AVGR Avinger Inc

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Delaware	001-36817	20-8873453
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	AVGR	The Nasdaq Stock Market LLC

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Item 1.01

Entry into a Material Definitive Agreement.

	-	extend the interest-only period through December 31, 2026;
	-	provide that interest payable through December 31, 2026 may be payable in kind rather than in cash; and
	-	permit the payment of dividends on the preferred stock issued or issuable to the Purchaser.

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Item 3.02

Unregistered Sales of Equity Securities.

Item 5.02

Departure of Director or Certain Officers; Election of Directors; Appointment of Certain Officers, Compensatory Arrangements with Certain Officers.

Item 5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Item 9.01

Financial Statements and Exhibits.

Exhibit No.	Description
3.1	Certificate of Designation of Preferences, Rights, and Limitations of Series F Convertible Preferred Stock.
3.2	Certificate of Designation of Preferences, Rights, and Limitations of Series A-1 Convertible Preferred Stock.
3.3	Certificate of Amendment to the Certificate of Designation of Preferences, Rights, and Limitations of Series E Convertible Preferred Stock.
10.1	Strategic Cooperation and Framework Agreement, dated March 4, 2024, made by and between Avinger, Inc. and Zylox-Tonbridge Medical Technology Co., Ltd.
10.2	Securities Purchase Agreement, dated March 4, 2024, made by and between Avinger, Inc. and Zylox-Tonbridge Medical Limited.
10.3	Registration Rights Agreement, dated March 5, 2024, made by and between Avinger, Inc. and Zylox-Tonbridge Medical Limited.
10.4	Amendment No. 9 to Term Loan Agreement, dated March 5, 2024, made by and among Avinger, Inc. and GRG Partners III L.P. and certain of its affiliated funds, as lenders.
10.5	Form of Warrant
10.6	Securities Purchase Agreement, dated March 5, 2024, and the purchasers party thereto
10.7	Registration Rights Agreement, dated March 5, 2024, by and between the Company and the holders party thereto
99.1	Press Release dated March 6, 2024
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

		AVINGER, INC.
Date: March 7, 2024	By:	/s/ Jeffrey M. Soinski
		Jeffrey M. Soinski
		Chief Executive Officer

Exhibit 3.1

 

 

AVINGER, INC.

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES F CONVERTIBLE PREFERRED STOCK

PURSUANT TO SECTION 151 OF THE

DELAWARE GENERAL CORPORATION LAW

 

The undersigned, Jeffrey M. Soinski, does hereby certify that:

 

1. He is the Chief Executive Officer of Avinger, Inc., a Delaware corporation (the “Corporation”).

 

2. The Corporation is authorized to issue 5,000,000 shares of preferred stock, 149,186 of which have been previously designated.

 

3. The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”):

 

WHEREAS, the certificate of incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, consisting of 5,000,000 shares, $0.001 par value per share, issuable from time to time in one or more series;

 

WHEREAS, the Board of Directors is authorized to fix the powers, designations, preferences and relative, participation, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, if any, of any wholly unissued series of preferred stock, including, without limitation, authority to fix the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including, without limitation, sinking fund provisions), redemption price or prices, and liquidation preferences of any such series, and the number of shares constituting any such series and the designation thereof, or any of the foregoing; and

 

WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the powers, designations, preferences and relative, participation, optional or other rights, if any, and the qualifications, limitations or restrictions relating to a series of the preferred stock, which shall consist of shares which the Corporation has the authority to issue, as follows:

 

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or exchange of debt or other securities, rights or property and does hereby fix and determine the powers, designations, preferences and relative, participation, optional or other rights, if any, and the qualifications, limitations or restrictions relating to such series of preferred stock as follows:

 

SERIES F CONVERTIBLE PREFERRED STOCK

 

1.    Definitions. For the purposes hereof, the following terms shall have the following meanings:

 

“Accrued Value” means, with respect to each share of Series F Preferred Stock, the sum, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to Series F Preferred Stock, of (i) the Series F Original Issue Price plus (ii) an additional amount equal to the dollar value of the Preferred Dividends, the Participating Dividends and any dividends on a share of Series F Preferred Stock which have accrued on any Participating Dividend Payment Date and have not been previously added to such Accrued Value, in each case to the extent such Preferred Dividends, Participating Dividends or other dividends have not been paid.

 

 

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Attribution Parties” shall have the meaning set forth in Section 6(d).

 

“Available Proceeds” shall have the meaning set forth in Section 4(c)(ii)(2).

 

“Beneficial Ownership Limitation” shall have the meaning set forth in Section 6(d).

 

“Board of Directors” shall have the meaning set forth in the preamble.

 

“Commission” shall have the meaning set forth in Section 6(d).

 

“Common Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified.

 

“Conversion Date” shall have the meaning set forth in Section 6(a)(i).

 

“Conversion Rights” shall have the meaning set forth in Section 6.

 

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series F Preferred Stock in accordance with the terms hereof.

 

“Corporation” shall have the meaning set forth in the preamble.

 

“Deemed Liquidation Event” shall have the meaning set forth in Section 4(c)(i).

 

“DGCL” means the Delaware General Corporation Law.

 

“Dividend Payment Date” shall have the meaning set forth in Section 3(b).

 

“Dividends” shall have the meaning set forth in Section 3(a)(ii).

 

“Exchange Act” shall have the meaning set forth in Section 6(e).

 

“FDA” means the United States Food and Drug Administration, or any successor organization.

 

“Issuance Date” means the first date on which any shares of Series F Preferred Stock are issued by the Corporation.

 

“Junior Stock” means the Common Stock, the Series A-1 Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and any other classes or series of capital stock that does not expressly rank pari passu with or senior to Series F Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation or upon a Deemed Liquidation Event of the Corporation, or in respect of the payment of dividends or rights of redemption (and, in each case, any rights or options to acquire any Junior Stock).

 

 

“License Agreement” means that certain License and Distribution Agreement dated on or about the effective date of this Certificate of Designation, by and between the Corporation and Licensee.

 

“Licensee” means Zylox-Tonbridge Medical Technology Co., Ltd., a company established in the People's Republic of China, and its successors and permitted assigns.

 

“Liquidation Amount” shall have the meaning set forth in Section 4(a).

 

“Liquidation Event” shall have the meaning set forth in Section 4(a).

 

“Milestones” means, collectively, the following two milestone events: (i) the successful registration and listing under 21 CFR part 807 with the FDA of the Purchaser and one of its designated Affiliates as a manufacturer of the Pantheris Series and a Purchaser establishment for purposes thereof, as reflected in the FDA’s Establishment Registration & Device Listing database; and (ii) the achievement by the Corporation of an aggregate of $10 million in gross revenue within any four consecutive fiscal quarters beginning with the quarter ending December 31, 2023, excluding any gross revenue achieved by the Corporation under the License Agreement, as reflected in the Corporation’s financial statements for such four consecutive quarters that have been prepared in accordance with the U.S. GAAP consistent with past practices, audited or reviewed by the Corporation’s independent registered public accounting firm.

 

“Nasdaq Stockholder Approval” means the approval of the stockholders of the Corporation as is necessary under the rules and regulations of The Nasdaq Stock Market (or any successor entity) (including, without limitation, Nasdaq Listing Rule 5635(d)) to permit the issuance of a number of shares of Common Stock to the Purchaser in excess of 19.99% of the Corporation’s outstanding Common Stock as of the date of the Purchase Agreement.

 

“Notice of Conversion” shall have the meaning set forth in Section 6(a)(i).

 

“Pantheris Series” means, collectively, all of the Pantheris A400 series products, Pantheris Large Vessel (LV) products and Pantheris Small Vessel (SV) products, the image atherectomy catheters developed by the Corporation as of the date of the Purchase Agreement.

 

“Participating Dividend Payment Date” shall have the meaning set forth in Section 3(b).

 

“Participating Dividends” shall have the meaning set forth in Section 3(a)(ii).

 

“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or any other entity or organization.

 

“PIK Shares” shall have the meaning set forth in Section 3(c).

 

“Preferred Dividend Payment Date” shall have the meaning set forth in Section 3(b).

 

“Preferred Dividend Period” shall have the meaning set forth in Section 3(b).

 

“Preferred Dividend Sunset Date” shall have the meaning set forth in Section 3(a).

 

“Preferred Dividends” shall have the meaning set forth in Section 3(a)(i).

 

“Purchase Agreement” means the Securities Purchase Agreement, dated March 4, 2024, among the Corporation and the Purchaser, as amended, modified or supplemented from time to time in accordance with its terms.

 

 

“Purchaser” means Zylox Tonbridge Medical Limited, a company established under the laws of Hong Kong.

 

“Redemption Date” shall have the meaning set forth in Section 4(c)(ii)(2).

 

“Redemption Notice” shall have the meaning set forth in Section 4(c)(ii)(3).

 

“Required Holders” shall have the meaning set forth in Section 4(c)(i).

 

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

 

“Series A-1 Preferred Stock” means the Corporation’s Series A-1 Convertible Preferred Stock, par value $0.001 per share.

 

“Series B Preferred Stock” means the Corporation’s Series B Convertible Preferred Stock, par value $0.001 per share.

 

“Series C Preferred Stock” means the Corporation’s Series C Convertible Preferred Stock, par value $0.001 per share.

 

“Series D Preferred Stock” means the Corporation’s Series D Convertible Preferred Stock, par value $0.001 per share.

 

“Series E Preferred Stock” means the Corporation’s Series E Convertible Preferred Stock, par value $0.001 per share.

 

“Series F Conversion Price” shall have the meaning set forth in Section 6(b) (subject to adjustment in the event of stock splits, combinations or similar events).

 

“Series F Original Issue Price” means, with respect to a share of Series F Preferred Stock, $1,000.

 

“Series F Preferred Stock” shall have the meaning set forth in Section 2.

 

“Series F Preferred Stock Register” shall have the meaning set forth in Section 2.

 

“Share Delivery Date” shall have the meaning set forth in Section 6(c)(i).

 

“Standard Settlement Period” shall have the meaning set forth in Section 6(c)(i).

 

“Term Loan Agreement” means that certain Term Loan Agreement, dated as of September 22, 2015, between the Corporation, the subsidiary guarantors from time to time party thereto and the lenders from time to time party thereto, as amended, restated, supplemented or otherwise modified from time to time.

 

“Trading Day” means a day on which the principal Trading Market is open for business.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

 

“U.S. GAAP” means generally accepted accounting principles in the United States.

 

 

2.    Designation, Amount and Par Value; Ranking; Assignment. The series of preferred stock designated by this Certificate of Designation shall be designated as the Corporation’s Series F Convertible Preferred Stock (the “Series F Preferred Stock”) and the number of shares so designated shall be 7,224. The Series F Preferred Stock shall have a par value of $0.001 per share. Series F Preferred Stock shall rank pari passu with Series E Preferred Stock and otherwise senior to any Junior Stock with respect to the payment of dividends, rights of redemption and distribution of assets on the liquidation, dissolution or winding up of the Corporation or upon a Deemed Liquidation Event. Series F Preferred Stock will initially be issued in book-entry form. The Corporation shall register shares of Series F Preferred Stock, upon records to be maintained by the Corporation for that purpose (the “Series F Preferred Stock Register”), in the name of the holders of Series F Preferred Stock thereof from time to time. The Corporation may deem and treat the registered holders of Series F Preferred Stock as the absolute owner thereof for the purpose of any conversion thereof and for all other purposes. Shares of Series F Preferred Stock may be issued solely in book-entry form or, if requested by any holder of Series F Preferred Stock, such holder’s shares may be issued in certificated form. The Corporation shall register the transfer of any shares of Series F Preferred Stock in the Series F Preferred Stock Register, upon surrender of the certificates (if applicable) evidencing such shares to be transferred, duly endorsed by the holder thereof, to the Corporation at its address specified herein. Upon any such registration or transfer, a new certificate (or book-entry notation, if applicable) evidencing the shares of Series F Preferred Stock so transferred shall be issued to the transferee and a new certificate (or book-entry notation, if applicable) evidencing the remaining portion of the shares not so transferred, if any, shall be issued to the transferring holder, in each case, within five business days. The provisions of this Certificate of Designation are intended to be for the benefit of all holders of Series F Preferred Stock from time to time and shall be enforceable by any such holder.

 

3.    Dividends.

 

(a)    The holders of Series F Preferred Stock shall be entitled to receive:

 

(i)    on each share of Series F Preferred Stock, dividends at a rate of (x) 5% per annum of the Series F Original Issue Price, compounded annually until the third (3^rd) anniversary of the Issuance Date of any such share of Series F Preferred Stock, and (y) 8% per annum of the Series F Original Issue Price, compounded annually from and after such third (3^rd) anniversary, which shall be payable as set forth below (the “Preferred Dividends”); and

 

(ii)    when, as and if declared by the Board, out of any funds legally available therefor, dividends on shares of Series F Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends (other than dividends in the form of Common Stock, which shall be made in accordance with Section 6(f)) actually paid on shares of any Junior Stock when, as and if such dividends (other than dividends in the form of Common Stock, which shall be made in accordance with Section 6(f)) are paid on shares of any Junior Stock (the “Participating Dividends” and, together with the Preferred Dividends, the “Dividends”).

 

The Corporation will not declare or pay any dividends or other distributions on any Junior Stock that would require a Participating Dividend unless it concurrently therewith declares and sets aside for payment or distribution, as applicable, such Participating Dividend for all shares of Series F Preferred Stock then outstanding. Notwithstanding anything herein to the contrary, the Preferred Dividends shall accrue through the date immediately prior to such date that the Milestones have been achieved as mutually agreed upon by the Corporation and the Purchaser (such date that the Milestones have been satisfied, the “Preferred Dividend Sunset Date”). Preferred Dividends shall cease accruing after the Preferred Dividend Sunset Date.

 

 

(b)    Preferred Dividends shall be cumulative and shall accrue and accumulate annually commencing on the Issuance Date and be payable annually within five (5) business days of the earlier to occur of (x) December 31 of each year commencing on December 31, 2024 and (y) the Preferred Dividend Sunset Date (each, a “Preferred Dividend Payment Date,” and the period from the Issuance Date to the first Preferred Dividend Payment Date and from the day after a Preferred Dividend Payment Date to the subsequent Preferred Dividend Payment Date being a “Preferred Dividend Period”). Participating Dividends shall be payable as and when paid to the holders of Junior Stock (each such date being a “Participating Dividend Payment Date,” and, together with each Preferred Dividend Payment Date, a “Dividend Payment Date”). Preferred Dividends that are payable on Series F Preferred Stock in respect of any Preferred Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The amount of Preferred Dividends payable on Series F Preferred Stock on any date prior to the end of a Preferred Dividend Period, and for the initial Preferred Dividend Period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months, and actual days elapsed over a 30-day month, and for the period that Series F Preferred Stock is outstanding or until the Preferred Dividend Sunset Date. Preferred Dividends shall accumulate whether or not in any Preferred Dividend Period there have been funds of the Corporation legally available for the payment of such Preferred Dividends. Participating Dividends are payable on a cumulative basis once declared, whether or not there shall be funds legally available for the payment thereon.

 

(c)    In lieu of the payment in cash of the Preferred Dividends otherwise payable on any Dividend Payment Date, such Preferred Dividends may be paid, at the sole option of (x) the Corporation from the Issuance Date until the third (3^rd) anniversary of the Issuance Date and (y) each holder of Series F Preferred Stock thereafter, by issuance and delivery of a number of additional fully paid and nonassessable shares of Series F Preferred Stock (“PIK Shares”) (including, at the sole option of (x) the Corporation before and on the third (3^rd) anniversary of the Issuance Date and (y) each holder of Series F Preferred Stock thereafter, the payment of cash in lieu of the issuance of any fractional PIK Shares) for each holder of Series F Preferred Stock equal to (i) the aggregate dollar amount of the Preferred Dividends payable to such holder with respect to Series F Preferred Stock held by such holder as of the Preferred Dividend Payment Date divided by (ii) the Series F Original Issue Price. The PIK Shares shall be subject to the terms of this Certificate of Designation, including, but not limited to, the Beneficial Ownership Limitation set forth in Section 6(d). No later than the record date for the determination of stockholders entitled to receive any Preferred Dividends, the Corporation will send written notice to each holder of Series F Preferred Stock stating the amount of Preferred Dividends payable and the amount of the PIK Shares, if any, that will be issued and delivered.

 

4.    Liquidation.

 

(a)    Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (each, a “Liquidation Event”), or Deemed Liquidation Event, the holders of Series F Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation available for distribution to its stockholders, with respect to each share of Series F Preferred Stock then outstanding held by the holder, pari passu with the holders of Series E Preferred Stock, an amount in cash per share of Series F Preferred Stock equal to the greater of (i) 0.75 multiplied by the Accrued Value or (ii) such amount per share as would have been payable in respect of the shares of Common Stock into which such share of Series F Preferred Stock is then convertible, assuming all outstanding shares of Series F Preferred Stock and Series E Preferred Stock were converted into Common Stock immediately prior to such Liquidation Event or Deemed Liquidation Event, as applicable, in accordance with Section 6, without regard as to whether sufficient shares of Common Stock are available out of the Corporation’s authorized but unissued stock for the purpose of effecting the conversion of Series F Preferred Stock and Series E Preferred Stock and without regard to any limitation on conversion in accordance with Section 6(d) or other similar limitations on conversion of the Series E Preferred Stock (the amount payable pursuant to this sentence is hereinafter referred to as the “Liquidation Amount”), before any distribution or payment shall be made to the holders of any Junior Stock. For the avoidance of doubt, in the event of a Liquidation Event or Deemed Liquidation Event pursuant to which the Series F Preferred Stock and Series E Preferred Stock participate pari passu pursuant to this Section 4(a), holders of Series E Preferred Stock shall be entitled to the amount designated in the Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock pari passu with the amount payable to the holders of the Series F Preferred Stock pursuant to clause (i) above. If upon any such Liquidation Event or Deemed Liquidation Event, the assets of the Corporation legally available for distribution to the Corporation’s stockholders shall be insufficient to pay the holders of shares of Series F Preferred Stock and the holders of shares of Series E Preferred Stock the full amount to which they shall be entitled pursuant to the preceding sentence of this Section 4(a), the holders of Series F Preferred Stock shall share ratably, pari passu with the holders of shares of Series E Preferred Stock, in any distribution of the assets available for distribution and funds of the Corporation in proportion to the respective amounts which would otherwise be payable in respect of such shares of Series F Preferred Stock and Series E Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

 

(b)    In the event of any Liquidation Event or Deemed Liquidation Event, after the payment of all preferential amounts required to be paid to the holders of Series F Preferred Stock and Series E Preferred Stock, the remaining assets and funds of the Corporation available for distribution to its stockholders shall be distributed among the holders of Junior Stock, pro rata based on the number of shares held by each such holder or otherwise in accordance with the terms of the Junior Stock.

 

(c)    Deemed Liquidation Events.

 

(i)    Each of the following events shall be considered a “Deemed Liquidation Event” unless the holders of a majority of the outstanding shares of Series F Preferred Stock (the “Required Holders”) elect otherwise by written notice sent to the Corporation at least five (5) days prior to the effective date of any such event:

 

(1)    a reorganization, merger or consolidation in which:

 

(A)    the Corporation is a constituent party or

 

(B)    a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such reorganization, merger or consolidation, except any such reorganization, merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such reorganization, merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such reorganization, merger or consolidation, a majority, by voting power, of the capital stock of (x) the surviving or resulting corporation or (y) if the surviving or resulting corporation is a wholly-owned subsidiary of another corporation immediately following such reorganization, merger or consolidation, the parent corporation of such surviving or resulting corporation;

 

(2)    the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all of the assets of the Corporation and its subsidiaries taken as a whole or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly-owned subsidiary of the Corporation; or

 

 

(3)    any tender offer or exchange offer (whether by the Corporation or another person or entity) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock.

 

(ii)    Effecting a Deemed Liquidation Event.

 

(1)    The Corporation shall not have the power to effect a Deemed Liquidation Event unless the agreement or plan of merger or consolidation or other agreement for such transaction provides that the consideration payable to the stockholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Sections 4(a) and 4(b) as if the consideration payable to stockholders were all assets of the Corporation available for distribution to stockholders.

 

(2)    In the event of a Deemed Liquidation Event referred to in Section 4(c)(i)(1)(B), 4(c)(i)(2) or 4(c)(i)(3), if the Corporation does not effect a dissolution of the Corporation under the DGCL within ninety (90) days of such Deemed Liquidation Event, then the Corporation shall send a written notice to each holder of Series F Preferred Stock no later than the ninetieth (90th) day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of Sections 4(c)(ii)(2), (3), (4) and (5) to require the redemption of such shares of Series F Preferred Stock, and unless the Required Holders agree otherwise in a written instrument delivered to the Corporation not later than one hundred twenty (120) days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors), together with any other assets of the Corporation legally available for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the “Available Proceeds”), to the extent legally available therefor, on or prior to the one hundred fiftieth (150th) day after such Deemed Liquidation Event, to redeem all outstanding shares of Series F Preferred Stock at a price per share equal to the Liquidation Amount.

 

Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Series F Preferred Stock and Series E Preferred Stock, the Corporation shall redeem a pro rata portion of each holder’s shares of Series F Preferred Stock and Series E Preferred Stock on a pari passu basis to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and shall redeem the remaining shares as soon as practicable after the Corporation has funds legally available therefor. Prior to the distribution or redemption provided for in this Section 4(c)(ii)(2) and to the fullest extent permitted by the DGCL, the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event. If the Corporation is required by the provisions of this Section 4(c)(ii)(2) to redeem shares, the redemption shall occur in accordance with the provisions of Sections 4(c)(ii)(2), (3), (4) and (5). The date upon which any such redemption is required to be effected pursuant to this Section 4(c)(ii)(2) shall be the “Redemption Date”.

 

 

(3)    The Corporation shall send written notice of any redemption pursuant to this Section 4(c)(ii) (the “Redemption Notice”) to each holder of record of Series F Preferred Stock as required by Section 4(c)(ii)(2). Each Redemption Notice shall state:

 

(A)    the number of shares held by the holder that the Corporation shall redeem on the Redemption Date specified in the Redemption Notice (which number shall not be less than the number of shares the Corporation is then required to redeem);

 

(B)    the Redemption Date and the redemption price; and

 

(C)    that the holder is to surrender to the Corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares of Series F Preferred Stock to be redeemed.

 

(4)    On or before the applicable Redemption Date, each holder of shares to be redeemed on such Redemption Date shall surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the redemption price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the shares represented by a certificate are redeemed, a new certificate representing the unredeemed shares shall promptly be issued to such holder.

 

(5)    If the Redemption Notice shall have been duly given, and if on the applicable Redemption Date the redemption price payable upon redemption of the shares to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that the certificates evidencing any of the shares so called for redemption shall not have been surrendered, dividends with respect to such shares shall cease to accrue after such Redemption Date and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the redemption price without interest upon surrender of their certificate or certificates therefor. Any shares of Series F Preferred Stock that are redeemed or otherwise acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred.

 

(iii)    Amount Deemed Paid or Distributed. The consideration paid by the Corporation upon a Liquidation Event or Deemed Liquidation Event shall be the cash or the value of the property, rights or securities paid or distributed to the holders of the capital stock of the Corporation by the Corporation or the acquiring person, firm or other entity, with the value of such property, rights or securities determined in good faith by the Board of Directors.

 

(iv)    Allocation of Escrow and Contingent Consideration. In the event of a Liquidation Event or a Deemed Liquidation Event, if any portion of the consideration payable to the stockholders of the Corporation is payable only upon satisfaction of contingencies (the “Additional Consideration”), the definitive agreement shall provide that (a) the portion of such consideration that is not Additional Consideration (such portion, the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with Sections 4(a) and 4(b) as if the Initial Consideration were the only consideration payable in connection with such Liquidation Event or Deemed Liquidation Event; and (b) any Additional Consideration that becomes payable to the stockholders of the Corporation upon satisfaction of such contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Sections 4(a) and 4(b) after taking into account the previous payment of the Initial Consideration as part of the same transaction. For the purposes of this Subsection 4(c)(iv), consideration placed into escrow or retained as a holdback to be available for satisfaction of indemnification or similar obligations in connection with such Liquidation Event or Deemed Liquidation Event shall be deemed to be Additional Consideration.

 

 

5.    Voting.

 

(a)    General. Except as otherwise provided herein or as otherwise required by law, Series F Preferred Stock shall vote together with shares of Common Stock on an as-converted to Common Stock basis from time to time, and not as a separate class, at any annual or special meeting of stockholders of the Corporation, or with respect to any action taken by written consent in lieu of a meeting, in either case upon the following basis: each share of Series F Preferred Stock shall be entitled to such number of votes equal to the whole number of shares of Common Stock into which such share of Series F Preferred Stock would then be convertible (pursuant to Section 6 hereof). On any matter which Series F Preferred Stock is entitled to vote, the holders of Series F Preferred Stock may take action with respect to such matter by written consent in lieu of a meeting.

 

Notwithstanding the foregoing in this Section 5(a), in no event shall the shares of Series F Preferred Stock be entitled to vote, on an as-converted to Common Stock basis and in the aggregate more than the Beneficial Ownership Limitation (as defined below). The determination of the applicability of the limitation contained in this paragraph shall be made solely by the Corporation in accordance with the rules and regulations of The Nasdaq Stock Market. In the event that the number of votes entitled to be cast by all shares of Series F Preferred Stock would otherwise exceed the Beneficial Ownership Limitation, the number of votes that each share of Series F Preferred Stock is entitled to cast shall be reduced on a pro rata basis such that the aggregate number of votes entitled to be cast by all shares of Series F Preferred Stock is equal to the Beneficial Ownership Limitation.

 

(b)    Series F Preferred Stock Protective Provisions. So long as any shares of Series F Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, recapitalization, reclassification, or otherwise, without the affirmative vote of the Required Holders in addition to such other vote as may be required by the DGCL, (i) liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any merger or consolidation, Deemed Liquidation Event, or consent to any of the foregoing; (ii) amend, alter, change or repeal the powers, preferences or rights given to Series F Preferred Stock or alter, amend or repeal any provision of this Certificate of Designation, (iii) amend, alter or repeal any provision of its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series F Preferred Stock, (iv) increase the number of authorized shares of Series F Preferred Stock or any additional class or series of capital stock of the Corporation unless the same ranks junior to Series F Preferred Stock with respect to its rights, preferences and privileges, (v) authorize the creation of, or issue or obligate itself to issue shares of, or reclassify, any capital stock unless the same ranks junior to Series F Preferred Stock with respect to its rights, preferences and privileges, (vi) purchase or redeem (or permit any subsidiary to purchase or redeem), or pay or declare any dividend or make any distribution on, any shares of capital stock of the Corporation other than (A) redemptions of or dividends or distributions on Series E Preferred Stock, (B) redemptions of or dividends or distributions on Series F Preferred Stock as expressly authorized herein (C) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service and (D) shares purchased or withheld by the Corporation in connection with any net exercise or tax payment with respect to awards granted under the Corporation’s equity compensation plans, or (vii) enter into any agreement with respect to any of the foregoing.

 

 

6.    Conversion. The holders of Series F Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

 

(a)    Conversion Right.

 

(i)    Conversions at Option of Holder. Subject to the limitations in Section 6(c) and Section 6(d) below, each share of Series F Preferred Stock shall be convertible, at any time and from time to time from and after the Issuance Date at the option of the holder thereof, into that number of fully-paid and nonassessable shares of Common Stock determined by dividing (x) the Accrued Value by (y) the Series F Conversion Price in effect at the time of conversion. Holders shall effect conversions by providing the Corporation with a conversion notice in the form attached hereto as Annex A (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of shares of Series F Preferred Stock to be converted, the number of shares of Series F Preferred Stock owned prior to the conversion at issue, the number of shares of Series F Preferred Stock owned subsequent to the conversion at issue and the date or future event on which such conversion is to be effected, which date or event may not be prior to the first Trading Day following the date the applicable holder delivers by facsimile or e-mail such Notice of Conversion to the Corporation (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required.  The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error.  To effect conversions of shares of Series F Preferred Stock, a holder shall not be required to surrender the certificate(s) representing the shares of Series F Preferred Stock to the Corporation unless all of the shares of Series F Preferred Stock represented thereby are so converted, in which case such holder shall deliver the certificate representing such shares of Series F Preferred Stock promptly following the Conversion Date at issue.  Shares of Series F Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled and shall not be reissued.  Notwithstanding the foregoing in this Section 6(a), a holder whose interest in Series F Preferred Stock is a beneficial interest in certificate(s) representing Series F Preferred Stock held in book-entry form through DTC (or another established clearing corporation performing similar functions), shall effect conversions made pursuant to this Section 6(a) by delivering to DTC (or such other clearing corporation, as applicable) the appropriate instruction form for conversion, complying with the procedures to effect conversions that are required by DTC (or such other clearing corporation, as applicable), subject to a holder’s right to elect to receive Series F Preferred Stock in certificated form pursuant to Section 2, in which case this sentence shall not apply; provided, however, that as between the Corporation and a beneficial owner of Series F Preferred Stock held in book-entry form through DTC (or another established clearing corporation performing similar functions), such beneficial owners shall have all of the rights and remedies of a holder hereunder.

 

(ii)    Termination of Conversion Rights. In the event of a liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series F Preferred Stock.

 

(b)    Conversion Price. The “Series F Conversion Price” shall initially be equal to $3.664. Such initial Series F Conversion Price, and the rate at which shares of Series F Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

 

 

(c)    Mechanics of Conversion.

 

(i)    Delivery of Conversion Shares Upon Conversion. Not later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) after each Conversion Date (the “Share Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the converting holder the number of Conversion Shares being acquired upon the conversion of the shares of Series F Preferred Stock. The Corporation shall use its best efforts to deliver the Conversion Shares required to be delivered by the Corporation under this Section 6 electronically through the Depository Trust Company or another established clearing corporation performing similar functions. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Corporation’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Conversion.

 

(ii)    Failure to Deliver Conversion Shares.  If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed by the applicable holder by the Share Delivery Date, the holder shall be entitled to elect by written notice to the Corporation at any time on or before its receipt of such Conversion Shares, to rescind such conversion, in which event the Corporation shall promptly return to the holder any original Series F Preferred Stock certificate delivered to the Corporation and the holder shall promptly return to the Corporation the Conversion Shares issued to such holder pursuant to the rescinded Notice of Conversion.

 

(iii)    Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it shall at all times when the Series F Preferred Stock shall be outstanding reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of Series F Preferred Stock as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the holder (and the other holders of Series F Preferred Stock), such aggregate number of shares of the Common Stock as shall from time to time be sufficient to be issued (taking into account the adjustments and restrictions of Section 6) upon the conversion of the then outstanding shares of Series F Preferred Stock, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Certificate of Incorporation. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

 

(iv)    Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of Series F Preferred Stock.  As to any fraction of a share which the holder would otherwise be entitled to upon such conversion, the Corporation shall pay cash in respect of such final fraction in an amount equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors.

 

(v)    Transfer Taxes and Expenses.  The issuance of Conversion Shares on conversion of Series F Preferred Stock shall be made without charge to any holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the holders of such shares of Series F Preferred Stock and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. 

 

 

(d)    Beneficial Ownership Limitation. Notwithstanding anything herein to the contrary, the Corporation shall not effect any conversion of Series F Preferred Stock, and a holder shall not have the right to convert any portion of Series F Preferred Stock, to the extent that, after giving effect to an attempted conversion set forth on an applicable conversion notice, such attempted conversion would result in the holder (together with such holder’s affiliates, and any other person whose beneficial ownership of Common Stock would be aggregated with the holder’s for purposes of Section 13(d) or Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the applicable regulations of the Securities and Exchange Commission (the “Commission”), including any “group” of which the holder is a member (the foregoing, “Attribution Parties”)) beneficially owning a number of shares of Common Stock in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such holder and its Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of Series F Preferred Stock subject to the conversion notice with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted shares of Series F Preferred Stock beneficially owned by such holder or any of its Attribution Parties, and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such holder or any of its Attribution Parties that, in the case of both (i) and (ii), are subject to a limitation on conversion or exercise similar to the limitation contained herein. For purposes of this Section 6(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable regulations of the Commission. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable regulations of the Commission. For purposes of this Section 6(d), in determining the number of outstanding shares of Common Stock, a holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (A) the Corporation’s most recent periodic or annual filing with the Commission, as the case may be, (B) a more recent public announcement by the Corporation that is filed with the Commission, or (C) a more recent notice by the Corporation or the Corporation’s transfer agent to the holder setting forth the number of shares of Common Stock then outstanding. Upon the written request of a holder (which may be by email) submitted to the Secretary of the Corporation, the Corporation shall, within three (3) business days thereof, confirm in writing to such holder (which may be via email) 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 any actual conversion or exercise of securities of the Corporation, including shares of Series F Preferred Stock, by such holder or its Attribution Parties since the date as of which such number of outstanding shares of Common Stock was last publicly reported or confirmed to the holder. The “Beneficial Ownership Limitation” shall (i) initially be 19.9% of the number of shares of the Common Stock and voting power outstanding immediately after giving effect to the issuance of shares of Common Stock pursuant to such conversion notice (to the extent permitted pursuant to this Section 6(d)) before the Nasdaq Stockholder Approval has been obtained and (ii) automatically and without further action by the Corporation or the holder, be increased to and become 49.9% of the number of shares of the Common Stock and voting power outstanding immediately after giving effect to the issuance of shares of Common Stock pursuant to such conversion notice if and after the Nasdaq Stockholder Approval has been obtained. The Corporation shall be entitled to rely on representations made to it by the holder in any conversion notice regarding its Beneficial Ownership Limitation.

 

(e)    Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Issuance Date effect a subdivision of the outstanding shares of Common Stock, the Series F Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common stock issuable on conversion of each share shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after the Issuance Date combine the outstanding shares of Common Stock, the Series F Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

 

(f)    Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to time after the Issuance Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then and in each such event the Series F Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Series F Conversion Price then in effect by a fraction:

 

(1)    the numerator of which shall be the total number of shares of Common Stock plus any shares of Common Stock issuable upon conversion of any Series E Preferred Stock and any Junior Stock, in each case issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

 

(2)    the denominator of which shall be the total number of shares of Common Stock plus any shares of Common Stock issuable upon conversion of any Series E Preferred Stock and any Junior Stock, in each case issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

 

provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Series F Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Series F Conversion Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions; and provided, further, however, that no such adjustment shall be made if the holders of Series F Preferred Stock simultaneously receive (i) a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Series F Preferred Stock had been converted into Common Stock on the date of such event or (ii) a dividend or other distribution of shares of Series F Preferred Stock which are convertible, as of the date of such event, into such number of shares of Common Stock as is equal to the number of additional shares of Common Stock being issued with respect to each share of Common Stock in such dividend or distribution.

 

(g)    Adjustment for Reclassification, Exchange, or Substitution. If the Common Stock issuable upon the conversion of Series F Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provided for below), then and in each such event the holder of each such share of Series F Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable, upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such shares of Series F Preferred Stock might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein.

 

(h)    Adjustment for Merger or Reorganization, etc. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which Common Stock (but not Series F Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by paragraphs (e), (f) or (g) of this Section 6), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Series F Preferred Stock shall be convertible into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of Series F Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction (without regard to any limitation in Section 6(d) on the conversion of Series F Preferred Stock).

 

 

(i)    Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Series F Conversion Price pursuant to this Section 6, the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than 10 days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series F Preferred Stock a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which Series F Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of Series F Preferred Stock (but in any event not later than 10 days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Series F Conversion Price then in effect and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Series F Preferred Stock.

 

(j)    Notice of Record Date. In the event:

 

(i)         that the Corporation declares a dividend (or any other distribution) on Common Stock payable in Common Stock or other securities of the Corporation;

 

(ii)         that the Corporation subdivides or combines its outstanding shares of Common Stock;

 

(iii)         of any reclassification of the Common Stock (other than a subdivision or combination of its outstanding shares of Common Stock or a stock dividend or stock distribution on the Common Stock), or of any consolidation or merger of the Corporation into or with another Person, or a Deemed Liquidation Event; or

 

(iv)         of a Liquidation Event;

 

then, and in each such case, the Corporation will send or cause to be sent to the holders of the Series F Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Series F Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series F Preferred Stock and the Common Stock. Such notice shall be sent at least ten (10) days prior to the record date or effective date for the event specified in such notice.

 

7.     Status of Converted or Redeemed Shares. Any shares of Series F Preferred Stock that are converted, redeemed or otherwise acquired by the Corporation or any of its subsidiaries in accordance with the terms of this Certificate of Designation shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series F Preferred Stock and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Series F Preferred Stock accordingly.

 

8.    Waiver. Any of the rights, powers, preferences and other terms of Series F Preferred Stock set forth herein may be waived on behalf of all holders of Series F Preferred Stock by the affirmative written consent or vote of the Required Holders.

 

 

9.    Notices. Any notice required or permitted to be given to a holder of shares of Series F Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the DGCL, and shall be deemed sent upon such mailing or electronic transmission.

 

RESOLVED FURTHER, that the officers of the Corporation be, and they hereby are, authorized and directed, for and in the name and on behalf of the Corporation, to prepare and to file a Certificate of Designation of Series F Preferred Stock in accordance with the foregoing resolution and the provisions of DGCL and to take such actions as they may deem necessary or appropriate to carry out the intent of the foregoing resolutions.”

 

**********

 

 

IN WITNESS WHEREOF, Avinger, Inc. has caused this Certificate of Designation of Preferences, Rights and Limitations of Series F Convertible Preferred Stock to be executed by the undersigned this 4th day of March, 2024.

/s/ Jeffrey M. Soinski
Name: Jeffrey M. Soinski
Title:   President and Chief Executive Officer

 

 

ANNEX A

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES F CONVERTIBLE PREFERRED STOCK)

 

The undersigned hereby elects to convert the number of shares of Series F Preferred Stock indicated below into shares of common stock, par value $0.001 per share (the “Common Stock”), of Avinger, Inc., a Delaware corporation (the “Corporation”), according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. No fee will be charged to the holders for any conversion, except for any such transfer taxes.

 

Conversion calculations:

 

Date to Effect Conversion:

Number of shares of Series F Convertible Preferred Stock owned prior to Conversion:

Number of shares of Series F Convertible Preferred Stock to be Converted:

Number of shares of Common Stock to be Issued:

Applicable Series F Conversion Price:

Number of shares of Series F Convertible Preferred Stock subsequent to Conversion:

Address for Delivery: or DWAC Instructions: Broker no: Account no:

	[HOLDER]
	By:
		Name:
		Title:

 

Exhibit 3.2

 

 

AVINGER, INC.

