UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 11)
Nanophase Technologies Corporation
(Name of Issuer)
COMMON STOCK, par value $.01
(Title of Class of Securities)
630079101
(CUSIP Number)
Bradford T. Whitmore
1603 Orrington Ave., Suite 900
Evanston, Illinois 60201
Telephone: (847) 733-1230
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
May 13, 2019
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject
of this Schedule 13D, and is filing this schedule because
of Section 240.13d-l(e), 240.13d-l(f) or 240.13d-l(g),
check the following box. [ ]
NOTE: Schedules filed in paper format shall include a
signed original and five copies of the schedule, including
all exhibits. See Section 240.13d-7 for other parties
to whom copies are to be sent.
The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect
to the subject class of securities, and for any subsequent
amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover
page shall not be deemed to be "filed" for the purpose of
Section 18 of the Securities Exchange Act of 1934 ("Act")
or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
Schedule 13D/A
CUSIP No. 630079101 Page 2 of 10 Pages
1. Names of Reporting Person
S.S. OR I.R.S. Identification No. of Above Persons
Bradford T. Whitmore
2. Check the Appropriate Box if a Member of a Group (See
instructions)
(a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds (See instructions)
OO
5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 17,147,889 shares
Shares
Beneficially 8 Shared Voting Power
Owned by 3,034,710 shares
Each
Reporting 9 Sole Dispositive Power
Person 17,147,889 shares
With
10 Shared Dispositive Power
3,034,710 shares
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
20,182,599 shares
12. Check if the Aggregate Amount in Row (11) Excludes
Certain Shares (See instructions) [ ]
13. Percent of Class Represented by Amount in Row (11)
53.0%
14. Type of Reporting Person (See instructions)
IN
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Schedule 13D/A
CUSIP No. 630079101 Page 3 of 10 Pages
1. Names of Reporting Person
S.S. OR I.R.S. Identification No. of Above Persons
Grace Investments, LP
2. Check the Appropriate Box if a Member of a Group (See
instructions)
(a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds (See instructions)
OO
5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware Limited Partnership
7 Sole Voting Power
Number of 0
Shares 8 Shared Voting Power
Beneficially 601,410 shares
Owned by
Each
Reporting 9 Sole Dispositive Power
Person 0
With 10 Shared Dispositive Power
601,410 shares
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
601,410 shares
12. Check if the Aggregate Amount in Row (11) Excludes
Certain Shares (See instructions) [ ]
13. Percent of Class Represented by Amount in Row (11)
1.6 %
14. Type of Reporting Person (See instructions)
PN
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Schedule 13D/A
CUSIP No. 630079101 Page 4 of 10 Pages
1. Names of Reporting Person
S.S. OR I.R.S. Identification No. of Above Persons
Grace Brothers, LP
2. Check the Appropriate Box if a Member of a Group (See
instructions)
(a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds (See instructions)
OO
5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware Limited Partnership
7 Sole Voting Power
Number of 0
Shares 8 Shared Voting Power
Beneficially 2,433,300 shares
Owned by
Each
Reporting 9 Sole Dispositive Power
Person 0
With 10 Shared Dispositive Power
2,433,300 shares
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
2,433,300 shares
12. Check if the Aggregate Amount in Row (11) Excludes
Certain Shares (See instructions) [ ]
13. Percent of Class Represented by Amount in Row (11)
6.4%
14. Type of Reporting Person (See instructions)
PN
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Schedule 13D/A
CUSIP No. 630079101 Page 5 of 10 Pages
1. Names of Reporting Person
S.S. OR I.R.S. Identification No. of Above Persons
Spurgeon Corporation
2. Check the Appropriate Box if a Member of a Group (See
instructions)
(a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds (See instructions)
OO
5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Illinois Corporation
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned by 3,034,710 shares
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
3,034,710 shares
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
3,034,710 shares
12. Check if the Aggregate Amount in Row (11) Excludes
Certain Shares (See instructions) [ ]
13. Percent of Class Represented by Amount in Row (11)
8.0%
14. Type of Reporting Person (See instructions)
CO
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Schedule 13D/A
CUSIP No. 630079101 Page 6 of 10 Pages
1. Names of Reporting Person
S.S. OR I.R.S. Identification No. of Above Persons
BRO-GP,LLC
2. Check the Appropriate Box if a Member of a Group (See
instructions)
(a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds (See instructions)
OO
5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware Limited Liability Company
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned by 2,433,300 shares
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
2,433,300 shares
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
2,433,300 shares
12. Check if the Aggregate Amount in Row (11) Excludes
Certain Shares (See instructions) [ ]
13. Percent of Class Represented by Amount in Row (11)
6.4%
14. Type of Reporting Person (See instructions)
OO
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Schedule 13D/A
CUSIP No. 630079101 Page 7 of 10 Pages
1. Names of Reporting Person
S.S. OR I.R.S. Identification No. of Above Persons
INV-GP, LLC
2. Check the Appropriate Box if a Member of a Group (See
instructions)
(a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds (See instructions)
OO
5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware Limited Liability Company
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned by 601,410 shares
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
601,410 shares
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
601,410 shares
12. Check if the Aggregate Amount in Row (11) Excludes
Certain Shares (See instructions) [ ]
13. Percent of Class Represented by Amount in Row (11)
1.6%
14. Type of Reporting Person (See instructions)
OO
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Page 8 of 10 Pages
The undersigned hereby amends its Schedule 13D as filed on
September 19, 2003 and as previously amended relating to
the Common Stock of Nanophase Technologies Corporation.
Unless otherwise indicated, all capitalized terms used
herein but not defined herein shall have the same meaning
as set forth in the Schedule 13D. Except as set forth
herein, the Schedule 13D remains unchanged.
Item 2. Identity and Background
(a) The statement is filed by Grace Brothers, LP, a
Delaware limited partnership ("Grace"), Grace Investments,
LP, a Delaware limited partnership ("Grace Investments"),
BRO-GP, LLC, a Delaware Limited Liability Company, INV-GP,
LLC, a Delaware Limited Liability Company, Bradford T.
Whitmore ("Whitmore"), and Spurgeon Corporation
("Spurgeon") (the "Filers"). Spurgeon and BRO-GP, LLC
are the general partners of Grace. Spurgeon and INV-GP,
LLC are the general partners of Grace Investments.
Whitmore is the manager and sole member of both BRO-GP,
LLC and INV-GP, LLC.
(b) The business address of Grace, Grace Investments,
BRO-GP, LLC, INV-GP, LLC and Whitmore is 1603 Orrington
Avenue, Suite 900, Evanston, Illinois 60201. The business
address of Spurgeon is 407 S. Third Street, Suite 230,
Geneva, Illinois 60134.
(c) The principal business of Grace and Grace Investments
is to purchase, sell, invest, and trade in securities.
The principal business of BRO-GP, LLC is that of being a
general partner of Grace. The principal business of
INV-GP, LLC is that of being a general partner of Grace
Investments. Whitmore's principal occupation is that of
being the manager of BRO-GP, LLC and INV-GP, LLC. The
principal business of Spurgeon is that of being a general
partner of Grace and Grace Investments.
(d) None of the persons referred to in this Item 2 has,
during the last five years, been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors).
(e) None of the persons referred to in this Item 2 has,
during the last five years, been a party to a civil
proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to , federal or state securities laws or
finding any violation with respect to such laws.
(f) Grace and Grace Investments are each a Delaware limited
partnership. BRO-GP, LLC and INV-GP, LLC are each a
Delaware limited liability company. Spurgeon is an
Illinois corporation. Whitmore is a citizen of the
United States.
