Stockholders and Plan of Distribution sections in substantially the
form attached hereto as Exhibit B. The Company shall use its reasonable best efforts to
have the Registration Statement declared effective by the SEC as soon as practicable, but in no
event later than the Effectiveness Deadline. By 9:30 a.m. on the Business Day following the
Effective Date, the Company shall
file with the SEC in accordance with Rule 424 under the 1933 Act
the final prospectus to be used in connection with sales pursuant to such Registration Statement.
b. Legal Counsel. Subject to Section 5 hereof, the Required Holders shall select one
legal counsel to review and oversee any registration pursuant to this Section 2 (Legal Counsel).
The Company and Legal Counsel shall reasonably cooperate with each other in performing the
Companys obligations under this Agreement.
c. Ineligibility for Form S-3. In the event that Form S-3 is not available for the
registration of the resale of Registrable Securities hereunder, the Company shall (i) register the
resale of the Registrable Securities on another appropriate form reasonably acceptable to the
Required Holders and (ii) undertake to register the Registrable Securities on Form S-3 as soon as
such form is available, provided that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a Registration Statement on Form S-3
covering the Registrable Securities has been declared effective by the SEC.
d. Sufficient Number of Shares Registered. In the event the number of shares
available under a Registration Statement filed pursuant to Section 2(a) is insufficient to cover
all of the Registrable Securities required to be covered by such Registration Statement, the
Company shall amend the applicable Registration Statement, or file a new Registration Statement (on
the short form available therefor, if applicable), or both, so as to cover all of such Registrable
Securities as soon as practicable, but in any event not later than fifteen (15) days after the
necessity therefor arises. The Company shall use its reasonable best efforts to cause such
amendment and/or new Registration Statement to become effective as soon as reasonably practicable
following the filing thereof.
e. Effect of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement. If (i) a Registration Statement covering all of the Registrable Securities required
to be covered thereby and required to be filed by the Company pursuant to this Agreement is (A) not
filed with the SEC on or before the Filing Deadline (a Filing Failure) or (B) not declared
effective by the SEC on or before the Effectiveness Deadline (an Effectiveness Failure) or (ii)
on any day after the Effective Date sales of all of the Registrable Securities required to be
included on such Registration Statement cannot be made (other than during an Allowable Grace Period
(as defined in Section 3(r)) pursuant to such Registration Statement (including, without
limitation, because of a failure to keep such Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to such Registration Statement or to
register a sufficient number of shares of Common Stock) (a Maintenance Failure) then, as partial
relief for the damages to any holder by reason of any such delay in or
reduction of its ability to sell the underlying shares of Common Stock (which remedy shall not
-3-
be exclusive of any other remedies available at law or in equity), subject to Section 2(g) hereof,
the Company shall pay to each holder of Registrable Securities relating to such Registration
Statement an amount in cash equal to one percent (1.0%) of the aggregate Purchase Price (as such
term is defined in the Securities Purchase Agreement) of such Investors Registrable Securities
included in such Registration Statement on each of the following dates: (i) the day of a Filing
Failure and on every thirtieth day (pro rated for periods totaling less than thirty (30) days)
thereafter until such Filing Failure is cured; (ii) the day of an Effectiveness Failure and on
every thirtieth day (pro rated for periods totaling less than thirty (30) days) thereafter until
such Effectiveness Failure is cured; and (iii) the initial day of a Maintenance Failure and on
every thirtieth day (pro rated for periods totaling less than thirty (30) days) thereafter until
such Maintenance Failure is cured. The payments to which a holder shall be entitled pursuant to
this Section 2(f) are referred to herein as Registration Delay Payments. Registration Delay
Payments shall be paid on the earlier of (I) the last day of the calendar month during which such
Registration Delay Payments are incurred and (II) the third Business Day after the event or failure
giving rise to the Registration Delay Payments is cured. In the event the Company fails to make
Registration Delay Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of one percent (1.0%) per month (prorated for partial months) until paid in
full. Notwithstanding anything herein or in the Securities Purchase Agreement to the contrary, in
no event shall the aggregate amount of Registration Delay Payments (other than Registration Delay
Payments payable pursuant to events that are within the control of the Company) exceed, in the
aggregate, 10% of the aggregate Purchase Price of the Common Shares.
f. Selling Investor Questionnaire. Each Investor agrees to furnish to the Company a
completed Questionnaire in the form attached to this Agreement as Annex A or in such other
form that provides substantially similar information (a Selling Investor Questionnaire). The
Company shall not be required to include the Registrable Securities of an Investor in a
Registration Statement and shall not be required to pay any Registration Delay Payments under
Section 2(f) hereof to any Investor who fails to furnish the Company a fully completed Selling
Holder Questionnaire at least three Trading Days prior to the Filing Deadline or fails to comply
with its obligations pursuant to Section 4 hereof.