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

 

OF

 

SERIES A-1 CONVERTIBLE PREFERRED STOCK

 

PURSUANT TO SECTION 151 OF THE

DELAWARE GENERAL CORPORATION LAW

 

AVINGER, INC., a Delaware corporation (the “Corporation”), in accordance with the provisions of Section 103 of the Delaware General Corporation Law (the “DGCL”), does hereby certify that, in accordance with Section 151 of the DGCL, the following resolutions were duly adopted by the Board of Directors of the Corporation on March , 2024:

 

RESOLVED, pursuant to authority expressly set forth in the Amended and Restated Certificate of Incorporation of the Corporation (as it may be amended from time to time, the “Certificate of Incorporation”), the issuance of a series of Preferred Stock designated as the Series A-1 Convertible Preferred Stock, par value $0.001 per share, of the Corporation is hereby authorized and the designation, number of shares, powers, preferences, rights, qualifications, limitations and restrictions thereof (in addition to any provisions set forth in the Certificate of Incorporation that are applicable to the Preferred Stock of all classes and series) are hereby fixed, and the Certificate of Designation of Preferences, Rights and Limitations of Series A-1 Convertible Preferred Stock is hereby approved as follows:

 

 

SERIES A-1 CONVERTIBLE PREFERRED STOCK

 

1.            Definitions. For the purposes hereof, the following terms shall have the following meanings:

 

“Common Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified.

 

“Issuance Date” means the first date on which any shares of Series A-1 Preferred Stock are issued by the Corporation.

 

“Junior Stock” means the Common Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and any other classes or series of capital stock that does not expressly rank pari passu with or senior to Series A-1 Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation or upon a Deemed Liquidation Event of the Corporation, or in respect of the payment of dividends or rights of redemption (and, in each case, any rights or options to acquire any Junior Stock); provided that, for the avoidance of doubt, Series A-1 Preferred Stock shall rank junior to the Senior Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation or upon a Deemed Liquidation Event of the Corporation, or in respect of the payment of dividends or rights of redemption (and, in each case, any rights or options to acquire any share of Senior Stock).

 

 

“Senior Stock” means Series F Preferred Stock and Series E Preferred Stock and any other classes of series of capital stock that expressly rank senior to the A-1 Preferred Stock.

 

“Series A-1 Stated Value” means, with respect to a share of Series A-1 Preferred Stock, $1,000.

 

“Series B Preferred Stock” means the Corporation’s Series B Convertible Preferred Stock, par value $0.001 per share.

 

“Series C Preferred Stock” means the Corporation’s Series C Convertible Preferred Stock, par value $0.001 per share.

 

“Series D Preferred Stock” means the Corporation’s Series D Convertible Preferred Stock, par value $0.001 per share.

 

“Series E Preferred Stock” means the Corporation’s Series E Convertible Preferred Stock, par value $0.001 per share.

 

“Series F Preferred Stock” means the Corporation’s Series F Convertible Preferred Stock, par value $0.001 per share.

 

2.            Designation, Amount and Par Value; Assignment.

 

(a)            The series of preferred stock designated by this Certificate of Designation shall be designated as the Corporation’s Series A-1 Convertible Preferred Stock (the “Series A-1 Preferred Stock”) and the number of shares so designated shall be Ten Thousand (10,000). The Series A-1 Preferred Stock shall have a par value of $0.001 per share.

 

(b)            The Corporation shall register shares of the Series A-1 Preferred Stock, upon records to be maintained by the Corporation for that purpose (the “Series A-1 Preferred Stock Register”), in the name of the holders of the Series A-1 Preferred Stock thereof from time to time. The Corporation may deem and treat the registered holders of the Series A-1 Preferred Stock as the absolute owner thereof for the purpose of any conversion thereof and for all other purposes. Shares of Series A-1 Preferred Stock may be issued solely in book-entry form or, if requested by any holder of the Series A-1 Preferred Stock, such holder’s shares may be issued in certificated form. The Corporation shall register the transfer of any shares of Series A-1 Preferred Stock in the Series A-1 Preferred Stock Register, upon surrender of the certificates (if applicable) evidencing such shares to be transferred, duly endorsed by the holder thereof, to the Corporation at its address specified herein. Upon any such registration or transfer, a new certificate (or book-entry notation, if applicable) evidencing the shares of Series A-1 Preferred Stock so transferred shall be issued to the transferee and a new certificate (or book-entry notation, if applicable) evidencing the remaining portion of the shares not so transferred, if any, shall be issued to the transferring holder, in each case, within three business days. The provisions of this Certificate of Designation are intended to be for the benefit of all holders of the Series A-1 Preferred Stock from time to time and shall be enforceable by any such holder.

 

 

3.            Dividends. The holders of the Series A-1 Preferred Stock shall be entitled to receive when, as and if declared by the Board, out of any funds legally available therefor, dividends on shares of Series A-1 Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends (other than dividends in the form of Common Stock, which shall be made in accordance with Section 6(f)) actually paid on shares of Common Stock when, as and if such dividends (other than dividends in the form of Common Stock, which shall be made in accordance with Section 6(f)) are paid on shares of Common Stock.

 

4.            Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the holders of the Series A-1 Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the par value, plus any accrued and unpaid dividends thereon, for each share of Series A-1 Preferred Stock before any distribution or payment shall be made to the holders of the Junior Stock but after the distribution or payment in full of any applicable liquidation amount to the holders of Senior Stock, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the holders of the Series A-1 Preferred Stock shall be ratably distributed among the holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full, and thereafter the same amount that a holder of Common Stock would receive if the Series A-1 Preferred Stock were fully converted (disregarding for such purposes any conversion limitations hereunder) to Common Stock which amounts shall be paid pari passu with all holders of Common Stock. The Corporation shall mail written notice of any such Liquidation, not less than prior to the effective date thereof, to each holder.

 

5.            Voting. So long as any shares of Series A-1 Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A-1 Preferred Stock in addition to such other vote as may be required by the DGCL, (a) materially alter or change the powers, preferences or rights given to the Series A-1 Preferred Stock or materially alter or amend this Certificate of Designation in a manner adverse to the holders of Series A-1 Preferred Stock, (b) materially amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders (in their capacity as holders of Series A-1 Preferred Stock) (c) increase the number of authorized shares of Series A-1 Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing. Except as otherwise provided herein or as otherwise required by the DGCL, the Series A-1 Preferred Stock shall have no voting rights.

 

6.            Optional Conversion. The holders of the Series A-1 Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

 

(a)            Right to Convert.

 

(i)            Conversion Ratio. Each share of Series A-1 Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Series A-1 Stated Value by the Series A-1 Conversion Price (as defined below) in effect at the time of conversion. The “Series A-1 Conversion Price” shall be equal to $3.664 (subject to adjustment in the event of stock splits, combinations or similar events). Such Series A-1 Conversion Price, and the rate at which shares of Series A-1 Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

 

 

(ii)            Termination of Conversion Rights. In the event of a notice of redemption of any shares of Series A-1 Preferred Stock pursuant to Section 7, the Conversion Rights of the shares designated for redemption shall terminate at the close of business on the last full day preceding the date fixed for redemption, unless the redemption price is not fully paid on such redemption date, in which case the Conversion Rights for such shares shall continue until such price is paid in full. In the event of a liquidation, dissolution or winding up of the Corporation, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series A-1 Preferred Stock.

 

(b)            Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series A-1 Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors of the Corporation. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Series A-1 Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

 

(c)            Mechanics of Conversion.

 

(i)            Notice of Conversion. In order for a holder of Series A-1 Preferred Stock to voluntarily convert shares of Series A-1 Preferred Stock into shares of Common Stock, such holder shall (a) provide written notice to the Corporation’s transfer agent at the office of the transfer agent for the Series A-1 Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent) that such holder elects to convert all or any number of such holder’s shares of Series A-1 Preferred Stock and, if applicable, any event on which such conversion is or such future time at which such conversion shall be effective (a “Conversion Notice”) and (b) if such holder’s shares are certificated, surrender the certificate or certificates for such shares of Series A-1 Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Series A-1 Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent). Such Conversion Notice shall state such holder’s name or the names of the nominees in which such holder wishes the shares of Common Stock to be issued. If required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such notice (or as applicable, the future event or time upon which the conversion was contingent or applicable) and, if applicable, certificates (or lost certificate affidavit and agreement) shall be the time of conversion (as applicable, the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the specified shares shall be deemed to be outstanding of record as of such Conversion Time. The Corporation shall, as soon as practicable after the Conversion Time, (i) issue and deliver to such holder of Series A-1 Preferred Stock, or to his, her or its nominees, a certificate or certificates (or a notice of issuance of uncertificated shares, if applicable) for the number of full shares of Common Stock issuable upon such conversion (or a notice of such issuance if uncertificated shares are issued) in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Series A-1 Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, (ii) pay in cash such amount as provided in Section 6(b) in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (iii) pay all declared but unpaid dividends on the shares of Series A-1 Preferred Stock converted.

 

 

(ii)            Reservation of Shares. The Corporation shall at all times when the Series A-1 Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series A-1 Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series A-1 Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series A-1 Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Certificate of Designation and the Certificate of Incorporation. Before taking any action that would cause an adjustment to reduce the Series A-1 Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the Series A-1 Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Series A-1 Conversion Price.

 

(iii)            Effect of Conversion. All shares of Series A-1 Preferred Stock that shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only for the right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Section 6(b) and to receive payment of any dividends declared but unpaid thereon. Any shares of Series A-1 Preferred Stock so converted shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Series A-1 Preferred Stock accordingly.

 

(iv)            No Further Adjustment. Upon any such conversion, no adjustment to the Series A-1 Conversion Price shall be made for any declared but unpaid dividends on the Series A-1 Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion. The holder shall be credited for any accrued but unpaid dividends at the time of conversion to be paid in the form of, and at the time prescribed by, Section 3(a).

 

(v)            Taxes. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Series A-1 Preferred Stock pursuant to this Section 6. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Series A-1 Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

 

 

(d)            Beneficial Ownership Limitation. Notwithstanding anything herein to the contrary, the Corporation shall not effect any conversion of the Series A-1 Preferred Stock, and a holder shall not have the right to convert any portion of the Series A-1 Preferred Stock, to the extent that, after giving effect to an attempted conversion set forth on an applicable conversion notice, such attempted conversion would result in the holder (together with such holder’s affiliates, and any other person whose beneficial ownership of Common Stock would be aggregated with the holder’s for purposes of Section 13(d) or Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the applicable regulations of the Securities and Exchange Commission (the “Commission”), including any “group” of which the holder is a member (the foregoing, “Attribution Parties”)) beneficially owning a number of shares of Common Stock in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such holder and its Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of the Series A-1 Preferred Stock subject to the conversion notice with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted shares of Series A-1 Preferred Stock beneficially owned by such holder or any of its Attribution Parties, and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such holder or any of its Attribution Parties that, in the case of both (i) and (ii), are subject to a limitation on conversion or exercise similar to the limitation contained herein. For purposes of this Section 6(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable regulations of the Commission. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable regulations of the Commission. For purposes of this Section 6(d), in determining the number of outstanding shares of Common Stock, a holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (A) the Corporation’s most recent periodic or annual filing with the Commission, as the case may be, (B) a more recent public announcement by the Corporation that is filed with the Commission, or (C) a more recent notice by the Corporation or the Corporation’s transfer agent to the holder setting forth the number of shares of Common Stock then outstanding. Upon the written request of a holder (which may be by email) submitted to the Secretary of the Corporation, the Corporation shall, within three (3) business days thereof, confirm in writing to such holder (which may be via email) 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 any actual conversion or exercise of securities of the Corporation, including shares of Series A-1 Preferred Stock, by such holder or its Attribution Parties since the date as of which such number of outstanding shares of Common Stock was last publicly reported or confirmed to the holder. The “Beneficial Ownership Limitation” shall initially be 9.9% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock pursuant to such conversion notice (to the extent permitted pursuant to this Section 6(d)). The Corporation shall be entitled to rely on representations made to it by the holder in any conversion notice regarding its Beneficial Ownership Limitation. Notwithstanding the foregoing, by written notice to the Corporation, any holder may, from time to time, reset the Beneficial Ownership Limitation percentage applicable to such Holder to a higher or lower percentage provided, however, that in no case will the Beneficial Ownership Limitation exceed 19.99% unless the required Nasdaq Stockholder Approval has been obtained. Any increase in the Beneficial Ownership Limitation will not be effective until the sixty-first (61st) day after such notice is delivered to the Company. Any decrease in the Beneficial Ownership Limitation will be effective upon delivery to the Company.

 

 

(e)            Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Issuance Date effect a subdivision of the outstanding Common Stock, the Series A-1 Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after the Issuance Date combine the outstanding shares of Common Stock, the Series A-1 Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

(f)            Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to time after the Issuance Date shall make or issue, or fix a record date for the determination of holders of Junior Stock entitled to receive, a dividend or other distribution payable on Junior Stock in additional shares of Common Stock, then and in each such event the Series A-1 Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Series A-1 Conversion Price then in effect by a fraction:

 

(1)           the numerator of which shall be the total number of shares of Common Stock, plus any shares of Common Stock issuable upon conversion of any Junior Stock, in each case issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

 

(2)            the denominator of which shall be the total number of shares of Common Stock, plus any shares of Common Stock issuable upon conversion of any Junior Stock, in each case issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

 

Notwithstanding the foregoing, (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Series A-1 Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Series A-1 Conversion Price shall be adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (b) that no such adjustment shall be made if the holders of Series A-1 Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Series A-1 Preferred Stock had been converted into Common Stock (without regard to any limitations in Section 6(d) on the conversion of the Series A-1 Preferred Stock) on the date of such event.

 

 

(g)            Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Issuance Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of Section 3 do not apply to such dividend or distribution, then and in each such event the holders of Series A-1 Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding shares of Series A-1 Preferred Stock had been converted into Common Stock (without regard to any limitations in Section 6(d) on the conversion of the Series A-1 Preferred Stock) on the date of such event.

 

(h)            Adjustment for Merger or Reorganization, etc. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Series A-1 Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Section 6(e) through Section 6(g)), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Series A-1 Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of Series A-1 Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Corporation) shall be made in the application of the provisions in this Section 6 with respect to the rights and interests thereafter of the holders of the Series A-1 Preferred Stock, to the end that the provisions set forth in this Section 6 (including provisions with respect to changes in and other adjustments of the Series A-1 Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Series A-1 Preferred Stock.

 

(i)            Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Series A-1 Conversion Price pursuant to this Section 6, the Corporation, at its expense shall, as promptly as reasonably practicable but in any event not later than ten (10) days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series A-1 Preferred Stock a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Series A-1 Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of Series A-1 Preferred Stock (but in any event not later than ten (10) days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Series A-1 Conversion Price then in effect, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Series A-1 Preferred Stock.

 

 

(j)            Notice of Record Date. In the event:

 

(i)          the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Series A-1 Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

 

(ii)           of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation; or

 

(iii)          of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation,

 

then, and in each such case, the Corporation will send or cause to be sent to the holders of the Series A-1 Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Series A-1 Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series A-1 Preferred Stock and the Common Stock. Such notice shall be sent at least ten (10) days prior to the record date or effective date for the event specified in such notice.

 

(k)            Mandatory Conversion.

 

(i)            Company Option. If the Corporation’s average market capitalization is equal to at least $100,000,000 (A) on such date based on the volume-weighted average closing price per share of Common Stock on such date multiplied by the number of outstanding shares of Common Stock on such date and (B) for the most recently completed fiscal quarter prior to such date based on the volume-weighted average closing price per share of Common Stock for such fiscal quarter multiplied by the number of outstanding shares of Common Stock on the last trading day of such quarter (i) then the Corporation may, at its option, elect that the outstanding shares of Series A-1 Preferred Stock shall automatically be converted into shares of Common Stock at the then effective conversion rate as calculated pursuant to Section 6(a)(i) (such date, the “Mandatory Conversion Time”) and (ii) such shares may not be reissued by the Corporation as shares of such series; provided no shares of Series A-1 Preferred Stock of any holder shall be automatically converted pursuant to this Section 6(k) to the extent, as a result of such conversion, the Beneficial Ownership Limitation would be exceeded for such holder; and provided further that prior to the Mandatory Conversion Time, the Corporation shall set aside and pay in full all declared but unpaid Dividends prior to the Mandatory Conversion Time.

 

 

(ii)            Procedural Requirements. All holders of record of shares of Series A-1 Preferred Stock shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Series A-1 Preferred Stock pursuant to this Section 6. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of such notice, each holder of shares of Series A-1 Preferred Stock in certificated form shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice. If so required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. All rights with respect to the Series A-1 Preferred Stock converted pursuant to Section 6(a), including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender any certificates at or prior to such time), except only for the rights of the holders thereof, upon surrender of any certificate or certificates of such holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Section 6(k)(ii). As soon as practicable after the Mandatory Conversion Time and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for Series A-1 Preferred Stock, the Corporation shall (a) issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates (or a notice of issuance of uncertificated shares, if applicable) for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and a certificate (or notice of issuance of uncertificated shares, if applicable) for the number of any remaining shares of Series A-1 Preferred Stock not converted due to the application of the Beneficial Ownership Limitation, and (b) pay cash as provided in Section 6(b) in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Series A-1 Preferred Stock converted. Such converted Series A-1 Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Series A-1 Preferred Stock accordingly.

 

7.            Redemption.

 

(a)            General. Unless prohibited by Delaware law governing distributions to stockholders, shares of Series A-1 Preferred Stock shall be redeemable by the Corporation at its option at a price equal to the Series A-1 Stated Value per share, plus any dividends accrued but unpaid thereon, up until but excluding the Redemption Date, as defined below (the “Redemption Price”); provided, however, that the Corporation shall not redeem any share of Series A-1 Preferred Stock until and unless the Corporation has paid in full all of the interests accrued and payable with respect to any share of Senior Stock. Following issuance of a Redemption Notice (defined below), the Corporation shall apply all of its legally available assets to any such redemption, and to no other corporate purpose, except to the extent prohibited by Delaware law governing distributions to stockholders. The date of payment provided in the Redemption Notice shall be referred to as the “Redemption Date.” On the Redemption Date, the Corporation shall redeem the outstanding shares of Series A-1 Preferred Stock. If on the Redemption Date, Delaware law governing distributions to stockholders prevents the Corporation from redeeming all shares of Series A-1 Preferred Stock to be redeemed, the Corporation shall ratably redeem the maximum number of shares that it may redeem consistent with such law, and shall redeem the remaining shares as soon as it may lawfully do so under such law.

 

 

(b)            Redemption Notice. The Corporation shall send written notice of the mandatory redemption (the “Redemption Notice”) to each holder of record of Series A-1 Preferred Stock not less than thirty (30) days but no more than sixty (60) days prior to each Redemption Date. Each Redemption Notice shall state:

 

(i)            the number of shares of Series A-1 Preferred Stock held by the holder that the Corporation shall redeem on the Redemption Date specified in the Redemption Notice;

 

(ii)           the Redemption Date and the Redemption Price;

 

(iii)          the date upon which the holder’s right to convert such shares terminates (as determined in accordance with Section 6(a)); and

 

(iv)           for holders of shares in certificated form, that the holder is to surrender to the Corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares of Series A-1 Preferred Stock to be redeemed.

 

(c)            Surrender of Certificates; Payment. On or before the applicable Redemption Date, each holder of shares of Series A-1 Preferred Stock to be redeemed on such Redemption Date, unless such holder has exercised his, her or its right to convert such shares as provided in Section 6, shall, if a holder of shares in certificated form, surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the shares of Series A-1 Preferred Stock represented by a certificate are redeemed, a new certificate, instrument, or book entry representing the unredeemed shares of Series A-1 Preferred Stock shall promptly be issued to such holder.

 

(d)          Interest. If any shares of Preferred Stock are not redeemed for any reason on any Redemption Date, all such unredeemed shares shall remain outstanding and entitled to all the rights and preferences provided herein, and the Corporation shall pay interest on the Redemption Price applicable to such unredeemed shares at an aggregate per annum rate equal to twelve percent (12% (increased by one percent (1%) each month following the Redemption Date until the Redemption Price, and any interest thereon, is paid in full), with such interest to accrue daily in arrears and be compounded annually; provided, however, that in no event shall such interest exceed the maximum permitted rate of interest under applicable law (the “Maximum Permitted Rate”), provided, however, that the Corporation shall take all such actions as may be necessary, including without limitation, making any applicable governmental filings, to cause the Maximum Permitted Rate to be the highest possible rate. In the event any provision hereof would result in the rate of interest payable hereunder being in excess of the Maximum Permitted Rate, the amount of interest required to be paid hereunder shall automatically be reduced to eliminate such excess; provided, however, that any subsequent increase in the Maximum Permitted Rate shall be retroactively effective to the applicable Redemption Date to the extent permitted by law.

 

 

(e)            Rights Subsequent to Redemption. If the Redemption Notice shall have been duly given, and if on the applicable Redemption Date the Redemption Price payable upon redemption of the shares of Series A-1 Preferred Stock to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that any certificates evidencing any of the shares of Series A-1 Preferred Stock so called for redemption shall not have been surrendered, dividends with respect to such shares of Series A-1 Preferred Stock shall cease to accrue on such Redemption Date and thereafter and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the Redemption Price without interest upon surrender of any such certificate or certificates therefor.

 

8.            Redeemed or Otherwise Acquired Shares. Any shares of Series A-1 Preferred Stock that are redeemed or otherwise acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred as shares of such series. Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Series A-1 Preferred Stock following redemption.

 

9.            Waiver. Any of the rights, powers, preferences and other terms of the Series A-1 Preferred Stock set forth herein may be waived on behalf of all holders of Series A-1 Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of Series A-1 Preferred Stock then outstanding.

 

10.           Notices. Any notice required or permitted to be given to a holder of shares of Series A-1 Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the DGCL, and shall be deemed sent upon such mailing or electronic transmission.

 

RESOLVED FURTHER, that the officers of the Corporation be, and they hereby are, authorized and directed, for and in the name and on behalf of the Corporation, to prepare and to file a Certificate of Designation of Series A-1 Preferred Stock in accordance with the foregoing resolution and the provisions of DGCL and to take such actions as they may deem necessary or appropriate to carry out the intent of the foregoing resolutions.”

 

 

IN WITNESS WHEREOF, Avinger, Inc. has caused this Certificate of Designation of Preferences, Rights and Limitations of Series A-1 Convertible Preferred Stock to be executed by its duly authorized officer this 4th day of March, 2024.

 

/s/ Jeffrey Soinski

Jeffrey Soinski President and Chief Executive Officer

 

Exhibit 3.3

 

CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF DESIGNATION OF PREFERENCES, RIGHTS AND LIMITATIONS OF SERIES E CONVERTIBLE PREFERRED STOCK OF AVINGER, INC.

 

Avinger, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), hereby certifies as follows:

 

1.

The name of the Corporation is Avinger, Inc., and the original Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock of this Corporation was filed with the Secretary of State of the State of Delaware on August 4, 2023 (the “Certificate of Designation”).

2.

The Certificate of Designation is hereby amended as follows:

a.

The eighth through 11th sentences of Section 6(e) of the Certificate of Designation are hereby amended and replaced in their entirety to read: “The “Beneficial Ownership Limitation” shall initially be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock pursuant to such conversion notice (to the extent permitted pursuant to this Section 6(e)). The Corporation shall be entitled to rely on representations made to it by the holder in any conversion notice regarding its Beneficial Ownership Limitation. Notwithstanding the foregoing, by written notice to the Corporation, any holder may, from time to time, reset the Beneficial Ownership Limitation percentage applicable to such Holder to a higher or lower percentage; provided, however, that in no case will the Beneficial Ownership Limitation exceed 19.99% unless the required Nasdaq Stockholder Approval has been obtained. Any increase in the Beneficial Ownership Limitation will not be effective until the sixty-first (61st) day after such notice is delivered to the Company. Any decrease in the Beneficial Ownership Limitation will be effective upon delivery to the Company.”

 

3.

The foregoing amendment has been duly approved by the board of directors of the Corporation in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

4.

The foregoing amendment has been duly approved by the holders of Series E Convertible Preferred Stock of the Corporation in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

5.

This Certificate of Amendment shall become effective upon filing with the Secretary of State for the State of Delaware.

 

 

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by a duly authorized officer of the Corporation as of March 4, 2024.

 

	AVINGER, INC.
	By:	/s/ Jeffrey M. Soinski
		Jeffrey M. Soinski
		President and Chief Executive Officer

Exhibit 10.1 

 

Project Artery

Strategic Cooperation Framework Agreement

 

 

This Strategic Cooperation Framework Agreement (the “Framework Agreement”) is entered into effective as of the effective date of the License and Distribution Agreement (as defined below) (the “Effective Date”) by and between Avinger, a company organized and existing under the laws of United States of America (“USA” or "US"), legally represented by Jeffrey M. SOINSKI, having its address at 400 Chesapeake Drive, Redwood City, CA 94063, USA (“Avinger” or “Party A”) and Zylox-Tonbridge Medical Technology Co., Ltd., a company established in the People's Republic of China (“PRC”), legally represented by Dr. Jonathon Zhong ZHAO, with its registered office at 270 Shuyun Road, Yuhang District, Hangzhou, Zhejiang Province, China (“Zylox” or “Party B”). Avinger and Zylox are referred to herein individually as a “Party” and collectively as the “Parties”.

 

RECITALS

 

WHEREAS, Avinger is a US-listed company which designs, manufactures, and sells real-time high-definition image-guided, minimally invasive catheter-based systems that are used by physicians to treat patients with peripheral artery disease.

 

WHEREAS, Zylox is a Chinese company listed in Hong Kong, which specializes in the innovative research and development, manufacturing and sales of medical devices in the field of peripheral and neurovascular interventions and implants.

 

WHEREAS, the Parties entered into a Term Sheet dated October 31, 2023 ("Term Sheet") regarding investment and strategic partnership undertaking related to the agreed products, which sets forth the key principles of the business cooperation between the Parties together with a set of legal documents to be concluded for that purpose, including this Framework Agreement.

 

WHEREAS, according to the Term Sheet, Zylox is to be granted an exclusive license to import, develop, and commercialize the relevant imported products of Avinger in the Territory (including Mainland China, Hong Kong, Macao and Taiwan), and be granted with an exclusive license from Avinger to develop, manufacture and commercialize the localized products in the Territory, which license is to be governed by a “License and Distribution Agreement” between the Parties that is currently the subject of negotiation.

 

WHEREAS, according to the above-mentioned Term Sheet, Zylox will be an OEM manufacturer for Avinger for the agreed products for out of Territory business, upon regulatory approval and/or complete filing, which will be subject to a separate agreement to be agreed between the Parties (the “OEM Manufacturing Agreement”);

 

WHEREAS, according to the above-mentioned Term Sheet, besides the Territory, the Parties also intend to collaborate on other markets including European and US markets.

 

 

Now, therefore, the Parties reached a consensus for strategic cooperation that is outlined in the below Framework Agreement :

 

ARTICLE 1
Definitions

 

1.

“Affiliate” means, with respect to a particular Party, a person, corporation, partnership, or other entity that controls, is controlled by or is under common control with such Party. For the purposes of this definition, the word “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such entity, whether by the ownership of fifty percent (50%) or more of the voting stock or equity of such entity, or by contract.

 

2.

“Applicable Law” means the applicable provisions of any and all national, supranational, regional, state and local laws, treaties, statutes, rules, regulations, administrative codes, guidance, ordinances, judgments, decrees, directives, injunctions, orders, or permits of or from any court, arbitrator or governmental agency or authority (including Regulatory Authorities) having jurisdiction over or related to the subject matter in question.

 

3.	“Avinger Financing Agreement” means the Securities Purchase Agreement to be entered into on or about the date of this Agreement by the Parties.

 

4.	“Business Day” means any day that is not a Saturday, a Sunday or other day on which commercial banks in the USA and the Territory are not operative.

 

5.

“Change of Control” with respect to a Party means (i) the acquisition (directly or indirectly, whether by merger, consolidation, purchase and sale, share exchange or otherwise) by any party other than an Affiliate of a beneficial interest in the securities of the Party representing more than 50% of the combined voting power of the then outstanding securities of the surviving entity immediately after acquisition (other than a capital raising transaction); or (ii) the transfer, sale or assignment of more than 50% of the assets of the Party to a party other than an Affiliate; or (iii) any other transfer to a party other than an Affiliate of the power and ability to control or direct the management and policies of that Party (including a change of the Executive Officer of Avinger, Mr. Jeffrey M. Soinski). For the avoidance of doubt, the following scenarios are explicitly excluded from the Change of Control of Zylox: any capital operations or equity restructure resulting in direct or indirect change of shareholding structure of Zylox.

 

6.

“Commercialization,” with a correlative meaning for “Commercialize” and “Commercializing,” means all activities directed to marketing, promoting, selling, offering for sale, importing for sale, distributing, leasing and repairing the products and providing after-sales services for the products in or out of the Territory (as the context may indicate or require), including activities relating to the importation, pre-launch, launch, detailing, advertising, pricing and reimbursement (including the obtaining of the required regulatory approvals for reimbursement), promotion, distribution, invoicing and sales of products in or out of the Territory (as the context may indicate or require). In addition to the foregoing, “Commercialization” in connection with the Product shall also include Post-Marketing Studies in or out of the Territory (as the context may indicate or require) and all types of cross-border direct sale or e-commerce in or out of the Territory (as the context may indicate or require).

 

 

7.

“Commercially Reasonable Efforts” means, with respect to a Party’s obligations under this Framework Agreement, the carrying out of such obligations with a level of efforts and resources consistent with the commercially reasonable practices of similarly situated companies in the medical device industry for the development and commercialization of similarly situated branded medical products as the applicable products at a similar stage of development and commercialization, taking into account efficacy, safety, patent and regulatory exclusivity, anticipated or approved labeling, present and future market potential, competitive market conditions, the profitability of the product in light of pricing and reimbursement issues (but not taking into account any payment owed to the other Party under this Framework Agreement), and all other relevant factors (such as financial).

 

8.

“Control” means, with respect to any material, Information, or Intellectual Property Right, the possession of the right, whether directly or indirectly, and whether by ownership, license or otherwise (other than by operation of the license grants under the License and Distribution Agreement concluded between the Parties), to grant a license, sublicense or other right to or under such material, Information, or Intellectual Property Right on the terms and conditions set forth in this Framework Agreement without violating the terms of any then-existing agreement or other arrangement with any Third Party.

 

9.	“Designated Party” means an Affiliate of Zylox or a Third Party (subject to the conditions in this Framework Agreement), which has been designated by Zylox to exercise certain rights and/or perform certain of the Zylox’s obligations under this Framework Agreement.

 

10.	“EMA” means the European Medicines Agency.

 

11.	“Executive Officer” means, (a) with respect to Avinger, its CEO or another senior officer of Licensor designated by its CEO and (b) with respect to Zylox, its Chairman of the Board of Directors, or another senior officer of Zylox designated by its Chairman of the Board of Directors.

 

12.	"FDA" means the United States Food and Drug Administration.

 

13.

“Field” means, treatment of any diseases or conditions in humans in the indications including but not limited to the following: for clinical use in vascular atherectomy and CTO crossing, and to use in medical institutions for vascular atherectomy and CTO crossing and for scientific research use in research related to vascular atherectomy and CTO crossing, and to use in medical institutions or non-medical institutions or companies for research and development related to vascular atherectomy and CTO crossing, as approved and updated by the Regulatory Authority from time to time of the respective country/region. To the avoidance of doubt, clinical use in Hainan is also included in the scope of the Field as approved, filed or updated by the Regulatory Authority from time to time.

 

 

14.

“Good Clinical Practices” or “GCP” means the then-current good clinical practice standards, practices and procedures for designing, conducting, recording, and reporting clinical trials that involve the participation of human subjects promulgated or endorsed by the relevant Regulatory Authority and applicable to the Territory or any other jurisdiction where clinical trials involving human subjects related to any Product are or were performed, as they may be updated from time to time.

 

15.

“Good Manufacturing Practices” or “GMP” means the then-current Good Manufacturing Practices promulgated or endorsed by the relevant Regulatory Authority and applicable to the manufacture and testing of medical devices in the Territory or any other jurisdiction where any Product is or was manufactured or tested, as may be updated from time to time.

 

16.

“Good Supply Practices” or “GSP” means the then-current Good Supply Practices promulgated or endorsed by the relevant Regulatory Authority and applicable to the distribution (including traceability and the process of procurement, warehousing, sale and transportation) of medical devices in or out of the Territory (as the context may indicate or require), as may be updated from time to time, including applicable rules promulgated by NMPA or its equivalent in Taiwan, by FDA, by EMA, or by other Regulatory Authority, in each case as applicable.

 

17.	“Governmental Authority” means any multi-national, federal, state, local, municipal, provincial or other governmental authority of any nature (including any governmental division, prefecture, subdivision, department, agency, bureau, branch, office, commission, council, court or other tribunal).

 

18.	“Indication” means an illness or condition which is accepted by the applicable Regulatory Authorities as an approved indication for a specific treatment or for particular scientific research in the Field.

 

19.	“Insolvency Event” shall mean “Insolvency Event” in relation to either Party, which means any one of the following:

 

(a)

the Party commences a bankruptcy proceeding or similar proceeding (except in relation to a solvent reorganization), an assignment for the benefit of creditors, or otherwise seeks dissolution, that is not dismissed, rescinded, or stayed within ninety (90) days of commencement thereof;

 

 

(b)

an involuntary petition in an insolvency proceeding is filed against a Party and is not dismissed or stayed within ninety (90) days of the filing thereof;

 

(c)

a trustee in bankruptcy, receiver, administrative receiver, receiver and manager, court appointed receiver, interim receiver, custodian, sequestrator or similar officer is appointed in respect of that Party or over any material part of that Party’s assets, other than to the extent that such officer is appointed at the request of the other Party to this Framework Agreement;

 

20.

“Localization” with a correlative meaning for “Localize” and “Localizing,” refers to the undertakings and activities related to the Imported Products and the Domestic Products which Zylox or its Designated Party is authorized to carry out under the terms of the License and Distribution Agreement (as those terms are defined therein).

 

21.

“Manufacture” means to make a Product in the Territory in compliance with the applicable GMP and the applicable Marketing Authorization (e.g.,. by NMPA, FDA, or EMA), including to process, prepare, make and Test the raw materials used in the production of the Product and to Test the Product prior to release packaging, and “Manufacturing” has the corresponding meaning.

 

22.	“Market” means for the purpose of this Framework Agreement, each of, or, certain particular regions of the world in or out of the Territory.

 

23.	“Marketing Authorization” or “Market Authorization” means that specific Regulatory Approval issued by a Regulatory Authority in a jurisdiction to register the Product and required for Commercialization in such jurisdiction, but excluding any pricing or reimbursement approval.

 

24.	“NMPA” means the National Medical Products Administration of the People’s Republic of China, including its local counterparts and any successor agency thereto having substantially the same function and authority (as, for example, the TFDA or DOH in Taiwan).

 

25.

“Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government.

 

26.	“PRC” or “China” means the People’s Republic of China, excluding Hong Kong, Macao and Taiwan for the purpose of this Framework Agreement;

 

27.

“Regulatory Approval” means all approvals necessary for the Localization, Manufacture, marketing, importation and Commercialization of any Product in the Field in a given country or regulatory jurisdiction within or outside of the Territory (as the context may indicate or require), including applicable Marketing Authorizations.

 

 

28.	“Regulatory Authority” means, in a particular country or jurisdiction, any applicable Governmental Authority involved in granting Regulatory Approval in such country or jurisdiction.

 

29.

"Subsidiary Agreements" means the agreements concluded under or related to this Framework Agreement, including without limitation the Avinger Financing Agreement, the License and Distribution Agreement, Non-Disturbance Agreement and the OEM Manufacturing Agreement, to be specified hereunder and attached to this Agreement.

 

30.	“Territory” means PRC, including Mainland China, Hong Kong, Macao and Taiwan.

 

31.	“Third Party” means any entity other than Licensor or Licensee or an Affiliate of either of them.

 

 

1.	Strategic Cooperation in PRC

 

a)

Investment by Party B

Pursuant to the terms of the Avinger Financing Agreement, Party B will make two tranches of investment into Party A ("Tranche 1 Investment" and "Tranche 2 Investment") to fund the Party A's core business, on the condition that Party B is to be granted an exclusive license related to imported Products and localized Products as mentioned under the License and Distribution Agreement.

 

b)

Exclusive License

Pursuant to the terms of the License and Distribution Agreement, Party B will be granted with an exclusive, transferrable, sub-licensable, sub-contractable license by Party A to use, ship and distribute within the Territory, Localize, register, Manufacture, supply and Commercialize the products within the Territory.

 

c)

OEM Manufacturing

Pursuant to the terms of the OEM Manufacturing Agreement, Party B will be an OEM manufacturer for Party A in terms of manufacturing products for sale by Party A out of the Territory, upon regulatory approval and/or complete filing of the Regulatory Authority of the jurisdiction where the products will be sold.

 

The costs to be incurred inside or outside of the Territory for the purpose of Regulatory Approval by the FDA, EMA, or by other Regulatory Authorities outside of the Territory for sale outside the Territory under the OEM manufacturing undertaken by Party B for Party A, or for other markets outside the Territory, shall be borne by Party A (except for the costs of compliance with and certification of GMP and costs of obtaining a CE mark, which shall by borne by Party B, unless specific more rigorous requirements may be required for the products to be manufactured under the OEM Manufacturing Agreement), and shall be subject to the OEM Manufacturing Agreement between the Parties.

 

 

2.	Technology Transfer

 

a)

The Parties agree that Party A shall transfer the relevant technologies to Party B so as to enable Party B to manufacture the “Licensed Products” as agreed between the Parties within the Territory under the terms of the License and Distribution Agreement. The terms of this Article 2 are only an outline of the detailed terms for Technology Transfer and will be replaced by the terms of the License and Distribution Agreement once concluded by the Parties.

 

b)

The Licensed Products include the following:

 

-

LightBox 300 system/ LightBox 250 system, including SLED, Stand

-

Pantheris A400/A400X

-

Pantheris A140-SV

-

Pantheris A110-LV

-

Tigereye ST

-

Ocelot

It is agreed between the Parties that whether Coronary ST should be included in the Licensed Products should be determined after further negotiation between the Parties.

 

c)

In accordance with Article 7.7 (b) of the License and Distribution Agreement, Party A shall provide training for Imported Products and training for Domestic Products as defined therein, and Party A shall provide training to Party B at the reasonable frequency and training courses content as requested by Zylox.