Page 9 of 10 Pages
Item 4. Purpose of Transaction
On May 13, 2019, Whitmore purchased 4,189,000 shares
of Common Stock from the Company at a price of $0.40 per
share.
The Filers have no plans or proposals which relate to, or
would result in, any of the matters referred to in
Paragraphs (a) through (j), inclusive, of Item 4 of the
Schedule 13D. The Filers may, at any time and from time to
time, review or reconsider their investment in the Company
and formulate plans or proposals with respect thereto, but
have no present intention of doing so.
Item 5. Interest in Securities of the Issuer
(a) As of the date of this filing:
(1) Grace Brothers, LP beneficially owns 2,433,300 shares of
Common Stock, representing approximately 6.4% of the
outstanding shares of Common Stock. As general partners of
Grace Brothers, LP, Spurgeon and BRO-GP, LLC each may be
deemed to share beneficial ownership of these 2,433,300
shares of Common Stock. Spurgeon and BRO-GP, LLC otherwise
disclaim beneficial ownership.
(2) Grace Investments, LP beneficially owns 601,410 shares of
Common Stock, representing approximately 1.6% of the
outstanding shares of Common Stock. As general partners of
Grace Investments, LP, Spurgeon and INV-GP, LLC may be deemed
to share beneficial ownership of these 601,410 shares of
Common Stock. Spurgeon and INV-GP, LLC otherwise disclaim
beneficial ownership.
(3) Whitmore owns 17,147,889 shares of Common Stock as
beneficial owner. As the manager and sole member of both
BRO-GP, LLC and INV-GP, LLC, Whitmore may be deemed the
indirect beneficial owner of 3,034,710 shares of stock
beneficially owned by those entities, for a total
beneficial ownership of 20,182,599 shares, or 53.0% of the
outstanding shares of Common Stock.
(b) Grace Brothers, LP: shared voting power (with BRO-GP,
LLC, Whitmore and Spurgeon)
2,433,300 Shares of Common Stock
Grace Investments, LP: shared voting power (with INV-GP,
LLC, Whitmore and Spurgeon)
601,410 Shares of Common Stock
Whitmore: shared voting power (with Grace Brothers, LP,
Grace Investments, LP, BRO-GP, LLC, INV-GP, LLC and Spurgeon)
3,034,710 Shares of Common Stock;
and
sole voting power
17,147,889 Shares of Common Stock
Spurgeon: shared voting power (with Grace Brothers, LP,
Grace Investments, LP, BRO-GP, LLC, INV-GP, LLC and Whitmore)
3,034,710 Shares of Common Stock
(c) The transactions effected by the Filers during the
past sixty days are set forth in Schedule A.
Page 10 of 10 Pages
Item 7. Items to be Filed as Exhibits
Exhibit 1 - Nanophase Technologies Corporation Common
Stock Purchase Agreement
SIGNATURE
After reasonable inquiry and to the best of its knowledge
and belief, the undersigned certifies that the information
set forth in this Statement with respect to it is true,
complete and correct.
Dated: May 15, 2019
Bradford T. Whitmore
By: /s/ Bradford T. Whitmore
Name: Bradford T. Whitmore
Grace Investments, LP
By: /s/ Bradford T. Whitmore
Name: Bradford T. Whitmore
Manager: INV-GP, LLC
Its: General Partner
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Grace Brothers, LP
By: /s/ Bradford T. Whitmore
Name: Bradford T. Whitmore
Manager: BRO-GP, LLC
Its: General Partner
|
Spurgeon Corporation
By: /s/ Jerald A. Trannel
Name: Jerald A. Trannel
Its: Vice President
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SCHEDULE A
TRADE ACTIVITY FOR NANOPHASE TECHNOLOGIES, CORP.
EFFECTED BY BRADFORD T. WHITMORE FOR THE PREVIOUS
60 DAYS.
Amount of Price per
Date Security Shares Share
Purchased
05/13/2019 Common Stock 4,189,000 $0.40
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Exhibit 1
Nanophase Technologies Corporation Common Stock
Purchase Agreement
This Common Stock Purchase Agreement (this "Agreement") is
made as of May 13, 2019 by and between NANOPHASE
TECHNOLOGIES CORPORATION, a Delaware corporation with its
principal office at 1319 Marquette Drive, Romeoville,
Illinois 60446 (the "Company"), and Bradford T. Whitmore
(the "Purchaser").
RECITALS
A. The Company has authorized the sale and issuance of up
to 4,189,000 shares (the "Shares") of the common stock of
the Company, $0.01 par value per share (the "Common
Stock"), to an
investor in a private placement (the "Offering").
B. Under Section 4(a)(2) of the Securities Act of 1933 (the
"Securities Act") and Rule 506(b) promulgated thereunder,
the Company desires to sell to the Purchaser and the
Purchaser desires to purchase from the Company 4,189,000
shares of Common Stock on the terms and subject to the
conditions set forth in this Agreement.
TERMS AND CONDITIONS
The parties agree as follows:
1. Purchase of the Shares.
1.1 Agreement to Sell and Purchase. At the Closing (as
hereinafter defined), the Company shall issue and sell to
the Purchaser, and Purchase shall purchase from the Company
4,189,000 shares of Common Stock for an aggregate purchase
price of $1,675,600 (the "Purchase Price"). The purchase
price for each Share purchased hereunder is $0.40.
1.2 Closing; Closing Date. The parties shall complete the
sale and purchase of the Shares (the "Closing") at 9:00
a.m. (Chicago time) on the date hereof (the "Closing
Date"), remotely by.pdf or other electronic transmission of
documents or at such other time and place as the Company
and Purchaser may agree.
1.3 Delivery of the Shares. At the Closing, subject to the
terms and conditions hereof, the Company will deliver to
the Purchaser a stock certificate or certificates in such
denominations and registered in such names as the Purchaser
may designate by notice to the Company, representing the
Shares, dated as of the Closing Date (each a
"Certificate"), against payment of the purchase price
therefor by cash in the form of wire transfer, unless other
means of payment is agreed upon by the Purchaser and the
Company.
2. Representations and Warranties of the Company. The
Company hereby represents and warrants to the Purchaser:
2.1 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this
Agreement has been taken. The Company has the requisite
corporate power to enter into this Agreement and carry out
and perform its obligations under the terms of this
Agreement. The Company has the requisite corporate power
to issue and sell the Shares. This Agreement has been duly
authorized, executed and delivered by the Company and, upon
due execution and delivery by the Purchaser, this Agreement
will be a valid and binding agreement of the Company,
enforceable against the Company in accordance with its
terms, except as rights to indemnity hereunder may be
limited by federal or state securities laws and except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally or by equitable principles.
2.2 Organization, Good Standing and Qualification. The
Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of
Delaware and has all requisite corporate power and
authority to carry on its business as now conducted.
2.3 SEC Filings; Financial Statements. As used herein, the
"Company SEC Documents" means all reports, schedules,
forms, statements and other documents filed or furnished,
as applicable, by the Company under the Securities Exchange
Act of 1934 (the "Exchange Act"), including pursuant to
Section 13(a) or 15(d) thereof, including the exhibits
thereto and documents incorporated by reference therein. As
of their respective filing dates, the Company SEC Documents
since December 31, 2018 complied in all material respects
with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the
Securities and Exchange Commission (the "SEC") promulgated
thereunder, and none of these Company SEC Documents, when
filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated
therein or necessary to make the statements therein in
light of the circumstances under which they were made not
misleading. The Company SEC Documents include all filings
on Form 8-K which may have been required by reason of
events occurring after December 31, 2018. The financial
statements contained in the Company SEC Documents since
December 31, 2018: (i) complied in all material respects
with applicable accounting requirements and the published
rules and regulations of the SEC applicable thereto; (ii)
were prepared in accordance with generally accepted
accounting principles applied on a consistent basis
throughout the periods covered, except as may be indicated
in the notes to such financial statements and (in the case
of unaudited consolidated condensed statements) as
permitted by Form 10-Q of the SEC, and except that
unaudited consolidated condensed financial statements may
not contain footnotes and are subject to year-end audit
adjustments; and (iii) fairly present the financial
position of the Company as of the respective dates thereof
and the results of operations, cash flows and the changes
in stockholders' equity of the Company for the periods
covered thereby.