3. Related Obligations.
At such time as the Company is obligated to file a Registration Statement with the SEC
pursuant to Section 2(a), 2(c) or 2(d), the Company will use its reasonable best efforts to effect
the registration of the Registrable Securities in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall have the following obligations:
a. The Company shall submit to the SEC, within five (5) Business Days after the Company learns
that no review of a particular Registration Statement will be made by the staff of the SEC or that
the staff has no further comments on a particular Registration Statement, as the case may be, a
request for acceleration of effectiveness of such Registration Statement to a time and date not
later than 48 hours after the submission of such request. The Company shall keep each Registration
Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which
the Investors may sell all of the Registrable Securities covered by such Registration Statement
without restriction pursuant to Rule 144(k) (or
any successor thereto) promulgated under the 1933 Act or (ii) the date on which the Investors
-4-
shall have sold all of the Registrable Securities covered by such Registration Statement (the
Registration Period). The Company shall ensure that each Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading.
b. The Company shall prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used in connection with
such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under
the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during
the Registration Period, and, during such period, comply with the provisions of the 1933 Act with
respect to the disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities shall have been
disposed of in accordance with the intended methods of disposition by the seller or sellers thereof
as set forth in such Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement (including
pursuant to this Section 3(b)) by reason of the Company filing a report on Form 10-Q, Form 10-QSB,
Form 10-K, Form 10-KSB or any analogous report under the Securities Exchange Act of 1934, as
amended (the 1934 Act), the Company shall have incorporated such report by reference into such
Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on
the same day on which the 1934 Act report is filed which created the requirement for the Company to
amend or supplement such Registration Statement.
c. The Company shall (A) permit Legal Counsel to review and comment upon (i) a Registration
Statement at least five (5) Business Days prior to its filing with the SEC and (ii) all amendments
and supplements to all Registration Statements (except for Annual Reports on Form 10-K and Form
10-KSB, and Reports on Form 10-Q and Form 10-QSB and any similar or successor reports) within a
reasonable number of days prior to their filing with the SEC, and (B) not file any Registration
Statement or amendment or supplement thereto in a form to which Legal Counsel reasonably objects.
The Company shall not submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto without the prior approval of Legal Counsel, which
consent shall not be unreasonably withheld. The Company shall furnish to Legal Counsel, without
charge, (i) copies of any correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement, (ii) promptly after the same is prepared
and filed with the SEC, one copy of any Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein by reference, if
requested by an Investor, and all exhibits and (iii) upon the effectiveness of any Registration
Statement, one copy of the prospectus included in such Registration Statement and all amendments
and supplements thereto. The Company shall reasonably cooperate with Legal Counsel in performing
the Companys obligations pursuant to this Section 3.
d. The Company shall furnish to each Investor whose Registrable Securities are included in any
Registration Statement, without charge, (i) promptly after the same
is prepared and filed with the SEC, at least one copy of such Registration Statement and any
-5-
amendment(s) thereto, including financial statements and schedules, all documents incorporated
therein by reference, if requested by an Investor, all exhibits and each preliminary prospectus,
(ii) upon the effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request) and (iii) such other documents, including
copies of any preliminary or final prospectus, as such Investor may reasonably request from time to
time in order to facilitate the disposition of the Registrable Securities owned by such Investor.
e. The Company shall use its reasonable best efforts to (i) register and qualify, unless an
exemption from registration and qualification applies, the resale by Investors of the Registrable
Securities covered by a Registration Statement under such other securities or blue sky laws of
all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions,
such amendments (including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during the Registration
Period, (iii) take such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 3(e), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to service of process
in any such jurisdiction. The Company shall reasonably promptly notify Legal Counsel and each
Investor who holds Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the Registrable Securities
for sale under the securities or blue sky laws of any jurisdiction in the United States or its
receipt of notice of the initiation or threatening of any proceeding for such purpose.
f. The Company shall notify Legal Counsel and each Investor in writing of the happening of any
event, as reasonably promptly as practicable after becoming aware of such event, as a result of
which the prospectus included in a Registration Statement, as then in effect, includes an untrue
statement of a material fact or omission to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any material, nonpublic
information), and, subject to Section 3(r), promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver ten (10) copies of
such supplement or amendment to Legal Counsel and each Investor (or such other number of copies as
Legal Counsel or such Investor may reasonably request). The Company shall also reasonably promptly
notify Legal Counsel and each Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a Registration Statement or any
post-effective amendment has become effective (notification of such effectiveness shall be
delivered to Legal Counsel and each Investor by facsimile on the same day of such effectiveness and
by overnight mail), (ii) of any request by the SEC for amendments or supplements to a Registration
Statement
or related prospectus or related information, and (iii) of the Companys reasonable
determination that a post-effective amendment to a Registration Statement would be appropriate.