 

d)

The Parties agree that for the License Fees to be paid by Zylox to Avinger under the License and Distribution Agreement, Avinger will waive, or offset if offsetting is agreed by the Parties, such payment quarterly after the calculation and determination of Gross Revenue and License Fees as defined under the License and Distribution Agreement, against the amounts of the receivables payable from Avinger under the OEM Manufacturing Agreement during the corresponding quarter. For the avoidance of doubt: (i) if, during any quarter of the year, the amount of License Fees to be paid by Zylox to Avinger under the License and Distribution Agreement is higher than the full amount of receivables of Zylox against Avinger, then Zylox agrees to pay the amount by which License Fees to be paid by Zylox exceed such receivables of Zylox against Avinger to the extent permitted by law; and (ii) if, during any quarter of the year, the amount of License Fees to be paid by Zylox to Avinger under the License and Distribution Agreement is lower than the full amount of receivables of Zylox against Avinger, then Avinger agrees to pay the amount by which receivables of Zylox against Avinger exceeds such License Fees to the extent permitted by law. The Parties explicitly agree that such payment is tax included, while Zylox will pay the withholding tax for Avinger in accordance with the PRC laws and regulations.

 

3.	Global Manufacturing Supply under OEM Mode

 

a)

Under the OEM manufacturing mode as mentioned in Article 1(c) hereof, Party B agrees to manufacture and supply OEM Products (defined below) to Party A upon obtaining Regulatory Approval for out of the Territory (FDA, EMA). Such manufacturing will be carried out at the approved manufacturing facilities unless otherwise agreed by Party A in writing. The detailed terms of the OEM Manufacturing arrangement shall be set forth in the OEM Manufacturing Agreement. The terms that follow in this Article 3 are only an outline of such terms and will be replaced by the terms of the OEM Manufacturing Agreement once concluded by the Parties.

 

 

b)

The Parties agree that OEM Products include the following:

-

LightBox 3

-

Pantheris A400 series, Pantheris LV/ SV

-

Tigereye ST

It is agreed between the Parties that whether Coronary ST should be included in the Licensed Products should be determined after further negotiation between the Parties.

 

Party B will start to OEM Manufacturing after the following conditions are met:

-

Party A has successfully obtained the relevant Regulatory Approval where Party A will sell outside of the PRC, the Market Approval of the Products equivalent to the Products to be manufactured under the OEM business model for which the transfer of the manufacturing operations at Party B’s approved facilities shall be carried out.

-

Party A has transferred all the relevant technical documents and its Know-how regarding the manufacturing of the Products to be manufactured under OEM business model and regarding the manufacturing of the Domestic Products to Party B;

-

Party A agrees to provide all necessary assistance so that Party B can pass the specific requirements under the Good Manufacturing Practice and other requirements which may be specifically required regarding the OEM Products by the Regulatory Authorities, including FDA approval, etc.

 

c)

The costs to be incurred outside the Territory, for the purpose of regulatory approval under the OEM manufacturing by Party B for Party A, including FDA approval or other regulatory approvals for the markets outside the Territory shall be borne by Party A (except as noted above in Article 1(c) and provided for in the OEM Manufacturing Agreement).

 

d)

As noted above in Article 1(c) and as provided for in the License and Distribution Agreement, for avoidance of doubt, such support shall be other than for the obtaining of regulatory approval from NMPA (National Medical Products Administration of the PRC) (if applicable), CE in European market and GMP requirements, if applicable. Notwithstanding the foregoing, Party A shall be responsible for all costs and expenses required to obtain any additional approvals or consents from the FDA as a result of Party A’s transfer of manufacturing operations to Party B at the approved facilities, but only to the extent such FDA approvals and consents require Party B to exceed NMPA requirements and/or EMA requirements for CE mark, as well as exceeding “Good Manufacturing Practices” for medical devices as such are defined by EMA (or if more rigorous, as defined by NMPA or FDA).

 

e)

For the OEM products supplied by Party B to Party A, Party B will charge a fixed 15% markup on actual manufacturing COGS (cost of goods sold) as the transfer price to Party A.

 

f)

Party B agrees to conclude an OEM Manufacturing Agreement with Party A within one month after Party B has been filed in FDA as a product manufacturer.

 

 

4.	Strategic Cooperation in the US

 

a)

The Parties agree that Party A is entitled to distribute Zylox US Products (to be defined as below) for the US market. Party A is entitled to select from the Zylox US Products for distribution in the US market.

 

b)

The Parties herewith agree that Zylox US Products include but are not limited to the following:

-

Second Generation PTA Balloon Catheter

-

PTA Scoring Balloon Catheter

-

Second Generation High-Pressure PTA Balloon Catheter

-

Long Tapered PTA Balloon Catheter

-

PTA Balloon Catheter Large Diameter

-

Femoral Introducer Sheath Set

-

Femoral Guiding Sheath Set

-

Peripheral Working Guidewire (0.014, 0.018, 0.035)

-

Angiographic Catheter (4-6F)

 

c)

For the Zylox US Products selected by Party A, Party B shall be the registered/filed market authorization owner at FDA in the US, unless otherwise agreed between the Parties. Party A and Party B agree to further negotiate on commercial terms for each selected US Product, including but not limited to the cost of registration, business model in US and further commercial plans.

 

d)

For those products not included in the list of Zylox US Products defined herein, Party A holds right of first refusal for distribution or commercialization in the US market.

 

e)

The price for supplying Zylox US Products by Party B to Party A for the US market is to be further agreed between the Parties.

 

5.	Strategic Cooperation in Europe

 

a)

The Parties agree that Party A is entitled to distribute Zylox EU Products (to be defined as below) for parts of the German market to be further agreed between the Parties. Party A is entitled to select from the Zylox EU Products for distribution in the afore-mentioned market.

 

b)

The Parties herewith agree that Zylox EU Products include but are not limited to the following:

-

ZENFLUXION Drug Coated PTA Balloon (plus second generation when available)

-

Peripheral Stent System

-

Peripheral Drug-Eluting Stent System

-

PTA Balloon Catheter (plus second generation when available)

-

High Pressure PTA Balloon Catheter

-

IVL System (when available)

 

c)

For the Zylox EU Products selected by Party A, Party B shall be the registered/filed CE market authorization owner, unless otherwise agreed between the Parties. Party A and Party B agree to further negotiate on commercial terms for each selected EU Product, including but not limited to the cost of registration, business model in Europe and further commercial plans.

 

 

d)

For those products not included in the list of Zylox EU Products defined herein, Party A holds right of first refusal for distribution in the agreed European market.

 

e)

The price for supplying Zylox EU Products by Party B to Party A for the agreed European market is to be further agreed between the Parties.

 

6.	Term and Termination

 

a)

This Framework Agreement shall commence on the Effective Date and shall continue in force and effect for twenty (20) years (the “Initial Term”) and shall be further automatically extended for additional twenty (20) years provided the operation term of Party B shall have been extended before that date and unless terminated earlier by mutual written agreement of the Parties or pursuant to Articles 6 of this Framework Agreement (all such additional terms extended, together with the Initial Term, the “Term”). Accordingly, Party B shall be responsible for extending its current business term which is to expire on November 4th 2032. If different terms are set forth in the Terms of the Subsidiary Agreements, such Terms of the Subsidiary Agreement shall prevail over the Term of this Framework Agreement.

 

b)

Any Party may terminate this Framework Agreement effective immediately by written notice to the other Party if the other Party is subject to an Insolvency Event. Upon termination of this Framework Agreement, the Subsidiary Agreements shall not be terminated as long as the License and Distribution Agreement is not terminated, unless they are terminated as provided for in each of them.

 

c)

Unless specified in each of the Subsidiary Agreements, the breach or termination of any Subsidiary Agreement shall not affect the effectiveness of the other Subsidiary Agreements concluded under this Framework Agreement, and will not lead to the termination of this Framework Agreement. However, the termination of the License and Distribution Agreement for whatever reason shall lead to the termination of this Framework Agreement and may lead to the termination of the other Subsidiary Agreements as provided therein.

 

d)

Each Party agrees that a Change of Control does not lead to the termination of this Framework Agreement.

 

e)

Termination of this Framework Agreement shall not affect rights or obligations of the Parties under this Framework Agreement or other agreements between the Parties that have accrued prior to the date of termination. Liability for breach under this Framework Agreement shall not independently be a breach under other agreements between the Parties regarding the event triggering such liabilities unless so provided in each relevant Subsidiary Agreement.

 

f)

Termination is not the sole remedy under this Framework Agreement and, whether or not termination is effected and notwithstanding anything contained in this Framework Agreement to the contrary, all other remedies shall remain available except as otherwise agreed upon and set forth herein.

 

 

7.	Confidentiality

 

During the term of performance of this Framework Agreement, and for a period of sixty (60) months thereafter, or unless and until the information properly comes into the public domain, each Party shall maintain the secrecy and confidentiality of any proprietary or secret information (the "Confidential Information") related to the other Party, and shall not disclose to any Third Party or person any Confidential Information disclosed to it by the other Party. Information contained in or relating to this Framework Agreement is considered as Confidential Information. Each Party shall promptly notify the other Party if it becomes aware of any unauthorized disclosure of Confidential Information. Confidential Information, however, shall not include information which is now or hereafter becomes part of the public domain through authorized publication, information which the receiving Party can demonstrate was in its lawful possession at the time of receipt, and information which hereafter comes into the possession of the receiving Party and was or is not acquired by the receiving Party directly or indirectly from the providing Party or sources under an obligation of secrecy to such providing Party. Each Party shall cause its affiliates, directors, managers, employees, and representatives to abide by the aforesaid confidentiality obligations and shall bear joint and several liabilities for the breach of such confidentiality obligations by its affiliates, directors, managers, employees, and representatives. Each Party shall be free to make disclosures of Confidential Information that are required by Applicable Law (such as in response to an order of a Governmental Authority, and including pursuant to the rules of any exchange on which the securities of the disclosing Party, or such Party’s Affiliates, are listed, in which case the disclosing Party will provide the other Parties with the opportunity to review and comment in advance of such disclosure).

 

8.	Governing Law

 

This Framework Agreement and all disputes arising out of or related to this Framework Agreement or any breach hereof shall be governed by and construed under the Laws of Hong Kong without giving effect to any choice of law principles that would require the application of the Laws of a different state.

 

 

9.	Dispute Resolution

 

a)

The Parties recognize that disputes as to certain matters may from time to time arise that relate to either Party’s rights or obligations hereunder. It is the objective of the Parties to establish procedures to facilitate the resolution of disputes arising under this Framework Agreement in an expedient manner by mutual cooperation. To accomplish this objective, the Parties agree that, if a dispute arises under this Framework Agreement, including any alleged breach of this Framework Agreement or any issue relating to the due execution, interpretation, validity, performance or application of this Framework Agreement (“Dispute”), and the Parties are unable to resolve such Dispute within thirty (30) days after such Dispute is first identified by either Party in writing to the other, the Parties shall refer such Dispute the Executive Officers for attempted resolution by good faith negotiations within thirty (30) days after such notice is received. If the negotiations by the Executive Officers fail to achieve a mutually acceptable resolution, the Dispute shall be submitted to the Singapore International Arbitration Center (“SIAC”) for arbitration in accordance with its arbitration rules then in force at the time of application. The place of arbitration shall be Singapore. The number of arbitrators shall be three (3).

 

 

Promptly following receipt of the Demand, the Parties shall each appoint one (1) arbitrator within 30 days of receipt of the Demand. The third arbitrator, who shall act as the presiding arbitrator, shall be appointed by the above two arbitrators within 15 days of when they are appointed. If such third arbitrator or any of the above two arbitrators fails to be appointed with the above deadline, the said arbitrator shall be appointed by the chairman of SIAC. The arbitrators shall have experience with respect to the matter(s) to be arbitrated. The arbitrators shall apply the governing law set forth in Article 8. The Parties shall instruct the arbitrators to: (i) conclude the arbitration as soon as practicable (and in any event within six (6) months after selection of the arbitrators), and (ii) deliver a written, reasoned opinion stating the arbitrators’ decision within thirty (30) days after the arbitration hearing is concluded.

 

b)

Each Party shall pay its own attorney’s fees incurred in connection with such arbitration; provided however, if the arbitrators specifically determine that one Party prevailed clearly and substantially over the other Party, then the arbitrators may require the non-prevailing Party to pay the prevailing Party’s reasonable attorney’s fees and expert witness costs and arbitration costs.

 

c)

Either Party may apply to the arbitrators for, or may seek from any court having jurisdiction, interim injunctive or provisional relief as necessary to protect the rights or property of such Party until the arbitration award is rendered or the controversy is otherwise resolved. The arbitrators may grant legal, equitable and monetary relief consistent with the terms of this Framework Agreement. Judgment upon the award rendered by the arbitrators shall be binding, final and non-appealable (absent manifest error) and may be entered and enforced in any court having jurisdiction thereof.

 

d)

Notwithstanding anything to the contrary in this Article 8, either Party may apply to any court having jurisdiction for interim injunctive relief (including a temporary restraining order or preliminary injunction) to protect a Party’s interests or preserve the status quo during the pendency of a dispute between the Parties.

 

 

In Witness Whereof, the Parties have executed this Framework Agreement by their duly authorized officers as of the Effective Date.

 

 

 

Avinger

 

Signature: /s/ Jeffrey M. Soinski

Name: Jeffrey M. Soinski

Title: Chief Executive Officer

 

 

 

Zylox-Tonbridge Medical Technology Co., Ltd.

 

Signature: /s/ Jonathon Zhong Zhao

Name: Jonathon Zhong Zhao

Title: Chairman

 

 

Annex 1 Subsidiary Agreements

 

Exhibit 10.2

  

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is made as of March 4, 2024, by and between Zylox Tonbridge Medical Limited, a company established under the laws of Hong Kong (“Zylox” or the “Purchaser”), and Avinger, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, on or about the date of this Agreement, and effective as of the Initial Closing Date, the Company and Zylox are entering into a License and Distribution Agreement (the “License Agreement”), pursuant to which, among other things, Zylox will have the exclusive license and right to manufacture, register and sell certain of the Company’s products in the greater China region; and

 

WHEREAS, in connection with the License Agreement, the Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company to raise additional capital of up to $15,000,000, by means of the issuance of: (i) at the Initial Closing (as defined below), a total number of shares of common stock of the Company, par value $0.001 per share (the “Common Stock”), and shares of Series F convertible preferred stock of the Company, par value $0.001 per share (the “Series F Preferred Stock”), for the total consideration of $7,500,000; and (ii) subject to and contingent upon the achievement of the Milestones, at the Milestone Closing (as defined below), a number of shares of Series G convertible preferred stock of the Company, par value $0.001 per share (the “Series G Preferred Stock”), for the total consideration of $7,500,000, all on the terms and conditions more fully set forth in this Agreement.

 

NOW THEREFORE, in consideration of the foregoing premises and the respective representations and warranties, covenants and agreements contained herein, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.     Definitions.

 

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Business Day” means any day, excluding Saturdays and Sundays, on which banks in the PRC, Hong Kong and the State of New York in the United States are generally open for business.

 

“CRG” means CRG Partners III L.P. and its affiliated funds.

 

“CRG Term Loan Agreement” means the Term Loan Agreement dated September 22, 2015, as amended, by and among the Company, certain of its subsidiaries from time to time party thereto as guarantors and CRG and certain of its affiliated funds, as lenders, to modify certain terms, covenants and conditions applicable thereto.

 

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

 

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith to the Purchaser on or prior to the date of this Agreement.

 

 

“Environmental Laws” means any national, state, provincial or local law, statute, rule or regulation or the common law relating to the environment or occupational health and safety, including without limitation any statute, regulation, administrative decision or order pertaining to (i) treatment, storage, disposal, generation and transportation of industrial, toxic or hazardous materials or substances or solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater and soil contamination; (iv) the release or threatened release into the environment of industrial, toxic or hazardous materials or substances, or solid or hazardous waste, including without limitation emissions, discharges, injections, spills, escapes or dumping of pollutants, contaminants or chemicals; (v) the protection of wild life, marine life and wetlands, including without limitation all endangered and threatened species; (vi) storage tanks, vessels, containers, abandoned or discarded barrels, and other closed receptacles; (vii) health and safety of employees and other Persons; and (viii) manufacturing, processing, using, distributing, treating, storing, disposing, transporting or handling of materials regulated under any law as pollutants, contaminants, toxic or hazardous materials or substances or oil or petroleum products or solid or hazardous waste. As used above, the terms “release” and “environment” shall have the meaning set forth in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

 

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

 

“FDA” means the United States Food and Drug Administration, or any successor organization.

 

“Fundamental Representations” means the representations and warranties set forth in Sections 4(a), 4(b), 4(c)(i), 4(c)(ii), 4(d), 4(h), 4(i), 4(x) (only the first sentence thereof), 4(cc) and 4(dd).

 

“Governmental Authority” means any court, tribunal, agency, authority, department, regulatory body, board, commission or other instrumentality of any government or country or of any national, federal, state, provincial, regional, county, city or other political subdivision of or pertaining to any such government or country or any supranational organization of which any such country is a member and any self-regulatory organization, including any stock exchange.

 

“Hong Kong” means the Hong Kong Special Administrative Region.

 

“Intellectual Property” means all of the following and all rights that are associated with any of the following, whether registered or unregistered: (i) trademarks, service marks, trade names, brand names, logos, trade dress, design rights and other similar designations of source, sponsorship, association or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications and renewals for, any of the foregoing; (ii) internet domain names; (iii) works of authorship, expressions, designs and design registrations, whether or not copyrightable, including copyrights, author, performer, moral and neighboring rights, and all registrations, applications for registration and renewals of such copyrights; (iv) inventions, discoveries, trade secrets, business and technical information and know-how, databases, data collections and other confidential and proprietary information and all rights therein; (v) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other Governmental Authority-issued indicia of invention ownership (including inventor’s certificates, petty patents and patent utility models); and (vi) software and firmware, including data files, source code, object code, application programming interfaces, architecture, files, records, schematics, computerized databases and other related specifications and documentation.

 

“Material Adverse Effect” means a material adverse effect on (i) the assets, properties, liabilities, business, conditions (financial or otherwise), operations, results of operations or prospects of the Company and its subsidiaries taken as a whole, (ii) the legality, validity or enforceability of any Transaction Document, or (iii) the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document.

 

 

“Milestones” means, collectively, the following two milestone events, the completion of which shall be a condition to the Milestone Closing (as defined below): (i) the successful registration and listing under 21 CFR part 807 with the FDA of Zylox and one of its designated Affiliates as a manufacturer of the Pantheris Series and a Zylox establishment for purposes thereof, as reflected in the FDA’s Establishment Registration & Device Listing database; and (ii) the achievement by the Company of an aggregate of $10 million in gross revenue within any four consecutive fiscal quarters after the Initial Closing Date, excluding any gross revenue achieved by the Company under the License Agreement, as reflected in the Company’s financial statements for such four consecutive quarters that have been prepared in accordance with the U.S. GAAP consistent with past practices, audited or reviewed by the Company’s independent registered public accounting firm.

 

“Nasdaq” means The Nasdaq Stock Market LLC.

 

“ODI Filings and Approvals” means all permits, approvals and filings from or to the Governmental Authority as required under the PRC laws with respect to the outbound direct investment by an entity incorporated in the PRC, including but not limited to the National Development and Reform Commission of the PRC or its competent local counterpart, the Ministry of Commerce of the PRC or its competent local counterpart, the State Administration of Foreign Exchange of the PRC or its competent local counterpart and related bank for foreign exchange.

 

“Pantheris Series” means, collectively, all of the Pantheris A400 series products, Pantheris Large Vessel (LV) products and Pantheris Small Vessel (SV) products, the image atherectomy catheters developed by the Company as of the date of this Agreement.

 

“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or any other entity or organization.

 

“PRC” means the People’s Republic of China, excluding, solely for purposes of this Agreement, Hong Kong, the Macau Special Administrative Region and Taiwan.

 

“Principal Market” means the Nasdaq Capital Market (or such other market or exchange on which the Common Stock is then listed or traded).

 

“Registration Rights Agreement” means the Registration Rights Agreement, dated on or about the date of the Initial Closing, between the Company and the Purchaser, in the form attached hereto as Exhibit A.

 

“Representatives” means, with respect to any Person, its officers, directors, principals, partners, managers, members, employees, consultants, agents, financial advisors, investment bankers, attorneys, accountants, other advisors, Affiliates and other representatives.

 

“SEC” means the Securities and Exchange Commission.

 

“SEC Reports” means all reports, schedules, forms, statements and other documents required to be filed by the Company under the Exchange Act (and remaining publicly available) prior to the date of this Agreement, including pursuant to Section 15(d) thereof (or that it would have been required to file by Section 15(d) of the Exchange Act if its duty to file thereunder had not been automatically suspended).

 

 

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

 

“Series A-1 Certificate of Designation” means the Certificate of Designation of Preferences, Rights and Limitations of Series A-1 Convertible Preferred Stock of the Company, dated on or about the date of the Initial Closing, which Series A-1 Certificate of Designation shall be substantially in the form attached as Exhibit B hereto.

 

“Series F Certificate of Designation” means the Certificate of Designation of Preferences, Rights and Limitations of Series F Convertible Preferred Stock of the Company, dated on or about the date of the Initial Closing, which Series F Certificate of Designation shall be substantially in the form attached as Exhibit C hereto.

 

“Series G Certificate of Designation” means the Certificate of Designation of Preferences, Rights and Limitations of Series G Convertible Preferred Stock of the Company, which Series G Certificate of Designation shall be substantially in the form attached as Exhibit D hereto.

 

“Tax” means any and all United States federal, state, local or non-United States taxes, fees, levies, duties, tariffs, imposts, and other similar charges (together with any and all interest, penalties and additions to tax) imposed by any Governmental Authority, including taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added or gains taxes; license, registration and documentation fees; and customs duties, tariffs and similar charges, together with any interest or penalty, in addition to tax or additional amount imposed by any Governmental Authority.

 

“Term Loan Agreement Amendment” means the amendment to the CRG Term Loan Agreement, dated on or about the date of the Initial Closing, between the Company and CRG, in the form of Exhibit E attached hereto.

 

“Trading Day” means days on which the shares of Common Stock trade on the Company’s Principal Market.

 

“Transaction Documents” means, collectively, this Agreement, the License Agreement, the Registration Rights Agreement, the Series A-1 Certificate of Designation, the Series F Certificate of Designation, the Series G Certificate of Designation and the Term Loan Agreement Amendment.

 

“U.S. GAAP” means generally accepted accounting principles in the United States.

 

2.    Sale and Purchase. Subject to the terms and conditions of this Agreement, the Company and the Purchaser hereby agree as follows:

 

(a)    Sale and Purchase of Initial Shares; Initial Closing. Subject to the terms and conditions of this Agreement, the Company hereby agrees to sell and issue to the Purchaser, and the Purchaser hereby agrees to purchase from the Company, at the Initial Closing (as defined below), for the total consideration of $7,500,000, (i) 75,327 shares of Common Stock (the “Initial Common Shares”) at a price per Initial Common Share equal to $3.664 (the “Initial Common Purchase Price”) and (ii) 7,224 shares of Series F Preferred Stock (the “Series F Preferred Shares” and collectively with the Initial Common Shares, the “Initial Shares”) at a price per Series F Preferred Share equal to $1,000 (the “Series F Preferred Purchase Price”). The conversion price of the Series F Preferred Shares will be equal to the Initial Common Purchase Price. The Series F Preferred Shares shall have the rights, preferences and privileges set forth in the Series F Certificate of Designation and shall not be convertible into shares of Common Stock in excess of the Beneficial Ownership Limit unless the Stockholder Approval contemplated by Section 3(c) shall have been obtained.

 

 

(b)    Sale and Purchase of Milestone Shares; Milestone Closing. Subject to the terms and conditions of this Agreement, contingent upon the achievement of the Milestones as mutually agreed upon by the Company and the Purchaser, the Company hereby agrees to sell and issue to the Purchaser, and the Purchaser hereby agrees to purchase from the Company, at the Milestone Closing (as defined below), for the total consideration of $7,500,000, a number of shares of Series G Preferred Stock (the “Series G Preferred Shares” or “Milestone Shares” and collectively with the Initial Shares, the “Shares”) at a price per Milestone Share of $1,000. The conversion price of the Series G Preferred Shares will be equal to the lowest of (i) the Initial Common Purchase Price, (ii) the closing price of the Common Stock on the date immediately preceding the Milestone Closing, and (iii) the average of the closing price for the last five (5) Trading Days preceding the Milestone Closing, and as shall be set forth in the Series G Certificate of Designation, provided that in no event will such conversion price be less than $0.20. The Series G Preferred Shares shall have the rights, preferences and privileges set forth in the Series G Certificate of Designation. Notwithstanding anything to the contrary contained herein or otherwise, none of the Milestone Shares shall be issuable unless the Stockholder Approval contemplated by Section 3(c) shall have been obtained prior to the Milestone Closing.

 

(c)    Ownership Limitation. Notwithstanding anything to the contrary herein, in no event will the shares of Common Stock held by the Purchaser and its Affiliates, whether issued and sold under this Agreement or as interests or dividends or upon conversion of Series F Preferred Stock or Series G Preferred Stock pursuant to the Series F Certificate of Designation or the Series G Certificate of Designation, represent more than 49.9% of the total shares of Common Stock then issued and outstanding and 49.9% of the voting power of the Company’s outstanding shares of capital stock entitled to vote generally in the election of directors.

 

3.    Closing; Delivery; Stockholder Approval.

 

(a)    Closing.

 

(i)    The closing of the purchase and sale of the Initial Shares (the “Initial Closing,” and the date thereof, the “Initial Closing Date”) shall occur on the fifth (5th) Business Day after all of the conditions applicable to the Initial Closing set forth in Sections 8 and 9 have been satisfied or, to the extent permitted by applicable law, waived by the party entitled to the benefit thereof (other than those conditions that by their nature are to be satisfied at the Initial Closing, but subject to the satisfaction or waiver of those conditions at such time) or such other time as the parties agree to.

 

(ii)    Subject to Section 2(b), the closing of the purchase and sale of the Milestone Shares (the “Milestone Closing,” and the date thereof, the “Milestone Closing Date”) shall occur on the fifth (5th) Business Day after all of the conditions applicable to the Milestone Closing set forth in Sections 8 and 9 have been satisfied or, to the extent permitted by applicable law, waived by the party entitled to the benefit thereof (other than those conditions that by their nature are to be satisfied at the Milestone Closing, but subject to the satisfaction or waiver of those conditions at such time) or such other time as the parties agree to. The Initial Closing and the Milestone Closing are each referred hereto as a “Closing” and the date of each Closing, a “Closing Date.”

 

(iii)    At each Closing, the purchase and sale of the Shares shall take place remotely via the exchange of documents and signatures therefor or at such other time or date as shall be agreed between the Company and the Purchaser.

 

 

(b)    Exchange; Delivery. At each Closing, the Company shall deliver to the Purchaser, in book entry form, the Shares being purchased by the Purchaser.

 

(c)    Stockholder Approval. The Company’s obligations to (i) accept conversion of the Series F Preferred Shares in excess of the Beneficial Ownership Limit and (ii) issue and sell the Milestone Shares in respect of the Milestone Closing, and (x) the Purchaser’s right and option to convert the Series F Preferred Shares in excess of the Beneficial Ownership Limit and (y) the Purchaser’s obligation to purchase any and all of the Milestone Shares in respect of the Milestone Closing, are each subject to receipt of the approval of the Company’s stockholders (“Stockholder Approval”) as is necessary under the rules and regulations of Nasdaq (including, without limitation, Nasdaq Rule 5635(d)) to permit the issuance of a number of shares of Common Stock to Purchaser in excess of 19.99% of the Company’s outstanding Common Stock as of the date of this Agreement (the “Beneficial Ownership Limit”).

 

4.    Representations and Warranties of the Company. Except as set forth in the SEC Reports, other than any risk factor disclosures in any such SEC Report contained in the “Risk Factors” section thereof or any forward-looking statements within the meaning of the Securities Act or the Exchange Act thereof (it being acknowledged that no such risk-factor disclosures or forward-looking statements in the SEC Reports shall be deemed to qualify or modify the Fundamental Representations), and the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby represents and warrants to the Purchaser, as of the date of this Agreement and each Closing Date, the following:

 

(a)    Organization and Qualification. The Company and each of its subsidiaries is a corporation or other business entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company and each of its subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing has not had and would not, individually or in the aggregate, reasonably be expected have a Material Adverse Effect.

 

(b)    Authorization, Enforcement, Compliance with Other Instruments.

 

(i)    The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and each of the other agreements and documents that are exhibits hereto or thereto or are contemplated hereby or thereby or necessary or desirable to effect the transactions contemplated hereby or thereby and to issue the Securities (as defined below), in accordance with the terms hereof and thereof;

 

(ii)    the execution and delivery by the Company of each of the Transaction Documents and the consummation by it of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Securities (as defined below), have been, or will be at the time of execution of such Transaction Document, duly authorized by the Company’s Board, and other than the Stockholder Approval (solely with respect to the conversion of Series F Preferred Shares in excess of the Beneficial Ownership Limit and the sale, issuance, and conversion of the Milestone Shares), no further consent or authorization is, or will be at the time of execution of such Transaction Document, required by the Company, its respective Board or its stockholders;

 

(iii)    each of the Transaction Documents will be duly executed and delivered by the Company; and

 

 

(iv)    the Transaction Documents when executed will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their 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 creditors’ rights and remedies.

 

(c)    Capitalization.

 

(i)    The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock and 5,000,000 shares of preferred stock. As of the date of this Agreement and immediately prior to the Initial Closing, (A) 1,511,107 shares of Common Stock, 60,876 shares of Series A preferred stock, par value $0.001 per share, no shares of Series A-1 preferred stock, par value $0.001 per share, 85 shares of Series B preferred stock, par value $0.001 per share, no shares of Series C preferred stock, par value $0.001 per share, no shares of Series D preferred stock, par value $0.001 per share, 1,920 shares of Series E preferred stock, par value $0.001 per share, and no shares of the Series F Preferred Stock or the Series G Preferred Stock, are issued and outstanding, (B) no shares of Common Stock are held in the treasury of the Company, (C) an aggregate of 68,109 shares of Common Stock are reserved for future issuance under the Company’s Amended and Restated 2015 Equity Incentive Plan (the “Company Plan”), (D) 115,807 shares of Common Stock are subject to outstanding options and restricted stock awards to acquire shares of Common Stock and (E) 456,096 shares of Common Stock are issuable upon the exercise of outstanding common stock purchase warrants. All of the outstanding shares of Common Stock and preferred stock, and of the stock of each of the Company’s subsidiaries, have been duly authorized, validly issued and are fully paid and nonassessable, free and clear of all liens. The shares of Common Stock issuable upon conversion of the Series F Preferred Shares and the Series G Preferred Shares (the “Underlying Shares” and together with the Shares, the “Securities”) have been duly authorized by all necessary corporate action, and when issued in accordance with the terms of the Series F Certificate of Designation and the Series G Certificate of Designation (subject the Stockholder Approval with respect to the conversion of the Series F Preferred Shares in excess of the Beneficial Ownership Limit and the issuance, sale, and conversion of the Milestone Shares), as applicable, will be validly issued and outstanding, fully paid and nonassessable, free and clear of all liens and the holders shall be entitled to all rights accorded to a holder of Common Stock. The Company will reserve from its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares.

 

(ii)    Except as described in Section 4(c)(i), as of the date of this Agreement, there are (A) no outstanding shares of capital stock of, or other equity or voting interests in, the Company, (B) no outstanding securities of the Company convertible into or exchangeable for shares of capital stock of, or other equity or voting interests in, the Company, (C) no outstanding options, warrants, rights or other commitments or agreements to acquire from the Company, or that obligate the Company to issue, any capital stock of, or other equity or voting interests in, or any securities convertible into or exchangeable for shares of capital stock of, or other equity or voting interests in, the Company other than obligations under the Company Plan in the ordinary course of business, (D) no obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock of, or other equity or voting interests in, the Company. There are no outstanding agreements of any kind which obligate the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the securities described in the immediately preceding sentence (other than pursuant to the cashless exercise or forfeiture of the stock options or restricted stock awards), or obligate the Company to grant, extend or enter into any such agreements relating to any such securities, including any agreements granting any preemptive rights, subscription rights, anti-dilutive rights, rights of first refusal or similar. None of the Company or any of its subsidiaries is a party to any stockholders’ agreement, voting trust agreement, registration rights agreement or other similar agreement or understanding relating to any such securities or any other agreement relating to the disposition, voting or dividends with respect thereto.

 

 

(iii)    After giving effect to the applicable Closing:

 

(A)    no shares of capital stock of the Company or any of its subsidiaries shall be subject to preemptive rights, subscription right or any other similar rights or any liens or encumbrances suffered or permitted by the Company;

 

(B)    all of the outstanding shares of capital stock of the Company have the rights, preferences, privileges and restrictions set forth in the Company’s Amended and Restated Certificate of Incorporation, as amended and including all certificates of designation and amendments thereto, as in effect as of the date of this Agreement (the “Certificate of Incorporation”), and the Company’s Amended and Restated Bylaws, as amended, as in effect as of the date of this Agreement (the “Bylaws”);

 

(C)    the Series F Preferred Shares and, as of the Milestone Closing, the Series G Preferred Shares, if any, shall additionally have the rights, preferences, privileges and restrictions set forth in the Series F Certificate of Designation and the Series G Certificate of Designation, respectively;

 

(D)    except as set forth in the SEC Reports, there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of their securities under the Securities Act;

 

(E)    except as set forth in the SEC Reports, there are no outstanding comment letters from the SEC or any other regulatory agency;

 

(F)    except as set forth in the SEC Reports, there are no securities or instruments containing anti-dilution or similar provisions, including the right to adjust the exercise, exchange or reset price under such securities, that will be triggered by the issuance of the Securities; and

 

(G)    no co-sale right, right of first refusal or other similar right will exist with respect to the Securities or the issuance and sale thereof.

 

(iv)    Except as described in the SEC Reports, as of the date of this Agreement, the Company is not party to a stockholder rights agreement, “poison pill” or similar anti-takeover agreement or plan.

 

(d)    Issuance of Shares. The Shares are duly authorized and, upon issuance in accordance with the terms hereof, shall be duly issued, fully paid and nonassessable, and are free and clear from all Taxes and Encumbrances. Any Underlying Shares will have been duly authorized and reserved for issuance and, upon conversion of the Shares into shares of Common Stock, will be validly issued, fully paid and nonassessable, and are free and clear from all Taxes and Encumbrances.

 

 

(e)    No Conflicts. The execution, delivery and performance of each of the Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Certificate of Incorporation or the Bylaws (or equivalent constitutive document) of the Company or any of its subsidiaries, (ii) violate or conflict with, or result in a breach of any provision of, 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 the Company or any subsidiary is a party, except for those which have not had and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, or (iii) result in a material violation of any law, rule, regulation, order, judgment or decree (including U.S. federal and state securities laws and regulations) applicable to the Company or any subsidiary or by which any property or asset of the Company or any subsidiary is bound or affected. Neither the Company nor any of its subsidiaries is in violation of any term of or in default under its Certificate of Incorporation, Bylaws or any other constitutive documents. Except for those violations or defaults which have not had and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, neither the Company nor any subsidiary is in violation of any term of or in default under any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or any subsidiary. The business of the Company and its subsidiaries is not being conducted, and shall not be conducted in violation of any law, ordinance or regulation of any governmental entity, except for any violation which has not had and would not, individually or in the aggregate, reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the Securities Act and any applicable state securities laws and the rules of the Principal Market, neither the Company nor any of its subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court or Governmental Authority in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement or the other Transaction Documents in accordance with the terms hereof or thereof. Neither the execution and delivery by the Company of the Transaction Documents, nor the consummation by the Company of the transactions contemplated hereby or thereby, will require any notice, consent or waiver under any contract or instrument to which the Company or any subsidiary is a party or by which the Company or any subsidiary is bound or to which any of their assets is subject. The Company is unaware of any facts or circumstance, which might give rise to any of the foregoing.

 

(f)    Absence of Litigation. Except as set forth in Schedule 4(f), there is no material action, litigation, suit, arbitration, claim, complaint (including qui tam complaint), demand, cause of action, inquiry, notice of violation, hearing, proceeding (including any partial proceeding such as a deposition), enforcement or investigation (each, an “Action”) now pending or, to the knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries. For the purpose of this Agreement, the knowledge of the Company means the knowledge of the officers of the Company (both actual or knowledge that they would have had upon reasonable investigation).

 

(g)    Acknowledgment Regarding Purchaser’s Purchase of the Shares. The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby.

 

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

 

(i)    No Integrated Offering. Neither the Company, nor any of its Affiliates, nor to the knowledge of the Company, any Person acting on its or 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 Shares under the Securities Act or cause this offering of the Shares to be integrated with prior offerings by the Company for purposes of the Securities Act.

 

(j)    Employee Relations. Neither Company nor any subsidiary is involved in any labor dispute nor, to the knowledge of the Company, is any such dispute threatened. Neither Company nor any subsidiary is party to any collective bargaining agreement. The Company’s and/or its subsidiaries’ employees are not members of any union, and the Company believes that its and its subsidiaries’ relationship with their respective employees is good.

 

 

(k)    Intellectual Property Rights. The Company and each of its subsidiaries owns, possesses, or has rights to, all Intellectual Property necessary for the conduct of the Company’s and its subsidiaries’ business as now conducted, free and clear of any Encumbrances, other than security interests granted pursuant to the CRG Term Loan Agreement. Furthermore, (A) to the Company’s knowledge, there is no infringement, misappropriation or violation by third parties of any such Intellectual Property, except as such infringement, misappropriation or violation has not had and would not, individually or in the aggregate, result in a Material Adverse Effect; (B) there is no pending or, to the Company’s knowledge, threatened, action, suit, proceeding or claim by others challenging the Company’s or any of its subsidiaries’ rights in or to any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (C) the Intellectual Property owned by the Company and its subsidiaries, and to the Company’s knowledge, the Intellectual Property licensed to the Company and its subsidiaries, has not been adjudged invalid or unenforceable, in whole or in part, and there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity, enforceability or scope of any such Intellectual Property, and, to the Company’s knowledge, there are no facts which would form a reasonable basis for any such claim; (D) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company or any of its subsidiaries infringes, misappropriates or otherwise violates any Intellectual Property or other proprietary rights of others, neither the Company nor any of its subsidiaries has received any notice of such claim and, to the Company’s knowledge, there are no other facts which would form a reasonable basis for any such claim, except for any action, suit, proceeding or claim as have not had and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and (E) to the Company’s knowledge, no employee of the Company or any of its subsidiaries is in or has ever been in violation of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Company or any of its subsidiaries or actions undertaken by the employee while employed with the Company or any of its subsidiaries, except as such violation has not had and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the Company’s knowledge, (x) there are no facts that are reasonably likely to provide a basis for a finding that the Company or any of its subsidiaries does not have clear title or valid license or sublicense rights to the patents or patent applications owned or licensed to the Company or other proprietary information rights as being owned by, or licensed or sublicensed to, as the case may be, the Company or any of its subsidiaries, (y) no valid issued U.S. patent is or would be infringed by the activities of the Company or any of its subsidiaries relating to products currently or proposed to be manufactured, used or sold by the Company or any of its subsidiaries and (z) there are no facts with respect to any issued patent owned or licensed to the Company that would cause any claim of any such patent not to be valid and enforceable in accordance with applicable regulations. The Company has entered into binding, written agreements with every current and former employee, and with every current and former independent contractor, in each case, who contributed to the creation or development of any of the Company’s Intellectual Property, whereby such employees and independent contractors (i) assign to the Company any ownership interest and right they may have in such Intellectual Property; and (ii) acknowledge the Company’s exclusive ownership of all such Intellectual Property.