2.4 Valid Issuance of Shares. The Shares are duly
authorized and, when issued, sold and delivered and paid
for in accordance with the terms hereof, will be duly and
validly authorized and issued, fully paid and
non-assessable, free from all taxes, liens, claims,
encumbrances and charges with respect to the issue thereof;
provided, however, that the Shares may be subject to
restrictions on transfer under state and/or federal
securities laws or as otherwise set forth herein. The
issuance, sale and delivery of the Shares in accordance
with the terms hereof will not be subject to preemptive
rights of stockholders of the Company.
3. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants to the Company as
follows:
3.1 Legal Power. The Purchaser has the requisite authority
to enter into this Agreement and to carry out and perform
his obligations under the terms of this Agreement. All
action on the Purchaser's part required for the lawful
execution and delivery of this Agreement have been or will
be effectively taken prior to the Closing.
3.2 Due Execution. This Agreement has been duly
authorized, executed and delivered by the Purchaser, and,
upon due execution and delivery by the Company, this
Agreement will be a valid and binding agreement of the
Purchaser, except as rights to indemnity hereunder may be
limited by federal or state securities laws and except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally or by equitable principles.
3.3 Investment Representations. In connection with the
sale and issuance of the Shares, the Purchaser makes the
following representations: (a) Investment for Own Account.
The Purchaser is acquiring the Shares for his own account,
not as nominee or agent, and not with a view to, or for
resale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act;
provided, however, that by making the representations
herein, the Purchaser does not agree to hold any of the
Shares for any minimum or specific term and reserves the
right to dispose of the securities at any time in
accordance with or pursuant to a registration statement or
an exemption from the registration requirements of the
Securities Act.
(b) Transfer Restrictions; Legends. The Purchaser
understands that (i) the Shares have not been registered
under the Securities Act; (ii) the Shares are being offered
and sold pursuant to an exemption from registration, based
in part upon the Company's reliance upon the statements and
representations made by the Purchaser in this Agreement,
and that the Shares must be held by the Purchaser
indefinitely, and that the Purchaser must, therefore, bear
the economic risk of such investment indefinitely, unless a
subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration; (iii)
each Certificate representing the Shares will be endorsed
with the following legend until the earlier of (1) such
date as the Shares have been registered for resale by the
Purchaser or (2) the date the Shares are eligible for sale
under Rule 144 under the Securities Act:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. UNLESS SOLD PURSUANT TO EITHER AN
EFFECTIVE REGISTRATION STATEMENT OR RULE 144 UNDER THE
SECURITIES ACT, THE ISSUER OF THESE SECURITIES MAY REQUIRE
AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
(iv) the Company will instruct any transfer agent not to
register the transfer of the Shares (or any portion
thereof) until the applicable date set forth in clause
(iii) above unless (A) the conditions specified in the
foregoing legends are satisfied, (B) if the opinion of
counsel referred to above is to the further effect that
such legend is not required in order to establish
compliance with any provisions of the Securities Act or
this Agreement, (C) if the Purchaser provides the Company
with reasonable assurance, such as through a representation
letter, that the Shares may be sold pursuant to Rule 144
under the Securities Act, or (D) other reasonably
satisfactory assurances of such nature are given to the
Company. If so required by the Company's transfer agent,
the Company shall cause its counsel to issue and deliver a
legal opinion to the transfer agent to effect the removal
of the restrictive legend contemplated by this Agreement.
Purchaser may from time to time pledge, and/or grant a
security interest in some or all of the Shares pursuant to
a bona fide margin agreement in connection with a bona fide
margin account and, if required under the terms of such
agreement or account, the Purchaser may transfer pledged or
secured Shares to the pledgees or secured parties. Such a
pledge or transfer is not subject to approval or consent of
the Company and no legal opinion of legal counsel to the
pledgee, secured party or pledgor is required in connection
with the pledge, but such legal opinion may be required in
connection with a subsequent transfer following default by
the Purchaser to the transferee of the pledge. No notice
is required of such pledge. At the Purchaser's expense,
the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Shares may
reasonably request in connection with a pledge or transfer
of the Shares.
Certificates evidencing the Shares will not contain any
legend (including the legend set forth in this Section):
(i) upon the effectiveness of a registration statement
(including the Registration Statement (as defined below))
covering the resale of the Shares, or (ii) following a sale
of such Shares pursuant to Rule 144, or (iii) while such
Shares are eligible for sale under Rule 144, if such Shares
have been held for one year or more pursuant to the
requirements of Rule 144, or (iv) if such legend is not
required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements
issued by the Staff of the SEC). Following such time as
restrictive legends are not required to be placed on
certificates representing Shares, the Company will, no
later than three business days following the delivery by
the Purchaser to the Company or the Company's transfer
agent of a certificate representing Shares containing a
restrictive legend and such other documentation and
representations as the Company, its legal counsel or
transfer agent may reasonably request to confirm compliance
with the preceding sentence as applicable (provided,
however, that neither the Company nor its legal counsel
will require a legal opinion in connection with any sale
pursuant to Rule 144), deliver or cause to be delivered to
the Purchaser a certificate representing such Shares that
is free from all restrictive and other legends. The
Company shall cause its counsel to issue a legal opinion to
the Company's transfer agent promptly after the effective
date of a registration statement covering the Shares if
required by the Company's transfer agent to effect the
removal of the legend hereunder. The Company may not make
any notation on its records or give instructions to any
transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section. Certificates for
Shares subject to legend removal hereunder shall be
transmitted by the transfer agent of the Company to the
Purchaser by crediting the account of the Purchaser's prime
broker with the Depository Trust Company system. The
Company will pay all fees and expenses of its transfer
agent and the Depository Trust Company in connection with
the removal of legends pursuant to this Section 3.3(b).
Removal of the restrictive legend from certificates
representing Shares as set forth in this Section 3.3(b) is
predicated upon the Company's reliance that the Purchaser
will sell any Shares pursuant to either the registration
requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an
exemption therefrom. (c) Financial Sophistication; Due
Diligence. The Purchaser has such knowledge and experience
in financial or business matters that he is capable of
evaluating the merits and risks of the investment in
connection with the transactions contemplated in this
Agreement. The Purchaser has, in connection with his
decision to purchase the Shares, relied only upon the
representations and warranties contained herein and the
information contained in the Company SEC Documents.
Further, the Purchaser has had such opportunity to obtain
additional information and to ask questions of, and receive
answers from, the Company, concerning the terms and
conditions of the investment and the business and affairs
of the Company, as the Purchaser considers necessary in
order to form an investment decision.
(d) Accredited Investor Status. The Purchaser is an
"accredited investor" as such term is defined in Rule
501(a) of the rules and regulations promulgated under the
Securities Act.
(e) General Solicitation. The Purchaser is not purchasing
the Shares as a result of any advertisement, article,
notice or other communication regarding the Shares
published in any newspaper, magazine or similar media or
broadcast over the television or radio or presented at any
seminar or any other general solicitation or general
advertisement. Prior to the time that the Purchaser was
first contacted by the Company the Purchaser had a
pre-existing and substantial relationship with the Company.
