Read 8Ks
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? At the closing, the Company is required to enter into a Registration Rights Agreement (the "Registration Rights Agreement") with the Investors (other than the Company's participating officers and directors), pursuant to which the Company will be required to file one or more shelf registration statements (the "Shelf Registration Statements") with the Securities and Exchange Commission ("SEC") registering for resale by the Investors (other than the Company's participating officers and directors) the shares of common stock purchased by them in the private placement. If an initial Shelf Registration Statement is (i) not filed within 30 days after closing,
(ii) not declared effective by the earlier of (A) five business days after the SEC informs the Company that the Company may request effectiveness of such initial Shelf Registration Statement or (B) 90 days after the closing or (iii) not effective for resales for more than 20 consecutive days or more than 45 days in any 12 month period during the registration period (i.e., the earlier of the date on which the shares have been sold or are eligible for sale under SEC Rule 144 without restriction) or any other required Shelf Registration Statement is not timely filed, declared effective by the SEC or continuously effective in accordance with the time periods prescribed by the Registration Rights Agreement, the Company is required to pay the Investors (other than the Company's participating officers and directors) liquidated damages in cash equal to 1.5% of the aggregate purchase price paid by the Investors (other than the Company's participating officers and directors) for the Shares for every 30 days or portion thereof until the default is cured;
? Within 60 days after closing, the Company is required to effect a reverse stock split on its common stock at a ratio determined in good faith by the Company's Board of Directors (the "Board") based on market conditions and other factors it deems relevant subject to the reasonable approval of the Investors which are affiliates of AWM Investment Company; provided, however, that the split ratio is required to yield an immediate post-split adjusted price per share of common stock of not less than 150% of the minimum bid price required for the Company to list its shares of common stock on The NASDAQ Capital Market;
? Within 180 days after closing, the Company is required to reconstitute the Board so that as so reconstituted, the Board shall consist of not less than five members, a majority of whom are required to qualify as an "independent director" as defined in NASDAQ Marketplace Rule 5605(a)(2) and the related NASDAQ interpretative guidance;
? As soon as reasonably practicable but not later than December 31, 2013, the Company is required to reincorporate to the State of Delaware from the State of Nevada;
? As soon as reasonably practicable but not later than 9 months after closing, the Company is required to list its common stock on The NASDAQ Capital Market and up until such time as the listing is accomplished the Company is required to comply with all NASDAQ rules (other than NASDAQ's board composition, board committee, minimum bid price and similar listing requirements), such as holding annual meetings and the timely filing of proxy statements; and
? Within 30 days after closing, the Company is required to reduce the number of shares of common stock reserved for issuance under its existing equity incentive plan to 9 million shares from 40 million shares (prior to giving effect to the reverse stock split referenced above). At no time is the Company permitted to have awards outstanding under its equity incentive plan(s) or otherwise for more than an aggregate of 9 million shares of common stock (appropriately adjusted for the reverse stock split referenced above and for any other stock split, stock dividend or other reclassification or combination of the common stock occurring after the closing).
The foregoing description of the Purchase Agreement and the private placement and the other transactions contemplated thereby is qualified in its entirety by reference to the full text of the Purchase Agreement and the form of Registration Rights Agreement filed herewith as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.
The Company has issued a press release reporting its entry into the Purchase Agreement and the private placement contemplated thereby, which is filed herewith as Exhibit 99.1.