-6-
g. The Company shall use its reasonable best efforts to prevent the issuance of any stop order
or other suspension of effectiveness of a Registration Statement, or the suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an
order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest
possible moment and to notify Legal Counsel and each Investor who holds Registrable Securities
being sold of the issuance of such order and the resolution thereof or its receipt of notice of the
initiation or threat of any proceeding for such purpose.
h. If any Investor is required under applicable securities law to be described in the
Registration Statement as an underwriter, at the reasonable request of such Investor, the Company
shall furnish to such Investor, on the date of the effectiveness of the Registration Statement and
thereafter from time to time on such dates as an Investor may reasonably request (i) a letter,
dated such date, from the Companys independent certified public accountants in form and substance
as is customarily given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the Investors, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such Registration Statement, in form,
scope and substance as is customarily given in an underwritten public offering, addressed to the
Investors.
i. Upon the written request of any Investor in connection with any Investors due diligence
requirements, if any, the Company shall make available for inspection by (i) any Investor, (ii)
Legal Counsel and (iii) one firm of accountants or other agents retained by the Investors
(collectively, the Inspectors), all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the Records), as shall be
reasonably deemed necessary by each Inspector, and cause the Companys officers, directors and
employees to supply all information which any Inspector may reasonably request; provided, however,
that each Inspector shall agree to hold in strict confidence and shall not make any disclosure
(except to an Investor) or use of any Record or other information which the Company determines in
good faith to be confidential, and of which determination the Inspectors are so notified, unless
(a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement or is otherwise required under the 1933 Act, (b) the release of such
Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government
body of competent jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any other Transaction
Document. Each Investor agrees that it shall, upon learning that disclosure of such Records is
sought in or by a court or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential.
Nothing herein (or in any other confidentiality agreement between the Company and any Investor)
shall be deemed to limit the Investors ability to sell Registrable Securities in a manner which is
otherwise consistent with applicable laws and regulations.
j. The Company shall hold in confidence and not make any disclosure of information concerning
an Investor provided to the Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any
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Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final, non-appealable order from a
court or governmental body of competent jurisdiction or (iv) such information has been made
generally available to the public other than by disclosure in violation of this Agreement or any
other agreement. The Company agrees that it shall, upon learning that disclosure of such
information concerning an Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt written notice to such Investor and allow such
Investor, at the Investors expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.
k. The Company shall use its reasonable best efforts either to (i) cause all of the
Registrable Securities covered by a Registration Statement to be listed on each securities exchange
on which securities of the same class or series issued by the Company are then listed, if any, if
the listing of such Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all of the Registrable Securities covered by a
Registration Statement on The NASDAQ Capital Market or (iii) if, despite the Companys reasonable
best efforts to satisfy, the preceding clauses (i) and (ii) the Company is unsuccessful in
satisfying the preceding clauses (i) and (ii), to secure the inclusion for quotation on the The New
York Stock Exchange, The NASDAQ Global Market, The NASDAQ Global Select Market or the American
Stock Exchange for such Registrable Securities and, without limiting the generality of the
foregoing, to use its reasonable best efforts to arrange for at least two market makers to register
with the National Association of Securities Dealers, Inc. (NASD) as such with respect to such
Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying
its obligation under this Section 3(k).
l. The Company shall cooperate in all reasonable respects with the Investors who hold
Registrable Securities being offered and, to the extent applicable, facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the Investors may
reasonably request and registered in such names as the Investors may request.
m. If requested by an Investor, the Company shall (i) as soon as reasonably practicable
incorporate in a prospectus supplement or post-effective amendment such information as an Investor
reasonably requests to be included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the number of Registrable
Securities being offered or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; (ii) as soon as reasonably
practicable make all required filings of such prospectus supplement or post-effective amendment
after being notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) as soon as reasonably practicable, supplement or make
amendments to any Registration Statement if reasonably requested by an Investor holding any
Registrable Securities.
n. The Company shall use its reasonable best efforts to cause the Registrable Securities
covered by a Registration Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to consummate the disposition of such Registrable
Securities.