 

(l)    Environmental Laws.

 

(i)    The Company and each subsidiary has complied with all applicable Environmental Laws, except for violations of Environmental Laws that, individually or in the aggregate, have not had and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. There is no pending or, to the knowledge of the Company, threatened civil or criminal litigation, notice of violation, formal administrative proceeding, or investigation, inquiry or information request, relating to any Environmental Law involving the Company or any subsidiary, except for litigation, notices of violations, formal administrative proceedings or investigations, inquiries or information requests that, individually or in the aggregate, have not had and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(ii)    To the knowledge of the Company, there is no material environmental liability with respect to any solid or hazardous waste transporter or treatment, storage or disposal facility that has been used by the Company or any subsidiary.

 

 

(iii)    The Company and its subsidiaries (i) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses except to the extent that the failure to have such permits, licenses or other approvals have not had and would not, individually or in the aggregate, have a Material Adverse Effect, and (ii) are in compliance, in all material respects, with all terms and conditions of any such permit, license or approval.

 

(m)    Authorizations; Regulatory Compliance. The Company and each of its subsidiaries holds, and is operating in compliance with, all authorizations, licenses, permits, approvals, clearances, registrations, exemptions, consents, certificates and orders of any Governmental Authority and supplements and amendments thereto (collectively, “Authorizations”) required for the conduct of its business and all such Authorizations are valid and in full force and effect and neither the Company nor any of its subsidiaries is in material violation of any terms of any such Authorizations, except, in each case, as have not had and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received notice of any revocation or modification of any such Authorization, or has reason to believe that any such Authorization will not be renewed in the ordinary course, except to the extent that any such revocation, modification, or non-renewal has not had or would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and each of its subsidiaries is in compliance with all applicable federal, state, local and foreign laws, regulations, orders and decrees, except as have not had and would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its subsidiaries has received any unresolved FDA Form 483, notice of adverse filing, warning letter, untitled letter or other correspondence or notice from the FDA, or any other federal, state, local, or foreign governmental or regulatory authority, alleging or asserting noncompliance with the Federal Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.) or comparable applicable law. The Company and each of its subsidiaries, and to the Company’s knowledge, each of their respective directors, officers, employees and agents, is and has been in material compliance with applicable health care laws, including, without limitation the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b); the Civil False Claims Act, 31 U.S.C. §§ 3729 et seq.; the Federal Criminal False Claims Act, 18 U.S.C. § 287; the False Statements Relating to Health Care Matters law, 18 U.S.C. § 1035; the All Payor Fraud Statute, 18 U.S.C. § 1347; 38 U.S.C. § 7332 et seq.; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; the Federal Health Care Program Exclusion Laws, 42 U.S.C. § 1320a-7; the federal Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h); the Public Health Service Act (42 U.S.C. § 201 et seq.); the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010; federal and state self-referral laws (including the federal Stark Law, 42 U.S.C. §1395nn); the anti-fraud provisions of the Health Insurance Portability and Accountability Act of 1996 as amended by the Health Information Technology for Economic and Clinical Health Act of 2009; and any regulations promulgated pursuant to each of the foregoing statutes, as well as all comparable state laws and regulations (collectively, “Health Care Laws”). Neither the Company nor any of its subsidiaries has received written or oral notice of any ongoing Action from any Governmental Authority or third party alleging that any product operation or activity is in material violation of any Health Care Laws or Authorizations and has no knowledge that any such Governmental Authority or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding. Neither the Company nor any of its subsidiaries has received notice that any Governmental Authority has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations and has no knowledge that any such Governmental Authority is considering such action. The Company and each of its subsidiaries has filed, obtained, maintained or submitted all reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments thereto as required by any Health Care Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete, correct and not misleading on the date filed (or were corrected or supplemented by a subsequent submission). Neither the Company nor any of its subsidiaries has, either voluntarily or involuntarily, initiated, conducted, or issued or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, post sale warning, “dear doctor” letter, or other notice or action relating to the alleged lack of safety or efficacy of any product or any alleged product defect or violation and, to the Company’s knowledge, no third party has initiated or conducted any such notice or action. Neither the Company nor any of its subsidiaries is a party to any corporate integrity agreement, deferred prosecution agreement, monitoring agreement, consent decree, settlement order, or similar agreements, or has any reporting obligations pursuant to any such agreement, plan or correction or other remedial measure entered into with any Governmental Authority. Neither the Company, its subsidiaries nor their officers, directors, employees, agents or contractors has been or is currently suspended, debarred or excluded from participation in the Medicare and Medicaid programs or any other state or Federal health care program (as that term is defined at 42 U.S.C. § 1320a-7b(f)) or in human clinical research.

 

 

(n)    Title. Neither the Company nor any of its subsidiaries owns any real property. Other than security interests granted pursuant to the CRG Term Loan Agreement, each of the Company and its subsidiaries has good and marketable title to all of its personal property and assets, free and clear of any restriction, mortgage, deed of trust, pledge, lien, security interest or other charge, claim or encumbrance (collective, the “Encumbrances”). With respect to properties and assets it leases, each of the Company and its subsidiaries is in compliance with such leases and holds a valid leasehold interest free of any Encumbrance.

 

(o)    No Material Restrictions, Breaches, etc. Neither the Company nor any subsidiary is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has had or would reasonably be expected to have a Material Adverse Effect. Neither the Company nor any subsidiary is in breach of any contract or agreement which breach, in the judgment of the Company’s officers, has had, or is reasonably expected to have a Material Adverse Effect.

 

(p)    Tax Status. The Company and each subsidiary has made and filed (taking into account any valid extensions) all federal and state income and all other Tax returns, reports and declarations required by any jurisdiction to which it is subject and (unless and only to the extent that the Company or such subsidiary has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported Taxes) 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 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. To the knowledge of the Company, there are no unpaid Taxes in any material amount claimed to be due from the Company or any subsidiary by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

 

(q)    Certain Transactions. Except for arm’s length transactions pursuant to which the Company or any subsidiary makes payments in the ordinary course of business upon terms no less favorable than it could obtain from third parties, none of the officers, directors, or employees of the Company or any subsidiary is a party to any transaction with the Company or any subsidiary (other than for services as employees, officers and 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 officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

 

(r)    Rights of First Refusal. The Company is not obligated to offer the securities offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former stockholders of the Company, underwriters, brokers, agents or other third parties.

 

 

(s)    Insurance. The Company has insurance policies of the type and in amounts customarily carried by organizations conducting businesses or owning assets similar to those of the Company and its subsidiaries. There is no material claim pending under any such policy as to which coverage has been questioned, denied or disputed by the underwriter of such policy.

 

(t)    SEC Reports. The Company has filed with the SEC, on a timely basis, all SEC Reports for the two (2) years preceding the date of this Agreement. As of their respective SEC filing dates, the SEC Reports complied with the requirements of the Securities Act, the Exchange Act or the Sarbanes-Oxley Act of 2002 (and the regulations promulgated thereunder), as the case may be, applicable to such SEC Reports.

 

(u)    Financial Statements; Undisclosed Liabilities. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with U.S. GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by U.S. GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries taken as a whole as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. The pro forma financial information and the related notes, if any, included in the SEC Reports and prepared in accordance with the applicable provisions of Regulation S-X have been properly compiled and prepared in accordance with the applicable requirements of the Securities Act and the regulations promulgated thereunder and fairly present in all material respects the information shown therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. Neither the Company nor any of its subsidiaries has any liabilities of any nature (whether accrued, absolute, contingent or otherwise) that would be required under the U.S. GAAP to be reflected on a consolidated balance sheet of the Company (including the notes thereto), except for liabilities (i) reflected or reserved against in the balance sheet (or the notes thereto) of the Company as of September 30, 2023 included in the SEC Reports (the “Balance Sheet Date”), (ii) incurred after the Balance Sheet Date in the ordinary course of business, or (iii) as expressly contemplated by this Agreement or otherwise incurred in connection with the transactions contemplated by this Agreement.

 

(v)    Material Changes. Since the Balance Sheet Date, (i) there have been no events, occurrences or developments that have had or would reasonably be expected to have a Material Adverse Effect with respect to the Company, (ii) the Company has not incurred any material liabilities (contingent or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the financial statements of the Company pursuant to U.S. GAAP or to be disclosed in filings made with the SEC, (iii) the Company has not materially altered its method of accounting or the manner in which it keeps its accounting books and records, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock (other than in connection with repurchases of unvested stock issued to employees of the Company), (v) the Company has not issued any equity securities to any officer, director or Affiliate, except Common Stock issued in the ordinary course pursuant to existing Company equity incentive plans or stock purchase plans or executive and director corporate arrangements disclosed in the SEC Reports, (vi) there has not been any change or amendment to, or any waiver of any material right under, any material contract under which the Company, or any of its assets are bound or subject, and (vii) except for the issuance of the Securities contemplated by this Agreement, no event, liability or development has occurred or exists with respect to the Company, its businesses, properties, operations or financial condition, as applicable, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made that has not been publicly disclosed in the SEC Reports.

 

 

(w)    Transactions With Affiliates and Employees. None of the officers or directors of the Company and, to the Company’s knowledge, none of the employees of the Company, is a party to any transaction with the Company or to a transaction contemplated by the Company (other than for services as employees, officers and directors) that would be required to be disclosed by the Company pursuant to Item 404 of Regulation S-K promulgated under the Securities Act, except as set forth in the SEC Reports.

 

(x)    Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to the knowledge of the Company would reasonably be expected to, terminate the registration of the Common Stock under the Exchange Act or delisting of the Common Stock from the Principal Market, nor, except as set forth in Schedule 4(x), has the Company received any notification that the SEC or the Principal Market is contemplating terminating such registration. Except as set forth in Schedule 4(x), the Company has not, in the previous twelve (12) months, received (i) written notice from the Principal Market that the Company is not in compliance with the listing or maintenance requirements of Principal Market that would result in immediate delisting or (ii) any notification, Staff Delisting Determination, or Public Reprimand Letter (as such terms are defined in applicable listing rules of the Principal Market) that requires a public announcement by the Company of any noncompliance or deficiency with respect to such listing or maintenance requirements. Except as set forth in Schedule 4(x), the Company is in compliance with all listing and maintenance requirements of the Principal Market on the date of this Agreement.

 

(y)    Sarbanes-Oxley. The Company is in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it.

 

(z)    Disclosure Controls. The Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Exchange Act) and such controls and procedures are effective in ensuring that material information relating to the Company, including its subsidiaries, is made known to the principal executive officer and the principal financial officer.

 

(aa)    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 SEC Reports and is not so disclosed or that otherwise have had or would reasonably be expected to have a Material Adverse Effect.

 

(bb)    Foreign Corrupt Practices. Neither the Company and its subsidiaries, nor to the Company’s knowledge, any agent or other Person acting on behalf of the Company and its subsidiaries, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any Person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

(cc)    Brokers’ Fees. Except as set forth in Schedule 4(cc), neither of the Company nor any of its subsidiaries has any liability or obligation to pay any fees, expenses or commissions to any broker, investment banker, financial advisor, finder or agent with respect to the transactions contemplated by this Agreement.

 

(dd)    CFIUS. The Company (i) does not produce, design, test, manufacture, fabricate, or develop any critical technologies as that term is defined in 31 C.F.R. § 800.215; (ii) does not perform the functions as set forth in column 2 of appendix A to 31 C.F.R. Part 800 with respect to covered investment critical infrastructure, as that term is defined in 31 C.F.R. § 800.212; and (iii) does not maintain or collect sensitive personal data, and has no demonstrated business objective to do so in the future, as described in 31 C.F.R. § 800.241, and, therefore, the Company is not a “TID U.S. business” as defined in 31 C.F.R. § 800.248.  The Company has no current intention of engaging in such activities in the future.

 

 

(ee)    OFAC. None of the Company or, to the Company’s knowledge, any director, officer, agent, employee, or Affiliate of the Company is a Person currently the subject or target of any comprehensive sanctions administered or enforced by the United States Governmental Authorities, including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control (collectively, “Sanctions”), nor is the Company located, organized, or resident in a country or territory that is the subject of comprehensive Sanctions; and the Company will not directly or indirectly use the proceeds of the sale of the Shares, or lend, contribute, or otherwise make available such proceeds to any subsidiaries, joint venture partners, or other Person to fund or facilitate any activities of or business with any Person, or in any country or territory, that, at the time of such funding or facilitating, is the subject of Sanctions in any other manner that is reasonably expected to result in a violation or in any other manner that is reasonably expected to result in a violation by any Person (including any Person known to the Company to be participating in the transaction, whether as underwriter, advisor, investor ) of Sanctions. For the past five years, the Company has not knowingly engaged in and is not now knowingly engaged in any dealings or transactions with any Person that at the time of the dealing or transaction is or was the subject or the target of comprehensive Sanctions or with country or territory that is the subject of comprehensive Sanction.

 

(ff)    Cybersecurity; Compliance with Data Privacy Laws. To the Company’s knowledge, the Company’s information technology assets (including networks, hardware, software, and databases (including the data processed thereby) (collectively, “IT Systems”) are adequate for and operate in all material respects as required in connection with the operation of the business of the Company as currently conducted and are free and clear of all material errors, defects, malware and other corruptants. The Company has implemented and maintained commercially reasonable information security controls to protect the confidentiality, integrity, and availability of its IT Systems and data (including data relating to identified or reasonably identifiable persons (“Personal Data”) and material confidential information). To the Company’s knowledge, there have been no material breaches, violations, outages or unauthorized uses of or access to such IT Systems and data, including Personal Data. The Company is in material compliance with all applicable laws, binding judgments and orders of any court or arbitrator or governmental or regulatory authority, mandatory industry standards and contractual obligations relating to data privacy and security (collectively, “Privacy Obligations”). The Company has taken appropriate steps to ensure material compliance with the Privacy Obligations, and such steps have included the maintenance of policies and procedures relating to data privacy and security and the processing of Personal Data (the “Privacy Policies”). The Company has made disclosures to Persons, including, as applicable, employees and users, required by Privacy Obligations, and no such disclosures have been materially inaccurate or in violation of any Privacy Obligations. The Company (i) has not received notice of or complaint regarding or indicating non-compliance with, or any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy Obligations, and there has not been any event or condition that would reasonably be expected to result in any such notice; (ii) is not currently conducting or paying for, in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Obligations; and (iii) is not party to any governmental order, decree, or agreement that imposes any obligation or liability under any Privacy Obligations. To the Company’s knowledge, it has taken or is in the process of taking all necessary actions to prepare to comply with all other applicable laws with respect to Personal Data that have been announced as of the date hereof as becoming effective within 12 months after the date hereof, and for which any noncompliance would be reasonably likely to create a material liability, as soon they take effect.

 

(gg)    Disclosure Materials. The SEC Reports do 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.

 

 

(hh)    Investment Company. The Company is not required to be registered as, and is not an Affiliate of, and immediately following the Closing will not be required to register as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

(ii)    U.S. Real Property Holding Corporation. The Company is not now and has never been a “United States real property holding corporation” as defined in the Code, and any applicable regulations promulgated thereunder.

 

5.    Representations, Warranties and Agreements of the Purchaser. The Purchaser hereby represents and warrants to the Company, as of the date of this Agreement and each Closing Date, the following:

 

(a)    Organization; Authority. The Purchaser is an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement and performance by the Purchaser of the transactions contemplated hereby have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of the Purchaser. This Agreement has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b)    Own Account. The Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other Persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law; provided, however, that this representation and warranty not limiting the Purchaser’s right to sell the Securities pursuant to a registration statement or otherwise in compliance with applicable federal and state securities laws.

 

(c)    Purchaser Status. At the time the Purchaser was offered the Securities, it was, and as of the date of this Agreement it is, and on each date on which it converts any Shares, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

 

(d)    Experience of the Purchaser. The Purchaser, 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 Shares, and has so evaluated the merits and risks of such investment. The Purchaser acknowledges and understands that its investment in the Securities involves a significant degree of risk.

 

(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 television or radio or presented at any seminar or, to the Purchaser’s knowledge, any other general solicitation or general advertisement.

 

 

(f)    Access to Information. The Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, Representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.

 

(g)    No Governmental Review. The Purchaser understands that no United States federal or state agency or any other Governmental Authority 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.

 

(h)    No Conflicts. The execution, delivery and performance by the Purchaser of this Agreement and the consummation by the Purchaser of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of the Purchaser 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 the Purchaser 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 the Purchaser, except in the case of clauses (ii) and (iii) above, for such that are not material and do not otherwise affect the ability of the Purchaser to consummate the transactions contemplated hereby.

 

(i)    Governmental Authorities and Third-Party Consents. Except for the ODI Filings and Approvals (if applicable), the Purchaser has obtained all consents, approvals, and authorizations required by any Governmental Authority in connection with the execution, delivery and performance of this Agreement by the Purchaser and with the Purchaser’s subscription for and purchase of the Shares and consummation of the transactions contemplated in this Agreement and the other Transaction Documents.

 

6.    Transfer Restrictions. The Purchaser acknowledges and agrees as follows:

 

(a)    None of the Securities have been registered for sale under the Securities Act, in reliance on the private offering exemption in Section 4(a)(2) thereof and/or Regulation S and the undersigned will not immediately be entitled to the benefits of Rule 144 under the Securities Act (“Rule 144”) with respect to the Shares or the Underlying Shares.

 

(b)    The Purchaser understands that there are substantial restrictions on the transferability of the Securities that the certificates representing the Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such certificates or other instruments):

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

 

 

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped, if (a) such Securities are sold pursuant to a registration statement under the Securities Act, (b) such holder delivers to the Company an opinion of counsel, reasonably acceptable to the Company, that a disposition of the Securities is being made pursuant to an exemption from such registration, or (c) any other evidence reasonably requested and reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Securities may be effected without registration under the Securities Act. The Company will not require a legal opinion (x) in any transaction in compliance with Rule 144, provided that Purchaser provides customary representations regarding Purchaser’s eligibility to sell securities under Rule 144; or (y) in any transaction in which such Purchaser distributes Securities to an Affiliate of such Purchaser for no consideration.

 

(c)    In connection with any sale, assignment, transfer or other disposition of the Securities by the Purchaser pursuant to an effective registration statement or pursuant to Rule 144 or any other exemption under the Securities Act such that the transferee acquires freely tradable shares not subject to applicable securities law restrictions on sale and upon compliance by the Purchaser with the requirements of this Agreement, if requested by the Purchaser by notice to the Company, the Company shall request the Transfer Agent to remove any restrictive legends related to the book entry account holding such shares in connection with such transfer within two (2) Trading Days of any such request therefor from such Purchaser. The Company shall be responsible for the fees of its Transfer Agent, its legal counsel and all DTC fees associated with such legend removal.

 

(d)    Until the Stockholder Approval has been obtained, the Series F Preferred Shares shall bear the following legend:

 

THESE SECURITIES ARE SUBJECT TO TRANSFER RESTRICTIONS SET FORTH IN A SECURITIES PURCHASE AGREEMENT BY AND BETWEEN AVINGER, INC. AND ZYLOX TONBRIDGE MEDICAL LIMITED, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF AVINGER, INC.

 

7.    Covenants and Other Rights.

 

(a)    Use of Proceeds. The Company shall use the net proceeds from the sale of the Shares hereunder for general corporate and working capital purposes and shall not use such proceeds for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and consistent with past practices).

 

(b)    Board Matters. The Company’s Board shall, subject to compliance with applicable Principal Market rules, increase the size of the Company’s Board to five directors and appoint an individual designated from time to time by the Purchaser as one member to the Company’s Board to serve as a Class I director (such designee, the “Zylox Board Representative”) effective as of the Initial Closing Date. Following the Initial Closing, and so long as Zylox continues to own at least 15% of the Company’s shares of capital stock on an as-if-converted to Common Stock basis (regardless of whether any preferred stock is convertible into Common Stock pursuant to any ownership limitation), the Company and the Board shall nominate the Zylox Board Representative to be elected at each annual meeting of the Company’s stockholders pursuant to which Class I directors shall be nominated and elected, recommend that holders of Common Stock vote to elect the Zylox Board Representative and use its reasonable efforts to cause the election to the Board of Class I directors that includes the Zylox Board Representative. The Company shall indemnify the Zylox Board Representative and provide the Zylox Board Representative with director and officer insurance to the same extent as it indemnifies and provides such insurance to other members of the Board, pursuant to the Certificate of Incorporation, the Bylaws, the Delaware General Corporation Law, as amended, supplemented or restated from time to time, or otherwise. As long as Zylox holds at least 5% of the Company’s shares of capital stock on an as-if-converted to Common Stock basis (regardless of whether any preferred stock is convertible into Common Stock pursuant to any ownership limitation) and is not otherwise entitled to appoint any director to the Board, Zylox shall be entitled to designate and appoint one (1) Person to attend and participate in all meetings of the Board in a non-voting observer capacity (the “Zylox Board Observer”) and receive Board meeting notices, Board minutes and other materials otherwise provided to the directors at the same time. The Observer may be excluded from access to any material or meeting or portion thereof if the board of directors determines in good faith, upon advice of counsel, that such exclusion is reasonably necessary to preserve attorney-client privilege or to protect highly confidential proprietary information. The Zylox Board Representative or the Zylox Board Observer shall be permitted to share information received in his or her capacity as such with the Purchaser for as long as he or she remains in such capacity, provided that the Purchaser hereby agrees to comply with all applicable securities laws and to maintain the confidentiality of such information in accordance with Section 21 of this Agreement.

 

 

(c)    Stockholder Approval. As soon as practicable following the Initial Closing, the Company shall provide each stockholder entitled to vote at a special meeting of stockholders of the Company (the “Stockholder Meeting”), which Stockholder Meeting shall be promptly called and held no later than 180 days after the Initial Closing (the “Stockholder Meeting Deadline”), a proxy statement meeting the requirements of Section 14 of the Exchange Act (the “Proxy Statement”) soliciting each such stockholder’s affirmative vote at the Stockholder Meeting for the Stockholder Approval, and the Company shall use its reasonable best efforts to solicit the Stockholder Approval and to cause the Company’s Board to recommend to stockholders that they adopt the Stockholder Approval. The Company shall keep the Purchaser apprised of the status of matters relating to the Proxy Statement and the Stockholder Meeting, including promptly furnishing the Purchaser and its counsel with copies of notices or other communications related to the Proxy Statement, the Stockholder Meeting or the transactions contemplated hereby received by the Company from the SEC or the Principal Market. If, despite the Company’s reasonable best efforts, Stockholder Approval is not obtained for all matters on or prior to the Stockholder Meeting Deadline, the Company shall cause an additional Stockholder Meeting to be held every six (6) months thereafter until such Stockholder Approval is obtained.

 

(d)    Integration. The Company has not sold, offered for sale or solicited offers to buy and shall not, and shall use its commercially reasonable efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be required to be integrated with the offer or sale of the Shares in a manner that would require the registration under the Securities Act of the sale of the Shares to the Purchaser, or that would be required to be integrated with the offer or sale of the Shares for purposes of the rules and regulations of the Principal Market.

 

(e)    Further Assurances. Upon the terms and subject to the conditions herein, the Company and the Purchaser each hereby agrees to use its reasonable best efforts to take or cause to be taken all actions, to execute all agreements, documents and instruments, cooperate and respond to any inquiry, investigation or action by any Governmental Authority or other Person, make all filings, submissions and notices, and assist and cooperate with the other party in taking, doing and accomplishing, all things necessary, proper or advisable under applicable Laws or otherwise, in the most expeditious manner practicable, in connection with, for purposes of or arising from the transactions contemplated by this Agreement and the other Transaction Documents.

 

 

8.    Conditions to Company’s Obligations at Closing. The Company’s obligation to complete the sale and issuance of the Shares and deliver the Shares to the Purchaser on each Closing Date shall be subject to the following conditions to the extent not waived by the Company in writing:

 

(a)    Representations and Warranties. The representations and warranties made by the Purchaser in Section 5 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects on each Closing Date, as the case may be, with the same force and effect as if they had been made on and as of said date.

 

(b)    Performance. The Purchaser shall have performed in all material respects all obligations and covenants herein required to be performed by them on or prior to each Closing Date.

 

(c)    No Suspension. No suspension of trading shall have been imposed by the Principal Market, the SEC or any other governmental regulatory body with respect to public trading in the Common Stock.

 

(d)    Stockholder Approval. Prior to the Milestone Closing, the Stockholder Approval shall have been obtained and remain effective as of the Milestone Closing.

 

(e)    Receipt of Executed Documents. The Purchaser shall have executed and delivered to the Company each of the Transaction Documents that requires its signature. There has been no uncured material breach of any of the Purchaser’s obligations under any Transaction Document.

 

(f)    ODI Filings and Approvals. As of the Initial Closing, the Purchaser shall have duly obtained all ODI Filings and Approvals with respect to its investment in the Company.

 

9.    Conditions to Purchaser’s Obligations at Closing. The Purchaser’s obligation to purchase and accept delivery of the Shares on each Closing Date shall be subject to the following conditions to the extent not waived by the Purchaser in writing:

 

(a)    Representations and Warranties Correct. (i) The Fundamental Representations shall be true and correct in all respects and (ii) the other representations and warranties made by the Company in Section 4 hereof shall be true and correct in all material respects (except to the extent any such representation and warranty is qualified by materiality or reference to Material Adverse Effect, in which case, such representation and warranty shall be true and correct in all respects as so qualified), in each case as of, and as if made on, the date of this Agreement and as of each Closing Date, except (x) to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date and (y) with respect to the representations and warranties of the Company in Section 4 hereof other than the Fundamental Representations, to the extent the failure of any such representation to be true and correct in all material respects has not had and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)    Performance. The Company shall have performed in all material respects all obligations and covenants herein required to be performed by it on or prior to each Closing Date.

 

(c)    Certificate. The Chief Executive Officer of the Company shall execute and deliver to the Purchaser a certificate to the effect that the representations and warranties of the Company in Section 4 hereof are true and correct (except to the extent any such representation and warranty is qualified by materiality or reference to Material Adverse Effect, in which case, such representation and warranty shall be true and correct in all respects as so qualified) as of, and as if made on, the date of this Agreement and as of each Closing Date and that the Company has satisfied in all material respects all of the conditions set forth in this Section 9.

 

(d)    Good Standing. The Company and each of its subsidiaries is a corporation or other business entity duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation.

 

 

(e)    Judgments. No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any Governmental Authority, shall have been issued, and no action or proceeding shall have been instituted by any Governmental Authority, enjoining or preventing the consummation of the transactions contemplated hereby.

 

(f)    No Suspension. No suspension of trading shall have been imposed by the Principal Market, the SEC or any other governmental regulatory body with respect to public trading in the Common Stock.

 

(g)    Series A Preferred Stock. As of the Initial Closing Date, the Company shall have filed the Series A-1 Certificate of Designation to, among other things, provide for the exchange of the Series A preferred stock of the Company, par value $0.001 per shares (the “Series A Preferred Stock”), into 10,000 shares of Series A-1 preferred stock of the Company, par value $0.001 per shares (the “Series A-1 Preferred Stock”), which is equivalent to $10 million based on the Series F Preferred Purchase Price and having a conversion price equal to the Initial Common Purchase Price.

 

(h)    Term Loan Agreement. As of the Initial Closing Date, the Company shall have executed and delivered the Term Loan Agreement Amendment.

 

(i)    Series F Certificate of Designation. As of the Initial Closing Date, the Company shall have filed the Series F Certificate of Designation with the State of Delaware.

 

(j)    Series G Certificate of Designation. As of the Milestone Closing Date, the Company shall have filed the Series G Certificate of Designation with the State of Delaware.

 

(k)    Nasdaq Listing of Additional Shares. As of the Initial Closing Date, the Company shall have provided the Purchaser with a written confirmation from the Principal Market that the staff of the Principal Market shall have received for its review the Listing of Additional Shares Notification form submitted by the Company in connection with the transactions contemplated by this Agreement and the other Transaction Documents (the “Listing of Additional Shares Form”).

 

(l)    ODI Filings and Approvals. As of the Initial Closing, the Purchaser shall have duly obtained all ODI Filings and Approvals with respect to its investment in the Company.

 

(m)    No Material Adverse Effect. There shall have been no Material Adverse Effect with respect to the Company since the date of this Agreement.

 

(n)    Stockholder Approval. Prior to the Milestone Closing, the Stockholder Approval shall have been obtained and remain effective as of the Milestone Closing.

 

(o)    Receipt of Executed Documents. The Company shall have executed and delivered to the Purchaser each of the Transaction Documents that requires its signature. There has been no uncured material breach of any of the Company’s obligations under any Transaction Document.

 

(p)    Board Size. The Company shall have taken all necessary action to, effective simultaneously with or immediately following the Initial Closing, (i) increase the size of the Company’s Board to five directors and (ii) appoint Jonathon Zhong Zhao to the Company’s Board.

 

 

10.    Termination. This Agreement shall terminate and be void and of no further force and effect, and all obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earliest to occur of: (a) the mutual written agreement of the Company and the Purchaser, (b) if, on the Milestone Closing, any of the conditions of such Closing set forth in Section 8  or Section 9 have not been satisfied as of the time required hereunder to be so satisfied or waived by the party entitled to grant such waiver, and are not capable of being satisfied and, as a result thereof, the transactions contemplated by this Agreement will not be and are not consummated, or (c) if the Initial Closing has not occurred on or before March 31, 2024, other than as a result of a Willful Breach of any party’s obligations hereunder; provided, however, that nothing herein shall relieve any party of any liability for common law fraud or for any Willful Breach of any representation, warranty, covenant, obligation or other provision contained in this Agreement and each party will be entitled to seek any remedies at law or in equity to recover losses, liabilities or damages arising from any such Willful Breach. “Willful Breach” means a deliberate act or deliberate failure to act, taken with the actual knowledge that such act or failure to act would result in or constitute a material breach of this Agreement.

 

11.    Indemnification.

 

(a)    The Company agrees to indemnify and hold harmless the Purchaser, its Affiliates and their respective directors, officers, shareholders, members, partners, employees and Representatives (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title), each person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title) of such controlling person, from and against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever (including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced or threatened) arising from any Action, whether or not involving a Third Party Claim, based upon or arising out of the failure of any representation or warranty of the Company to be true and correct, or breach by the Company of any covenant or agreement made by the Company, contained herein or in any other document delivered by the Company in connection with this Agreement.

 

(b)    The Purchaser agrees to indemnify and hold harmless the Company and its directors, officers, shareholders, members, partners, employees and agents (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title), each person who controls such indemnified person (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title) of such controlling person, from and against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever (including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced or threatened, and including in settlement of any litigation, but only if such settlement is effected with the written consent of the Purchaser) arising from any Action, whether or not involving a Third Party Claim, insofar as such losses, liabilities, claims, damages, costs, fees and expenses are primarily based upon or primarily arise out of the failure of representation or warranty of the Purchaser to be true and correct, or breach by the Purchaser of any covenant or agreement made by the Purchaser, contained herein or in any other document delivered by the Purchaser in connection with this Agreement.

 

 

(c)    Promptly after receipt by an indemnified party under this Section 11 of notice of the commencement of any Action for which such indemnified party is asserting a right to indemnification under this Section 11, including any claim hereunder from, or the commencement of any Action, by, a person unaffiliated with either party or its Affiliates, which claim the indemnified party hereunder believes in good faith is an indemnifiable claim under this Agreement (each, a “Third Party Claim”), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 11, promptly notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 11, unless such delay materially harms the indemnifying party. In case any such Action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if the defendants in any such Action include both the indemnified party and the indemnifying party and either (i) the indemnifying party or parties and the indemnified party or parties mutually agree or (ii) representation of both the indemnifying party or parties and the indemnified party or parties by the same counsel is inappropriate under applicable standards of professional conduct due to actual or potential differing interests between them, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such Action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such Action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 11 for any reasonable legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (A) the indemnified party shall have employed counsel in connection with the assumption of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel in such circumstance), (B) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the Action or (C) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. No indemnifying party shall (x) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened Action in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such Action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such Action, or (y) be liable for any settlement of any such Action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment of the plaintiff in any such Action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment.

 

12.    Binding Effect. The Purchaser hereby acknowledges and agrees that this Agreement shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

13.    No Third-Party Beneficiaries. This Agreement is intended only for the benefit of the parties hereto and their respective successors and permitted. A Person who is not a party to this Agreement, other than the indemnified parties referred to in Section 11, has no right under the Contracts (Rights of Third Parties) Act 2001 of Singapore to enforce or to enjoy the benefit of any term of this Agreement.

 

14.    Amendments and Waivers. Any term of this Agreement may be amended, terminated or waived only with the written consent of the Company and the Purchaser. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The conditions to each party’s obligation to consummate each Closing are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable law. No waiver of any party will be effective unless it is in a writing signed by a duly authorized officer of the waiving party that makes express reference to the provision or provisions subject to such waiver. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by applicable law.

 

 

15.    Notices. Any notice, consents, waivers or other communication required or permitted to be given hereunder shall be in writing and will be deemed to have been delivered: (i) upon receipt, when personally delivered; (ii) upon receipt when sent by certified mail, return receipt requested, postage prepaid; (iii) when sent, if by e-mail, provided that such sent e‑mail is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s e‑mail server that such e-mail could not be delivered to such recipient; or (iv) three (3) Business Day after deposit with an internationally-recognized courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses and email addresses for such communications shall be:

 

(a)    if to the Company, at

 

Avinger, Inc.

400 Chesapeake Drive

Redwood City, CA 94063

Attention: Chief Executive Officer

E-mail: jsoinski@avinger.com

 

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

 

Dorsey & Whitney LLP

111 South Main Street

Suite 2100

Salt Lake City, UT 84111

Attention: David Marx

Email: david.marx@dorsey.com

 

or

 

(b)    if to Zylox, at

 

Zylox Tonbridge Medical Limited

6/F Manulife Place, 348 Kwun Tong Road, KL, Hong Kong

Attention: Jonathon Zhong Zhao, Director

Email: jon.zhao@zyloxmedical.com

 

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

 

Sidley Austin LLP

Suite 2009, 5 Corporate Avenue

150 Hubin Road, Shanghai 200021, PRC
Attention: Ruchun Ji

Email: rji@sidley.com

 

(or, in any case, to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 15).

 

Any notice or other communication given by certified mail shall be deemed given at the time of certification thereof, except for a notice changing a party’s address which shall be deemed given at the time of receipt thereof.

 

 

16.    Assignability. This Agreement and the rights, interests and obligations hereunder are not transferable or assignable by any of the parties (whether by operation of law or otherwise) without the prior written consent of the other party; provided, however, that the Purchaser may assign its rights, interests and obligations under this Agreement, in whole or in part, to one or more of its Affiliates, which assignee shall agree in writing to be bound by the provisions of this Agreement, including the rights, interests and obligations so assigned.

 

17.    Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the Republic of Singapore.

 

18.    Arbitration.

 

(a)         Any dispute, controversy, difference or claim arising out of or relating to this Agreement, including the existence, validity, invalidity, interpretation, performance, breach or termination thereof or any dispute regarding contractual or non-contractual obligations arising out of or relating to it (a “Dispute”), shall be referred to and finally resolved by arbitration administered by the Singapore International Arbitration Centre in Singapore (the “SIAC”) in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (the “SIAC Rules”) in force when the Notice of Arbitration is submitted. The seat of arbitration shall be Singapore.

 

(b)         There shall be three arbitrators, the claimant to the Dispute, or in the case of multiple claimants, all such claimants acting collectively (the “Claimant”) shall select one arbitrator and the respondent to the Dispute, or in the case of more than one respondent, the respondents acting collectively (the “Respondent”) shall select one arbitrator. All selections shall be made within 30 days after the selecting party gives or receives the demand for arbitration. Such arbitrators shall be freely selected, and neither the Claimant nor the Respondent shall be limited in their selection to any prescribed list. The first two arbitrators shall select the third arbitrator; provided that if the first two arbitrators cannot agree on a third arbitrator within five (5) Business Days, the Chairman of SIAC shall select the third arbitrator who will act as chairman of the arbitration board. If any arbitrator to be appointed by a party has not been appointed and consented to participate within thirty (30) days after the selection of the first arbitrator, the relevant appointment shall be made by the Chairman of SIAC.

 

(c)         The arbitral proceedings shall be conducted in English. To the extent that the SIAC Rules are in conflict with the provisions of this Section 18, including the provisions concerning the appointment of the arbitrators, the provisions of this Section 18 shall prevail.

 

(d)         The award of the arbitral tribunal shall be final and binding upon the Parties thereto, and the prevailing party may apply to a court of competent jurisdiction for enforcement of such award.

 

(e)         Any party to the Dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

 

(f)         During the course of the arbitral tribunal’s adjudication of the Dispute, this Agreement shall continue to be performed except with respect to the part in dispute and under adjudication.

 

(g)         The parties agree to keep confidential the existence of the arbitration, the arbitral proceedings, the submissions made by any party and the decisions made by the arbitral tribunal, including its awards, except as required by applicable Law or the Principal Market.

 

(h)         The law of this arbitration clause shall be the laws of the Republic of Singapore.

 

 

19.    Use of Pronouns. All pronouns and any variations thereof used herein shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the Person or Persons referred to may require.