3.4 No Investment, Tax or Legal Advice. The Purchaser
understands that nothing in the Company SEC Documents, this
Agreement, or any other materials presented to the
Purchaser in connection with the purchase and sale of the
Shares constitutes legal, tax or investment advice. The
Purchaser has consulted such legal, tax and investment
advisors as he, in his sole discretion, has deemed
necessary or appropriate in connection with his purchase of
Shares.
3.5 Additional Acknowledgement. The Purchaser acknowledges
that he has independently evaluated the merits of the
transactions contemplated by this Agreement, that he has
independently determined to enter into the transactions
contemplated hereby, and that he is not relying on any
advice from or evaluation by any other person.
3.6 No Short Position. As of the date hereof, and as of
the date of the public announcement of the Offering, the
Purchaser does not and will not (between the date hereof
and the date of the public announcement of the Offering)
engage in any short sale of the Company's voting stock or
any other type of hedging transaction involving the
Company's securities (including, without limitation,
depositing shares of the Company's securities with a
brokerage firm where such securities are made available by
the broker to other customers of the firm for purposes of
hedging or short selling the Company's securities).
4. Reporting Status. With a view to making available to
the Purchaser the benefits of certain rules and regulations
of the SEC which may permit the sale of the Shares to the
public without registration, the Company agrees to use its
reasonable efforts to file with the SEC, in a timely manner
all reports and other documents required of the Company
under the Exchange Act. The Company will otherwise take
such further action as the Purchaser may reasonably
request, all to the extent required from time to time to
enable the Purchaser to sell the Shares without
registration under the Securities Act or any successor rule
or regulation adopted by the SEC.
5. Registration Rights.
5.1 Demand Registration.
(a) Requests for Registration. At any time after four
years after the date of this Agreement, the Purchaser may
demand that the Company register all or part of the
Registrable Securities (as defined below) under the
Securities Act (a "Demand Registration") on Forms S-1 or
S-3 (or similar forms then in effect) (each, a
Registration Statement") promulgated by the SEC under the
Securities Act. Within ten days after receipt of a demand,
the Company shall notify in writing all holders of
Registrable Securities of the demand. Any holder who wants
to include his, her, or its Registrable Securities in the
Demand Registration must notify the Company within ten
business days of receiving the notice of the Demand
Registration. Except as provided in this Section 5, the
Company shall include in all Demand Registrations all
Registrable Securities for which the Company receives
timely written demands for inclusion. All demands made
pursuant to this Section 5.1(a) must specify the number of
Registrable Securities to be registered (which may not be
less than one third of the Registrable Securities) and the
intended method of disposing of the Registrable Securities.
The Company shall prepare and file with (or confidentially
submit to) the SEC a Registration Statement covering all of
the Registrable Securities that the holders thereof have
requested to be included pursuant to such Demand
Registration within 90 days after the date on which the
initial request is given and will use its commercially
reasonable efforts to cause such Registration Statement to
be declared effective by the SEC as soon as practicable
thereafter, subject to compliance with review by the SEC.
Once a Registration Statement is declared effective by the
SEC, the Company shall maintain its effectiveness for at
least one hundred 120 days (or such shorter period as will
terminate when all Registrable Securities covered by such
Registration Statement have been sold or withdrawn). The
Company shall not be obligated to effect, or to take any
action to effect, a registration pursuant to any demand
notice in accordance with this Section 5.1(a) after the
Company has filed with the SEC three Registration
Statements (counting for these purposes only registrations
which have been declared or ordered effective). For
purposes of this Agreement, the term "Registrable
Securities" means (i) the Shares, and (ii) any Common Stock
of the Company issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which
is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, any Shares.
(b) Selection of Underwriters. The Company shall select
the investment bankers and managers that will administer
the offering as long as the investment bankers and the
managers are reasonably satisfactory to the holders of a
majority of the Registrable Securities requested to be
included in a Demand Registration. The Company shall enter
into a customary underwriting agreement with those
investment bankers and managers.
(c) Delay in Filing. The Company may delay the filing of
the Registration Statement in connection with a Demand
Registration for a period of not more than 120 days upon
the advice of the investment bankers and managers that will
administer the offering that a delay is necessary or
appropriate under the circumstances to prevent a material
adverse effect on the Company. The Company may not use
this right to delay more than once during the term of this
Agreement.
(d) Priority on Demand Registration. If the managing
underwriters give the Company and the holders of the
Registrable Securities being registered a written opinion
that the number of Registrable Securities requested to be
included exceeds the number of securities that can be sold,
the Company will include in the registration only the
number of Registrable Securities that the underwriters
believe can be sold. The number of securities registered
shall be allocated pro rata among the holders of
Registrable Securities on the basis of the total number of
Registrable Securities requested to be included in the
registration.
5.2 Piggyback Registration.
(a) If at any time the Company proposes to prepare and file
a Registration Statement or post-effective amendments
thereto covering the sale for cash of shares of Common
Stock, including shares of Common Stock held by
stockholders of the Company (in any such case, other than
in connection with a merger, acquisition, pursuant to Form
S-8 or successor form, or on any form which does not
include substantially the same information as would be
required to be included in a Registration Statement
covering the sale of Registrable Securities), it will give
written notice of its intention to do so ("Notice"), at
least 30 days prior to the filing of each such Registration
Statement, to the Purchaser. Upon the written request of
the Purchaser, made within 20 days after the Notice is
given, that the Company include any or all of the
Purchaser's Registrable Securities in the proposed
Registration Statement, the Company shall use its best
efforts to effect the registration under the Securities Act
of the Registrable Securities which it has been so
requested to register (the "Piggyback Registration").
(b) Notwithstanding the provisions of this Section 5.2, the
Company may at any time after it has given written notice
pursuant to this Section 5.2 (irrespective of whether any
written request for inclusion of Registrable Securities
shall have already been made) to elect not to file any such
proposed Registration Statement, or to withdraw the same
after the filing but prior to the effective date thereof,
without incurring any liability to the Purchaser.
(c) If any Piggyback Registration is an underwritten
offering, the Company shall select the investment bankers
and managers that will administer the offering, as long as
the investment bankers and managers are reasonably
satisfactory to the holders of a majority of the
Registrable Securities. The Company shall enter into a
customary underwriting agreement with the investment
bankers and managers.
5.3 Registration Procedures.
(a) Whenever the Purchaser requests the registration of any
Registrable Securities under this Agreement, the Company
shall use its reasonable best efforts to register and
permit the sale of the Registrable Securities in accordance
with the intended method of disposition, and to effect such
registration and any related qualification or compliance
with respect to all Registrable Securities held by the
Purchaser. If the Company is not eligible to use Form S-3
at the time of filing, and the Company subsequently becomes
eligible to use Form S-3, the Company shall file, as
promptly as reasonably practicable, a new Registration
Statement on Form S-3 covering the resale of the
Registrable Securities and replace the Registration
Statement on Form S-1 with the new Registration Statement
on Form S-3 upon the effectiveness of the new Registration
Statement on Form S-3.