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o. The Company shall make generally available to its security holders as soon as practical,
but not later than ninety (90) days after the close of the period covered thereby, an earnings
statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under
the 1933 Act) covering a twelve-month period beginning not later than the first day of the
Companys fiscal quarter next following the effective date of a Registration Statement.
p. The Company shall otherwise use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC in connection with any registration hereunder.
q. Within two (2) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with
copies to the Investors whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit A.
r. Notwithstanding anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning the Company the
disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the
Company and its counsel, in the best interest of the Company and, in the opinion of counsel to the
Company, otherwise required (a Grace Period); provided, that the Company shall reasonably
promptly (i) notify the Investors in writing of the existence of material, non-public information
giving rise to a Grace Period (provided that in each notice the Company will not disclose the
content of such material, non-public information to the Investors) and the date on which the Grace
Period will begin, and (ii) notify the Investors in writing of the date on which the Grace Period
ends; and, provided further, that no Grace Period shall exceed five (5) consecutive days and during
any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of
twenty (20) days and the first day of any Grace Period must be at least five (5) trading days after
the last day of any prior Grace Period (each, an Allowable Grace Period). For purposes of
determining the length of a Grace Period above, the Grace Period shall begin on and include the
date the Investors receive the notice referred to in clause (i) and shall end on and include the
later of the date the Investors receive the notice referred to in clause (ii) and the date referred
to in such notice. The provisions of Section 3(g) hereof shall not be applicable during the period
of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall again be
bound by the first sentence of Section 3(f) with respect to the information giving rise thereto
unless such material, non-public information is no longer applicable. Notwithstanding anything to
the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common
Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase
Agreement in connection with any sale of Registrable Securities with respect to which an Investor
has entered into a contract for sale, and
delivered a copy of the prospectus included as part of the applicable Registration Statement
(unless an exemption from such prospectus delivery requirement exists), prior to the Investors
receipt of the notice of a Grace Period and for which the Investor has not yet settled.
-9-
s. All information disclosed in the notices contemplated in this Section 3 shall be kept
confidential by the recipient thereof until such information is publicly disclosed by the Company
unless disclosure by the recipient is required by law or legal process.
4. Obligations of the Investors.
a. At least five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each Investor in writing of the information in
addition to the information required pursuant to the Selling Investor Questionnaire, the Company
requires from each such Investor if such Investor elects to have any of such Investors Registrable
Securities included in such Registration Statement. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall furnish to the Company
such information regarding itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably required to effect the
effectiveness of the registration of such Registrable Securities and shall execute such documents
in connection with such registration as the Company may reasonably request.
b. Each Investor, by such Investors acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection with the
preparation and filing of any Registration Statement hereunder, unless such Investor has notified
the Company in writing of such Investors election to exclude all of such Investors Registrable
Securities from such Registration Statement.
c. Each Investor agrees that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 3(g) or the first sentence of 3(f), such Investor will
immediately discontinue disposition of Registrable Securities pursuant to any Registration
Statement(s) covering such Registrable Securities until such Investors receipt of the copies of
the supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of 3(f)
or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the
contrary, the Company shall use its reasonable best efforts to cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of
the Securities Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale prior to the Investors receipt
of a notice from the Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f) and for which the Investor has not yet settled.
d. Each Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom in connection with sales
of Registrable Securities pursuant to the Registration Statement.
e. Each Investor agrees not to take any action with respect to any distribution deemed to be
made pursuant to such Registration Statement which would constitute a violation of Regulation M
under the Exchange Act or any other applicable rule, regulation or law.
-10-
5. Expenses of Registration.
All reasonable expenses, other than underwriting discounts and commissions incurred in
connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including,
without limitation, all registration, listing and qualifications fees, printers and accounting
fees, and fees and disbursements of counsel for the Company, shall be paid by the Company;
provided, however, that all selling commissions applicable to the sale of Registrable Securities
and all fees and expenses of legal counsel for any Investor shall be borne by such Investor.