 

20.    Securities Laws Disclosure; Publicity. The Purchaser and the Company shall consult with each other before issuing, and shall give each other the opportunity to review and comment upon, any press release or other public statements (other than any filings with the SEC required by Section 13 or Section 16 under the Exchange Act) with respect to the Transaction Documents or the transactions contemplated hereby or thereby, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law, court process or the rules and regulations of any national securities exchange or national securities quotation system. Notwithstanding the forgoing, this Section 20 shall not apply to any press release or other public statement made by the Company or the Purchaser (a) which is consistent with the initial press release that has been approved by the parties and issued after the Initial Closing Date and does not contain any information relating to the transactions that has not been previously announced or made public in accordance with the terms of this Agreement or (b) is made in the ordinary course of business and does not relate specifically to the signing of the Transaction Documents or the transactions contemplated hereby or thereby. Without limiting the generality of the foregoing, the Company shall promptly, and no later than four Business Days after the date of this Agreement, file a Current Report on Form 8-K with the SEC disclosing the material terms of the transactions contemplated by the Transaction Documents (the “Transaction Form 8-K”). The Company shall give the Purchaser a reasonable opportunity to review and comment on the Transaction Form 8-K and consult with the Purchaser before the filing thereof.

 

21.    Confidentiality. The Purchaser will, and will cause its Affiliates and their respective Representatives to, keep confidential any information (including oral, written and electronic information) concerning the Company, its subsidiaries or its Affiliates that may be furnished to the Purchaser, its Affiliates or their respective Representatives by or on behalf of the Company or any of its Representatives (“Confidential Information”) and use the Confidential information solely for the purposes of monitoring, administering or managing the investment in the Company made pursuant to this Agreement; provided that the Confidential Information shall not include information that (i) was or becomes available to the public other than as a result of a disclosure by the Purchaser, any of its Affiliates or any of their respective Representatives in violation of this Section 21, (ii) was or becomes available to the Purchaser, any of its Affiliates or any of their respective Representatives from a source other than the Company or its Representatives, provided that such source is known or reasonably knowable by the Purchaser not to be disclosing such information in violation of an obligation of confidentiality (whether by agreement or otherwise) to the Company, (iii) at the time of disclosure is already in the possession of the Purchaser, any of its Affiliates or any of their respective Representatives, provided that such information is known or reasonably knowable by the Purchaser not to be subject to an obligation of confidentiality (whether by agreement or otherwise) to the Company, or (iv) was independently developed by the Purchaser, any of its Affiliates or any of their respective Representatives without reference to, incorporation of, or other use of any Confidential Information. The Purchaser agrees, on behalf of itself and its Affiliates and their respective Representatives, that Confidential Information may be disclosed solely (i) to the respective Representatives of the Purchaser and its Affiliates to the extent necessary to obtain their services in connection with the Purchaser’s investment in the Company, (ii) to any Affiliate or related investment fund of the Purchaser and its Affiliates and their respective directors, officers, employees, consultants, financing sources and Representatives, in each case in the ordinary course of business (provided that the recipients of such confidential information agree to abide by the confidentiality and non-disclosure obligations contained herein and the Purchaser shall be responsible for any breach of these obligations by such recipients) or (iii) in the event that the Purchaser, any of its Affiliates or any of its or their respective Representatives are requested or required by applicable law, judgment, stock exchange rule or other applicable judicial or governmental process (including by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, in each of which instances described in this clause (iii) the Purchaser, its Affiliates and their respective Representatives, as the case may be, shall (a) provide notice to the Company in advance of any such disclosure so that the Company will have a reasonable opportunity to timely seek to limit such disclosure, (b) use its reasonable efforts, in cooperation with the Company, to avoid or minimize such disclosure and/or to obtain a protective order or other relief to protect such information, and (c) disclose only so much of such information as is legally required. The Purchaser, its Affiliates and its Representatives further acknowledge that certain information concerning the matters that are the subject matter of this Agreement may constitute material non-public information under U.S. federal securities laws, and that U.S. federal securities laws prohibit any person who has received material non-public information relating to the Company from purchasing or selling securities of the Company, or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of the Company. Accordingly, until such time as any material non-public information that has been received by the Purchaser, its Affiliates or Representatives has been adequately disseminated to the public, the Purchaser, its Affiliates and Representatives agree that they will not purchase or sell any securities of the Company on any trading market or otherwise, or communicate such information to any other person. The obligations of this Section 21 shall remain in full force and effect until the later of (x) two (2) years from the last Closing Date that has occurred hereunder and (y) the date that the Zylox Board Representative ceases to serve on the Board pursuant to the provisions of this Agreement. This Section 21 shall replace and supersede that certain mutual nondisclosure agreement, dated May 12, 2023, by and between the parties, which shall terminate and be of no force or effect.

 

 

22.    Miscellaneous.

 

(a)    This Agreement, together with the other Transaction Documents and any confidentiality agreement between the Purchaser and the Company, constitute the entire agreement between the Purchaser and the Company with respect to the transactions contemplated by this Agreement and supersede all prior oral or written agreements and understandings, if any, relating to the subject matter hereof. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by a written document executed by the party entitled to the benefits of such terms or provisions.

 

(b)    The representations and warranties of the Company and the Purchaser made in this Agreement shall survive the execution and delivery hereof and delivery of the Shares. All of the covenants or other agreements of the parties contained in this Agreement shall survive until fully performed or fulfilled, unless and to the extent that non-compliance or non-performance with such covenants or agreements is waived in writing by the party entitled to such compliance or performance.

 

(c)    If the Shares are certificated and any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company and the Company’s transfer agent of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company and the Company’s transfer agent for any losses in connection therewith or, if required by the transfer agent, a bond in such form and amount as is required by the transfer agent. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Shares. If a replacement certificate or instrument evidencing any Shares is requested due to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.

 

 

(d)    Each of the parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such party) in connection with this Agreement and the transactions contemplated hereby, whether or not the transactions contemplated hereby are consummated.

 

(e)    This Agreement may be executed in one or more original or facsimile or by an e‑mail which contains a portable document format (.pdf) file of an executed signature page counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument and which shall be enforceable against the parties actually executing such counterparts. Either party may enter into this Agreement by executing any such counterpart manually or electronically (such as Adobe Sign or DocuSign) and delivering the executed counterpart by electronic means to the other party. The receiving party may rely on the receipt of such document so executed and delivered as if the original had been received. Such electronic signatures shall be recognised and construed as secure electronic signatures pursuant to the Electronic Transactions Act 2010 of Singapore and that the parties accordingly shall deem such signatures to be original and binding signatures for all intents and purposes.

 

(f)    Each provision of this Agreement shall be considered separable and, if for any reason any provision or provisions hereof are determined to be invalid or contrary to applicable law, such invalidity or illegality shall not impair the operation of or affect the remaining portions of this Agreement.

 

(g)    Paragraph titles are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text.

 

(h)    Any reference to “$” shall mean U.S. dollars, which is the currency used for all purposes in this Agreement and the other Transaction Documents except as otherwise explicitly specified.

 

[Signature Page to Follow]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

 

	COMPANY:   AVINGER, INC.
	By:	/s/ Jeffrey M. Soinski
	Name:	Jeffrey M. Soinski
	Title:	Chief Executive Officer

 

	PURCHASER:   ZYLOX TONBRIDGE MEDICAL LIMITED
	By:	/s/ Jonathon Zhong Zhao
	Name:	Jonathon Zhong Zhao
	Title:	Chairman

 

 

 

EXHIBIT A

 

FORM OF REGISTRATION RIGHTS AGREEMENT

 

 

 

EXHIBIT B

 

FORM OF SERIES A-1 CERTIFICATE OF DESIGNATION

 

 

EXHIBIT C

 

FORM OF SERIES F CERTIFICATE OF DESIGNATION

 

 

EXHIBIT D

 

FORM OF SERIES G CERTIFICATE OF DESIGNATION

 

 

EXHIBIT E

 

FORM OF CRG TERM LOAN AGREEMENT AMENDMENT

 

Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made as of March 5, 2024, by and between Zylox Tonbridge Medical Limited, a company established under the laws of Hong Kong (“Zylox” or the “Purchaser”), and Avinger, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, the Company and the Purchaser are parties to a Securities Purchase Agreement, dated as of March 4, 2024 (the “Purchase Agreement”), pursuant to which the Purchaser is purchasing 75,327 shares of common stock (the “Initial Common Shares”) of the Company, par value $0.001 per share (the “Common Stock”), and 7,224 shares (the “Series F Preferred Shares”) of Series F preferred stock of the Company, par value $0.001 per share (the “Series F Preferred Stock”);

 

WHEREAS, pursuant to the Purchase Agreement, subject to and contingent upon the achievement of certain milestones and the satisfaction of the other conditions set forth therein, the Purchaser agrees to purchase from the Company, and the Company agrees to issue and sell to the Purchaser, certain number of shares of Series G preferred stock (the “Series G Preferred Shares” and collectively with the Initial Common Shares and the Series F Preferred Shares, the “Shares”) of the Company, par value $0.001 per share (the “Series G Preferred Stock”); and

 

WHEREAS, in connection with the consummation of the transactions contemplated by the Purchase Agreement and pursuant to the terms of the Purchase Agreement, the parties hereto desire to enter into this Agreement in order to grant certain registration rights to the Purchaser with respect to the Shares as set forth below.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual and dependent covenants hereinafter set forth, the parties hereto agree as follows:

 

1.           Definitions.

 

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Block Trade” shall mean an offering and/or sale of Registrable Securities by any Holder on a block trade or underwritten basis (whether firm commitment or otherwise) without substantial marketing efforts prior to pricing, including, without limitation, a same day trade, overnight trade or similar transaction, but excluding a variable price reoffer.

 

“Board” means the board of directors of the Company.

 

“Business Day” means any day, excluding Saturdays and Sundays, on which banks in the PRC, Hong Kong and the State of New York in the United States are generally open for business.

 

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

 

“DTCDRS” has the meaning set forth in Section 4(q).

 

 

“Effectiveness Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 60th calendar day following the date hereof (or, in the event of a “full review” by the Commission, the 90th calendar day following the date hereof) and with respect to any additional Registration Statements which may be required pursuant to Section 2(b) and Section 2(c) or Section 4(c), the 60th calendar day following the date on which an additional Registration Statement is required to be filed hereunder (or, in the event of a “full review” by the Commission, the 90th calendar day following the date such additional Registration Statement is required to be filed hereunder); provided, however, that in the event the Company is notified by the Commission in writing that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above; provided, further, that if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.

 

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

 

“Family Member” means (a) with respect to any individual, such individual’s spouse, any descendants (whether natural or adopted), any trust all of the beneficial interests of which are owned by any of such individuals or by any of such individuals together with any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any such individual, and any corporation, association, partnership or limited liability company all of the equity interests of which are owned by those above described individuals, trusts or organizations and (b) with respect to any trust, the owners of the beneficial interests of such trust.

 

“Filing Date” means, with respect to the Initial Registration Statement required hereunder, the 30th calendar day following the date hereof and, with respect to any additional Registration Statements which may be required pursuant to Section 2(b), Section 2(c) or Section 4(c), the 30th calendar day following the date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.

 

“Governmental Authority” means any court, agency, authority, department, regulatory body or other instrumentality of any government or country or of any national, federal, state, provincial, regional, county, city or other political subdivision of any such government or country or any supranational organization of which any such country is a member, and any self-regulatory organization, including any stock exchange.

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.

 

“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.

 

“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

 

 

“Piggyback Registration” means, in any registration of Common Stock referenced in Section 3, the right of each Holder to include the Registrable Securities of such Holder in such registration.

 

“Principal Market” means the Nasdaq Capital Market (or such other market or exchange on which Common Stock is then listed or traded).

 

“Prospectus” means the prospectus or prospectuses included in any Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance on Rule 430A or Rule 430B under the Securities Act or any successor rule thereto), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.

 

“Registrable Securities” means, to the extent that such securities are permitted to be included in a Registration Statement under the SEC Guidance at the time such Registration Statement is filed, (a) the Initial Common Shares, shares of Common Stock issuable upon conversion of the shares of Series F Preferred Stock and the conversion of the shares of Series G Preferred Stock beneficially owned by the Holders, whether issued pursuant to the Purchase Agreement or as dividends thereupon, and (b) any shares of Common Stock issued or issuable with respect to any shares described in subsection (a) above by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other reorganization or other similar event with respect to the Common Stock (it being understood that, for purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to then acquire or obtain from the Company any Registrable Securities, whether or not such acquisition has actually been effected). As to any particular Registrable Securities, such securities shall cease to be Registrable Securities for as long as (i) the Commission has declared a Registration Statement covering the Registrable Securities effective and such Registrable Securities have been disposed of pursuant to such effective Registration Statement, (ii) such Registrable Securities have been previously sold under circumstances in which all of the applicable conditions of Rule 144 under the Securities Act are met, (iii) such securities become eligible for resale pursuant to Rule 144 without restriction by the Holder, including without volume or manner-of-sale restrictions and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144(c)(1) (or any successor thereto), or (iv) such Registrable Securities have ceased to be outstanding.

 

“Registration Statement” means any registration statement of the Company filed with the SEC in compliance with the Securities Act, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference in such registration statement.

 

“Rule 144” means Rule 144 under the Securities Act or any successor rule thereto.

 

“Rule 415” means Rule 415 under the Securities Act or any successor rule thereto.

 

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

 

 

“SEC Guidance” means (i) any publicly-available written guidance of the Commission staff, or any written comments, requirements or requests of the Commission staff and (ii) the Securities Act.

 

“Selling Expenses” means all underwriting discounts, selling commissions and stock transfer taxes and other similar expenses applicable to the sale of Registrable Securities.

 

“Trading Day” means a day on which the principal Trading Market is open for business.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

 

“Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.

 

“Underwritten Offering” shall mean a registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.

 

Capitalized terms used herein without definition have the meanings ascribed to them in the Purchase Agreement.

 

2.           Shelf Registration.

 

(a)        On or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities that are not then registered on an effective Registration Statement and that are then permitted under the SEC Guidance to be included on such Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith, subject to the provisions of Section 2(e)) and shall contain substantially the “Plan of Distribution” attached hereto as Annex A; provided, however, that no Holder shall be required to be named as an “underwriter” without such Holder’s express prior written consent, except as required by applicable law. Subject to the terms of this Agreement, the Company shall use its reasonable best efforts to cause a Registration Statement filed under this Agreement (including, without limitation, under Section 4(c)) to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use its reasonable best efforts to keep such Registration Statement continuously effective under the Securities Act until the date that all Registrable Securities covered by such Registration Statement cease to be Registrable Securities.

 

(b)        Notwithstanding the registration obligations set forth in Section 2(a), if the resale of all of the Registrable Securities cannot, as a result of the application of the SEC Guidance, be registered as a secondary offering on a single registration statement, the Company agrees to promptly inform and provide a copy of the applicable SEC Guidance to each Holder thereof and use its reasonable best efforts to promptly file amendments to the Registration Statement or one or more new Registration Statements as soon as any additional portion of the Registrable Securities can be so registered pursuant to such SEC Guidance, covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-3 or such other form available to register for resale the Registrable Securities as a secondary offering, subject to the provisions of Section 2(e) with respect to filing on Form S-3 or other appropriate form; provided, however, that prior to filing such Registration Statement or amendment, the Company shall be obligated to use its reasonable best efforts to seek the registration of all of the Registrable Securities in accordance with the SEC Guidance, including, without limitation, Compliance and Disclosure Interpretation 612.09.  Notwithstanding anything herein to the contrary, the payment of liquidated damages by the Company pursuant to Section 2(d) or any other penalties to the Company shall not be required with respect to any delay or inability to register any of the Registrable Securities pursuant to a Registration Statement solely resulting from complying with the applicable SEC Guidance as described in the first sentence of this Section 2(b).

 

 

(c)       Notwithstanding any other provision of this Agreement, if the Commission or any SEC Guidance sets forth a limitation on the number or type of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used its reasonable best efforts to seek the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number and type of Registrable Securities to be registered on such Registration Statement will be limited to the number and type permitted under the SEC Guidance. Any reduction in the number of Registrable Securities will be made as follows: (a) first, the Company shall reduce or eliminate any securities to be included other than Registrable Securities and (b) second, the Company shall reduce Registrable Securities, applied to the Holders on a pro rata basis based on the total number of Registrable Securities held by such Holders. In the event of a cutback hereunder, the Company shall give the Holder at least three Trading Days prior written notice along with the calculations as to such Holder’s allotment. In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will use its reasonable best efforts to file with the Commission, as promptly as allowed by the Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement (the “Cut Back Shares”), as amended (the “Remainder Registration Statement”). From and after such date as the Company is allowed by the Commission or SEC Guidance to effect the registration of the resale of all such Cut Back Shares in accordance with any Commission restrictions applicable to such Cut Back Shares (the “Restriction Termination Date”), all of the provisions of this Section 2 (including the Company’s obligations with respect to the filing of a Registration Statement and its obligations to use its reasonable best efforts to have such Registration Statement declared effective within the time periods set forth herein) shall again be applicable to such Cut Back Shares; provided, however, that (i) the Filing Date for such Cut Back Shares shall be the 30th calendar day after such Restriction Termination Date, and (ii) the date by which the Company is required to obtain effectiveness with respect to such Cut Back Shares shall be the 60th calendar day immediately after the Restriction Termination Date (or, in the event of a “full review” by the Commission, the 90th calendar day following the date such Remainder Registration Statement is required to be filed hereunder). Notwithstanding anything herein to the contrary, the payment of liquidated damages by the Company pursuant to Section 2(d) or any other penalties to the Company shall not be required with respect to any delay or inability to register all of the Registrable Securities pursuant to a Registration Statement resulting from the limitation referred to in the first sentence of this Section 2(c).

 

 

(d)         If: (i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the Company files the Initial Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 4(d), the Company shall be deemed to have not satisfied this clause (i) as of the Filing Date), (ii) the Company fails to file with the Commission a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities Act, within five (5) Trading Days of the date that the Company is notified in writing by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further review, (iii) a Registration Statement registering for resale all of the Registrable Securities then eligible to be included in such Registration Statement, including, but not limited to, after any reduction in Registrable Securities included in such Registration Statement in accordance with Section 2(b) and Section 2(c), is not declared effective by the Commission by the Effectiveness Date of the Registration Statement, or (iv) after the effective date of a Registration Statement, such Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities included in such Registration Statement, other than any period of time following the Company’s filing of any required post-effective amendment to a Registration Statement until such post-effective amendment is declared effective, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, other than due to the Holder’s knowledge of or access to material non-public information of the Company, for more than ten (10) consecutive calendar days or more than an aggregate of fifteen (15) calendar days (which need not be consecutive calendar days) during any twelve (12)-month period (any such failure or breach being referred to as an “Event”, and for purposes of clauses (i) and (iv), the date on which such Event occurs, and for purpose of clause (ii) the date on which such five (5) Trading Day period is exceeded, and for purpose of clause (iii) the date which such ten (10) calendar day period is exceeded, and for purpose of clause (v) the date on which such ten (10) or fifteen (15) calendar day period, as applicable, is exceeded being referred to as “Event Date”), then, in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 1.0% multiplied by the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement with respect to the remaining Registrable Securities included in such Registration Statement. The parties agree that the maximum aggregate liquidated damages payable to a Holder under this Agreement shall be 4% of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement with respect to the remaining Registrable Securities included in such Registration Statement. If the Company fails to pay any partial liquidated damages pursuant to this Section in full within seven (7) days after the date payable, the Company will pay interest thereon at a rate of 8% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event.

 

(e)         If 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 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 Commission.

 

(f)        In the event that any Holder holds Registrable Securities that are not registered for resale on a delayed or continuous basis, the Company, upon request of such Holder, shall promptly use its reasonable best efforts to cause the resale of such Registrable Securities to be covered by (1) an existing Registration Statement or (2) a new Registration Statement and cause the same to become effective as soon as practicable after such filing and such new Registration Statement shall be subject to the terms hereof. The Holders may request not more than one (1) Registration Statement per year pursuant to this Section 2(f), provided that this Section 2(f) shall not affect or limit any Holder's rights under the other provisions of Section 2 and Section 3.

 

 

(g)        At any time and from time to time when an effective Registration Statement is on file with the Commission, any Holder (a “Demanding Holder”) may request to sell all or any portion of its Registrable Securities in an Underwritten Offering that is registered pursuant to the Registration Statement, including a Block Trade (each, an “Underwritten Shelf Takedown”); provided that the Company shall only be obligated to effect an Underwritten Shelf Takedown if such offering shall include Registrable Securities proposed to be sold by the Demanding Holders with a total offering price reasonably expected to exceed, in the aggregate $500,000 (the “Minimum Takedown Threshold”). All requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown. Within five (5) days of receipt of this notice, the Company must notify all of the Holders of Registrable Securities of the Underwritten Shelf Takedown. The Company shall include in any Underwritten Shelf Takedown the securities requested to be included by any other Holder (each a “Takedown Requesting Holder”). The Demanding Holders shall have the right to select the Underwriters for such offering (which shall consist of one or more reputable nationally recognized investment banks), subject to the Company’s prior approval (which shall not be unreasonably withheld, conditioned or delayed). The Holders may demand not more than one (1) Underwritten Shelf Takedown per year. Notwithstanding anything to the contrary in this Agreement, the Company may effect any Underwritten Offering pursuant to any then effective Registration Statement, including a Form S-3, that is then available for such offering. The Company shall enter into an underwriting agreement in a form as is customary in Underwritten Offerings of securities by the Company with the managing Underwriter or Underwriters and shall take all such other reasonable actions as are requested by the managing Underwriter or Underwriters in order to expedite or facilitate the disposition of such Registrable Securities. In connection with any Underwritten Shelf Takedown contemplated by this paragraph, the underwriting agreement into which each Holder and the Company shall enter shall contain such representations, covenants, indemnities and other rights and obligations of the Company and the selling stockholders as are customary in underwritten offerings of securities.

 

(i)        If the managing Underwriter or Underwriters in an Underwritten Shelf Takedown, in good faith, advises the Company, the Demanding Holders and the Takedown Requesting Holders (if any) (collectively, the “Requesting Holders”) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Takedown Requesting Holders (if any) desire to sell, taken together with all other Common Stock or other equity securities that the Company desires to sell and the Common Stock, if any, that have been requested to be sold in such Underwritten Offering pursuant to separate written contractual piggy-back registration rights held by any other stockholders of the Company, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, as follows: (A) first, the Registrable Securities of the Requesting Holders (if any) (pro rata based on the respective number of Registrable Securities that each Requesting Holder (if any) has requested be included in such Underwritten Shelf Takedown and the aggregate number of Registrable Securities that the Requesting Holders have requested be included in such Underwritten Shelf Takedown) that can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the Common Stock or other equity securities of other persons or entities that the Company is obligated to offer in an Underwritten Offering pursuant to separate written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Securities.

 

 

(ii)     Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used for marketing such Underwritten Shelf Takedown, a majority-in-interest of the Demanding Holders initiating an Underwritten Shelf Takedown shall have the right to withdraw from such Underwritten Shelf Takedown for any or no reason whatsoever upon written notification (a “Withdrawal Notice”) to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Underwritten Shelf Takedown, and such Underwritten Shelf Takedown shall not be counted as a demand for an Underwritten Shelf Takedown; provided that the Requesting Holders may elect to have the Company continue an Underwritten Shelf Takedown if the Minimum Takedown Threshold would still be satisfied by the Registrable Securities proposed to be sold in the Underwritten Shelf Takedown by the Requesting Holders or any of its respective permitted transferees, as applicable. Following the receipt of any Withdrawal Notice, the Company shall promptly forward such Withdrawal Notice to any other Holders that had elected to participate in such Underwritten Shelf Takedown. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the registration expenses incurred in connection with a Underwritten Shelf Takedown pursuant to Section 2(f)(i) prior to its withdrawal under this section.

 

(iii)     Notwithstanding any other provision of Agreement, if the Holders desire to effect a Block Trade, the Holders shall provide written notice to the Company at least three (3) Business Days prior to the date such Block Trade will commence. As promptly as reasonably practicable, the Company shall use its reasonable best efforts to facilitate such Block Trade. The Holders shall use reasonable best efforts to work with the Company and the Underwriter(s) (including by disclosing the maximum number of Registrable Securities proposed to be the subject of such Block Trade) in order to facilitate preparation of the Registration Statement, Prospectus and other offering documentation related to the Block Trade and any related due diligence and comfort procedures.

 

(iv)     In connection with any Underwritten Offering of equity securities of the Company, if requested by the managing Underwriters, each Holder that is an executive officer, director or Holder in excess of five percent (5%) of the outstanding shares of Common Stock participating in such Underwritten Offering agrees that it shall not transfer any shares of Common Stock or other equity securities of the Company (other than those included in such offering pursuant to this Agreement) during the ninety (90)-day period (or such shorter time agreed to by the managing Underwriters) beginning on the date of pricing of such offering, except as expressly permitted by such lock-up agreement or in the event the managing Underwriters otherwise agree by written consent. Each such Holder agrees to execute a customary lock-up agreement in favor of the Underwriters to such effect (in each case on substantially the same terms and conditions as all such Holders).

 

(v)       For purposes of clarity, Piggyback Registration effected pursuant to Section 3 hereof shall not be counted as a demand for an Underwritten Shelf Takedown under Section 2.

 

3.           Piggyback Registration.

 

(a)        If, any time thirty (30) days after the date hereof, the Company shall determine to register for sale for cash any of its Common Stock, for its own account or for the account of others (other than the Holders), other than (i) a registration relating solely to employee benefit plans or securities issued or issuable to employees, consultants (to the extent the securities owned or to be owned by such consultants could be registered on Form S-8 (or its then equivalent form) or any of their Family Members (including a registration on Form S-8 (or its then equivalent form)), (ii) a registration relating solely to a Securities Act Rule 145 transaction or a registration on Form S-4 (or its then equivalent form) in connection with a merger, acquisition, divestiture, reorganization or similar event, or (iii) a transaction relating solely to the sale of debt or convertible debt instruments, then the Company shall promptly give to each Holder of Registrable Securities that are not then registered on an effective Registration Statement written notice thereof (but in no event later than twenty (20) calendar days prior to the filing of such registration statement), and shall, subject to Section 3(b), include as a Piggyback Registration all of the Registrable Securities (including any Registrable Securities that are removed from the Registration Statement as a result of a requirement by the Commission staff), specified in a written request delivered by the Holder thereof within ten (10) calendar days after delivery to the Holder of such written notice from the Company. However, the Company may, without the consent of such Holders, withdraw such registration statement prior to its becoming effective if the Company or such other selling stockholders have elected to abandon the proposal to register the securities proposed to be registered thereby.

 

 

(b)         If a Piggyback Registration is for a registered public offering that is to be made by an underwriting, the Company shall so advise the Holders as part of the notice given pursuant to Section 3(a) in connection with the Piggyback Registration. In that event, the right of any Holder to Piggyback Registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to sell any of their Registrable Securities through such underwriting shall (together with the Company and any other stockholders of the Company selling their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter selected for such underwriting by the Company or such other selling stockholders, as applicable. Notwithstanding any other provision of this Section 3(b), if the underwriter or the Company determines that marketing factors require a limitation on the number of shares of Common Stock or the amount of other securities to be underwritten, the underwriter may exclude some or all Registrable Securities from such registration and underwriting. The Company shall so advise all Holders (except those Holders who failed to timely elect to include their Registrable Securities through such underwriting or have indicated to the Company their decision not to do so), and indicate to each such Holder the number of shares of Registrable Securities that may be included in the registration and underwriting, if any. The number of shares of Registrable Securities to be included in such registration and underwriting shall be allocated among such Holders as follows:

 

(i)      If the Piggyback Registration was initiated by the Company, the number of shares that may be included in the registration and underwriting shall be allocated first to the Company and then, subject to obligations and commitments existing as of the date hereof, to all Holders exercising piggyback registration rights who have requested to sell in the registration on a pro rata basis according to the number of shares requested to be included therein; and

 

(ii)       If the Piggyback Registration was initiated by the exercise of demand registration rights by a stockholder or stockholders of the Company (other than the Holders) then the number of shares that may be included in the registration and underwriting shall be allocated first to such selling stockholders who exercised such demand to the extent of their demand registration rights, subject to obligations and commitments existing as of the date hereof, to all Holders exercising piggyback registration rights who have requested to sell in the registration on a pro rata basis according to the number of shares requested to be included therein, and then, subject to obligations and commitments existing as of the date hereof, to the Company.

 

No Registrable Securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such registration. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw such Holder’s Registrable Securities therefrom by delivering a written notice to the Company and the underwriter. The Registrable Securities so withdrawn from such underwriting shall also be withdrawn from such registration; provided, however, that, if by the withdrawal of such Registrable Securities, a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities pursuant to the terms and limitations set forth herein in the same proportion used above in determining the underwriter limitation. The Company shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering.

 

 

4.           Registration Procedures. If and whenever any Registration Statement is required to be filed pursuant to Section 2 or Section 3, the Company shall use its reasonable best efforts to effect the registration of the offer and sale of such Registrable Securities under the Securities Act, and pursuant thereto the Company shall as soon as reasonably practicable and as applicable:

 

(a)          prepare and file with the Commission a Registration Statement covering such Registrable Securities in accordance with Section 2 or Section 3, as applicable, and use its reasonable best efforts to cause such Registration Statement to be declared effective;

 

(b)          if the Registration Statement is subject to review by the Commission, promptly respond to all comments and diligently pursue resolution of any comments to the satisfaction of the Commission;

 

(c)         prepare and file with the Commission such amendments, post-effective amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective until all of such Registrable Securities have been disposed of and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such Registration Statement;

 

(d)         at least five (5) Business Days before filing such Registration Statement, Prospectus or amendments or supplements thereto with the Commission, furnish to the Holders and one counsel selected by the Holders copies of such documents proposed to be filed, which documents shall be subject to the review, comment and approval of such counsel;

 

(e)          notify each selling Holder, promptly after the Company receives notice thereof, of the time when such Registration Statement has been declared effective or a supplement to any Prospectus forming a part of such Registration Statement has been filed with the Commission;

 

(f)         furnish to each Holder such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus) and any supplement thereto (in each case including all exhibits and documents incorporated by reference therein), and such other documents as the Holders may reasonably request in order to facilitate the disposition of the Registrable Securities owned by each Holder;

 

(g)        notify each Holder at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event that would cause the Prospectus included in such Registration Statement to contain an untrue statement of a material fact or omit any fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and, at the request of any such Holder, the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

 

(h)         provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such registration;

 

(i)          use its reasonable best efforts to cause such Registrable Securities to be listed on the Principal Market or each other securities exchange on which the Common Stock is then listed;

 

 

(j)          use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment and to promptly notify Holders of any such orders or suspensions;

 

(k)         in connection with an underwritten offering, enter into such customary agreements (including underwriting and lock-up agreements in customary form) and take all such other customary actions as the Holders or the managing underwriter of such offering reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, making appropriate officers of the Company available to participate in “road show” and other customary marketing activities (including one-on-one meetings with prospective purchasers of the Registrable Securities));

 

(l)          in a firm commitment underwritten offering, use its reasonable best efforts to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion dated such date of the legal counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, (ii) a “negative assurances letter”, dated such date of the legal counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and (iii) “comfort” letters dated the date of pricing of such offering and dated such date from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters;

 

(m)       without limiting Section 4(g), use its reasonable best efforts to cause such Registrable Securities to be registered with, qualified or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Holders to consummate the disposition of such Registrable Securities in accordance with their intended method of distribution thereof;

 

(n)         notify each Holder promptly of any request by the Commission for the amending or supplementing of such Registration Statement or Prospectus or for additional information;

 

(o)         advise each Holder, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and 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;

 

(p)         delay the filing or suspend the use of any such Registration Statement (x) if it determines, upon advice of legal counsel, that in order for the Registration Statement to not contain a material misstatement or omission, an amendment thereto would be needed, (y) as may be necessary in connection with the preparation and filing of a post-effective amendment to the Registration Statement following the filing of the Company’s Annual Report on Form 10-K, or (z) if the Board, upon advice of legal counsel, reasonably believes that such filing or use would materially affect a bona fide business or financing transaction of the Company or any of its subsidiaries, or would require premature disclosure of information that could materially adversely affect the Company; provided, however, that, except as permitted under Section 2, the Company may not delay filing or suspend use of any Registration Statement on more than two occasions or for more than sixty (60) consecutive calendar days or more than ninety (90) total calendar days, in each case in any 12-month period;

 

 

(q)         cooperate with the holders of the Registrable Securities to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold pursuant to such Registration Statement or Rule 144 free of any restrictive legends and representing such number of shares of Common Stock and registered in such names as the holders of the Registrable Securities may reasonably request a reasonable period of time prior to sales of Registrable Securities pursuant to such Registration Statement or Rule 144; provided, that the Company may satisfy its obligations hereunder without issuing physical stock certificates through the use of The Depository Trust Company’s Direct Registration System (the “DTCDRS”);

 

(r)          not later than the effective date of such Registration Statement, provide a CUSIP number for all Registrable Securities and provide the applicable transfer agent with printed certificates for the Registrable Securities which are in a form eligible for deposit with The Depository Trust Company; provided, that the Company may satisfy its obligations hereunder without issuing physical stock certificates through the use of the DTCDRS;

 

(s)          take no direct or indirect action prohibited by Regulation M under the Exchange Act; provided, that, to the extent that any prohibition is applicable to the Company, the Company will take all reasonable action to make any such prohibition inapplicable;

 

(t)          prior to any public offering of Registrable Securities, use its reasonable best efforts to register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as any Holder of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may reasonably request (or provide evidence satisfactory to such Holders that the Registrable Securities are exempt from such registration or qualification); provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject; and

 

(u)         otherwise use its reasonable best efforts to take all other steps necessary to effect the registration of such Registrable Securities contemplated hereby.

 

5.           Company Information Requests. The Company may require each Holder to furnish to the Company such information regarding the distribution of Registrable Securities and such other information relating to such Holder and its ownership of Registrable Securities or other securities of the Company as the Company may from time to time reasonably request in writing, and the Company may exclude the Registrable Securities of each Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request. Each Holder shall furnish such information to the Company and cooperate with the Company as reasonably necessary to enable the Company to comply with the provisions of this Agreement.

 

6.          Expenses. All expenses (other than Selling Expenses) incurred by the Company in complying with its obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Securities shall be paid by the Company, including, without limitation, all (i) registration and filing fees (including, without limitation, any fees relating to filings required to be made with, or the listing of any Registrable Securities on, any securities exchange or over-the-counter trading market on which the Registrable Securities are listed or quoted); (ii) expenses of any audits incident to or required by any such registration; (iii) fees and expenses of complying with securities and “blue sky” laws (including, without limitation, fees and disbursements of counsel for the Company in connection with “blue sky” qualifications or exemptions of the Registrable Securities); (iv) printing expenses; (v) messenger, telephone and delivery expenses; (vi) fees and expenses of the Company’s counsel and accountants; and (vii) Financial Industry Regulatory Authority, Inc. filing fees (if any). In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties) and the expense of any annual audits. All Selling Expenses relating to the offer and sale of Registrable Securities registered under the Securities Act pursuant to this Agreement shall be borne and paid by the Holders in proportion to the number of Registrable Securities included in such registration for each such Holder. Notwithstanding the foregoing, the Company shall reimburse the Holders for the fees and disbursements of legal counsel in connection with the registration, filing or qualification pursuant to Section 2 not to exceed $35,000 per initial filing and an additional $35,000 per Piggyback Registration or Underwritten Shelf Takedown.

 

 

7.            Indemnification.

 

(a)         The Company shall indemnify and hold harmless, to the fullest extent permitted by law, each Holder, such Holder’s officers, directors, managers, members, partners, stockholders, employees, agents, representatives and Affiliates, each underwriter, broker or any other Person acting on behalf of such Holder, if any, who controls any of the foregoing Persons, against all losses, claims, actions, damages, liabilities and expenses, joint or several, to which any of the foregoing Persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, actions, damages, liabilities or expenses arise out of or are based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus or free writing prospectus, in light of the circumstances under which they were made) not misleading, or (ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement; and shall reimburse such Persons for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, action, damage or liability, except and only insofar as the same are solely caused by an untrue statement in or omission from such Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto in reliance upon and in conformity with written information furnished by such Holder to the Company expressly for use in the preparation thereof or by such Holder’s failure to deliver a copy of the Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendments or supplements thereto (if the same was required by applicable law to be so delivered) after the Company has furnished such Holder with a sufficient number of copies of the same prior to any written confirmation of the sale of Registrable Securities. This indemnity shall be in addition to any liability the Company may otherwise have.

 

(b)        In connection with any registration in which a Holder is participating, each such Holder shall furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the extent permitted by law, shall indemnify and hold harmless, the Company, each director of the Company, each officer of the Company who shall sign such Registration Statement, each underwriter, broker or other Person acting on behalf of the Holder who controls any of the foregoing Persons against any losses, claims, actions, damages, liabilities or expenses resulting from any untrue or alleged untrue statement of material fact contained in the Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus or free writing prospectus, in light of the circumstances under which they were made) not misleading, but only to the extent that such untrue statement or omission is contained in any information so furnished in writing by such Holder, it being understood and agreed that the only information furnished by any Holder consists of the number of shares of Common Stock (or any securities convertible, exchangeable or exercisable for Common Stock within sixty (60) days of any such filing) beneficially owned by such Holder, the number of Registrable Securities proposed to be sold by such Holder, the name and address of such Holder proposing to sell, and the distribution proposed by such Holder; provided, that the obligation to indemnify shall be several, not joint and several, for each Holder and shall not exceed an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. This indemnity shall be in addition to any liability the selling Holder may otherwise have.

 

 

(c)         Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in this Section 7, such indemnified party shall, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action. The failure of any indemnified party to notify an indemnifying party of any such action shall not (unless such failure shall have a material adverse effect on the indemnifying party) relieve the indemnifying party from any liability in respect of such action that it may have to such indemnified party hereunder. In case any such action is brought against an indemnified party, the indemnifying party shall be entitled to participate in and to assume the defense of the claims in any such action that are subject or potentially subject to indemnification hereunder, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after written notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided, that, if (i) any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity provided hereunder, or (ii) such action seeks an injunction or equitable relief against any indemnified party or involves actual or alleged criminal activity, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party without such indemnified party’s prior written consent (but, without such consent, shall have the right to participate therein with counsel of its choice) and such indemnifying party shall reimburse such indemnified party of such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified party which is reasonably related to the matters covered by the indemnity provided hereunder. If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.

 

(d)        If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided, that the maximum amount of liability in respect of such contribution shall be limited, in the case of a Holder, to an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by such Holder from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No Person guilty or liable of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

 

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

 

9.           Termination. This Agreement shall terminate and be of no further force or effect when there shall no longer be any Registrable Securities outstanding; provided, that the provisions of Section 6 (Expenses), Section 7 (Indemnification) and Section 16 (Governing Law) shall survive any such termination.