(b) The Company shall use its best efforts to:
(i) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the
Prospectus used in connection therewith as may be necessary
or advisable to keep the Registration Statement current and
effective for the Registrable Securities held by the
Purchaser for a period ending on the earlier of (i) the
date on which all Registrable Securities may be sold
pursuant to Rule 144 under the Securities Act or any
successor rule ("Rule 144") during any three-month period
without the requirement for the Company to be in compliance
with the current public information required under Rule
144(c)(1), or (ii) such time as all Registrable Securities
have been sold pursuant to a registration statement or Rule
144. The Company shall notify the Purchaser promptly upon
the Registration Statement and each post-effective
amendment thereto, being declared effective by the SEC and
advise the Purchaser that the form of Prospectus contained
in the Registration Statement or post-effective amendment
thereto, as the case may be, at the time of effectiveness
meets the requirements of Section 10(a)of the Securities
Act or that it intends to file a Prospectus pursuant to
Rule 424(b) under the Securities Act that meets the
requirements of Section 10(a) of the Securities Act;
(ii) furnish to the Purchaser with respect to the
Registrable Securities registered under the Registration
Statement such number of copies of the Registration
Statement and the Prospectus (including supplemental
prospectuses) filed with the SEC in conformance with
the requirements of the Securities Act and other such
documents as the Purchaser may reasonably request, in
order to facilitate the public sale or other disposition of
all or any of the Registrable Securities by the Purchaser;
(iii) make any necessary blue sky filings;
(iv) pay the expenses incurred by the Company and the
Purchaser in complying with Section 5, including, all
registration and filing fees, FINRA fees, exchange listing
fees, printing expenses, fees and disbursements of counsel
for the Company, blue sky fees and expenses and the expense
of any special audits incident to or required by any such
registration (but excluding attorneys' fees of the
Purchaser and any and all underwriting discounts and
selling commissions applicable to the sale of Registrable
Securities by the Purchaser);
(v) advise the Purchaser, promptly after it shall receive
notice or obtain knowledge of the issuance of any stop
order by the SEC delaying or suspending the effectiveness
of the Registration Statement or of the initiation of any
proceeding for that purpose; and it will promptly use its
reasonable best efforts to prevent the issuance of any stop
order or to obtain its withdrawal at the earliest possible
moment if such stop order should be issued; and
(vi) with a view to making available to the Purchaser the
benefits of Rule 144 and any other rule or regulation of
the SEC that may at any time permit the Purchaser to sell
Registrable Securities to the public without registration,
the Company covenants and agrees to: (i) make and keep
public information available, as such term is understood
and defined in Rule 144, until the earlier of (A) such date
as all of the Registrable Securities qualify to be resold
immediately pursuant to Rule 144 or any other rule of
similar effect during any three-month period without the
requirement for the Company to be in compliance with the
current public information required under Rule 144(c)(1) or
(B) such date as all of the Registrable Securities shall
have been resold pursuant to Rule 144 (and may be further
resold without restriction); (ii) file with the SEC in a
timely manner all reports and other documents required of
the Company under the Securities Act and under the Exchange
Act; and (iii) furnish to the Purchaser upon request, as
long as the Purchaser owns any Registrable Securities, (A)
a written statement by the Company as to whether it has
complied with the reporting requirements of the Securities
Act and the Exchange Act, (B) a copy of the Company's most
recent Annual Report on Form 10-K or Quarterly Report on
Form 10-Q, and (C) such other information as may be
reasonably requested in order to avail the Purchaser of any
rule or regulation of the SEC that permits the selling of
any such Registrable Securities without registration.
The Company understands that the Purchaser disclaims being
an underwriter, but acknowledges that a determination by
the SEC that the Purchaser is deemed an underwriter does
not relieve the Company of any obligations it has
hereunder.
5.4 Transfer of Shares After Registration; Suspension.
(a) Except if Section 5.4(b) applies, the Company shall:
(i) if deemed necessary or advisable by the Company,
prepare and file from time to time with the SEC a
post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or a supplement or
amendment to any document incorporated therein by reference
or file any other required document so that such
Registration Statement will not contain an untrue statement
of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and so that, as
thereafter delivered to purchasers of the Registrable
Securities being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(ii) provide the Purchaser copies of any documents filed
pursuant to Section 5.4(a)(i); and (iii) upon request,
inform the Purchaser if he so requests that the Company has
complied with its obligations in Section 5.4(b)(i) (or
that, if the Company has filed a post-effective amendment
to the Registration Statement which has not yet been
declared effective, the Company will notify the Purchaser
to that effect, will use its reasonable best efforts to
secure the effectiveness of such post-effective amendment
as promptly as possible and will promptly notify the
Purchaser pursuant to Section 5.4(b)(i) when the amendment
has become effective). (b) If: (i) of any request by the
SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration
Statement or related Prospectus or for additional
information; (ii) of the issuance by the SEC or any other
federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement
or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification
with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation
of any proceeding for such purpose; or (iv) of any event or
circumstance which necessitates the making of any changes
in the Registration Statement or Prospectus, or any
document incorporated or deemed to be incorporated therein
by reference, so that, in the case of the Registration
Statement, it will not contain any untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the
Prospectus, it will not contain any untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; then the Company shall promptly
deliver a certificate in writing to the Purchaser (the
"Suspension Notice") to the effect of the foregoing and,
upon receipt of such Suspension Notice, the Purchaser will
refrain from selling any Registrable Securities pursuant to
the Registration Statement (a "Suspension") until the
Purchaser is advised in writing by the Company that the
current Prospectus may be used, and has received copies
from the Company of any additional or supplemental filings
that are incorporated or deemed incorporated by reference
in any such Prospectus. If any Suspension occurs, the
Company will use its reasonable best efforts to cause the
use of the Prospectus so suspended to be resumed as soon as
reasonably practicable after delivery of a Suspension
Notice to the Purchaser. In addition to and without
imiting any other remedies (including, without limitation,
at law or at equity) available to the Company and the
Purchaser, each of the Company and the Purchaser is
entitled to specific performance if the other party fails
to comply with the provisions of this Section 5.4(b).
(c) Notwithstanding the foregoing paragraphs of this
Section 5.4, the Company shall use its reasonable best
efforts to ensure that (i) a Suspension shall not exceed 30
days individually, (ii) Suspensions covering no more than
45 days, in the aggregate, shall occur during any twelve
month period and (iii) each Suspension must be separated
by a period of at least 30 days from a prior Suspension
(each Suspension that satisfies the foregoing criteria
being referred to herein as a "Qualifying Suspension").
(d) The Company shall, immediately following the
Registration Statement being declared effective, cause its
counsel to issue a legal opinion to the Company's transfer
agent to effect the removal of the restrictive legend
contemplated by this Agreement. The Company may not make
any notation on its records or give instructions to any
transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Agreement. Certificates for
Registrable Securities subject to legend removal hereunder
shall be transmitted by the transfer agent of the Company
to the Purchaser by crediting the account of the
Purchaser's prime broker with the Depository Trust Company
system.