6. Indemnification.
In the event any Registrable Securities are included in a Registration Statement under this
Agreement:
a. To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold
harmless and defend each Investor, the directors, officers, members, partners, employees, agents,
representatives of, and each Person, if any, who controls any Investor within the meaning of the
1933 Act or the 1934 Act (each, an Indemnified Person), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys fees, amounts paid
in settlement or expenses, joint or several, (collectively, Claims) (it being understood and
agreed that Claims shall not include any Claims for loss of market value of the Registrable
Securities) incurred in investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a party thereto (Indemnified
Damages), to which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement
or any post-effective amendment thereto or in any filing made in connection with the qualification
of the offering under the securities or other blue sky laws of any jurisdiction in which
Registrable Securities are offered (Blue Sky Filing), or the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein
any material fact necessary to make the statements made therein, in the light of the circumstances
under which the statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities pursuant to a
Registration Statement or (iv) any violation of this Agreement by the Company (the matters in
the foregoing clauses (i) through (iv) being, collectively, Violations). Subject to Section
6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred
and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim. Notwithstanding anything
-11-
to the
contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs
in reliance upon and in conformity with information furnished in writing to the Company by such
Indemnified Person for such Indemnified Person expressly for use in connection with the preparation
of the Registration Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(d) and (ii) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably withheld or delayed. Such
indemnity shall remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by
the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an Investor is participating, each
such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers, agents and employees and each Person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act and their directors, officers, agents and their
employees (each, an Indemnified Party), against any Claim or Indemnified Damages to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and
only to the extent, that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in connection with such
Registration Statement; and, subject to Section 6(c), such Investor will reimburse any legal or
other expenses reasonably incurred by an Indemnified Party in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement contained in this Section
6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld or delayed; provided,
further, however, that the Investor shall be liable under this Section 6(b) for only that amount of
a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of
the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
c. Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any governmental action or
proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to
the extent the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel reasonably satisfactory to
the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that an Indemnified Person or Indemnified Party shall have the
right to retain its own counsel with the fees and expenses of not more than one counsel for such
Indemnified
-12-
Person or Indemnified Party to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or Indemnified Party and
any other party represented by such counsel in such proceeding. In the case of an Indemnified
Person, legal counsel referred to in the immediately preceding sentence shall be selected by the
Investors holding at least a majority in interest of the Registrable Securities included in the
Registration Statement to which the Claim relates. The Indemnified Party or Indemnified Person
shall cooperate fully with the indemnifying party in connection with any negotiation or defense of
any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party or Indemnified Person which relates to
such action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person reasonably apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its prior written consent; provided,
however, that the indemnifying party shall not unreasonably withhold, delay or condition
its consent. No indemnifying party shall, without the prior written consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim or litigation, and such settlement shall not include any admission as to
fault on the part of the Indemnified Party. Following indemnification as provided for hereunder,
the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified
Person with respect to all third parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except
to the extent that the indemnifying party is prejudiced in its ability to defend such action.
d. The indemnification required by this Section 6 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, as and when bills are received or
Indemnified Damages are incurred and bills therefor are received.
e. The indemnity agreements contained herein shall be in addition to (i) any cause of action
or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or
others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
7. Contribution.
To the extent any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to any amounts for
which it would otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that: (i) no Person involved in the sale of Registrable
Securities, which Person is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) in connection with such sale, shall be entitled to contribution from any
-13-
Person involved in such sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale of such Registrable
Securities pursuant to such Registration Statement.
8. Reports Under the 1934 Act.
With a view to making available to the Investors the benefits of Rule 144 promulgated under
the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration (Rule 144), the
Company agrees to:
a. make and keep public information available, as those terms are understood and defined in
Rule 144;
b. file with the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such
requirements and the filing of such reports and other documents is required for the applicable
provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns Registrable Securities, reasonably
promptly upon request, (i) a written statement by the Company, if true, that it has complied with
the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and documents so filed by
the Company and (iii) such other information as may be reasonably requested to permit the Investors
to sell such securities pursuant to Rule 144 without registration.
9. Assignment of Registration Rights.
The rights under this Agreement shall be automatically assignable by the Investors to any
transferee of all or any portion of such Investors Registrable Securities if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights and a copy of such
agreement is furnished to the Company within a reasonable time after such assignment; (ii) the
Company is, within a reasonable time after such transfer or assignment, furnished with written
notice of (a) the name and address of such transferee or assignee and (b) the securities with
respect to which such registration rights are being transferred or assigned; (iii) immediately
following such transfer or assignment the further disposition of such securities by the transferee
or assignee is restricted under the 1933 Act or applicable state securities laws; (iv) at or before
the time the Company receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of the provisions
contained herein; and (v) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement and applicable securities laws.
10. Amendment of Registration Rights.
Provisions of this Agreement may be amended and the observance thereof 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 Required Holders. Any amendment or waiver
-14-
effected in
accordance with this Section 10 shall be binding upon each Investor and the Company. No such
amendment shall be effective to the extent that it applies to less than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.
11. Miscellaneous.
a. A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is
deemed to own of record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or election received from
the such record owner of such Registrable Securities.
b. Any notices, consents, waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have been delivered:
(i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:
If to the Company:
If to the Company:
Electro-Optical Sciences, Inc.
3 West Main Street, Suite 201
Irvington, New York 10533
Telephone: (914) 541-3783
Facsimile: (914) 591-3701
Attention: Chief Financial Officer
With a copy (for informational purposes only):
Dreier LLP
499 Park Ave
New York, NY 10022
Telephone: (212) 328-6100
Facsimile: (212) 328-6101
Attention: Valerie Price
-15-
If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers attached
hereto, with copies to such Buyers representatives as set forth on the Schedule of Buyers, or to
such other address and/or facsimile number and/or to the attention of such other Person as the
recipient party has specified by written notice given to each other party five (5) days prior to
the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or electronically generated
by the senders facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii)
above, respectively.
c. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
d. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of New York or any
other jurisdictions) that would cause the application of the laws of any jurisdictions other than
the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
e. This Agreement, the other Transaction Documents (as defined in the Securities Purchase
Agreement) and the instruments referenced herein and therein constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, the other Transaction Documents and
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the instruments referenced
herein and therein supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.
f. Subject to the requirements of Section 9, this Agreement shall inure to the benefit of and
be binding upon the permitted successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
h. This Agreement may be executed in identical counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this Agreement.
i. Each party shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements, certificates, instruments and
documents, as any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
j. All consents and other determinations required to be made by the Investors pursuant to this
Agreement shall be made, unless otherwise specified in this Agreement, by the Required Holders.
k. 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.
l. 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.
m. The obligations of each Investor hereunder are several and not joint with the obligations
of any other Investor, and no provision of this Agreement is intended to confer any obligations on
any Investor vis-à-vis any other Investor. Nothing contained herein, and no action taken by any
Investor pursuant hereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such obligations or the
transactions contemplated herein.
[Signature Page Follows]
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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Registration Rights Agreement to be duly executed as of the date first written above.
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[Signature page to Registration Rights Agreement]
Buyer Signature Page
By its execution and delivery of this signature page, the undersigned Buyer hereby joins in
and agrees to be bound by the terms and conditions of the Registration Rights Agreement dated as of
July 31, 2007 (the Registration Rights Agreement) by and among Electro-Optical Sciences, Inc. and
the Buyers (as defined therein), and authorizes this signature page to be attached to the
Registration Rights Agreement or counterparts thereof.
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[Signature page to Registration Rights Agreement]
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[ ]
[ ]
[ ]
Attention: [ ]
Re: Electro-Optical Sciences, Inc.
Ladies and Gentlemen:
[We are][I am] counsel to Electro-Optical Sciences, Inc., a corporation organized under the
laws of Delaware (the Company), and have represented the Company in connection with that certain
Securities Purchase Agreement (the Securities Purchase Agreement), entered into by and among the
Company and the buyers named therein (collectively, the Holders) pursuant to which the Company
issued to the Holders its shares of the Companys Common Stock, par value $0.001 per share (the
Common Stock) and warrants exercisable for shares of Common Stock (the Warrants). Pursuant to
the Securities Purchase Agreement, the Company also has entered into a Registration Rights
Agreement with the Holders (the Registration Rights Agreement) pursuant to which the Company
agreed, among other things, to register the resale of the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable upon exercise of the
Warrants under the Securities Act of 1933, as amended (the 1933 Act). In connection with the
Companys obligations under the Registration Rights Agreement, on , 2007, the
Company filed a Registration Statement on Form S-3 (File No. 333- ) (the Registration
Statement) with the Securities and Exchange Commission (the SEC) relating to the Registrable
Securities which names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, [we][I] advise you that a member of the SECs staff has
advised [us][me] by telephone that the SEC has entered an order declaring the Registration
Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF
EFFECTIVENESS] and [we][I] have no knowledge, after telephonic inquiry of a member of the SECs
staff, that any stop order suspending its effectiveness has been issued or that any proceedings for
that purpose are pending before, or threatened by, the SEC and the Registrable Securities are
available for resale under the 1933 Act pursuant to the Registration Statement.
This letter shall serve as our standing instruction to you that the shares of Common Stock are
freely transferable by the Holders pursuant to the Registration Statement. You need not require
further letters from us to effect any future legend-free issuance or reissuance of shares of Common
Stock to the Holders as contemplated by the Companys Irrevocable Transfer Agent Instructions dated
, 2007, provided at the time of such
reissuance, the Company has not otherwise notified you that the Registration Statement is
unavailable for the resale of the Registrable Securities.
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Very truly yours, |
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[ISSUERS COUNSEL] |
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By: |
CC: [LIST NAMES OF HOLDERS] |
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EXHIBIT B
SELLING STOCKHOLDERS
The shares of common stock being offered by the selling stockholders are those previously
issued to the Selling Stockholders and those issuable to the Selling Stockholders upon exercise of
the warrants. For additional information regarding the issuances of common stock and the warrants,
see Private Placement of Common Shares and Warrants above. We are registering the shares of
common stock in order to permit the selling stockholders to offer the shares for resale from time
to time. Except for the ownership of the shares of common stock and the warrants, the selling
stockholders have not had any material relationship with us within the past three years.
The table below lists the selling stockholders and other information regarding the beneficial
ownership of the shares of common stock by each of the selling stockholders. The second column
lists the number of shares of common stock beneficially owned by each selling shareholder, based on
its ownership of the shares of common stock and the warrants, as of ___, 2007, assuming
exercise of the warrants held by the selling stockholders on that date, without regard to any
limitations on exercise.