 

10.        Notices. Any notice, consents, waivers or other communication required or permitted to be given hereunder shall be in writing and will be deemed to have been delivered: (i) upon receipt, when personally delivered; (ii) upon receipt when sent by certified mail, return receipt requested, postage prepaid; (iii) when sent, if by e-mail, provided that such sent e‑mail is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s e‑mail server that such e-mail could not be delivered to such recipient; or (iv) three (3) Business Days after deposit with an internationally-recognized courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses and email addresses for such communications shall be:

 

	(a)	if to the Company, at
		Avinger, Inc.
		400 Chesapeake Drive
		Redwood City, CA 94063
		Attention: Chief Executive Officer
		E-mail: jsoinski@avinger.com

 

 

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

 

 

Dorsey & Whitney LLP

 

111 South Main Street

 

Suite 2100

 

Salt Lake City, UT 84111

 

Attention: David Marx

 

Email: david.marx@dorsey.com

 

 

or

 

 

(b)          if to Zylox, at

Zylox Tonbridge Medical Limited

 

6/F Manulife Place, 348 Kwun Tong Road, KL, Hong Kong

 

Attention: Jonathon Zhong Zhao, Director

 

Email: jon.zhao@zyloxmedical.com

 

 

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

 

 

Sidley Austin LLP

 

Suite 2009, 5 Corporate Avenue

 

150 Hubin Road, Shanghai 200021, PRC

Attention: Ruchun Ji

 

Email: rji@sidley.com

 

(or, in any case, to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 10).

 

11.       Entire Agreement. This Agreement, together with the Purchase Agreement and any related exhibits and schedules thereto, constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. Notwithstanding the foregoing, in the event of any conflict between the terms and provisions of this Agreement and those of the Purchase Agreement, the terms and conditions of this Agreement shall control.

 

 

12.        Assignability. This Agreement and the rights, interests and obligations hereunder are not transferable or assignable by any of the parties (whether by operation of law or otherwise) without the prior written consent of the other party; provided, however, that the Purchaser may assign its rights, interests and obligations under this Agreement, in whole or in part, to one or more of its Affiliates, or to any other Person in connection with any transfer of all or a portion of the Registrable Securities, which assignee shall agree in writing to be bound by the provisions of this Agreement, including the rights, interests and obligations so assigned.

 

13.        No Third-Party Beneficiaries. This Agreement is intended only for the benefit of the parties hereto and their respective successors and permitted assigns. A Person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 2001 of Singapore to enforce or to enjoy the benefit of any term of this Agreement.

 

14.         Amendments and Waivers. Any term of this Agreement may be amended, terminated or waived only with the written consent of the Company and the Purchaser. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No waiver of any party will be effective unless it is in a writing signed by a duly authorized officer of the waiving party that makes express reference to the provision or provisions subject to such waiver. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by applicable law.

 

15.       Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

16.         Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Republic of Singapore.

 

17.         Arbitration.

 

(a)         Any dispute, controversy, difference or claim arising out of or relating to this Agreement, including the existence, validity, invalidity, interpretation, performance, breach or termination thereof or any dispute regarding contractual or non-contractual obligations arising out of or relating to it (a “Dispute”), shall be referred to and finally resolved by arbitration administered by the Singapore International Arbitration Centre in Singapore (the “SIAC”) in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (the “SIAC Rules”) in force when the Notice of Arbitration is submitted, which rules are deemed to be incorporated into this Section. The seat of arbitration shall be Singapore.

 

(b)         There shall be three arbitrators, the claimant to the Dispute, or in the case of multiple claimants, all such claimants acting collectively (the “Claimant”) shall select one arbitrator and the respondent to the Dispute, or in the case of more than one respondent, the respondents acting collectively (the “Respondent”) shall select one arbitrator. All selections shall be made within 30 days after the selecting party gives or receives the demand for arbitration. Such arbitrators shall be freely selected, and neither the Claimant nor the Respondent shall be limited in their selection to any prescribed list. The first two arbitrators shall select the third arbitrator; provided that if the first two arbitrators cannot agree on a third arbitrator within five (5) Business Days, the Chairman of SIAC shall select the third arbitrator who will act as chairman of the arbitration board. If any arbitrator to be appointed by a party has not been appointed and consented to participate within thirty (30) days after the selection of the first arbitrator, the relevant appointment shall be made by the Chairman of SIAC.

 

 

(c)          The arbitral proceedings shall be conducted in English. To the extent that the SIAC Rules are in conflict with the provisions of this Section 17, including the provisions concerning the appointment of the arbitrators, the provisions of this Section 17 shall prevail.

 

(d)          The award of the arbitral tribunal shall be final and binding upon the Parties thereto, and the prevailing party may apply to a court of competent jurisdiction for enforcement of such award.

 

(e)          Any party to the Dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

 

(f)          During the course of the arbitral tribunal’s adjudication of the Dispute, this Agreement shall continue to be performed except with respect to the part in dispute and under adjudication.

 

(g)          The parties agree to keep confidential the existence of the arbitration, the arbitral proceedings, the submissions made by any party and the decisions made by the arbitral tribunal, including its awards, except as required by applicable Law or the Principal Market.

 

(h)          The law of this arbitration clause shall be the laws of the Republic of Singapore.

 

18.        Counterparts. This Agreement may be executed in one or more original or facsimile or by an e‑mail which contains a portable document format (.pdf) file of an executed signature page counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument and which shall be enforceable against the parties actually executing such counterparts. Either party may enter into this Agreement by executing any such counterpart manually or electronically (such as Adobe Sign or DocuSign) and delivering the executed counterpart by electronic means to the other party. The receiving party may rely on the receipt of such document so executed and delivered as if the original had been received. Such electronic signatures shall be recognised and construed as secure electronic signatures pursuant to the Electronic Transactions Act 2010 of Singapore and that the parties accordingly shall deem such signatures to be original and binding signatures for all intents and purposes.

 

19.         Further Assurances. Each of the parties to this Agreement shall execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and to give effect to the transactions contemplated hereby.

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

 

	AVINGER, INC.
	By /s/ Jeffrey M. Soinski
	Name: Jeffrey M. Soinski
	Title: Chief Executive Officer
	ZYLOX TONBRIDGE MEDICAL LIMITED
	By /s/ Jonathon Zhong Zhao
	Name: Jonathon Zhong Zhao
	Title: Chairman

 

[Signature Page to Registration Rights Agreement]

 

 

Annex A

 

Plan of Distribution

 

 

Each Selling Stockholder (the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the Principal Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:

 

 

●

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

 

 

●

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

 

 

●

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

 

 

●

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

 

 

●

privately negotiated transactions;

 

 

●

settlement of short sales;

 

 

●

in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;

 

 

●

through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

 

●

a combination of any such methods of sale; or

 

 

●

any other method permitted pursuant to applicable law.

 

 

The Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.

 

 

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown in compliance with FINRA Rule 2121.

 

 

In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

 

The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

 

 

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

 

 

We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect or otherwise have ceased to be outstanding. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

 

 

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

Exhibit 10.4

 

AMENDMENT NO. 9 TO TERM LOAN AGREEMENT

 

THIS AMENDMENT NO. 9 TO TERM LOAN AGREEMENT dated as of March 5, 2024 (this “Agreement”), is made among AVINGER, INC., a Delaware corporation (“Borrower”), the Subsidiary Guarantors from time to time party thereto (together with Borrower, the Obligors”), and the Lenders listed on the signature pages hereto under the heading “LENDERS” (each a “Lender” and, collectively, “Lenders”), with respect to the Loan Agreement referred to below.

 

RECITALS

 

WHEREAS, Borrower, the Subsidiary Guarantors from time to time party thereto, and the Lenders are parties to the Term Loan Agreement, dated as of September 22, 2015, as amended by Amendment No. 1 to Term Loan Agreement, dated as of October 28, 2016, as further amended by Amendment No. 2 to Term Loan Agreement, dated as of February 14, 2018, as further amended by Amendment No. 3 to Term Loan Agreement, dated as of March 2, 2020, as further amended by Amendment No 4. and Waiver to Term Loan Agreement, dated as of May 12, 2020, as further amended by Amendment No. 5 to Term Loan Agreement, dated as of January 22, 2021, as further amended by Amendment No. 6 to Term Loan Agreement, dated as of August 10, 2022, as further amended by Amendment No. 7 to Term Loan Agreement, dated as of December 27, 2023, as further amended by Amendment No. 8 to Term Loan Agreement, dated as of January 26, 2024, and as modified by the Waiver and Consent, dated as of December 14, 2017, the Waiver and Consent, dated as of January 24, 2018, the Waiver and Consent, dated as of August 3, 2018, the Waiver and Consent, dated as of April 5, 2019, the Waiver and Consent, dated as of July 24, 2019, the Waiver and Consent, dated as of March 2, 2020, the Consent, dated as of April 20, 2020, the Waiver and Consent, dated as of January 27, 2021, the Waiver and Consent, dated as of May 16, 2022, the Waiver and Consent, dated as of August 3, 2022, and the Consent, dated as of August 2, 2023 (as amended, restated, modified or otherwise supplemented from time to time, the “Loan Agreement”).

 

WHEREAS, Borrower has requested that the Lenders (which Lenders constitute all of the Lenders party to the Loan Agreement as required by Section 12.04 of the Loan Agreement), and the Lenders have agreed to, amend the Loan Agreement on the terms and subject to the conditions set forth herein.

 

AGREEMENT

 

NOW THEREFORE, accordingly, the parties hereto agree as follows.

 

SECTION 1.    Definitions; Interpretation.

 

(a)    Terms Defined in Loan Agreement. All capitalized terms used in this Agreement (including in the recitals hereof) and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement.

 

(b)    Interpretation. The rules of interpretation set forth in Section 1.03 of the Loan Agreement shall be applicable to this Agreement and are incorporated herein by this reference.

 

 

SECTION 2.    Amendments to Loan Agreement. Subject to Section 3, the Loan Agreement is hereby amended as follows:

 

(a)    The following definitions are hereby added to Section 1.01 of the Loan Agreement to appear in appropriate alphabetical order:

 

““ZT Holders” means Zylox and its Affiliates.”

 

““ZT License Agreement” means that certain License and Distribution Agreement, dated as of March 4, 2024, by and between the Borrower and Zylox-Tonbridge Medical Technology Co., Ltd., a company established in the People’s Republic of China.”

 

““ZT Preferred Equity Interests” means the Preferred Stock issued by Borrower to Zylox pursuant to the ZT Preferred Equity Purchase Agreement.”

 

““ZT Preferred Equity Purchase Agreement” means that certain Securities Purchase Agreement, dated and as in effect on March 4, 2024, by and between Zylox and Borrower.”

 

““ZT Preferred Equity Transaction Documents” means collectively the ZT Preferred Equity Purchase Agreement and any certificate of designation governing any Equity Interests issued to Zylox pursuant to the ZT Preferred Equity Purchase Agreement, including the Series A-1 Certificate of Designation, the Series F Certificate of Designation and Series G Certificate of Designation (in each case, as defined in the ZT Preferred Equity Purchase Agreement and as in effect on the date hereof).”

 

““Zylox” means Zylox Tonbridge Medical Limited, a company established under the laws of Hong Kong.”

 

(b)    The following definitions in Section 1.01 of the Loan Agreement shall be amended and restated in their entirety as follows:

 

““Change of Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by (i) any Person or group of Persons (other than the Permitted Holders or ZT Holders) acting jointly or otherwise in concert of capital stock representing more than 25% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of Borrower, (ii) one or more Permitted Holders, acting as a group, of capital stock representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of Borrower, or (iii) one or more ZT Holders, acting jointly or otherwise in concert, of capital stock representing more than 49.9% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of Borrower or (b) during any period of twelve (12) consecutive calendar months, the occupation of a majority of the seats (other than vacant seats) on the board of directors of Borrower by Persons who were neither (i) nominated or approved (either by a specific vote or by approval of the Board of Directors of Borrower of a proxy statement in which such member was named as a nominee for election as a director) by the board of directors of Borrower, nor (ii) appointed or approved (either by a specific vote or by approval of the Board of Directors of Borrower of a proxy statement in which such member was named as a nominee for election as a director) by directors so nominated or approved; in each case whether as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise.”

 

 

““Disqualified Stock” or “Disqualified Equity Interests” means, with respect to any Person, any Equity Interests of such Person which, by their terms, or by the terms of any security into which they are convertible or for which they are putable or exchangeable, or upon the happening of any event or condition, (a) mature or are mandatorily redeemable (other than solely as a result of a change of control or asset sale, so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior indefeasible repayment in full in cash of the Loans and all other Obligations that are accrued and payable and the termination or expiration of the Commitments) pursuant to a sinking fund obligation or otherwise, or are redeemable at the option of the holder thereof (other than solely as a result of a change of control or asset sale, so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior indefeasible repayment in full in cash of the Loans and all other Obligations that are accrued and payable and the termination or expiration of the Commitments), in whole or in part, or otherwise has any distributions or other payments which are mandatory or otherwise required at any time (other than distributions or payments in Equity Interests that do not constitute Disqualified Stock), in each case prior to the date 181 days after the Stated Maturity Date, or (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (x) debt securities or (y) any Equity Interest referred to in clause (a) above; provided, however, that if such Equity Interests are issued to any plan for the benefit of employees of Borrower or its Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because they may be required to be repurchased by Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations; provided, however, that in no event shall ZT Preferred Equity Interests be considered Disqualified Stock or Disqualified Equity Interests.”

 

““Interest-Only Period” means the period from and including the first Borrowing Date and through and including the forty-sixth (46th) Payment Date after the first Borrowing Date, which is December 31, 2026.”

 

““PIK Period” means the period beginning on the first Borrowing Date through and including the earlier to occur of (i) forty-sixth (46th) Payment Date after the first Borrowing Date, which is December 31, 2026 and (ii) the date on which any Default shall have occurred (provided that if such Default shall have been cured or waived, the PIK Period shall resume until the earlier to occur of the next Default and December 31, 2026).”

 

 

““Preferred Stock” means the Borrower’s Series A-1 Convertible Preferred Stock, par value $0.001 per share, Series E Convertible Preferred Stock, par value $0.001 per share, Series F Preferred Stock, par value $0.001 per share, and Series G Preferred Stock, par value $0.001 per share.”

 

““Stated Maturity Date” means the fifty-fourth (54th) Payment Date following the Closing Date, which is December 31, 2028.”

 

(c)    Section 3.02(d) of the Loan Agreement shall be amended and restated in the entirety to read as follows:

 

“(d)         Paid In-Kind Interest. Notwithstanding Section 3.01(a), at any time during the PIK Period, Borrower may elect to pay the interest on the outstanding principal amount of the Loans payable pursuant to Section 3.01 as follows: (i) only 8.50% of the 12.50% per annum interest in cash and (ii) 4.00% of the 12.50% per annum interest as compounded interest, added to the aggregate principal amount of the Loans (the amount of any such compounded interest being a “PIK Loan”). At the request of any Lender, each PIK Loan of such Lender may be evidenced by a Note in the form of Exhibit C-2; provided that, for the Payment Dates commencing with the eleventh (11th) Payment Date following the Closing Date and continuing through and including December 31, 2026, Borrower may elect to pay such interest on the outstanding principal amount of the Loans entirely in the form of PIK Loans; provided further that no Default shall have occurred and be continuing as of each such Payment Date. The principal amount of each PIK Loan shall accrue interest in accordance with the provisions of this Agreement applicable to the Loans.”

 

(d)    Section 9.06(b) of the Loan Agreement shall be amended and restated in its entirety to read as follows:

 

“(b)         (i) the accrual and payment of dividends (whether in cash or shares of Preferred Stock) on the Preferred Stock; provided that the payment of dividends in cash shall only be permitted in respect of (x) the ZT Preferred Equity Interests so long as the ZT Holders are the sole holders of the ZT Preferred Equity Interests and (y) any other Preferred Stock so long as the Lenders (or their affiliates) are the sole holders of such Preferred Stock; provided further that payments of cash in lieu of fractional shares in connection with the payment of any dividend on the Preferred Stock shall be permitted at all times; and (ii) the issuance of common stock and cash in lieu of fractional shares upon conversion of the Preferred Stock;”

 

(e)    Section 9.10 of the Loan Agreement shall be amended as follows:

 

(i)    delete and replace “; and” at the end of clause (e) with “;”;

 

 

(ii)    delete and replace the “.” at the end of clause (f) with “; and”;

 

(iii)    add a new clause (g) as follows:

 

“(g)         transactions pursuant to the ZT License Agreement, the ZT Preferred Equity Transaction Documents or any other transaction between or among Borrower and any of the ZT Holders the transaction value of which does not exceed $5,000,000, each case, to the extent it becomes and continues to be an Affiliate of Borrower; provided that such transactions shall be upon fair and reasonable terms no less favorable to Borrower than would be obtained at the time in a comparable arm’s length transaction with a Person not an Affiliate of Borrower.”

 

SECTION 3.    Conditions to Effectiveness. The effectiveness of Section 2 shall be subject to the satisfaction of each of the following conditions precedent:

 

(a)    Borrower and all of the Lenders shall have duly executed and delivered this Agreement pursuant to Section 12.04 of the Loan Agreement; provided, however, that this Agreement shall have no binding force or effect unless all conditions set forth in this Section 3 have been satisfied.

 

(b)    The Borrower shall have paid or reimbursed Lenders for Lenders’ reasonable out of pocket costs and expense incurred in connection with this Agreement, including Lenders’ reasonable and documented out of pocket legal fees and costs, pursuant to Section 12.03(a)(i)(z) of the Loan Agreement.

 

(c)    No Default or Event of Default shall have occurred and be continuing.

 

SECTION 4.    Representations and Warranties. Each Obligor hereby represents and warrants to each Lender as follows:

 

(i)    Such Obligor has full power, authority and legal right to make and perform this Agreement. This Agreement is within such Obligor’s corporate powers and has been duly authorized by all necessary corporate and, if required, by all necessary shareholder action. This Agreement has been duly executed and delivered by such Obligor and constitutes a legal, valid and binding obligation of such Obligor, enforceable against such Obligor in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). This Agreement (x) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any third party, except for such as have been obtained or made and are in full force and effect and the filing of a copy of this Agreement with the SEC following its effectiveness, (y) will not violate any applicable Law or regulation or the charter, bylaws or other organizational documents of such Obligor and its Subsidiaries or any order of any Governmental Authority, other than any such violations that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, (z) will not violate or result in an event of default under any material indenture, agreement or other instrument binding upon such Obligor and its Subsidiaries or assets, or give rise to a right thereunder to require any payment to be made by any such Person.

 

 

(ii)    No Default has occurred or is continuing or will result after giving effect to this Agreement.

 

(iii)    There has been no Material Adverse Effect since the date of the Loan Agreement.

 

(iv)    The representations and warranties made by or with respect to such Obligor in Section 7 of the Loan Agreement are (A) in the case of representations qualified by “materiality,” “Material Adverse Effect” or similar language, true and correct in all respects and (B) in the case of all other representations and warranties, true and correct in all material respects (except that the representation regarding representations and warranties that refer to a specific earlier date are true and correct on the basis set forth above as of such earlier date), in each case taking into account any changes made to schedules updated in accordance with Section 7.21 of the Loan Agreement or attached hereto.

 

SECTION 5.    Reaffirmation. Each Obligor hereby ratifies, confirms, reaffirms, and acknowledges its obligations under the Loan Documents to which it is a party and agrees that the Loan Documents remain in full force and effect, undiminished by this Agreement, except as expressly provided herein. By executing this Agreement, each Obligor acknowledges that it has read, consulted with its attorneys regarding, and understands, this Agreement.

 

SECTION 6.    Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

 

(a)    Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed in accordance with, the law of the State of New York, without regard to principles of conflicts of laws that would result in the application of the laws of any other jurisdiction; provided that Section 5-1401 of the New York General Obligations Law shall apply.

 

(b)    Submission to Jurisdiction. Each Obligor agrees that any suit, action or proceeding with respect to this Agreement or any other Loan Document to which it is a party or any judgment entered by any court in respect thereof may be brought initially in the federal or state courts in Houston, Texas or in the courts of its own corporate domicile and irrevocably submits to the non-exclusive jurisdiction of each such court for the purpose of any such suit, action, proceeding or judgment. This Section 6 is for the benefit of the Lenders only and, as a result, no Lender shall be prevented from taking proceedings in any other courts with jurisdiction. To the extent allowed by applicable Laws, the Lenders may take concurrent proceedings in any number of jurisdictions.

 

 

(c)    Waiver of Jury Trial. Each Obligor and each Lender hereby irrevocably waives, to the fullest extent permitted by applicable Laws, any and all right to trial by jury in any suit, action or proceeding arising out of or relating to this Agreement, the other Loan Documents or the transactions contemplated hereby or thereby.

 

SECTION 7.    No Actions, Claims, Etc. Each Obligor acknowledges and confirms that it has no knowledge of any actions, causes of action, claims, demands, damages or liabilities of whatever kind or nature, in law or in equity, against any Secured Party, in any case, arising from any action or failure of any Secured Party to act under any Loan Document on or prior to the date hereof, or of any offset right, counterclaim or defense of any kind against any of its respective obligations, indebtedness or liabilities to Secured Party under any Loan Document. Each Obligor unconditionally releases, waives and forever discharges (i) any and all liabilities, obligations, duties, promises or indebtedness of any kind of any Lender to such Obligor, except the obligations required to be performed by any Lender under the Loan Documents on or after the date hereof, and (ii) all claims, offsets, causes of action, suits or defenses of any kind whatsoever (if any), whether arising at law or in equity, whether known or unknown, which such Obligor might otherwise have against any Secured Party in connection with the Loan Documents or the transactions contemplated thereby, in the case of each of clauses (i) and (ii), on account of any past or presently existing condition, act, omission, event, contract, liability, obligation, indebtedness, claim, cause of action, defense, circumstance or matter of any kind. Each Obligor acknowledges that it may discover facts or law different from, or in addition to, the facts or law that it knows or believes to be true with respect to the claims released in this Section 7 and agrees, nonetheless, that this release shall be and remain effective in all respects notwithstanding such different or additional facts or the discovery of them. Each Obligor expressly acknowledges and agrees that all rights under Section 1542 of the California Civil Code are expressly waived. That section provides:

 

“A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”

 

SECTION 8.    Miscellaneous.

 

(a)    No Waiver. Nothing contained herein shall be deemed to constitute a waiver of compliance with any term or condition contained in the Loan Agreement or any of the other Loan Documents or constitute a course of conduct or dealing among the parties. Except as expressly stated herein, the Lenders reserve all rights, privileges and remedies under the Loan Documents (including, without limitation, all such rights, privileges and remedies with respect to any Default, Event of Default or Material Adverse Effect, whether or not communicated to Lenders). Except as amended hereby, the Loan Agreement and other Loan Documents remain unmodified and in full force and effect. All references in the Loan Documents to the Loan Agreement shall be deemed to be references to the Loan Agreement as amended hereby.

 

 

(b)    Severability. In case any provision of or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

(c)    Headings. Headings and captions used in this Agreement (including the Exhibits, Schedules and Annexes hereto, if any) are included for convenience of reference only and shall not be given any substantive effect.

 

(d)    Integration. This Agreement constitutes a Loan Document and, together with the other Loan Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

 

(e)    Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. Executed counterparts delivered by facsimile or other electronic transmission (e.g., “PDF” or “TIF”) shall be effective as delivery of a manually executed counterpart.

 

(f)    Controlling Provisions. In the event of any inconsistencies between the provisions of this Agreement and the provisions of any other Loan Document, the provisions of this Agreement shall govern and prevail.

 

(g)    Loan Document. This Agreement is a Loan Document.

 

[Remainder of page intentionally left blank]

 

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

 

	OBLIGORS:     AVINGER, INC.
	By:	/s/ Jeffrey M. Soinski
	Name:	Jeffrey M. Soinski
	Title:	Chief Executive Officer

 

[Signature Page to Amendment No. 9]

 

LENDERS:

 

CRG PARTNERS III L.P.

By CRG PARTNERS III GP L.P., its General

Partner

By CRG PARTNERS III GP LLC, its

General Partner

 

By /s/ Nathan Hukill                                

Name: Nathan Hukill

Title: Authorized Signatory

 

CRG PARTNERS III – PARALLEL FUND “A” L.P.

By CRG PARTNERS III – PARALLEL FUND

“A” GP L.P., its General Partner

By CRG PARTNERS III GP LLC, its

General Partner

 

By /s/ Nathan Hukill                                

Name: Nathan Hukill

Title: Authorized Signatory

 

CRG PARTNERS III – PARALLEL FUND “B” (CAYMAN) L.P.

By CRG PARTNERS III (CAYMAN) GP L.P.,

its General Partner

By CRG PARTNERS III GP LLC, its

General Partner

 

By /s/ Nathan Hukill                                

Name: Nathan Hukill

Title: Authorized Signatory

 

WITNESS: /s/ Brian Englander

Name: Brian Englander

 

CRG PARTNERS III (CAYMAN) LEV AIV L.P.

By CRG PARTNERS III (CAYMAN) GP L.P.,

its General Partner

By CRG PARTNERS III GP LLC, its

General Partner

 

By /s/ Nathan Hukill                                

Name: Nathan Hukill

Title: Authorized Signatory

 

WITNESS: /s/ Brian Englander

Name: Brian Englander

 

[Signature Page to Amendment No. 9]

 

 

CRG PARTNERS III (CAYMAN) UNLEV AIV I L.P.

By CRG PARTNERS III (CAYMAN) GP L.P.,

its General Partner

By CRG PARTNERS III (CAYMAN) GP LLC,

its General Partner

 

By /s/ Nathan Hukill                                

Name: Nathan Hukill

Title: Authorized Signatory

 

WITNESS: /s/ Brian Englander

Name: Brian Englander

 

[Signature Page to Amendment No. 9]

 

Exhibit 10.5

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

 

COMMON STOCK PURCHASE WARRANT

 

AVINGER, INC.

 

Warrant Shares: [__]

Issue Date: [__], 2024   Initial Exercise Date: [__], 2024

 

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [__] or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date set forth above (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on [__] (the “Termination Date”) but not thereafter, to subscribe for and purchase from Avinger, Inc., a Delaware corporation (the “Company”), up to [__] shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant is issued pursuant to that certain engagement letter, dated as of [__], by and between the Company and [__].

 

Section 1.         Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated February 28, 2024, among the Company and the purchasers signatory thereto.

 

 

Section 2.         Exercise.

 

a)    Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary trading market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

 

b)    Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $[__], subject to adjustment hereunder (the “Exercise Price”)

 

c)    Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) =   as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal trading market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day; 

 

 

(B) =   the Exercise Price of this Warrant , as adjusted hereunder; and

 

(X) =   the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise

 

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a trading market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the trading market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a trading market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the board of directors of the Company, the fees and expenses of which shall be paid by the Company. 

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a trading market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the trading market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if OTCQB or OTCQX is not a trading market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the board of directors of the Company, the fees and expenses of which shall be paid by the Company.

 

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant.  The Company agrees not to take any position contrary to this Section 2(c), except to the extent required by applicable law, rule, or regulation.

 

d)    Mechanics of Exercise.

 

i.

Delivery of Warrant Shares Upon Exercise. Subject to Section 2(e), the Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144 (assuming cashless exercise of the warrants), and otherwise by physical delivery of a certificate to the address specified by the Holder in the Notice of Exercise or book entry, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise by the date that is three (3) Trading Days after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, 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 of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by the Warrant Share Delivery Date.

 

ii.    Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii.    Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

 

iv.    No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

v.    Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for electronic delivery of the Warrant Shares.

 

vi.    Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

 

e)    Holder’s Exercise Limitations. The Company shall not effect any exercise of any portion of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within one (1) Trading Day confirm orally or 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 this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61^st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

 

Section 3.         Certain Adjustments.

 

a)    Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re‑classification.

 

b)    Subsequent Rights Offerings. In addition to (but without duplication of) any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

c)    Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend (other than cash) or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of 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, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

 

d)    Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (and all of its Subsidiaries, taken as a whole), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of more than 50% of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation (or the ultimate parent thereof) or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). 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. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to or concurrently with such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the occurrence or consummation of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. For the avoidance of doubt, if, at any time while this Warrant is outstanding, a Fundamental Transaction occurs, pursuant to the terms of this Section 3(d), the Holder shall not be entitled to receive more than one of (i) the consideration receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction or (ii) the assumption by the Successor Entity of all of the obligations of the Company under this Warrant and the other Transaction Documents and the option to receive a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant.

 

e)    Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

 

f)    Notice to Holder.

 

i.    Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii.    Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

 

g)    Par Value. Notwithstanding anything in this Warrant to the contrary, no adjustment shall be made to the Exercise Price to the extent such adjustment would reduce the Exercise Price below the then-current par value of the Common Stock.

 

Section 4.         Transfer of Warrant.

 

a)    Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto 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. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b)    New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Issue Date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)    Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

d)    Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, to agree to be bound by the provisions of this Warrant.

 

 

e)    Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5.         Miscellaneous.

 

a)    No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be required to net cash settle an exercise of this Warrant.

 

b)    Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c)    Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d)    Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the trading market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, 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, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e)    Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

f)    Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

g)    Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

 

h)    Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered to the address of the Holder in the Warrant Register.

 

i)    Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j)    Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k)    Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l)    Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder of this Warrant, on the other hand.

 

m)    Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n)    Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

 

o)    Registration Rights. If, at any time after the Initial Exercise Date, the Company shall determine to prepare and file with the Securities and Exchange Commission a registration statement relating to an offering for its account or the account of others under the Securities Act of any of its equity securities, other than (i) on Form S-4 or Form S-8 (each as promulgated under the Securities Act), or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the stock option or other employee benefit plans or (ii) any registration statement filed pursuant to that certain Registration Rights Agreement dated March 5, 2024 between the Company and Zylox Tonbridge Medical Limited, the Company shall send to the Holder a written notice of such determination and if, within 10 calendar days after the date of such notice, the Holder (or any permitted successor or assign) shall so request in writing, the Company shall include in such registration statement all or any part of the shares of Common Stock underlying this Warrant (the “Warrant Shares”) that such Holder requests to be registered; provided, however, that the Company shall not be required to register any Warrant Shares pursuant to this Section 5(o) that are eligible for resale pursuant to Rule 144 under the Securities Act. Further, in the event that the offering is a firm-commitment underwritten offering, the Company may exclude the Warrant Shares if so requested in writing by the lead underwriter of such offering. In the case of inclusion in a firm-commitment underwritten offering, the Holder must sell their Warrant Shares on the same terms set by the underwriters for shares of Common Stock to be sold in such offering.

 

********************

 

(Signature Page Follows)

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

 

	AVINGER, INC.
	By:
		Name: Jeffrey M. Soinski
		Title: Chief Executive Officer

 

 

NOTICE OF EXERCISE

 

TO:         AVINGER, INC.

 

(1)    The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)    Payment shall take the form of (check applicable box):

 

[ ] in lawful money of the United States; or

 

[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3)    Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

(4)    Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

 

EXHIBIT B

 

 

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

Name:
	(Please Print)
Address:
	(Please Print)
Phone Number:
Email Address:
Dated: _______________ __, ______
Holder’s Signature:
Holder’s Address:

 

Exhibit 10.6

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is made as of March 5, 2024, by and among CRG Partners III L.P., CRG Partners III - Parallel Fund “A” L.P., CRG Partners III – Parallel Fund “B” (Cayman) L.P., CRG Partners III (Cayman) LEV AIV L.P. and CRG Partners III (Cayman) UNLEV AIV L.P. (together, “CRG” or the “Purchasers”, with each of the purchasing entities, a “Purchaser”) and Avinger, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, the Company is entering into a Securities Purchase Agreement with Zylox Tonbridge Medical Limited (the “Purchase Agreement”) and in connection therewith the parties have agreed to exchange all of the shares of Series A Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”) issued pursuant to the Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock (the “Series A Certificate of Designation”) of the Company held by the Purchasers (the “Exchange,” with such exchanged shares, the “Exchange Shares”) into shares of the Company’s newly designated Series A-1 Convertible Preferred Stock, par value $0.001 per share;

 

WHEREAS, the Company and the Purchasers are parties to that certain Registration Rights Agreement, dated February 16, 2018 (as amended, restated, modified or otherwise supplemented from time to time, the “Existing Registration Rights Agreement”) and the Company and the Purchasers desire to replace the Existing Registration Rights Agreement, with a new Registration Rights Agreement covering the Series A-1 Preferred Stock dated (the “New Registration Rights Agreement”) in substantially the form attached hereto as Exhibit A;

 

WHEREAS, the parties intend to execute that certain Amendment No. 8 to Term Loan Agreement relating to the Purchase Agreement (the “Amendment”);

 

WHEREAS, as consideration for the Exchange, the Company shall issue to the Purchasers in a private placement offering (the “Offering”) the Company’s newly designated Series A-1 Convertible Preferred Stock, par value $0.001 per share (the “Preferred Stock”), with the rights and preferences as set forth in that certain Certificate of Designation of Preferences, Rights and Limitations of Series A-1 Preferred Stock (the “Series A-1 Certificate of Designation” and together with this Agreement, the Registration Rights Agreement and the Amendment, the “Transaction Documents”) in substantially the form attached hereto as Exhibit B, upon Exchange of the Exchange Shares set forth on Schedule A hereto (the “Shares”); and

 

WHEREAS, the Exchange is intended to be treated as a recapitalization in accordance with Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended (the “Code”).

 

NOW THEREFORE, in consideration of the foregoing premises and the respective representations and warranties, covenants and agreements contained herein, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.    Sale and Purchase. Subject to the terms and conditions of this Agreement, each Purchaser hereby agrees to purchase at the Closing and the Company hereby agrees to sell and issue to each Purchaser at the Closing, the number of Shares set forth opposite such Purchaser’s name on Schedule A hereto, in exchange for the Exchange Shares set forth opposite such Purchaser’s name on Schedule A hereto.

 

 

2.    Closing; Delivery.

 

(a)    Closing. The purchase and sale of the Shares shall take place remotely via the exchange of documents and signatures simultaneously with the satisfaction of each of the conditions set forth in Section 7 and Section 8 (to the extent not waived in accordance therewith) (the “Closing,” and the date on which the Closing occurs hereinafter referred to as the “Closing Date”).

 

(b)    Exchange; Delivery. Immediately upon the Closing, the Exchange shall be effected. At the Closing, the Company shall deliver to each Purchaser, in book entry form, the Shares being purchased by such Purchaser pursuant to the Exchange.

 

3.    Representations and Warranties of the Company. Except as set forth in the SEC Reports, the Company hereby represents and warrants to each Purchaser, as of the Closing Date, the following:

 

(a)    Organization and Qualification. The Company and each of its subsidiaries is a corporation or other business entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company and each of its subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the assets, business, conditions (financial or otherwise), results of operations of the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”).

 

(b)    Authorization, Enforcement, Compliance with Other Instruments.

 

(i)    The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and each of the other agreements and documents that are exhibits hereto or thereto or are contemplated hereby or thereby or necessary or desirable to effect the transactions contemplated hereby or thereby and to issue the Securities (as defined below), in accordance with the terms hereof and thereof;

 

(ii)    the execution and delivery by the Company of each of the Transaction Documents and the consummation by it of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Securities, have been, or will be at the time of execution of such Transaction Document, duly authorized by the Company’s Board of Directors, and no further consent or authorization is, or will be at the time of execution of such Transaction Document, required by the Company, its respective Board of Directors or its stockholders;

 

(iii)    each of the Transaction Documents will be duly executed and delivered by the Company; and

 

(iv)    the Transaction Documents when executed will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their 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 creditors’ rights and remedies.

 

 

(c)    Capitalization. The authorized capital stock of the Company consists of 100,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”) and 5,000,000 shares of Preferred Stock. All of the outstanding shares of Common Stock and of the stock of each of the Company’s subsidiaries have been duly authorized, validly issued and are fully paid and nonassessable, free and clear of all liens. The shares of Common Stock issuable upon conversion of the Shares (the “Underlying Shares” and together with the Shares, the “Securities”) have been duly authorized by all necessary corporate action, and when issued in accordance with the terms of the Series A-1 Certificate of Designation, will be validly issued and outstanding, fully paid and nonassessable, free and clear of all liens and the holders shall be entitled to all rights accorded to a holder of Common Stock. The Company will reserve from its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares. After giving effect to the Closing:

 

(i)    no shares of capital stock of the Company or any of its subsidiaries will be subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company;

 

(ii)    all of the outstanding shares of capital stock of the Company have the rights, preferences, privileges and restrictions set forth in the Company’s Restated Certificate of Incorporation, as in effect as of the date hereof (the “Certificate of Incorporation”), and the Company’s Amended and Restated Bylaws, as in effect as of the date hereof (the “Bylaws”).

 

(iii)    except as set forth in the SEC Reports (as defined below), there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of their securities under the Securities Act;

 

(iv)    except as set forth in the SEC Reports (as defined below), there are no outstanding comment letters from the SEC or any other regulatory agency;

 

(v)    except as set forth in the SEC Reports (as defined below), there are no securities or instruments containing anti-dilution or similar provisions, including the right to adjust the exercise, exchange or reset price under such securities, that will be triggered by the issuance of the Securities; and

 

(vi)    no co-sale right, right of first refusal or other similar right will exist with respect to the Securities or the issuance and sale thereof.

 

(d)    Issuance of Shares. The Shares are duly authorized and, upon issuance in accordance with the terms hereof, shall be duly issued, fully paid and nonassessable, and are free and clear from all taxes, liens and charges with respect to the issue thereof. Any Underlying Shares will have been duly authorized and reserved for issuance and, upon conversion of the Shares into shares of Common Stock, will be validly issued, fully paid and nonassessable, and are free and clear from all taxes, liens and charges with respect to the issue thereof.

 

 

(e)    No Conflicts. The execution, delivery and performance of each of the Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Certificate of Incorporation or the Bylaws (or equivalent constitutive document) of the Company or any of its subsidiaries or (ii) violate or conflict with, or result in a breach of any provision of, 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 the Company or any subsidiary is a party, except for those which would not reasonably be expected to have a Material Adverse Effect, or (iii) result in a material violation of any law, rule, regulation, order, judgment or decree (including U.S. federal and state securities laws and regulations) applicable to the Company or any subsidiary or by which any property or asset of the Company or any subsidiary is bound or affected. Neither the Company nor any of its subsidiaries is in violation of any term of or in default under its Certificate of Incorporation, Bylaws or any other constitutive documents. Except for those violations or defaults which would not reasonably be expected to have a Material Adverse Effect, neither the Company nor any subsidiary is in violation of any term of or in default under any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or any subsidiary. The business of the Company and its subsidiaries is not being conducted, and shall not be conducted in violation of any law, ordinance or regulation of any governmental entity, except for any violation which would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the Securities Act and any applicable state securities laws and the rules of the Principal Market, neither the Company nor any of its subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement or the other Transaction Documents in accordance with the terms hereof or thereof. Neither the execution and delivery by the Company of the Transaction Documents, nor the consummation by the Company of the transactions contemplated hereby or thereby, will require any notice, consent or waiver under any contract or instrument to which the Company or any subsidiary is a party or by which the Company or any subsidiary is bound or to which any of their assets is subject. The Company is unaware of any facts or circumstance, which might give rise to any of the foregoing.