5.5 Indemnification. For the purpose of this Section 5.5:
(a) the term "Registration Statement" includes any final
Prospectus, exhibit, supplement or amendment included in or
relating to, and any document incorporated by reference in,
the Registration Statement (or deemed to be a part thereof)
referred to in Section 5.1; and (b) the term "untrue
statement" means any untrue statement or alleged untrue
statement of a material fact, or any omission or alleged
omission to state in the Registration Statement a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading. (c) The Company shall
indemnify and hold harmless the Purchaser from and against
any losses, claims, damages or liabilities to which the
Purchaser may become subject (under the Securities Act or
otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon (i) any untrue statement of
a material fact contained in the Registration Statement,
(ii) any inaccuracy in the representations and warranties
of the Company contained in this Agreement or the failure
of the Company to perform its obligations hereunder or
(iii) any failure by the Company to fulfill any undertaking
included in the Registration Statement, and the Company
will reimburse the Purchaser for any reasonable legal
expense or other actual accountable out-of-pocket expenses
reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim;
provided, however, that the Company shall not be liable in
any such case to the extent that such loss, claim, damage
or liability arises out of, or is based upon, an untrue
statement made in such Registration Statement in reliance
upon and in conformity with written information furnished
to the Company by or on behalf of the Purchaser
specifically for use in preparation of the Registration
Statement or the failure of the Purchaser to comply with
his covenants and agreements contained herein or any
statement or omission in any Prospectus that is corrected
in any subsequent Prospectus that was delivered to the
Purchaser prior to the pertinent sale or sales by the
Purchaser. (d) The Purchaser shall indemnify and hold
harmless the Company (and each person, if any, who controls
the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each
officer of the Company who signs the Registration Statement
and each director of the Company) from and against any
losses, claims, damages or liabilities to which the Company
(or any such officer, director or controlling person) may
become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of, or
are based upon, (i) any failure by the Purchaser to comply
with the covenants and agreements contained in this Section
5 or (ii) any untrue statement of a material fact contained
in the Registration Statement if, and only if, such untrue
statement was made in reliance upon and in conformity with
written information furnished by or on behalf of the
Purchaser specifically for use in preparation of the
Registration Statement, and the Purchaser will reimburse
the Company (or such officer, director or controlling
person, as the case may be), for any reasonable legal
expense or other reasonable actual accountable out-of-
ocket expenses reasonably incurred in investigating,
defending or preparing to defend any such action,
proceeding or claim. The obligation to indemnify is
limited to the net amount of the proceeds received by the
Purchaser from the sale of the Registrable Securities
pursuant to the Registration Statement.
(e) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect
of which indemnity is to be sought against an indemnifying
person pursuant to this Section 5.5, such indemnified
person shall notify the indemnifying person in writing of
such claim or of the commencement of such action, but the
omission to so notify the indemnifying party will not
relieve it from any liability which it may have to any
indemnified party under this Section 5.5 (except to the
extent that such omission materially and adversely affects
the indemnifying party's ability to defend such action) or
from any liability otherwise than under this Section 5.5.
Subject to the provisions hereinafter stated, in case any
such action is brought against an indemnified person, the
indemnifying person is entitled to participate therein, and
to the extent that it elects by written notice delivered to
the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, is entitled
to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified person. After notice from
the indemnifying person to such indemnified person of his
or its election to assume the defense thereof (unless it
has failed to assume the defense thereof and appoint
counsel reasonably satisfactory to the indemnified party),
such indemnifying person is not liable to such indemnified
person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof;
provided, however, that if there exists a conflict of
interest that would make it inappropriate, in the
reasonable opinion of counsel to the indemnified person,
for the same counsel to represent both the indemnified
person and such indemnifying person or any affiliate or
associate thereof, the indemnified person is entitled to
retain his or its own counsel (who shall not be the same
as the opining counsel) at the expense of such indemnifying
person; provided, however, that no indemnifying person is
responsible for the fees and expenses of more than one
separate counsel (together with appropriate local counsel)
for all indemnified parties. In no event is any
indemnifying person liable in respect of any amounts paid
in settlement of any action unless the indemnifying person
has approved the terms of such settlement; provided that
such consent may not be unreasonably withheld. No
indemnifying person shall, without the prior written
consent of the indemnified person, effect any settlement of
any pending or threatened proceeding in respect of which
any indemnified person is or could reasonably have been a
party and indemnification could have been sought hereunder
by such indemnified person, unless such settlement includes
an unconditional release of such indemnified person from
all liability on claims that are the subject matter of such
proceeding.
(f) If the indemnification provided for in this Section 5.5
is unavailable to or insufficient to hold harmless an
indemnified party under subsection (c) or (d) above in
respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Company on
the one hand and the Purchaser on the other in connection
with the statements or omissions or other matters which
resulted in such losses, claims, damages or liabilities
(or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault is
determined by reference to, among other things, in the case
of an untrue statement, whether the untrue statement
relates to information supplied by the Company on the one
hand or the Purchaser on the other and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement.
The Company and the Purchaser agree that it would not be
just and equitable if contribution pursuant to this
subsection (f) were determined by pro rata allocation or by
any other method of allocation which does not take into
account the equitable considerations referred to above in
this subsection (f). The amount paid or payable by an
indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof)
referred to above in this subsection (f) is deemed to
include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the
provisions of this subsection (f), the Purchaser is not
required to contribute any amount in excess of the amount
by which the net amount received by that the Purchaser from
the sale of the Registrable Securities to which such loss
relates exceeds the amount of any damages which the
Purchaser has otherwise been required to pay to the Company
by reason of such untrue statement. No person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) is entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
(g) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were
represented by counsel during the negotiations regarding
the provisions hereof including, without limitation, the
provisions of this Section 5.5, and are fully informed
regarding said provisions. They further acknowledge that
the provisions of this Section 5.5 fairly allocate the
risks in light of the ability of the parties to investigate
the Company and its business in order to assure that
adequate disclosure is made in the Registration Statement
as required by the Securities Act and the Exchange Act.
(h) The obligations of the Company and of the Purchaser
under this Section 5.5 survive completion of any offering
of Registrable Securities in such Registration Statement
for a period of two years from the effective date of the
Registration Statement. No indemnifying party, in the
defense of any such claim or litigation, shall, except with
the consent of each indemnified party, consent to entry of
any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or
litigation.
5.6 Termination of Conditions and Obligations. The
conditions precedent imposed by Section 3 or this Section 5
upon the transferability of the Registrable Securities
cease and terminate as to any particular number of the
Registrable Securities when such Registrable Securities
have been effectively registered under the Securities Act
and sold or otherwise disposed of in accordance with the
intended method of disposition set forth in the
Registration Statement covering such Registrable Securities
or at such time as an opinion of counsel satisfactory to
the Company has been rendered to the effect that such
conditions are not necessary in order to comply with the
Securities Act. The Company shall request an opinion of
counsel promptly upon receipt of a request therefor from
the Purchaser.
5.7 Information Available. So long as the Registration
Statement is effective covering the resale of Registrable
Securities owned by the Purchaser, the Company will furnish
(or, to the extent such information is available
electronically through the Company's filings with the SEC,
the Company will make available via the SEC's EDGAR system
or any successor thereto) to the Purchaser:
(a) as soon as practicable after it is available, one copy
of (i) its Annual Report to Stockholders (which Annual
Report shall contain financial statements audited in
accordance with generally accepted accounting principles by
a national firm of certified public accountants) and (ii)
if not included in substance in the Annual Report to
Stockholders, its Annual Report on Form 10-K (the
foregoing, in each case, excluding exhibits);
(b) upon the request of the Purchaser, all exhibits
excluded by the parenthetical to subparagraph (a)(ii) of
this Section 5.7 as filed with the SEC and all other
information that is made available to stockholders; and
(c) upon the reasonable request of the Purchaser, an
adequate number of copies of the Prospectuses to supply to
any other party requiring such Prospectuses; and the
Company, upon the reasonable request of the Purchaser, will
meet with the Purchaser or a representative thereof at the
Company's headquarters during the Company's normal business
hours to discuss all information relevant for disclosure in
the Registration Statement covering the Registrable
Securities and will otherwise reasonably cooperate with the
Purchaser conducting an investigation for the purpose of
reducing or eliminating the Purchaser's exposure to
liability under the Securities Act, including the
reasonable production of information at the Company's
headquarters; provided, that the Company is not required to
disclose any confidential information to or meet at its
headquarters with the Purchaser until and unless the
Purchaser has entered into a confidentiality agreement in
form and substance reasonably satisfactory to the Company
with the Company with respect thereto.