The third column lists the shares of common stock being offered by this prospectus by the
selling stockholders.
In accordance with the terms of registration rights agreements with the holders of the shares
of common stock and the warrants, this prospectus generally covers the resale of that number of
shares of common stock equal to the number of shares of common stock issued and the shares of
common stock issuable upon exercise of the related warrants, determined as if the outstanding
warrants were exercised, as applicable, in full, in each case, as of the trading day immediately
preceding the date this registration statement was initially filed with the SEC. The fourth column
assumes the sale of all of the shares offered by the selling stockholders pursuant to this
prospectus.
Under the terms of the warrants, a selling shareholder may not exercise the warrants, to the
extent such exercise would cause such selling shareholder, together with its affiliates, to
beneficially own a number of shares of common stock which would exceed 4.99% of our then
outstanding shares of common stock following such exercise, excluding for purposes of such
determination shares of common stock issuable upon exercise of the warrants which have not been
exercised. The number of shares in the second column does not reflect this limitation. The
selling stockholders may sell all, some or none of their shares in this offering. See Plan of
Distribution.
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Maximum Number of Shares |
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Number of Shares Owned |
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to be Sold Pursuant to this |
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Number of Shares Owned |
Name of Selling Stockholder |
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Prior to Offering |
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Prospectus |
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After Offering |
(1) [Buyers]
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0 |
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(1)
Exhibit 10.2
PLAN OF DISTRIBUTION
We are registering the shares of common stock previously issued and the shares of common stock
issuable upon exercise of the warrants to permit the resale of these shares of common stock by the
holders of the common stock and warrants from time to time after the date of this prospectus. We
will not receive any of the proceeds from the sale by the selling stockholders of the shares of
common stock. We will bear all fees and expenses incident to our obligation to register the shares
of common stock.
The selling stockholders may sell all or a portion of the shares of Common Stock beneficially
owned by them and offered hereby from time to time directly or through one or more underwriters,
broker-dealers or agents. If the shares of Common Stock are sold through underwriters or
broker-dealers, the selling stockholders will be responsible for underwriting discounts or
commissions or agents commissions. The shares of Common Stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the sale, at varying
prices determined at the time of sale, or at negotiated prices. These sales may be effected in
transactions, which may involve crosses or block transactions,
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on any national securities exchange or quotation service on which the securities may
be listed or quoted at the time of sale; |
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in the over-the-counter market; |
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in transactions otherwise than on these exchanges or systems or in the
over-the-counter market; |
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through the writing of options, whether such options are listed on an options
exchange or otherwise; |
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ordinary brokerage transactions and transactions in which the broker-dealer solicits
purchasers; |
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block trades in which the broker-dealer will attempt to sell the shares as agent but
may position and resell a portion of the block as principal to facilitate the
transaction; |
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purchases by a broker-dealer as principal and resale by the broker-dealer for its
account; |
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an exchange distribution in accordance with the rules of the applicable exchange; |
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privately negotiated transactions; |
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short sales; |
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sales pursuant to Rule 144; |
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broker-dealers may agree with the selling securityholders to sell a specified number
of such shares at a stipulated price per share; |
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a combination of any such methods of sale; and |
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any other method permitted pursuant to applicable law. |
If the selling stockholders effect such transactions by selling shares of Common Stock to or
through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may
receive commissions in the form of discounts, concessions or commissions from the selling
stockholders or commissions from purchasers of the shares of Common Stock for whom they may act as
agent or to whom they may sell as principal (which discounts, concessions or commissions as to
particular underwriters, broker-dealers or agents may be in excess of those customary in the types
of transactions involved). In connection with sales of the shares of Common Stock or otherwise,
the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the shares of Common Stock in the course of hedging in positions they
assume. The selling stockholders may also sell shares of Common Stock short and deliver shares of
Common Stock covered by this prospectus to close out short positions and to return borrowed shares
in connection with such short sales. The selling stockholders may also loan or pledge shares of
Common Stock to broker-dealers that in turn may sell such shares.
The selling stockholders may pledge or grant a security interest in some or all of the
convertible notes, warrants or shares of Common Stock owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may offer and sell the
shares of Common Stock from time to time pursuant to this prospectus or any amendment to this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as
amended, amending, if necessary, the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this prospectus. The
selling stockholders also may transfer and donate the shares of Common Stock in other circumstances
in which case the transferees, donees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
The selling stockholders and any broker-dealer participating in the distribution of the shares
of Common Stock may be deemed to be underwriters within the meaning of the Securities Act, and
any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be
deemed to be underwriting commissions or discounts under the Securities Act. At the time a
particular offering of the shares of Common Stock is made, a prospectus supplement, if required,
will be distributed which will set forth the aggregate amount of shares of Common Stock being
offered and the terms of the offering, including the name or names of any broker-dealers or agents,
any discounts, commissions and other terms constituting compensation from the selling stockholders
and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.