 

(f)    Absence of Litigation. Except as set forth in the SEC Reports, there is no action, suit, claim, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation before or by any court, public board, governmental or administrative agency, self-regulatory organization, arbitrator, regulatory authority, stock market, stock exchange or trading facility (an “Action”) now pending or, to the knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries. For the purpose of this Agreement, the knowledge of the Company means the knowledge of the officers of the Company (both actual or knowledge that they would have had upon reasonable investigation).

 

(g)    Acknowledgment Regarding Purchaser’s Purchase of the Shares. The Company acknowledges and agrees that each Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby.

 

(h)    No General Solicitation. Neither the Company, nor any of its Affiliates, nor, to the knowledge of the Company, any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Shares. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser. For purposes of this Agreement, “Affiliate” means, with respect to any person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms are used in and construed under Rule 144 under the Securities Act (“Rule 144”).

 

 

(i)    No Integrated Offering. Neither the Company, nor any of its Affiliates, nor to the knowledge of the Company, any person acting on its or 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 Shares under the Securities Act or cause this offering of the Shares to be integrated with prior offerings by the Company for purposes of the Securities Act.

 

(j)    Employee Relations. Neither Company nor any subsidiary is involved in any labor dispute nor, to the knowledge of the Company, is any such dispute threatened. Neither Company nor any subsidiary is party to any collective bargaining agreement. The Company’s and/or its subsidiaries’ employees are not members of any union, and the Company believes that its and its subsidiaries’ relationship with their respective employees is good.

 

(k)    Intellectual Property Rights. Except as set forth in the SEC Reports, (i) the Company and each of its subsidiaries owns, possesses, or has rights to, all Intellectual Property necessary for the conduct of the Company’s and its subsidiaries’ business as now conducted, except as such failure to own, possess or have such rights would not reasonably be expected to result in a Material Adverse Effect and (ii) there are no unreleased liens or security interests which have been filed, or which the Company has received notice of, against any of the patents owned or licenses to the Company. Furthermore, (A) to the Company’s knowledge, there is no infringement, misappropriation or violation by third parties of any such Intellectual Property, except as such infringement, misappropriation or violation would not result in a Material Adverse Effect; (B) there is no pending or, to the Company’s knowledge, threatened, action, suit, proceeding or claim by others challenging the Company’s or any of its subsidiaries’ rights in or to any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (C) the Intellectual Property owned by the Company and its subsidiaries, and to the Company’s knowledge, the Intellectual Property licensed to the Company and its subsidiaries, has not been adjudged invalid or unenforceable, in whole or in part, and there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity, enforceability or scope of any such Intellectual Property, and, to the Company’s knowledge, there are no facts which would form a reasonable basis for any such claim; (D) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company or any of its subsidiaries infringes, misappropriates or otherwise violates any Intellectual Property or other proprietary rights of others, neither the Company nor any of its subsidiaries has received any notice of such claim and, to the Company’s knowledge, there are no other facts which would form a reasonable basis for any such claim, except for any action, suit, proceeding or claim as would not be reasonably expected to have a Material Adverse Effect; and (E) to the Company’s knowledge, no employee of the Company or any of its subsidiaries is in or has ever been in violation of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Company or any of its subsidiaries or actions undertaken by the employee while employed with the Company or any of its subsidiaries, except as such violation would not reasonably be expected to have a Material Adverse Effect. Except as would not reasonably be expected to have a Material Adverse Effect and to the Company’s knowledge, (A) there are no facts that are reasonably likely to provide a basis for a finding that the Company or any of its subsidiaries does not have clear title or valid license or sublicense rights to the patents or patent applications owned or licensed to the Company or other proprietary information rights as being owned by, or licensed or sublicensed to, as the case may be, the Company or any of its subsidiaries, (B) no valid issued U.S. patent is or would be infringed by the activities of the Company or any of its subsidiaries relating to products currently or proposed to be manufactured, used or sold by the Company or any of its subsidiaries and (C) there are no facts with respect to any issued patent owned or licensed to the Company that would cause any claim of any such patent not to be valid and enforceable in accordance with applicable regulations. “Intellectual Property” shall mean all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade secrets, domain names, technology and know-how.

 

 

(l)    Environmental Laws.

 

(i)    The Company and each subsidiary has complied with all applicable Environmental Laws (as defined below), except for violations of Environmental Laws that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect. There is no pending or, to the knowledge of the Company, threatened civil or criminal litigation, notice of violation, formal administrative proceeding, or investigation, inquiry or information request, relating to any Environmental Law involving the Company or any subsidiary, except for litigation, notices of violations, formal administrative proceedings or investigations, inquiries or information requests that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect. For purposes of this Agreement, “Environmental Law” means any national, state, provincial or local law, statute, rule or regulation or the common law relating to the environment or occupational health and safety, including without limitation any statute, regulation, administrative decision or order pertaining to (i) treatment, storage, disposal, generation and transportation of industrial, toxic or hazardous materials or substances or solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater and soil contamination; (iv) the release or threatened release into the environment of industrial, toxic or hazardous materials or substances, or solid or hazardous waste, including without limitation emissions, discharges, injections, spills, escapes or dumping of pollutants, contaminants or chemicals; (v) the protection of wild life, marine life and wetlands, including without limitation all endangered and threatened species; (vi) storage tanks, vessels, containers, abandoned or discarded barrels, and other closed receptacles; (vii) health and safety of employees and other persons; and (viii) manufacturing, processing, using, distributing, treating, storing, disposing, transporting or handling of materials regulated under any law as pollutants, contaminants, toxic or hazardous materials or substances or oil or petroleum products or solid or hazardous waste. As used above, the terms “release” and “environment” shall have the meaning set forth in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

 

(ii)    To the knowledge of the Company, there is no material environmental liability with respect to any solid or hazardous waste transporter or treatment, storage or disposal facility that has been used by the Company or any subsidiary.

 

 

(iii)    The Company and its subsidiaries (i) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses except to the extent that the failure to have such permits, licenses or other approvals would not have a Material Adverse Effect, and (ii) are in compliance, in all material respects, with all terms and conditions of any such permit, license or approval.

 

(m)    Authorizations; Regulatory Compliance. The Company and each of its subsidiaries holds, and is operating in compliance with, all authorizations, licenses, permits, approvals, clearances, registrations, exemptions, consents, certificates and orders of any governmental authority and supplements and amendments thereto (collectively, “Authorizations”) required for the conduct of its business and all such Authorizations are valid and in full force and effect and neither the Company nor any of its subsidiaries is in material violation of any terms of any such Authorizations, except, in each case, as would not reasonably be expected to have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received notice of any revocation or modification of any such Authorization, or has reason to believe that any such Authorization will not be renewed in the ordinary course, except to the extent that any such revocation, modification, or non-renewal would not be reasonably expected to have a Material Adverse Effect. The Company and each of its subsidiaries is in compliance with all applicable federal, state, local and foreign laws, regulations, orders and decrees, except as would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its subsidiaries has received any unresolved FDA Form 483, notice of adverse filing, warning letter, untitled letter or other correspondence or notice from the U.S. Food and Drug Administration (“FDA”), or any other federal, state, local, or foreign governmental or regulatory authority, alleging or asserting noncompliance with the Federal Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.) or comparable applicable law. The Company and each of its subsidiaries, and to the Company’s knowledge, each of their respective directors, officers, employees and agents, is and has been in material compliance with applicable health care laws (collectively, “Health Care Laws”). Neither the Company nor any of its subsidiaries has received notice of any ongoing claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any Governmental Authority or third party alleging that any product operation or activity is in material violation of any Health Care Laws or Authorizations and has no knowledge that any such Governmental Authority or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding. Neither the Company nor any of its subsidiaries has received notice that any governmental authority has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations and has no knowledge that any such governmental authority is considering such action. The Company and each of its subsidiaries has filed, obtained, maintained or submitted all reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments thereto as required by any Health Care Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete, correct and not misleading on the date filed (or were corrected or supplemented by a subsequent submission). Neither the Company nor any of its subsidiaries has, either voluntarily or involuntarily, initiated, conducted, or issued or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, post sale warning, “dear doctor” letter, or other notice or action relating to the alleged lack of safety or efficacy of any product or any alleged product defect or violation and, to the Company’s knowledge, no third party has initiated or conducted any such notice or action. Neither the Company nor any of its subsidiaries is a party to any corporate integrity agreement, deferred prosecution agreement, monitoring agreement, consent decree, settlement order, or similar agreements, or has any reporting obligations pursuant to any such agreement, plan or correction or other remedial measure entered into with any Governmental Authority. Neither the Company, its subsidiaries nor their officers, directors, employees, agents or contractors has been or is currently suspended, disbarred or excluded from participation in the Medicare and Medicaid programs or any other state or federal health care program or in human clinical research.

 

 

(n)    Title. Neither the Company nor any of its subsidiaries owns any real property. Other than security interests granted pursuant to that certain Term Loan Agreement dated September 22, 2015, as amended from time to time, between the Company and the lenders party thereto, each of the Company and its subsidiaries has good and marketable title to all of its personal property and assets, free and clear of any restriction, mortgage, deed of trust, pledge, lien, security interest or other charge, claim or encumbrance which would have a Material Adverse Effect. With respect to properties and assets it leases, each of the Company and its subsidiaries is in compliance with such leases and holds a valid leasehold interest free of any liens, claims or encumbrances which would have a Material Adverse Effect.

 

(o)    No Material Restrictions, Breaches, etc. Neither Company nor any subsidiary is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has had, or is reasonably expected in the future to have, a Material Adverse Effect. Neither Company nor any subsidiary is in breach of any contract or agreement which breach, in the judgment of the Company’s officers, has had, or is reasonably expected to have a Material Adverse Effect.

 

(p)    Tax Status. The Company and each subsidiary has made and filed (taking into account any valid extensions) all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject and (unless and only to the extent that the Company or such subsidiary has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) 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 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. To the knowledge of the Company, there are no unpaid taxes in any material amount claimed to be due from the Company or any subsidiary by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

 

(q)    Certain Transactions. Except for arm’s length transactions pursuant to which the Company or any subsidiary makes payments in the ordinary course of business upon terms no less favorable than it could obtain from third parties, none of the officers, directors, or employees of the Company or any subsidiary is a party to any transaction with the Company or any subsidiary (other than for services as employees, officers and 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 officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

 

 

(r)    Rights of First Refusal. The Company is not obligated to offer the securities offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former stockholders of the Company, underwriters, brokers, agents or other third parties.

 

(s)    Insurance. The Company has insurance policies of the type and in amounts customarily carried by organizations conducting businesses or owning assets similar to those of the Company and its subsidiaries. There is no material claim pending under any such policy as to which coverage has been questioned, denied or disputed by the underwriter of such policy.

 

(t)    SEC Reports. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including pursuant to Section 15(d) thereof (or that it would have been required to file by Section 15(d) of the Exchange Act if its duty to file thereunder had not been automatically suspended) (collectively, the “SEC Reports”) for the two (2) years preceding the date hereof.

 

(u)    Financial Statements. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries taken as a whole as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. The pro forma financial information and the related notes, if any, included in the SEC Reports have been properly compiled and prepared in accordance with the applicable requirements of the Securities Act and the regulations promulgated thereunder and fairly present in all material respects the information shown therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein.

 

(v)    Material Changes. Since the respective date of the latest balance sheet of the Company included in the financial statements contained within the SEC Reports, except as specifically disclosed in the SEC Reports, (i) there have been no events, occurrences or developments that have had or would reasonably be expected to have a Material Adverse Effect with respect to the Company, (ii) the Company has not incurred any material liabilities (contingent or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the financial statements of the Company pursuant to GAAP or to be disclosed in filings made with the SEC, (iii) the Company has not materially altered its method of accounting or the manner in which it keeps its accounting books and records, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock (other than in connection with repurchases of unvested stock issued to employees of the Company), (v) the Company has not issued any equity securities to any officer, director or Affiliate, except Common Stock issued in the ordinary course pursuant to existing Company stock option or stock purchase plans or executive and director corporate arrangements disclosed in the SEC Reports, (vi) there has not been any change or amendment to, or any waiver of any material right under, any material contract under which the Company, or any of its assets are bound or subject, and (vii) except for the issuance of the Securities contemplated by this Agreement, no event, liability or development has occurred or exists with respect to the Company, its businesses, properties, operations or financial condition, as applicable, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made that has not been publicly disclosed in the SEC Reports.

 

 

(w)    Transactions With Affiliates and Employees. None of the officers or directors of the Company and, to the Company’s knowledge, none of the employees of the Company, is a party to any transaction with the Company or to a transaction contemplated by the Company (other than for services as employees, officers and directors) that would be required to be disclosed by the Company pursuant to Item 404 of Regulation S-K promulgated under the Securities Act, except as set forth in the SEC Reports.

 

(x)    Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to terminate the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration. Except as set forth in the SEC Reports, the Company has not, in the previous twelve (12) months, received (i) written notice from the Nasdaq Capital Market (or such other market or exchange on which the Common Stock is then listed or traded) (the “Principal Market”) that the Company is not in compliance with the listing or maintenance requirements of Principal Market that would result in immediate delisting or (ii) any notification, Staff Delisting Determination, or Public Reprimand Letter (as such terms are defined in applicable listing rules of the Principal Market) that requires a public announcement by the Company of any noncompliance or deficiency with respect to such listing or maintenance requirements. Except as set forth in the SEC Reports, the Company is in compliance with all listing and maintenance requirements of the Principal Market on the date hereof.

 

(y)    Sarbanes-Oxley. The Company is in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it.

 

(z)    Disclosure Controls. The Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Exchange Act) and such controls and procedures are effective in ensuring that material information relating to the Company, including its subsidiaries, is made known to the principal executive officer and the principal financial officer.

 

(aa)    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 SEC Reports and is not so disclosed or that otherwise would have a Material Adverse Effect.

 

(bb)    Foreign Corrupt Practices. Neither the Company and its subsidiaries, nor to the Company’s knowledge, any agent or other person acting on behalf of the Company and its subsidiaries, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

 

(cc)    Brokers’ Fees. Neither of the Company nor any of its subsidiaries has any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

 

(dd)    Disclosure Materials. The SEC Reports and the disclosure materials taken as a whole do 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.

 

(ee)    Investment Company. The Company is not required to be registered as, and is not an Affiliate of, and immediately following the Closing will not be required to register as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

(ff)    Reliance. The Company acknowledges that the Purchaser is relying on the representations and warranties made by the Company hereunder and that such representations and warranties are a material inducement to the Purchaser purchasing the Shares. The Company further acknowledges that without such representations and warranties of the Company made hereunder, the Purchasers would not enter into this Agreement.

 

(gg)    U.S. Real Property Holding Corporation. The Company is not now and has never been a “United States real property holding corporation” as defined in the Code, and any applicable regulations promulgated thereunder.

 

4.    Representations, Warranties and Agreements of the Purchasers. Each Purchaser represents and warrants to, and agrees with, the Company the following:

 

(a)    Organization; Authority. Such Purchaser is an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement and performance by such Purchaser of the transactions contemplated hereby have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. This Agreement has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

 

(b)    Own Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to a registration statement or otherwise in compliance with applicable federal and state securities laws).

 

(c)    Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it converts any Shares, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

 

(d)    Experience of Such Purchaser. Such Purchaser, 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 Purchaser 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. Such Purchaser and its advisors, if any, have been furnished with all materials relating to the business, financial condition and results of operations of the Company, and materials relating to the offer and sale of the Securities, that have been requested by such Purchaser or its advisors, if any. Such Purchaser acknowledges and understands that its investment in the Securities involves a significant degree of risk.

 

(e)    General Solicitation. Such 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 television or radio or presented at any seminar or, to such Purchaser’s knowledge, any other general solicitation or general advertisement.

 

(f)    Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.

 

(g)    No Governmental Review. Such Purchaser 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.

 

 

(h)    No Conflicts. The execution, delivery and performance by such Purchaser of this Agreement and the consummation by such Purchaser of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Purchaser 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 Purchaser 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 Purchaser, except in the case of clauses (ii) and (iii) above, for such that are not material and do not otherwise affect the ability of such Purchaser to consummate the transactions contemplated hereby.

 

(i)    No Legal, Tax or Investment Advice. Such Purchaser understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Purchaser in connection with the purchase of the Shares constitutes legal, tax or investment advice. Such Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

 

5.    Transfer Restrictions. The Purchaser acknowledges and agrees as follows:

 

(a)    None of the Securities have been registered for sale under the Securities Act, in reliance on the private offering exemption in Section 4(a)(2) thereof; the Company does not currently intend to register the Securities under the Securities Act at any time in the future; and the undersigned will not immediately be entitled to the benefits of Rule 144 with respect to the Shares or the Underlying Shares.

 

(b)    The Purchaser understands that there are substantial restrictions on the transferability of the Securities that the certificates representing the Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such certificates or other instruments):

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

 

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped, if (a) such Securities are sold pursuant to a registration statement under the Securities Act, (b) such holder delivers to the Company an opinion of counsel, reasonably acceptable to the Company, that a disposition of the Securities is being made pursuant to an exemption from such registration, or (c) any other evidence reasonably requested and reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Securities may be effected without registration under the Securities Act. The Company will not require a legal opinion (x) in any transaction in compliance with Rule 144, provided that Purchaser provides customary representations regarding Purchaser’s eligibility to sell securities under Rule 144; or (y) in any transaction in which such Purchaser distributes Securities to an Affiliate of such Purchaser for no consideration.

 

 

6.    Covenants and Other Rights.

 

(a)    Listing of Common Stock. The Company shall promptly secure the listing of the Underlying Shares upon each national securities exchange and automated quotation system that requires an application by the Company for listing, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain such listing, so long as any other shares of Common Stock shall be so listed. The Company shall use its reasonable best efforts to maintain the Common Stock’s listing on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action that would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market, unless the Common Stock is immediately thereafter traded on the New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 6(a).

 

(b)    Tax Treatment of Common Stock and Preferred Stock. The Company covenants and agrees that, unless required pursuant to a final determination (within the meaning of Section 1313 of the Code, (i) the Shares constitute stock that participates in corporate growth to a significant extent within the meaning of Section 1.305-5(a) of the Treasury Regulations and therefore shall not be treated as preferred stock for purposes of Section 305 of the Code and the Treasury Regulations thereunder, and (ii) for U.S. federal and applicable state income and withholding tax purposes no dividends shall be treated as having been paid with respect to the Shares unless and until paid in cash with respect to the Shares. Each of the parties hereto shall file all tax returns and determine all taxes consistent with such treatment and shall not take any action that is inconsistent with such treatment unless otherwise required by a final determination (within the meaning of Section 1313(a) of the Code).

 

7.    Conditions to Company’s Obligations at Closing. The Company’s obligation to complete the sale and issuance of the Shares and deliver the Shares to each Purchaser on the Closing Date, shall be subject to the following conditions to the extent not waived by the Company:

 

(a)    Representations and Warranties. The representations and warranties made by the Purchasers in Section 4 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date, as the case may be, with the same force and effect as if they had been made on and as of said date.

 

(b)    Performance. Each Purchaser shall have performed in all material respects all obligations and covenants herein required to be performed by them on or prior to the Closing Date.

 

(c)    Receipt of Executed Documents. Each Purchaser shall have executed and delivered to the Company each of the Transaction Documents that requires its signature.

 

8.    Conditions to Purchasers’ Obligations at Closing. Each Purchaser’s obligation to accept delivery of the Shares and to effect the Exchange on the Closing Date shall be subject to the following conditions to the extent not waived by CRG:

 

(a)    Representations and Warranties Correct. The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects (except to the extent any such representation and warranty is qualified by materiality or reference to Material Adverse Effect, in which case, such representation and warranty shall be true and correct in all respects as so qualified) as of, and as if made on, the date of this Agreement and as of the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date.

 

 

(b)    Performance. The Company shall have performed in all material respects all obligations and covenants herein required to be performed by it on or prior to the Closing Date.

 

(c)    Certificate. The Chief Executive Officer of the Company shall execute and deliver to the Purchasers a certificate to the effect that the representations and warranties of the Company in Section 3 hereof are true and correct (except to the extent any such representation and warranty is qualified by materiality or reference to Material Adverse Effect, in which case, such representation and warranty shall be true and correct in all respects as so qualified) as of, and as if made on, the date of this Agreement and as of the Closing Date and that the Company has satisfied in all material respects all of the conditions set forth in this Section 8.

 

(d)    Good Standing. The Company and each of its subsidiaries is a corporation or other business entity duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation.

 

(e)    Judgments. No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby.

 

(f)    No Suspension. No suspension of trading shall have been imposed by the Nasdaq Capital Market, the SEC or any other governmental regulatory body with respect to public trading in the Common Stock.

 

(g)    Series A-1 Certificate of Designation. The Company shall have filed the Series A-1 Certificate of Designation with the State of Delaware, which Series A-1 Certificate of Designation shall be substantially in the form attached as Exhibit B hereto.

 

(h)    Series E Certificate of Amendment. The Company shall have filed the Series E Certificate of Amendment to the Certificate of Designation with the State of Delaware, which Series E Certificate of Amendment shall be substantially in the form attached as Exhibit C hereto.

 

(i)    Nasdaq LAS. The Company shall have provided the Purchasers with a written confirmation from the Principal Market that the staff of the Principal Market shall have received for its review the Listing of Additional Shares Notification form submitted by the Company in connection with the transactions contemplated by this Agreement and the other Transaction Documents (the “Listing of Additional Shares Form”).

 

 

9.    Indemnification.

 

(a)    The Company agrees to indemnify and hold harmless each Purchaser, and its directors, officers, shareholders, members, partners, employees and agents (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title), each person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title) of such controlling person, from and against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever (including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced or threatened) arising from any Action based upon or arising out of the Company’s actual false representation or warranty, including, but not limited to, Section 3(dd), or material breach by the Company of any covenant or agreement made by the Company, contained herein or in any other document delivered by the Company in connection with this Agreement; provided, however, that the Company will not be liable in any such case to the extent and only to the extent that any such loss, liability, claim, damage, cost, fee or expense arises out of or is based upon the inaccuracy of any representations made by such indemnified party in this Agreement.

 

(b)    Each Purchaser, severally and not jointly, agrees to indemnify and hold harmless the Company and its directors, officers, shareholders, members, partners, employees and agents (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title), each person who controls such indemnified person (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title) of such controlling person, from and against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever (including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced or threatened, and including in settlement of any litigation, but only if such settlement is effected with the written consent of Purchaser) arising from any Action insofar as such losses, liabilities, claims, damages, costs, fees and expenses are primarily based upon or primarily arise out of the Purchaser’s actual false representation or warranty or material breach by the Purchaser of any covenant or agreement made by the Purchaser, contained herein or in any other document delivered by the Purchaser in connection with this Agreement.

 

 

(c)    Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any Action for which such indemnified party is asserting a right to indemnification under this Section 9, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 9, promptly notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 9, unless such delay materially harms the indemnifying party. In case any such Action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, if the defendants in any such Action include both the indemnified party and the indemnifying party and either (i) the indemnifying party or parties and the indemnified party or parties mutually agree or (ii) representation of both the indemnifying party or parties and the indemnified party or parties by the same counsel is inappropriate under applicable standards of professional conduct due to actual or potential differing interests between them, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such Action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such Action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any reasonable legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed counsel in connection with the assumption of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel in such circumstance), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the Action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened Action in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such Action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such Action, or (ii) be liable for any settlement of any such Action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment of the plaintiff in any such Action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment.

 

10.    Termination. This Agreement shall automatically terminate and become null and void if the Closing Date shall not have occurred on or before March 31, 2024.

 

11.    Binding Effect. The Purchaser hereby acknowledges and agrees that this Agreement shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

12.    Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under this Agreement are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under this Agreement. Nothing contained herein and no action taken by any Purchaser pursuant hereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group, or are deemed affiliates (as such term is defined under the Exchange Act) with respect to such obligations or the transactions contemplated by this Agreement. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.

 

 

13.    No Third-Party Beneficiaries. This Agreement is intended only for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

14.    Amendments and Waivers. Except as set forth in Section 7 and Section 8, any term of this Agreement may be amended, terminated or waived only with the written consent of the Company and each of the Purchasers.

 

15.    Notices. Any notice, consents, waivers or other communication required or permitted to be given hereunder shall be in writing and will be deemed to have been delivered: (i) upon receipt, when personally delivered; (ii) upon receipt when sent by certified mail, return receipt requested, postage prepaid; (iii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iv) when sent, if by e-mail, (provided that such sent e‑mail is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s e‑mail server that such e-mail could not be delivered to such recipient); or (v) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. For purposes of this Agreement, “Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business. The addresses, facsimile numbers and email addresses for such communications shall be:

 

(a)    if to the Company, at

 

Avinger, Inc.

400 Chesapeake Drive

Redwood City, CA 94063

Attention: Chief Executive Officer

E-mail: jsoinski@avinger.com

 

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

 

Dorsey & Whitney LLP

111 South Main Street

Suite 2100

Salt Lake City, UT 84111

Attention: David Marx

Email: david.marx@dorsey.com

 

or

 

 

(b)    if to CRG, at

 

CRG

1000 Main Street, Suite 2500

Houston, TX 77002

Attention: General Counsel

Facsimile: 713-209-7351

Email: notices@crglp.com

 

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

 

Cooley LLP

3 Embarcadero Ctr, 20^th Floor

San Francisco, CA 94111

Attention: Mischi a Marca

Facsimile: (415) 693-2222

Email: gmamarca@cooley.com

 

(or, in any case, to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 15). Any notice or other communication given by certified mail shall be deemed given at the time of certification thereof, except for a notice changing a party’s address which shall be deemed given at the time of receipt thereof.

 

16.    Assignability. This Agreement and the rights, interests and obligations hereunder are not transferable or assignable by the Purchaser, and the transfer or assignment of the Shares shall be made only in accordance with all applicable laws.

 

17.    Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to the principles thereof relating to the conflict of laws.

 

18.    Arbitration. The parties agree to submit all controversies to arbitration in accordance with the provisions set forth below and understand that:

 

(a)    Arbitration shall be final and binding on the parties.

 

(b)    The parties are waiving their right to seek remedies in court, including the right to a jury trial.

 

(c)    Pre-arbitration discovery is generally more limited and different from court proceedings.

 

(d)    The arbitrator’s award is not required to include factual findings or legal reasoning and any party’s right to appeal or to seek modification of rulings by arbitrators is strictly limited.

 

(e)    The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry.

 

 

(f)    All controversies which may arise between the parties concerning this Agreement shall be determined by arbitration pursuant to the rules then pertaining to the Financial Industry Regulatory Authority in New York City, New York. Judgment on any award of any such arbitration may be entered in the Supreme Court of the State of New York or in any other court having jurisdiction of the person or persons against whom such award is rendered. Any notice of such arbitration or for the confirmation of any award in any arbitration shall be sufficient if given in accordance with the provisions of this Agreement. The parties agree that the determination of the arbitrators shall be binding and conclusive upon them. The prevailing party, as determined by such arbitrators, in a legal proceeding shall be entitled to collect any costs, disbursements and reasonable attorney’s fees from the other party. Prior to filing an arbitration, the parties hereby agree that they will attempt to resolve their differences first by submitting the matter for resolution to a mediator, acceptable to all parties, and whose expenses will be borne equally by all parties. The mediation will be held in the County of New York, State of New York, on an expedited basis. If the parties cannot successfully resolve their differences through mediation within sixty (60) days from the receipt of the written notice of a matter from the notifying party, the matter will be resolved by arbitration. The arbitration shall take place in the County of New York, State of New York, on an expedited basis.

 

19.    Blue Sky Qualification. The Company 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 Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

 

20.    Use of Pronouns. All pronouns and any variations thereof used herein shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require.

 

21.    Securities Laws Disclosure; Publicity. The Company shall promptly, and no later than four Business Days after the date of this Agreement, file a Current Report on Form 8-K with the SEC disclosing the material terms of the transactions contemplated by the Transaction Documents (the “Transaction Form 8-K”). If the Company desires, the Company may also issue a press release relating to the Transaction Documents (the “Press Release”) prior to the filing of the Transaction Form 8-K. The Company shall give the Purchasers a reasonable opportunity to review and comment on the Transaction Form 8-K and Press Release. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company as described in this Section 21, such Purchaser will maintain the confidentiality of all disclosures made to it in connection with such transactions (including the existence and terms of such transactions).

 

22.    Miscellaneous.

 

(a)    This Agreement, together with the other Transaction Documents and any confidentiality agreement between the Purchaser and the Company, constitute the entire agreement between the Purchaser and the Company with respect to the Offering and supersede all prior oral or written agreements and understandings, if any, relating to the subject matter hereof. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by a written document executed by the party entitled to the benefits of such terms or provisions.

 

 

(b)    The representations and warranties of the Company and the Purchasers made in this Agreement shall survive the execution and delivery hereof and delivery of the Shares.

 

(c)    If the Shares are certificated and any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company and the Company’s transfer agent of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company and the Company’s transfer agent for any losses in connection therewith or, if required by the transfer agent, a bond in such form and amount as is required by the transfer agent. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Shares. If a replacement certificate or instrument evidencing any Shares is requested due to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.

 

(d)    Each of the parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such party) in connection with this Agreement and the transactions contemplated hereby, whether or not the transactions contemplated hereby are consummated.

 

(e)    This Agreement may be executed in one or more original or facsimile or by an e‑mail which contains a portable document format (.pdf) file of an executed signature page counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument and which shall be enforceable against the parties actually executing such counterparts. The exchange of copies of this Agreement and of signature pages by facsimile transmission or in .pdf format shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile or by e-mail of a document in pdf format shall be deemed to be their original signatures for all purposes.

 

(f)    Each provision of this Agreement shall be considered separable and, if for any reason any provision or provisions hereof are determined to be invalid or contrary to applicable law, such invalidity or illegality shall not impair the operation of or affect the remaining portions of this Agreement.

 

(g)    Paragraph titles are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text.

 

(h)    Each Purchaser hereby agrees to furnish the Company such other information as the Company may request prior to the Closing with respect to its purchase of Shares hereunder.

 

23.    Public Disclosure. No Purchaser nor any officer, manager, director, member, partner, stockholder, employee, Affiliate, affiliated person or entity of a Purchaser shall make or issue any press releases or otherwise make any public statements or make any disclosures to any third person or entity with respect to the transactions contemplated herein and will not make or issue any press releases or otherwise make any public statements of any nature whatsoever with respect to the Company without the Company’s express prior approval. The Company has the right to withhold such approval in its sole discretion.

 

[Signature Page to Follow]

 

 

IN WITNESS WHEREOF, the undersigned have executed, or caused to be executed on their behalf by an agent there unto duly authorized, this Securities Purchase Agreement as of the date first above written.

 

	COMPANY:   AVINGER, INC.
	By:	/s/ Jeffrey M. Soinski
	Name:	Jeffrey M. Soinski
	Title:	Chief Executive Officer

 

 

 

IN WITNESS WHEREOF, the undersigned have executed, or caused to be executed on their behalf by an agent there unto duly authorized, this Securities Purchase Agreement as of the date first above written.

 

CRG:   CRG PARTNERS III L.P. By CRG PARTNERS III GP L.P., its General Partner By CRG PARTNERS III GP LLC, its General Partner   By /s/ Nathan Hukill                      Name: Nathan Hukill Title: Authorized Signatory   Address for Notices:   1000 Main Street, Suite 2500 Houston, TX 77002 Attn:         General Counsel Tel.:           713.209.7350 Fax:           713.209.7351 Email        adorenbaum@crglp.com   CRG PARTNERS III – PARALLEL FUND “A” L.P. By CRG PARTNERS III – PARALLEL FUND “A” GP L.P., its General Partner By CRG PARTNERS III GP LLC, its General Partner   By /s/ Nathan Hukill                      Name: Nathan Hukill Title: Authorized Signatory   Address for Notices:   1000 Main Street, Suite 2500 Houston, TX 77002 Attn:         General Counsel Tel.:           713.209.7350 Fax:           713.209.7351 Email:       adorenbaum@crglp.com

 

 

CRG PARTNERS III – PARALLEL FUND “B” (CAYMAN) L.P. By CRG PARTNERS III (CAYMAN) GP L.P., its General Partner By CRG PARTNERS III GP LLC, its General Partner   By /s/ Nathan Hukill               Name: Nathan Hukill Title: Authorized Signatory   WITNESS: Brian Englander Name: Brian Englander   Address for Notices:   1000 Main Street, Suite 2500 Houston, TX 77002 Attn:         General Counsel Tel.:           713.209.7350 Fax:           713.209.7351 Email:       adorenbaum@crglp.com   CRG PARTNERS III (CAYMAN) L.P. By CRG PARTNERS III (CAYMAN) GP L.P., its General Partner By CRG PARTNERS III GP LLC, its General Partner   By /s/ Nathan Hukill                Name: Nathan Hukill Title: Authorized Signatory WITNESS: /s/ Brian Englander Name: Brian Englander

 

 

SCHEDULE A

 

 

Purchaser	Exchange Shares	Shares of Preferred Stock
CRG Partners III L.P.	9,819	1,613
CRG Partners III – Parallel Fund “A” L.P.	5,266	865
CRG Partners III Parallel Fund “B” (Cayman) L.P.	23,228	3,816
CRG Partners III (Cayman) Lev AIV I L.P.	20,871	3,428
CRG Partners III Cayman) Unlev AIV I L.P.	1,692	278
Total	60,876	10,000

 

 

EXHIBIT A

 

FORM OF REGISTRATION RIGHTS AGREEMENT

 

 

EXHIBIT B

 

FORM OF SERIES A-1 CERTIFICATE OF DESIGNATION

 

 

EXHIBIT C

 

FORM OF SERIES E CERTIFICATE OF AMENDMENT

 

Exhibit 10.7

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into effective as of March 5, 2024, by and among Avinger, Inc., a Delaware corporation (the “Company”), and CRG Partners III L.P., CRG Partners III - Parallel Fund “A” L.P., CRG Partners III – Parallel Fund “B” (Cayman) L.P., CRG Partners III (Cayman) LEV AIV L.P. and CRG Partners III (Cayman) UNLEV AIV L.P. (together, “CRG” or the “Holders”, with each of the purchasing entities, a “Holder”).

 

RECITALS:

 

WHEREAS, the Company is entering into a Securities Purchase Agreement with Zylox Tonbridge Medical Limited (the “Purchase Agreement”) and in connection therewith the Holders and the Company have agreed to exchange shares of Series A Preferred Stock held by such Holders for shares of Series A-1 Preferred Stock; and

 

WHEREAS, in connection with the exchange, the Company has agreed to enter into a registration rights agreement with each of the Holders.

 

NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants, and conditions set forth herein, the parties mutually agree as follows:

 

1.    Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

 

“Approved Market” means the Nasdaq Stock Market, the New York Stock Exchange or the NYSE MKT.

 

“Business Day” means any day of the year, other than a Saturday, Sunday, or other day on which banks in the State of New York are required or authorized to close.

 

“Commission” means the U. S. Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

 

“Common Stock” means the common stock, par value $0.001 per share, of the Company and any and all shares of capital stock or other equity securities of: (i) the Company which are added to or exchanged or substituted for the Common Stock by reason of the declaration of any stock dividend or stock split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other such modification of the capital structure of the Company; and (ii) any other corporation, now or hereafter organized under the laws of any state or other governmental authority, with which the Company is merged, which results from any consolidation or reorganization to which the Company is a party, or to which is sold all or substantially all of the shares or assets of the Company, if immediately after such merger, consolidation, reorganization or sale, the Company or the stockholders of the Company own equity securities having in the aggregate more than 50% of the total voting power of such other corporation.

 

“Demand Registration” shall have the meaning set forth in Section 3(a) hereof.

 

“Effectiveness Period” shall have the meaning set forth in Section 3(a) hereof.

 

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

 

 

“Family Member” means (a) with respect to any individual, such individual’s spouse, any descendants (whether natural or adopted), any trust all of the beneficial interests of which are owned by any of such individuals or by any of such individuals together with any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any such individual, and any corporation, association, partnership or limited liability company all of the equity interests of which are owned by those above described individuals, trusts or organizations and (b) with respect to any trust, the owners of the beneficial interests of such trust.

 

“Holder” means the holder or holders, as the case may be, from time to time of Registrable Securities and any Permitted Assignees who acquire rights in accordance with this Agreement with respect to any Registrable Securities.

 

“Majority Holders” means, at any time, Holders of a majority of the Registrable Securities then outstanding.

 

“Permitted Assignee” means (a) with respect to a partnership, its partners or former partners in accordance with their partnership interests, (b) with respect to a corporation, its stockholders in accordance with their interest in the corporation, (c) with respect to a limited liability company, its members or former members in accordance with their interest in the limited liability company, (d) with respect to an individual party, any Family Member of such party, (e) an entity that is controlled by, controls, or is under common control with a transferor, or (f) a party to this Agreement.

 

“Piggyback Registration” means, in any registration of Common Stock referenced in Section 3(b), the right of each Holder to include the Registrable Securities of such Holder in such registration.

 

“Preferred Stock” means the shares of the Company’s Series A-1 Convertible Preferred Stock held by the Holders.

 

The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement by the Commission.

 

“Registrable Securities” means (a) the shares of Common Stock issued or issuable upon conversion of any of the Shares, and (b) any shares of Common Stock issued or issuable with respect to any shares described in subsection (a) above by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other reorganization or other similar event with respect to the Common Stock; provided, however, that any such Registrable Securities shall cease to be Registrable Securities on the date that is two (2) years from the date the Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act or such shorter period ending on the earlier of the date on which (i) such Registrable Securities have been disposed of by the Holder in accordance with such Registration Statement, or (ii) all Registrable Securities held by such Holder may be sold under Rule 144 without restriction (including, without limitation, volume restrictions and manner-of-sale) and without the need for current public information required by Rule 144(c)(1).

 

“Registration Statement” means any registration statement of the Company, including the prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference in such registration statement.

 

 

“Rule 144” means Rule 144 promulgated by the Commission under the Securities Act, as such rule may be amended or supplemented from time to time, or any similar successor rule that may be promulgated by the Commission.