5.8 Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to
this Section 5 may be assigned by the Purchaser to a party
that acquires, other than pursuant to the Registration
Statement or Rule 144, any of the Registrable Securities
originally issued or issuable to the Purchaser as
contemplated by this Agreement, or to any affiliate of the
Purchaser that acquires any Registrable Securities. Any
such permitted assignee has all the rights of the Purchaser
under this Section 5 with respect to the Registrable
Securities transferred.
5.9 Selling Stockholder Questionnaire. The Purchaser
agrees to furnish to the Company a completed questionnaire
in the form attached to this Agreement as Exhibit A (a
"Selling Stockholder Questionnaire"). The Company is not
required to include the Registrable Securities of the
Purchaser in a Registration Statement and is not be
required to pay any liquidated or other damages hereunder
to the Purchaser if he fails to furnish to the Company a
fully completed Selling Stockholder Questionnaire at least
three business days prior to the filing of the Registration
Statement.
6. Miscellaneous.
6.1 Governing Law. This Agreement is governed by and
construed in accordance with the laws of the State of
Illinois, without regard to the choice of law provisions
thereof, and the federal laws of the United States.
6.2 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof inure to the benefit
of, and are binding upon, the successors, assigns, heirs,
executors, and administrators of the parties hereto.
Notwithstanding the foregoing, the Company may not assign
this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser, and the
Purchaser may not assign this Agreement or any rights or
obligations hereunder without the assignee agreeing to be
bound by the terms hereof applicable to the Purchaser and
make the representations required of the Purchaser
hereunder.
6.3 Entire Agreement. This Agreement and the exhibits
hereto, and the other documents delivered pursuant hereto,
constitute the full and entire understanding and agreement
among the parties with regard to the subjects hereof and no
party is liable or bound to any other party in any manner
by any representations, warranties, covenants, or
agreements except as specifically set forth herein or
therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties
hereto and their respective successors and assigns, any
rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided
herein.
6.4 Severability. If any provision of this Agreement is
invalid, illegal, or unenforceable, it is to the extent
practicable, modified so as to make it valid, legal and
enforceable and to retain as nearly as practicable the
intent of the parties, and the validity, legality, and
enforceability of the remaining provisions are not in any
way be affected or impaired thereby.
6.5 Amendment and Waiver. Except as otherwise provided
herein, any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived
(either generally or in a particular instance, either
retroactively or prospectively, and either for a specified
period of time or indefinitely), with the written consent
of the Company and the Purchaser. Any amendment or waiver
made in accordance with this Section 6.5 is binding upon
any holder of any Shares purchased under this Agreement,
each future holder of all such securities, and the Company.
6.6 Fees and Expenses. Except as otherwise set forth
herein, the Company and the Purchaser bear its or his own
expenses and legal fees incurred on its or his behalf with
respect to this Agreement and the transactions contemplated
hereby. Each party hereby agrees to indemnify and to hold
harmless of and from any liability the other parties for
any commission or compensation in the nature of a finder's
fee to any broker or other person or firm (and the costs
and expenses of defending against such liability or
asserted liability) for which such indemnifying party or
any of his or its employees or representatives are
responsible.
6.7 Notices. All notices, requests, consents and other
communications hereunder must be in writing, delivered (A)
if within the United States, by first-class registered or
certified airmail, or nationally recognized overnight
express courier, postage prepaid or by facsimile or
electronic mail, or (B) if from outside the United States,
by International Federal Express (or comparable service) or
by facsimile or electronic mail, and deemed given (i) if
delivered by first-class registered or certified mail
domestic, upon the business day received, (ii) if delivered
by nationally recognized overnight carrier, one business
day after timely delivery to such carrier, (iii) if
delivered by International Federal Express (or comparable
service), two business days after so mailed, or (iv) if
delivered by facsimile or electronic mail at or prior to
5:30 p.m. (Chicago time) on a business day, on the business
day so delivered or, if delivered by facsimile or
electronic mail after 5:30 p.m. (Chicago time) on a
business day or on a day that is not a business day, the
next business day after the date of delivery, and addressed
as follows, or to such other address or addresses as may
have been furnished in writing by a party to another party
pursuant to this paragraph:
* if to the Company, to the address of the Company's
principal office set forth on the first page of this
Agreement, Attention: Chief Executive Officer, e-mail:
jjankowski@nanophase.com
* if to the Purchaser, at his address on the signature page
to this Agreement.
6.8 Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to
this Agreement, all covenants, agreements, representations
and warranties made by the Company and the Purchaser herein
survive the execution of this Agreement, the delivery to
the Purchaser of the Shares being purchased and the payment
therefor, and a party's reliance on such representations
and warranties are not affected by any investigation made
by such party or any information developed thereby.
6.9 Counterparts. This Agreement may be executed by
electronic or facsimile signature and in any number of
counterparts, each of which is deemed an original, but all
of which together constitute one instrument.
6.10 Headings. The headings herein are for convenience
only, do not constitute a part of this Agreement and do not
limit or affect any of the provisions hereof.
(The Remainder of this Page is Blank; Signature Pages
Follow)
Signed:
NANOPHASE TECHNOLOGIES CORPORATION
By: /s/ Jess Jankowski
Name: Jess Jankowski
Title: President and Chief Executive Officer
|
Signed:
/s/ Bradford T. Whitmore
Bradford T. Whitmore
Investment Amount (# shares): 4,189,000
Investment Amount ($ @ $0.40/share): $1,675,600
|
Address for Notice and Delivery Instructions:
1603 Orrington Avenue
Suite 900
Evanston, IL 60201
Attention: Bradford T. Whitmore
Telephone: 847 733 1230
EXHIBIT A
SELLING STOCKHOLDER QUESTIONNAIRE
NANOPHASE TECHNOLOGIES CORPORATION
Questionnaire for Selling Stockholder
This questionnaire is necessary to obtain information to be
used by Nanophase Technologies Corporation (the "Company")
to complete a Registration Statement (the "Registration
Statement") covering the resale of certain shares of
Company Common Stock currently outstanding. Please
complete and return this questionnaire to Taft Stettinius &
Hollister LLP, the Company's legal counsel, to the
attention of Matthew R. Godfrey either by mail to Taft
Stettinius & Hollister LLP, 111 E. Wacker Drive, Suite
2800, Chicago, Illinois 60601-3713 or by fax to 312.966.
8487. Please return the questionnaire by May, 13, 2019 or
sooner, if possible. Call Matthew R. Godfrey at 312.836.
4092 with questions.
FAILURE TO RETURN THE QUESTIONNAIRE MAY RESULT IN THE
EXCLUSION OF YOUR NAME AND SHARES FROM THE REGISTRATION
STATEMENT.
Please answer all questions. If the answer to any
question is "None" or "Not Applicable," please so state.
If there is any question about which you have any doubt,
please set forth the relevant facts in your answer.
1. Please correct your name and/or address if not correct
below
Name:
Address:
2. Please state the total number of currently outstanding
shares of Company Common Stock that you beneficially own*
and the form of ownership and the date that you acquired
such stock. Include shares registered in your name
individually or jointly with others and shares held in the
name of a bank, broker, nominee, depository or in "street
name" for your account. (DO NOT list options, warrants or
other derivative securities. See Question #3).
3. Please list any outstanding options and warrants to
purchase Company Common Stock or other derivative
securities to acquire Company Common Stock that you
beneficially own*, including (i) the number of shares of
Company Common Stock to be issued upon the exercise of such
option or warrant, (ii) the date such option or warrant is
exercisable, (iii) the expiration date and (iv) the
exercise price per share of EACH such option and warrant.
Number of Shares Covered by Option or Warrant
Date Exercisable
Exercise Price
Expiration Date
4. Please list the number of shares of Common Stock listed
under Question #2 above that you wish to include in the
Registration Statement.