Under the securities laws of some states, the shares of Common Stock may be sold in such
states only through registered or licensed brokers or dealers. In addition, in some states the
shares of Common Stock may not be sold unless such shares have been registered or qualified
for sale in such state or an exemption from registration or qualification is available and is
complied with.
There can be no assurance that any selling stockholder will sell any or all of the shares of
Common Stock registered pursuant to the registration statement, of which this prospectus forms a
part.
The selling stockholders and any other person participating in such distribution will be
subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which
may limit the timing of purchases and sales of any of the shares of Common Stock by the selling
stockholders and any other participating person. Regulation M may also restrict the ability of any
person engaged in the distribution of the shares of Common Stock to engage in market-making
activities with respect to the shares of Common Stock. All of the foregoing may affect the
marketability of the shares of Common Stock and the ability of any person or entity to engage in
market-making activities with respect to the shares of Common Stock.
We will pay all expenses of the registration of the shares of Common Stock pursuant to the
registration rights agreement, estimated to be $[ ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with state securities or
blue sky laws; provided, however, that a selling stockholder will pay all underwriting discounts
and selling commissions, if any. We will indemnify the selling stockholders against liabilities,
including some liabilities under the Securities Act, in accordance with the registration rights
agreements, or the selling stockholders will be entitled to contribution. We may be indemnified by
the selling stockholders against civil liabilities, including liabilities under the Securities Act,
that may arise from any written information furnished to us by the selling stockholder specifically
for use in this prospectus, in accordance with the related registration rights agreement, or we may
be entitled to contribution.
Once sold under the registration statement, of which this prospectus forms a part, the shares
of Common Stock will be freely tradable in the hands of persons other than our affiliates.
EX-99.1
Exhibit 99.1
For further information contact:
David Carey
Lazar Partners Ltd.
212-867-1768
dcarey@lazarpartners.com
Electro-Optical Sciences Announces $11.5 Million Private Placement
IRVINGTON, New York August 1, 2007 Electro-Optical Sciences, Inc. (EOS) [NASDAQ CM: MELA], a
medical device company focused on the design and development of MelaFind®, a
non-invasive, point-of-care instrument to assist in the early diagnosis of melanoma, today
announced that it has signed definitive documents with institutional and accredited investors to
close a private placement of approximately $11.5 million comprised of 2,000,178 shares of common
stock at $5.75 and 500,041common stock warrants that are exercisable at $8.00 for 54 months
beginning six months after the closing.
Cowen and Company, LLC acted as the lead placement agent for the transaction and ThinkEquity
Partners acted as a co-placement agent.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any
securities. There shall not be any sale of these securities in any jurisdiction in which such
offering would be unlawful.
Pursuant to an agreement with the investors, the Company is required to file a registration
statement with the U.S. Securities and Exchange Commission covering the resale of the shares of
common stock to be issued to the investors as well as the shares of common stock issuable upon
exercise of the warrants, subject to certain terms and conditions.
The securities offered in the private placement were not registered under the Securities Act of
1933, as amended (the Act) or any state securities laws, and may not be offered or sold in the
United States absent registration, or an applicable exemption from registration, under the Act and
applicable state securities laws.
EOS is a medical device company focused on designing and developing a non-invasive, point-of-care
instrument to assist in the early diagnosis of melanoma.
MelaFind®, EOS flagship product,
features a hand-held imaging device that emits light of multiple wavelengths to capture images of
suspicious pigmented skin lesions and extract data. Using sophisticated algorithms, the data are
then
analyzed against a proprietary database of melanomas and benign lesions in order to provide
information to the physician and produce a recommendation of whether the lesion should be biopsied.
Melanoma is the deadliest of skin cancers, responsible for approximately 80% of all skin cancer
deaths. Unless melanoma is detected early and excised with proper margins, the patient survival
rate is poor, as there is currently no cure for advanced stage melanoma.
For more information on EOS, visit www.eosciences.com.
Safe Harbor
This press release includes forward-looking statements within the meaning of the Securities
Litigation Reform Act of 1995. These statements include but are not limited to our plans,
objectives, expectations and intentions and other statements that contain words such as expects,
contemplates, anticipates, plans, intends, believes and variations of such words or
similar expressions that predict or indicate future events or trends, or that do not relate to
historical matters. These statements are based on our current beliefs or expectations and are
inherently subject to significant uncertainties and changes in circumstances, many of which are
beyond our control. There can be no assurance that our beliefs or expectations will be achieved.
Actual results may differ materially from our beliefs or expectations due to economic, business,
competitive, market and regulatory factors.
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