 

“Rule 145” means Rule 145 promulgated by the Commission under the Securities Act, as such rule may be amended or supplemented from time to time, or any similar successor rule that may be promulgated by the Commission.

 

“Rule 415” means Rule 415 promulgated by the Commission under the Securities Act, as such rule may be amended or supplemented from time to time, or any similar successor rule that may be promulgated by the Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute promulgated in replacement thereof, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

 

“SEC Effective Date” means the date the Registration Statement is declared effective by the Commission.

 

“Shares” means the shares of Series A-1 Preferred Stock set forth in the Recitals.

 

“Trading Day” means any day on which the Nasdaq Capital Market, or such other securities market or quotation system, which at the time constitutes the principal securities market for the Common Stock, is open for general trading of securities.

 

Capitalized terms used herein without definition have the meanings ascribed to them in the Purchase Agreement.

 

2.    Term. The registration rights provided to the Holders of Registrable Securities hereunder, and the Company’s obligation to keep the Registration Statements effective, shall terminate on the earlier of (i) the date at which there are no longer any Registrable Securities outstanding, or (ii) the Effectiveness Period. Notwithstanding the foregoing, Section 6, Section 8, and Section 10 shall survive the termination of this Agreement.

 

3.    Registration.

 

(a)    Demand Registration. At any time ninety (90) days after the date hereof, the holders of a majority of the Registrable Securities then outstanding may request registration under the Securities Act of all of the Registrable Securities that are not then registered on an existing and effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415, on Form S-3 or any other form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the resale by the Holders of all of the Registrable Securities (each, a “Demand Registration”). Upon receipt of such request, the Company shall promptly (but in no event later than twenty (20) calendar days after receipt of such request) deliver notice of such request to all other holders of Registrable Securities who shall then have ten (10 calendar days from the date such notice is given to notify the Company in writing of their desire to be included in such registration. The Company shall (i) use its commercially reasonable efforts to make the initial filing of the Registration Statement within ninety (90) calendar days after the date on which the initial request is given (ii) use its commercially reasonable efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter, and (iii) use its commercially reasonable efforts to keep such Registration Statement effective until the date on which all securities under such Registration Statement have ceased to be Registrable Securities (the “Effectiveness Period”). The Registration Statement filed hereunder shall contain (except if otherwise required pursuant to written comments received from the Commission upon a review of such Registration Statement) that “Plan of Distribution” in substantially the form attached hereto as Annex A. Notwithstanding the foregoing, in the event that the staff (the “Staff”) of the Commission should limit the number of Registrable Securities that may be sold pursuant to the Registration Statement, the Company may remove from the Registration Statement such number of Registrable Securities as specified by the Commission on behalf of all of the holders of Registrable Securities on a pro rata basis among the holders thereof. In such event, the Company shall give the Holders prompt notice of the number of Registrable Securities excluded therefrom. The Company shall not be required to effect a registration pursuant to Form S-3 (or any other form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the resale by the Holders of all of the Registrable Securities) more than two times for the holders of Registrable Securities as a group.

 

 

(b)    Piggyback Registration. If, after the SEC Effective Date, the Company shall determine to register for sale for cash any of its Common Stock, for its own account or for the account of others (other than the Holders), other than (i) a registration relating solely to employee benefit plans or securities issued or issuable to employees, consultants (to the extent the securities owned or to be owned by such consultants could be registered on Form S-8 (or its then equivalent form) or any of their Family Members (including a registration on Form S-8 (or its then equivalent form)), (ii) a registration relating solely to a Securities Act Rule 145 transaction or a registration on Form S-4 (or its then equivalent form) in connection with a merger, acquisition, divestiture, reorganization or similar event, (iii) a transaction relating solely to the sale of debt or convertible debt instruments, or (iv) an offering of securities purchased pursuant to the Purchase Agreement, then the Company shall promptly give to each Holder written notice thereof (but in no event later than twenty (20) calendar days prior to the filing of such registration statement), and shall, subject to Section 3(c), include as a Piggyback Registration all of the Registrable Securities (including any Registrable Securities that are removed from the Registration Statement as a result of a requirement by the Staff), specified in a written request delivered by the Holder thereof within ten (10) calendar days after delivery to the Holder of such written notice from the Company. However, the Company may, without the consent of such Holders, withdraw such registration statement prior to its becoming effective if the Company or such other selling stockholders have elected to abandon the proposal to register the securities proposed to be registered thereby.

 

(c)    Underwriting. If a Piggyback Registration is for a registered public offering that is to be made by an underwriting, the Company shall so advise the Holders as part of the notice given in connection with the Piggyback Registration. In that event, the right of any Holder to Piggyback Registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to sell any of their Registrable Securities through such underwriting shall (together with the Company and any other stockholders of the Company selling their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter selected for such underwriting by the Company or such other selling stockholders, as applicable. Notwithstanding any other provision of this Section 3(c), if the underwriter or the Company determines that marketing factors require a limitation on the number of shares of Common Stock or the amount of other securities to be underwritten, the underwriter may exclude some or all Registrable Securities from such registration and underwriting. The Company shall so advise all Holders (except those Holders who failed to timely elect to include their Registrable Securities through such underwriting or have indicated to the Company their decision not to do so), and indicate to each such Holder the number of shares of Registrable Securities that may be included in the registration and underwriting, if any. The number of shares of Registrable Securities to be included in such registration and underwriting shall be allocated among such Holders as follows:

 

(i)    If the Piggyback Registration was initiated by the Company, the number of shares that may be included in the registration and underwriting shall be allocated first to the Company and then, subject to obligations and commitments existing as of the date hereof, to all Holders exercising piggyback registration rights who have requested to sell in the registration on a pro rata basis according to the number of shares requested to be included therein; and

 

 

(ii)    If the Piggyback Registration was initiated by the exercise of demand registration rights by a stockholder or stockholders of the Company, then the number of shares that may be included in the registration and underwriting shall be allocated first to such selling stockholders who exercised such demand to the extent of their demand registration rights, subject to obligations and commitments existing as of the date hereof, to all Holders exercising piggyback registration rights who have requested to sell in the registration on a pro rata basis according to the number of shares requested to be included therein, and then, subject to obligations and commitments existing as of the date hereof, to the Company.

 

No Registrable Securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such registration. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw such Holder’s Registrable Securities therefrom by delivering a written notice to the Company and the underwriter. The Registrable Securities so withdrawn from such underwriting shall also be withdrawn from such registration; provided, however, that, if by the withdrawal of such Registrable Securities, a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities pursuant to the terms and limitations set forth herein in the same proportion used above in determining the underwriter limitation. The Company shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering.

 

4.    Registration Procedures. The Company will keep each Holder reasonably advised as to the filing and effectiveness of the Registration Statement. At its expense with respect to the Registration Statement, the Company will:

 

(a)    prepare and file with the Commission with respect to the Registrable Securities, a Registration Statement in accordance with Section 3 hereof, and use its commercially reasonable efforts to cause such Registration Statement to become effective and to remain effective for the Effectiveness Period;

 

(b)    if the Registration Statement is subject to review by the Commission, promptly respond to all comments and diligently pursue resolution of any comments to the satisfaction of the Commission;

 

(c)    prepare and file with the Commission such amendments and supplements to such Registration Statement as may be necessary to keep such Registration Statement effective during the Effectiveness Period;

 

(d)    prior to filing a Registration Statement or any related prospectus or any amendment or supplement thereto, the Company shall provide notice of such filing to any Holder that is directly referenced in or affected by such filing and duly consider any comments received by such Holder regarding the portion of the filing directly relating to such Holder;

 

 

(e)    furnish, without charge, to each Holder of Registrable Securities covered by such Registration Statement (i) a reasonable number of copies of such Registration Statement (including any exhibits thereto other than exhibits incorporated by reference), each amendment and supplement thereto as such Holder may reasonably request, (ii) such number of copies of the prospectus included in such Registration Statement (including each preliminary prospectus and any other prospectus filed under Rule 424 of the Securities Act) as such Holders may reasonably request, in conformity with the requirements of the Securities Act, and (iii) such other documents as such Holder may reasonably require to consummate the disposition of the Registrable Securities owned by such Holder, but only during the Effectiveness Period;

 

(f)    use its commercially reasonable efforts to register or qualify such registration under such other applicable securities laws of such jurisdictions within the United States as any Holder of Registrable Securities covered by such Registration Statement reasonably requests and as may be necessary for the marketability of the Registrable Securities (such request to be made by the time the applicable Registration Statement is deemed effective by the Commission) and do any and all other acts and things necessary to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph, (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction other than to the extent relating to the registration or sale of securities in such jurisdiction;

 

(g)    as promptly as practicable after becoming aware of such event, notify each Holder of Registrable Securities, the disposition of which requires delivery of a prospectus relating thereto under the Securities Act, of the happening of any event, which comes to the Company’s attention, that will after the occurrence of such event cause the prospectus included in such Registration Statement, if not amended or supplemented, to contain an untrue statement of a material fact or an omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading and the Company shall promptly thereafter prepare and furnish to such Holder a supplement or amendment to such prospectus (or prepare and file appropriate reports under the Exchange Act) so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, unless suspension of the use of such prospectus otherwise is authorized herein;

 

(h)    comply, and continue to comply during the Effectiveness Period, in all material respects with the Securities Act and the Exchange Act and with all applicable rules and regulations of the Commission with respect to the disposition of all securities covered by such Registration Statement;

 

(i)    as promptly as practicable after becoming aware of such event, notify each Holder of Registrable Securities being offered or sold pursuant to the Registration Statement of the issuance by the Commission of any stop order or other suspension of effectiveness of the Registration Statement;

 

(j)    use its commercially reasonable efforts to cause all the Registrable Securities covered by the Registration Statement to be listed on the Nasdaq Capital Market or such other principal securities market or quotation system on which securities of the same class or series issued by the Company are then listed or traded or quoted;

 

(k)    provide a transfer agent and registrar, which may be a single entity, for the shares of Common Stock at all times and cooperate with the Holders to facilitate the timely preparation and delivery of the Registrable Securities to be delivered to a transferee pursuant to the Registration Statement (whether electronically or in certificated form) which Registrable Securities shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request;

 

 

(l)    cooperate with the Holders of Registrable Securities being offered pursuant to the Registration Statement to issue and deliver, or cause its transfer agent to issue and deliver, certificates representing Registrable Securities to be offered pursuant to the Registration Statement within a reasonable time after the delivery of certificates representing the Registrable Securities to the transfer agent or the Company, as applicable, and enable such certificates to be in such denominations or amounts as the Holders may reasonably request and registered in such names as the Holders may request;

 

(m)    notify the Holders or their counsel as promptly as reasonably possible and (if requested by any such person) confirm such notice in writing no later than one (1) Trading Day following the day: (i)(A) when a Prospectus or any prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a “no review,” “review” or a “completion of a review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement (in which case the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders that pertain to the Holders as a selling stockholder or to the Plan of Distribution, but not information which the Company believes would constitute material and non-public information); and (C) with respect to each Registration Statement or any post-effective amendment, when the same has been declared effective, provided, however, that such notice under this clause (C) shall be delivered to each Holder; (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or prospectus or for additional information that pertains to the Holders as selling stockholders or the Plan of Distribution; or (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 or threatening of any proceeding for such purpose;

 

(n)    during the Effectiveness Period, refrain from bidding for or purchasing any Common Stock or any right to purchase Common Stock or attempting to induce any person to purchase any such security or right if such bid, purchase or attempt would in any way limit the right of the Holders to sell Registrable Securities by reason of the limitations set forth in Regulation M of the Exchange Act; and

 

(o)    take all other commercially reasonable actions necessary to effect the registration of such Registrable Securities contemplated by this Agreement.

 

5.    Obligations of the Holders.

 

(a)    Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(g) hereof, such Holder shall discontinue the disposition of Registrable Securities included in the Registration Statement until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 4(g) hereof.

 

(b)    Each Holder agrees, by acquisition of the Registrable Securities, that no Holder shall be entitled to sell any of such Registrable Securities pursuant to a Registration Statement or to receive a prospectus relating thereto, unless such Holder has furnished the Company with all material information required to be set forth in the Selling Securityholder Questionnaire attached to this Agreement as Annex B. Any sale of any Registrable Securities by any Holder shall constitute a representation and warranty by such Holder pursuant to a Registration Statement that such prospectus does not as of the time of such sale contain any untrue statement of a material fact regarding such Holder or omit to state any material fact regarding such Holder necessary to make the statements in such prospectus, in the light of the circumstances under which they were made, not misleading, solely to the extent such facts are based upon, and in conformity with, the information regarding such Holder furnished in writing to the Company by such Holder expressly for use in such prospectus.

 

 

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

 

6.    Registration Expenses. The Company shall pay all expenses in connection with any registration obligation provided herein, including, without limitation, all registration, filing, stock exchange fees, printing expenses, all fees and expenses of complying with applicable federal and state securities laws, the fees and disbursements of counsel for the Company and of the Company’s independent accountants and reasonable fees and disbursements of a single counsel of the Holders, in an amount not to exceed $25,000; provided, that, in any underwritten registration, the Company shall have no obligation to pay any underwriting discounts, selling commissions or transfer taxes attributable to the Registrable Securities being sold by the Holders thereof, which underwriting discounts, selling commissions and transfer taxes shall be borne by such Holders. Except as provided in Section 8 of this Agreement, the Company shall not be responsible for the expenses of any attorney or other advisor employed by a Holder.

 

7.    Assignment of Rights. No Holder may assign its rights under this Agreement to any party without the prior written consent of the Company; provided, however, that any Holder may assign its rights under this Agreement without such consent (a) to a Permitted Assignee as long as (i) such transfer or assignment is effected in accordance with applicable securities laws; (ii) such transferee or assignee agrees in writing to become bound by and subject to the terms of this Agreement; and (iii) such Holder notifies the Company in writing of such transfer or assignment, stating the name and address of the transferee or assignee and identifying the Registrable Securities with respect to which such rights are being transferred or assigned; or (b) as otherwise permitted under the Purchase Agreement. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party hereto (other than by merger or consolidation or to an entity which acquires the Company including by way of acquiring all or substantially all of the Company’s assets).

 

8.    Indemnification.

 

(a)    In the event of the offer and sale of Registrable Securities under the Securities Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers, partners, employees and agents, and each other person, if any, who controls or is under common control with such Holder within the meaning of Section 15 of the Securities Act, and the directors, officers, partners, employees and agents of such controlling persons (collectively, the “Holder Indemnified Parties”), from and, against any losses, claims, damages or liabilities, joint or several, and expenses to which the Holder Indemnified Party may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement of any material fact contained in any registration statement prepared and filed by the Company under which Registrable Securities were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission to state therein a material fact required to be stated or necessary to make the statements therein in the light of the circumstances in which they were made not misleading, and the Company shall reimburse the Holder Indemnified Party for any legal or any other expenses reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, damage, liability, action or proceeding; provided, however, that the Company shall not be liable in any such case (i) to the extent, but only to the extent, that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon (x) an untrue statement in or omission from such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished by a Holder to the Company expressly for use in the preparation thereof or, (y) the failure of a Holder to comply with the covenants and agreements contained in Section 5 hereof respecting the sale of Registrable Securities; or (ii) if the person asserting any such loss, claim, damage, liability (or action or proceeding in respect thereof) who purchased the Registrable Securities that are the subject thereof did not receive a copy of an amended preliminary prospectus or the final prospectus (or the final prospectus as amended or supplemented) at or prior to the written confirmation of the sale of such Registrable Securities to such person because of the failure of such Holder to so provide such amended preliminary or final prospectus and the untrue statement or omission of a material fact made in such preliminary prospectus was corrected in the amended preliminary or final prospectus (or the final prospectus as amended or supplemented). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holder Indemnified Party and shall survive the transfer of such shares by the Holder.

 

 

(b)    As a condition to including Registrable Securities in any registration statement filed pursuant to this Agreement, each Holder agrees to be bound by the terms of this Section 8 and to indemnify and hold harmless, to the fullest extent permitted by law, the Company, each of its directors, officers, partners, and each underwriter, if any, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act (collectively the “Company Indemnified Parties”), from and against any losses, claims, damages or liabilities, joint or several, to which the Company Indemnified Party may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement of a material fact or any omission of a material fact required to be stated in any registration statement, any preliminary prospectus, final prospectus, summary prospectus, amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or omission is included or omitted in reliance upon and in conformity with written information furnished by the Holder to the Company for use in the preparation thereof, and such Holder shall reimburse the Company Indemnified Party for any legal or other expenses reasonably incurred by them in connection with investigating, defending, or settling any such loss, claim, damage, liability, action, or proceeding; provided, however, that indemnity obligation contained in this Section 8(b) shall in no event exceed the amount of the net proceeds received by such Holder as a result of the sale of such Holder’s 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 the Company Indemnified Party and shall survive the transfer by any Holder of such shares.

 

(c)    Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in this Section 8 (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the indemnifying party of the commencement of such action; provided, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Section, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, unless in the reasonable judgment of counsel to such indemnified party a conflict of interest between such indemnified and indemnifying parties may exist or the indemnified party may have defenses not available to the indemnifying party in respect of such claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof, unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties arises in respect of such claim after the assumption of the defenses thereof or the indemnifying party fails to defend such claim in a diligent manner, other than reasonable costs of investigation. Neither an indemnified nor an indemnifying party shall be liable for any settlement of any action or proceeding effected without its consent. No indemnifying party shall, without the consent of the 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 of such claim or litigation. Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shall have the right to retain, at its own expense, counsel with respect to the defense of a claim. Each indemnified party shall furnish such information regarding itself or the claim in question as an indemnifying party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom.

 

 

(d)    If an indemnifying party does not or is not permitted to assume the defense of an action pursuant to Sections 8(c) or in the case of the expense reimbursement obligation set forth in Sections 8(a) and 8(b), the indemnification required by Sections 8(a) and 8(b) 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 expenses, losses, damages, or liabilities are incurred.

 

(e)    If the indemnification provided for in Section 8(a) or 8(b) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense (i) in such proportion as is appropriate to reflect the proportionate relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission), or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, then in such proportion as is appropriate to reflect not only the proportionate relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations. No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation.

 

(f)    Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

(g)    Other Indemnification. Indemnification similar to that specified in this Section (with appropriate modifications) shall be given by the Company and each Holder of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act.

 

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

 

 

10.    Miscellaneous.

 

(a)    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the United States of America and the State of New York, both substantive and remedial, without regard to New York conflicts of law principles. Any judicial proceeding brought against either of the parties to this Agreement or any dispute arising out of this Agreement or any matter related hereto shall be brought in the courts of the State of New York, New York County, or in the United States District Court for the Southern District of New York and, by its execution and delivery of this Agreement, each party to this Agreement accepts the jurisdiction of such courts. The foregoing consent to jurisdiction shall not be deemed to confer rights on any person other than the parties to this Agreement.

 

(b)    Remedies. In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

 

(c)    Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, Permitted Assignees, executors and administrators of the parties hereto.

 

(d)    No Inconsistent Agreements. The Company has not entered, as of the date hereof, and shall not enter, on or after the date of this Agreement, into any agreement with respect to its securities that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.

 

(e)    Entire Agreement. This Agreement and the documents, instruments and other agreements specifically referred to herein or delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof.

 

 

(f)    Notices, etc. All notices, consents, waivers, and other communications which are required or permitted under this Agreement shall be in writing will be deemed given to a party (a) upon receipt, when personally delivered; (b) one (1) Business Day after deposit with an nationally recognized overnight courier service with next day delivery specified, costs prepaid) on the date of delivery, if delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (c) the date of transmission if sent by facsimile or e-mail with confirmation of transmission by the transmitting equipment if such notice or communication is delivered prior to 5:00 P.M., New York City time, on a Trading Day, or the next Trading Day after the date of transmission, if such notice or communication is delivered on a day that is not a Trading Day or later than 5:00 P.M., New York City time, on any Trading Day, provided confirmation of facsimile is mechanically or electronically generated and kept on file by the sending party and confirmation of email is kept on file, whether electronically or otherwise, by the sending party and the sending party does not receive an automatically generated message from the recipients email server that such e-mail could not be delivered to such recipient; (d) the date received or rejected by the addressee, if sent by certified mail, return receipt requested, postage prepaid; or (e) seven days after the placement of the notice into the mails (first class postage prepaid), to the party at the address, facsimile number, or e-mail address furnished by the such party,

 

If to the Company, to:

 

Avinger, Inc.

400 Chesapeake Drive

Redwood City, CA 94063

Attention: Chief Executive Officer

E-mail: jsoinski@avinger.com

 

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

 

Dorsey & Whitney LLP

111 South Main Street

Suite 2100

Salt Lake City, UT 84111

Attention: David Marx

Email: david.marx@dorsey.com

 

if to a Holder, to:

 

such Holder at the address set forth on the signature page hereto;

 

or at such other address as any party shall have furnished to the other parties in writing in accordance with this Section 10(f).

 

(g)    Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Holder, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereunder occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement, or any waiver on the part of any Holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded to any Holder, shall be cumulative and not alternative.

 

(h)    Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument. In the event that any signature is delivered by facsimile transmission or by an e-mail, which contains a portable document format (.pdf) file of an executed signature page, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or e-mail of a .pdf signature page were an original thereof.

 

(i)    Severability. In the case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

 

(j)    Amendments. Except as otherwise provided herein, the provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and the Majority Holders. The Holders acknowledge that by the operation of this Section, the Majority Holders may have the right and power to diminish or eliminate all rights of the Holders under this Agreement.

 

[Signature Page to Follow]

 

 

IN WITNESS WHEREOF, the undersigned have executed, or caused to be executed on their behalf by an agent there unto duly authorized, this Registration Rights Agreement as of the date first above written.

 

	COMPANY:   AVINGER, INC.
	By:	/s/  Jeffrey M. Soinski
	Name:	Jeffrey M. Soinski
	Title:	Chief Executive Officer

 

 

 

IN WITNESS WHEREOF, the undersigned have executed, or caused to be executed on their behalf by an agent there unto duly authorized, this Registration Rights Agreement as of the date first above written.

 

	CRG:1   CRG PARTNERS III L.P. By CRG PARTNERS III GP L.P., its General Partner By CRG PARTNERS III GP LLC, its General Partner
	By:	/s/ Nathan Hukill
	Name:	Nathan Hukill
		Title: Authorized Signatory
	Address for Notices:   1000 Main Street, Suite 2500 Houston, TX 77002 Attn:         General Counsel Tel.:           713.209.7350 Fax:           713.209.7351 Email:       adorenbaum@crglp.com

 

 

	CRG PARTNERS III – PARALLEL FUND “A” L.P. By CRG PARTNERS III – PARALLEL FUND “A” GP L.P., its General Partner By CRG PARTNERS III GP LLC, its General Partner
	By:	/s/ Nathan Hukill
	Name:	Nathan Hukill
		Title: Authorized Signatory
	Address for Notices:   1000 Main Street, Suite 2500 Houston, TX 77002 Attn:         General Counsel Tel.:           713.209.7350 Fax:           713.209.7351 Email:       adorenbaum@crglp.com

 

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¹ To confirm Holder entities

 

	CRG PARTNERS III – PARALLEL FUND “B” (CAYMAN) L.P. By CRG PARTNERS III (CAYMAN) GP L.P., its General Partner By CRG PARTNERS III GP LLC, its General Partner
	By:	/s/ Nathan Hukill
	Name:	Nathan Hukill
		Title: Authorized Signatory
	WITNESS: /s/ Brian Englander Name: Brian Englander
	Address for Notices:   1000 Main Street, Suite 2500 Houston, TX 77002 Attn:         General Counsel Tel.:           713.209.7350 Fax:           713.209.7351 Email:       adorenbaum@crglp.com

 

	CRG PARTNERS III (CAYMAN) L.P. By CRG PARTNERS III (CAYMAN) GP L.P., its General Partner By CRG PARTNERS III GP LLC, its General Partner
	By:	/s/ Nathan Hukill
	Name:	Nathan Hukill
	Title:	Authorized Signatory
	WITNESS: /s/ Brian Englander Name: Brian Englander
	Address for Notices:   1000 Main Street, Suite 2500 Houston, TX 77002 Attn:         General Counsel Tel.:           713.209.7350 Fax:           713.209.7351 Email:       adorenbaum@crglp.com

 

 

Annex A

 

PLAN OF DISTRIBUTION

 

 

The selling stockholders and any of their pledgees, donees, transferees, assignees or other successors-in-interest may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. The selling stockholders may use one or more of the following methods when disposing of the shares or interests therein:

 

•

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

 

•

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

 

•

through brokers, dealers or underwriters that may act solely as agents;

 

•

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

 

•

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

 

•

privately negotiated transactions;

 

•

settlement of short sales, to the extent permitted by law;

 

•

through the writing or settlement of options or other hedging transactions entered into after the effective date of the registration statement of which this prospectus is a part, whether through an options exchange or otherwise;

 

•

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

 

•

a combination of any such methods of disposition; and

 

•

any other method permitted pursuant to applicable law.

 

The selling stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended, or Securities Act, if available, rather than under this prospectus.

 

Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

 

 

The selling stockholders may from time to time pledge or grant a security interest in some or all of the 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 shares of common stock from time to time under this prospectus, or under a supplement or amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

 

Upon being notified in writing by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, we will file a supplement to this prospectus, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such shares of common stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon being notified in writing by a selling stockholder that a donee or pledge intends to sell more than 500 shares of common stock, we will file a supplement to this prospectus if then required in accordance with applicable securities law.

 

The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

In connection with the sale of the shares of common stock or interests in shares of common stock, the selling stockholders may enter into hedging transactions after the effective date of the registration statement of which this prospectus is a part with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of common stock short after the effective date of the registration statement of which this prospectus is a part and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions after the effective date of the registration statement of which this prospectus is a part with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act and the rules of the Financial Industry Regulatory Authority (FINRA).

 

We have advised the selling stockholders that they are required to comply with Regulation M promulgated under the Securities and Exchange Act during such time as they may be engaged in a distribution of the shares. The foregoing may affect the marketability of the common stock.

 

The aggregate proceeds to the selling securityholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling securityholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering.

 

 

We are required to pay all fees and expenses incident to the registration of the shares. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act or otherwise.

 

We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the date on which all securities under such Registration Statement have ceased to be Registrable Securities.

 

The selling stockholder will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder unless an exemption therefrom is available.

 

The shares of common stock will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the shares of common stock covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

 

 

Annex B

 

Avinger, Inc.

 

Selling Securityholder Notice and Questionnaire

 

The undersigned beneficial owner of Registrable Securities of Avinger, Inc., a Delaware corporation (the “Company”), understands that the Company has filed or intends to file with the U.S. Securities and Exchange Commission a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended, of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

 

Certain legal consequences arise from being named as a selling security holder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling security holder in the Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Securityholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.

 

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

1.         Name:

 

	(a)	Full Legal Name of Selling Securityholder

 

	(b)	Full Legal Name of Registered Holder (holder of record) (if not the same as (a) above) through which Registrable Securities are held:

 

 

	(c)	If you are not a natural person, full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire):

 

2.	Address for Notices to Selling Securityholder:

 

Telephone:		Fax:
Email:
Contact Person:

 

3.	Broker-Dealer Status:

 

(a)

Are you a broker-dealer?

 

Yes ☐         No ☐

 

(b)

If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?

 

Yes ☐         No ☐

 

Note:

If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

(c)

Are you an affiliate of a broker-dealer?

 

Yes ☐         No ☐

 

(d)

If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

 

Yes ☐         No ☐

 

Note:

If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

 

4.	Beneficial Ownership of Securities of the Company Owned by the Selling Securityholder:

 

Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company.

 

(a)

Please list the type (common stock, warrants, etc.) and amount of all securities of the Company (including any Registrable Securities) beneficially owned3 by the Selling Securityholder:

 

5.	Relationships with the Company:

 

Except as set forth below, neither you nor (if you are a natural person) any member of your immediate family, nor (if you are not a natural person) any of your affiliates⁴, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

 

The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective.

 

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.

 

[Remainder of Page Intentionally Left Blank]

 

 

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³ Beneficially Owned: A “beneficial owner” of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares (i) voting power, including the power to direct the voting of such security, or (ii) investment power, including the power to dispose of, or direct the disposition of, such security. In addition, a person is deemed to have “beneficial ownership” of a security of which such person has the right to acquire beneficial ownership at any time within 60 days, including, but not limited to, any right to acquire such security: (i) through the exercise of any option, warrant or right, (ii) through the conversion of any security or (iii) pursuant to the power to revoke, or the automatic termination of, a trust, discretionary account or similar arrangement.

 

It is possible that a security may have more than one “beneficial owner,” such as a trust, with two co-trustees sharing voting power, and the settlor or another third party having investment power, in which case each of the three would be the “beneficial owner” of the securities in the trust. The power to vote or direct the voting, or to invest or dispose of, or direct the investment or disposition of, a security may be indirect and arise from legal, economic, contractual or other rights, and the determination of beneficial ownership depends upon who ultimately possesses or shares the power to direct the voting or the disposition of the security.

 

The final determination of the existence of beneficial ownership depends upon the facts of each case. You may, if you believe the facts warrant it, disclaim beneficial ownership of securities that might otherwise be considered “beneficially owned” by you.

 

⁴ Affiliate: An “affiliate” is a company or person that directly, or indirectly through one or more intermediaries, controls you, or is controlled by you, or is under common control with you.

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Selling Securityholder Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

BENEFICIAL OWNER (individual)		BENEFICIAL OWNER (entity)
Signature		Name of Entity
Print Name		Signature
		Print Name:
Signature (if Joint Tenants or Tenants in Common)
		Title:

 

Exhibit 99.1

 

 

Avinger Announces Strategic Partnership and up to $15 Million Equity Funding Agreement with Zylox-Tonbridge

 

Initial $7.5 Million Strategic Investment

 

Strategic Partnership Opens Pathway to Access Greater China Market

 

Strengthened Balance Sheet and Three-Year Extension of Existing Debt Terms

 

Redwood City, Calif., March 6, 2024 - Avinger, Inc. (Nasdaq: AVGR), a commercial-stage medical device company developing and marketing the first and only intravascular image-guided, catheter-based systems for diagnosis and treatment of vascular disease, today announced a new strategic partnership with Zylox-Tonbridge Medical Technology Co., Ltd. (2190.HK, “Zylox-Tonbridge”), a leading medical device company in the neuro- and peripheral-vascular interventional market in China.

 

Based in Hangzhou, China and listed on the Hong Kong Stock Exchange, Zylox-Tonbridge has developed and launched 36 products into the Greater China interventional markets since its founding in 2012. With a sales and marketing organization of more than 130 people and a vast distribution network, Zylox-Tonbridge achieved the equivalent of approximately $58 million in sales in the most recently reported 12-month period (ended June 30, 2023), representing a growth rate of greater than 50% compared to the prior year period.

 

The strategic partnership provides up to $15 million of equity funding from Zylox-Tonbridge in two tranches, a licensing agreement providing access for Avinger’s products in the Greater China region, and a technology transfer agreement to build cost-efficient manufacturing capacity to support global sales. In addition, the parties have signed a strategic collaboration agreement which provides the opportunity for Avinger to access certain Zylox-Tonbridge peripheral vascular products for distribution in the U.S. and Germany.

 

Key Terms of Financing Agreement

Under the terms of the financing agreement, Zylox-Tonbridge will invest up to $15 million into Avinger through the purchase of preferred and common stock in two tranches. The initial $7.5 million investment was priced at-the-market under Nasdaq rules at a purchase price of $3.66 per share on an as converted to common stock basis. A second tranche of $7.5 million will be funded upon achieving key milestones, including successfully registering Zylox-Tonbridge as a manufacturer of Avinger’s products with the U.S. Food & Drug Administration (“FDA”) and Avinger achieving $10 million in aggregate revenue over four consecutive quarters.

 

 

Avinger’s obligation to accept conversion of the initial shares of preferred stock and issue and sell shares of preferred stock upon completion of the milestones are each subject to receipt of the approval of Avinger’s stockholders.

 

Concurrent with the Zylox-Tonbridge first tranche investment, CRG Partners, the primary holder of Avinger debt and preferred equity exchanged its Series A preferred stock with an aggregate liquidation preference of approximately $60 million for new Series A-1 preferred stock with a value of $10 million. The new Series A-1 preferred stock is convertible at the same price as the Zylox-Tonbridge transaction and carries no liquidation preference or dividends. Additionally, CRG extended principal payments on Avinger’s debt from the first quarter of 2024 to the first quarter of 2027, with interest payments accruing during this time.

 

Key Terms of License, Technology Transfer and Strategic Collaboration Agreement

Under the terms of the license and technology transfer agreement, Zylox-Tonbridge has exclusive rights to distribute and manufacture Avinger’s proprietary image-guided devices in the Greater China region, including mainland China, Hong Kong, Macao, and Taiwan (the “Territory”). Zylox-Tonbridge will lead all regulatory activities for the registration of the Avinger products in the Territory. Avinger will supply product to Zylox-Tonbridge until such time Zylox-Tonbridge’s manufacturing capability has been established. All sales of Avinger products in the Territory will be royalty bearing to Avinger.

 

In addition, the parties have signed a strategic cooperation framework agreement, which provides the opportunity for Avinger to access certain Zylox-Tonbridge peripheral vascular products for distribution in the U.S. and Germany. The agreement also provides the option for Avinger to source finished goods from Zylox-Tonbridge following registration of their manufacturing facility with the FDA.

 

"We are excited to announce this strategic transaction with Zylox-Tonbridge, a dynamic leader in the peripheral interventional market in China,” said Jeff Soinski, Avinger’s President and CEO. “Our broad-reaching partnership creates an exciting new pathway for Avinger products to enter the large and growing Greater China market through an established commercial channel. It also provides the opportunity for a more cost-efficient manufacturing structure to support the growth of global sales, as well as the potential for Avinger to access Zylox-Tonbridge’s high-quality peripheral products for distribution in the U.S. and Germany.”

 

Dr. Jonathon Zhao, Chairman and CEO of Zylox-Tonbridge, said, “We are pleased to partner with Avinger to provide Chinese healthcare professionals and patients with cutting-edge medical technologies and disruptive innovative products. We believe this collaboration will expand the company’s Peripheral Vascular Intervention product portfolio, reinforce our market leadership, and accelerate the growth of the vessel preparation business in China’s peripheral vascular intervention market. By leveraging our leading manufacturing capabilities and working with Avinger, we are confident in bringing patients more cost-efficient and high-quality products. We are looking forward to cooperating with global partners to share growing market opportunities by offering high-quality and affordable innovative medical products and services.”

 

 

Mr. Soinski continued, “Concurrent with this transaction, we have significantly improved our balance sheet with a cash infusion, the exchange of our Series A preferred stock for new Series A-1 preferred stock, and the deferral of principal payments on our existing debt for three years. Combined, these transactions represent a strong show of confidence in our product portfolio.

 

“With this transaction, we have positioned Avinger to access exciting new growth opportunities in China and improve its operating cost structure as global manufacturing comes online. We have also provided the opportunity for new revenue growth and increased sales productivity in our current markets through the potential distribution of Zylox-Tonbridge products in the U.S. and Germany. We are excited to move forward in 2024 as we continue to drive sales of our best-in-class commercial peripheral products and ready our groundbreaking image-guided coronary CTO-crossing device for IDE submission later this year.”

 

Detailed terms of the Zylox-Tonbridge transaction will be filed on Form 8-K with the United Stated Securities and Exchange Commission.

 

About Avinger, Inc.

Avinger is a commercial-stage medical device company that designs and develops the first image-guided, catheter-based system for the diagnosis and treatment of patients with vascular disease in the peripheral and coronary arteries. Avinger is dedicated to radically changing the way vascular disease is treated through its Lumivascular platform, which currently consists of the Lightbox series of imaging consoles, the Ocelot and Tigereye® family of chronic total occlusion (CTO) catheters, and the Pantheris® family of atherectomy devices for the treatment of peripheral artery disease (PAD), estimated to affect more than 200 million people worldwide. Avinger is developing its first product application for the treatment of coronary artery disease (CAD), an image-guided system for CTO-crossing in the coronary arteries, which provides the opportunity to redefine a large and underserved market. Avinger is based in Redwood City, California. For more information, please visit www.avinger.com.

 

Follow Avinger on Twitter and Facebook.

 

About Zylox-Tonbridge

Zylox-Tonbridge is one of the leading players in the neuro- and peripheral-vascular interventional medical device market in China. The Company was founded in 2012 and is headquartered in Hangzhou, China. As an integrated medical device company supported by in-house R&D and manufacturing capabilities, proprietary technological platforms, and commercialization capabilities, Zylox-Tonbridge strives to provide all patients, regardless of their ethnicity, age and economic conditions, with accessible medical devices and services.

 

 

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding benefits of the strategic transaction with Zylox-Tonbridge, benefits to our manufacturing structure, the pathway for Avinger products to enter the Greater China market, benefits of accessing Zylox-Tonbridge’s peripheral products, the potential expansion of the Peripheral Vascular Intervention product portfolio of Zylox-Tonbridge, potential benefits to patients of the collaboration with Zylox-Tonbridge, the improvement in our operating cost structure, the opportunities for new revenue growth and increased sales productivity, and obtaining stockholder approval to facilitate the equity financing. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include our dependency on a limited number of products; the resource requirements related to Pantheris, Tigereye and our Lightbox imaging console; the outcome of clinical trial results; the adoption of our products by physicians; our ability to obtain regulatory approvals for our products; as well as the other risks described in the section entitled "Risk Factors" and elsewhere in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2023, as amended, and Quarterly Reports on Form 10-Q. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. Avinger disclaims any obligation to update these forward- looking statements.

 

 

Investor Contact:

Matt Kreps

Darrow Associates Investor Relations

(214) 597-8200

mkreps@darrowir.com

 

Public Relations Contact:

Phil Preuss

Chief Commercial Officer

Avinger, Inc.

(650) 241-7942

pr@avinger.com

 

v3.24.0.1

Document And Entity Information	Mar. 04, 2024
Document Information [Line Items]
Entity, Registrant Name	Avinger, Inc.
Current Fiscal Year End Date	--12-31
Document, Type	8-K
Document, Period End Date	Mar. 04, 2024
Entity, Incorporation, State or Country Code	DE
Entity, File Number	001-36817
Entity, Tax Identification Number	20-8873453
Entity, Address, Address Line One	400 Chesapeake Drive
Entity, Address, City or Town	Redwood City
Entity, Address, State or Province	CA
Entity, Address, Postal Zip Code	94063
City Area Code	650
Local Phone Number	241-7900
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	AVGR
Security Exchange Name	NASDAQ
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0001506928

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