5. Please list the number of shares of Common Stock
underlying warrants listed under Question #3 above that,
upon exercise of such warrants, you wish to include in the
Registration Statement.
6. If you are a limited liability company or limited
partnership, please name the managing member or general
partner and each person controlling such managing member or
general partner.
7. If you are an entity, please identify the natural
persons who exercises sole or shared voting power* and/or
sole or shared investment power* with regard to the shares
listed under Question #2 and Question #3.
8. Please advise whether you are a registered broker-dealer
or an affiliate* thereof. If you are an affiliate of a
registered broker-dealer, please explain the nature of the
affiliation and disclose whether you acquired the shares in
the ordinary course of business and whether at the time of
the acquisition you had any plans or proposals, directly or
with any other person, to distribute the shares listed
under Question #2 and Question #3.
9. List below the nature of any position, office or other
material relationship that you have, or have had within the
past three years, with the Company or any of its
predecessors or affiliates*.
10. If you expressly wish to disclaim any beneficial
ownership* of any shares listed under Question #2 for any
reason in the Registration Statement, indicate below the
shares and circumstances for disclaiming such beneficial
ownership*.
11. With respect to the shares that you wish to include in
the Registration Statement, please list any party that has
or may have secured a lien, security interest or any other
claim relating to such shares, and please give a full
description of such claims.
12. Please review Appendix B "Plan of Distribution." Please
identify and describe any method of distribution, other
than described in Appendix B, that you plan on using to
sell your shares of the Company's Common Stock. By signing
below you agree to distribute your shares of the Company's
Common Stock as described in Appendix B and this Item 12
and to notify the Company of any plan to distribute the
Company's Common Stock that is not described in Appendix B
or herein under Item 12.
The undersigned, a Selling Stockholder of the Company,
hereby furnishes the foregoing information for use by the
Company in connection with the preparation of the
Registration Statement. The undersigned will notify
Janelle Blankenship, at the address specified above,
in writing immediately of any changes in the foregoing
answers that should be made as a result of any developments
occurring prior to the time that all the shares of Common
Stock of the Company are sold pursuant to the Registration
Statement referred to above. Otherwise, the Company is to
understand that the above information continues to be, to
the best of the undersigned's knowledge, information and
belief, complete and correct.
Dated:
By:
Name:
Its:
*See Appendix A for definitions
APPENDIX A
TO EXHIBIT A
CERTAIN TERMS USED IN QUESTIONNAIRE
AFFILIATE
An "affiliate" of a company is a person that directly, or
indirectly through one or more intermediaries, controls or
is controlled by, or is under common control with, such
company.
BENEFICIAL OWNERSHIP
A person "beneficially owns" a security if such person,
directly or indirectly, has or shares voting power or
investment power of such security, whether through a
contract, arrangement, understanding, relationship or
otherwise. A person is also the beneficial owner of a
security if he has the right to acquire beneficial
ownership at any time within 60 days through the exercise
of any option, warrant or right, or the power to revoke a
trust, discretionary account or similar arrangement.
INVESTMENT POWER
"Investment power" includes the power to dispose, or to
direct the disposition of, a security.
VOTING POWER
"Voting power" includes the power to vote, or to direct the
voting of, a security.
APPENDIX B
TO EXHIBIT A
PLAN OF DISTRIBUTION
We are registering for resale by the selling stockholder
and certain transferees a total of 4,189,000 shares of
common stock, all of which are issued and outstanding. We
will not receive any of the proceeds from the sale by the
selling stockholder of the shares of common stock. We will
bear all fees and expenses incident to our obligation to
register the shares of common stock. If the shares of
common stock are sold through broker-dealers or agents, the
selling stockholder will be responsible for any
compensation to such broker-dealers or agents.
The selling stockholder may pledge or grant a security
interest in some or all of the shares of common stock owned
by him and, if he defaults in the performance of his
secured obligations, the pledgees or secured parties may
offer and sell the shares of common stock from time to time
pursuant to this prospectus.
The selling stockholder 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 stockholder will sell his shares of common
stock subject to the following:
* all of a portion of the shares of common stock
beneficially owned by the selling stockholder or his
perspective pledgees, donees, transferees or successors in
interest, may be sold on the OTC Bulletin Board Market, any
national securities exchange or quotation service on which
the shares of our common stock may be listed or quoted at
the time of sale, in the over-the counter market, in
privately negotiated transactions, through the writing of
options, whether such options are listed on an options
exchange or otherwise, short sales or in a combination of
such transactions;
* each sale may be made at market price prevailing at the
time of such sale, at negotiated prices, at fixed prices or
at carrying prices determined at the time of sale;
* some or all of the shares of common stock may be sold
through one or more broker-dealers or agents and may
involve crosses, block transactions or hedging
transactions. The selling stockholder may enter into
hedging transactions with broker-dealers or agents, which
may in turn engage in short sales of the common stock in
the course of hedging in positions they assume. The selling
stockholder may also sell shares of common stock short and
deliver shares of common stock to close out short positions
or loan or pledge shares of common stock to broker-dealers
or agents that in turn may sell such shares;
* in connection with such sales through one or more
broker-dealers or agents, such broker-dealers or agents may
receive compensation in the form of discounts, concessions
or commissions from the selling stockholder and may receive
commissions from the purchasers of the shares of common
stock for whom they act as broker-dealer or agent or to
whom they sell as principal (which discounts, concessions
or commissions as to particular broker-dealers or agents
may be in excess of those customary in the types of
transaction involved). Any broker-dealer or agent
participating in any such sale may be deemed to be an
"underwriter" within the meaning of the Securities Act and
will be required to deliver a copy of this prospectus to
any person who purchases any share of common stock from or
through such broker-dealer or agent. We have been advised
that, as of the date hereof, the selling stockholder has
not made any arrangements with any broker-dealer or agent
for the sale of his shares of common stock; and
* in connection with any other sales or transfers of common
stock not prohibited by law.
The selling stockholder 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 profits realized by the selling
stockholder and any commissions 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. In addition, any shares of common stock
covered by this prospectus which qualify for sale pursuant
to Rule 144 may be sold under Rule 144 rather than pursuant
to this prospectus. The selling stockholder may also
transfer, devise or gift the shares of common stock by
other means not covered in this prospectus in which case
the transferee, devisee or giftee will be the selling
stockholder under this prospectus.
If required at the time a particular offering of the shares
of common stock is made, a prospectus supplement or, if
appropriate, a post-effective amendment to the shelf
registration statements of which this prospectus is a part,
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-deals or agents, 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 the selling stockholder will sell any
or all of the shares of common stock registered pursuant to
the shelf registration statement, of which this prospectus
forms a part.
The selling stockholder and any other person participating
in such distribution will be subject to applicable
provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation,
Regulation M of the Exchange Act, which may limit the
timing of purchases and sales of any of the shares of
common stock by the selling stockholder 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 bear all expenses of the registration of the shares
of common stock including, without limitation, Securities
and Exchange Commission filing fees and expenses of
compliance with the state securities of "blue sky" laws.
The selling stockholder will pay all underwriting discounts
and selling commissions and expenses, brokerage fees and
transfer taxes, as well as the fees and disbursements of
counsel to and experts for the selling stockholder, if any.
We will indemnify the selling stockholder against
liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights
agreement or the selling stockholder will be entitled to
contribution. We will be indemnified by the selling
stockholder against civil liabilities, including
liabilities under the Securities Act that may arise from
any written information furnished to us by the selling
stockholder for use in this prospectus, in accordance with
the related securities purchase agreement or will be
entitled to contribution. Once sold under this shelf
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.
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