Exhibit 1.1
PLACEMENT AGENCY AGREEMENT
September 30, 2009
Roth Capital Partners, LLC
24 Corporate Plaza
Newport Beach, CA 92660
Boenning & Scattergood, Inc.
4 Tower Bridge
200 Bar Harbor Drive, Suite 300
West Conshohocken, PA 19428
Ladies and Gentlemen:
RegeneRx Biopharmaceuticals, Inc., a Delaware corporation (the “
Company
”), proposes, subject
to the terms and conditions herein, to issue and sell an aggregate of up to (i) 4,512,195 shares
(the “
Shares
”) of its common stock, $0.001 par value per share (the “
Common Stock
”), and (ii)
2,256,098 warrants to purchase shares of Common Stock (the “
Warrants
”, and together with the
Shares, the “
Securities
”), to certain investors (each an “
Investor
” and, collectively, the
"
Investors
”), in an offering under its registration statement on Form S-3 (Registration No.
333-150675). The shares of Common Stock issuable upon exercise of the Warrants are hereinafter
referred to as the Warrant Shares. The Securities are more fully described in the Prospectus (as
defined below). The Company desires to engage Roth Capital Partners, LLC and Boenning &
Scattergood, Inc. in connection with such issuance and sale of the Securities.
The Company hereby confirms its agreement with you as follows:
Section 1. Agreement to Act as Placement Agents
.
(a) On the basis of the representations, warranties and agreements of the Company herein
contained, and subject to all the terms and conditions of this Agreement between the Company and
you, Roth Capital Partners, LLC and Boenning & Scattergood, Inc. shall be the Company’s exclusive
placement agents (in such capacity, the “
Placement Agents
”), on a reasonable efforts basis, in
connection with the issuance and sale by the Company of the Securities to the Investors in a
proposed takedown under the Registration Statement (as defined below), with the terms of each
offering to be subject to market conditions and negotiations between the Company, Roth Capital and
the prospective Investors (such takedown shall be referred to herein as the “
Offering
”). As
compensation for services rendered, and provided that any of the Securities are sold to Investors
in the Offering, on the Closing Date (as defined below) of the Offering, the Company shall pay to
the Placement Agents an amount equal to 7% of the gross proceeds received by the Company from the
sale of the Securities (the “
Placement Fee
”). The Placement Fee shall be allocated between the
Placement Agents as they may agree. The sale of the Securities shall be made pursuant to a
securities purchase agreement in the form included as
Exhibit A
hereto (the “
Purchase
Agreement
”) on the terms described on
Exhibit B
hereto. The Company shall have the sole
right to accept offers to purchase the Securities and may reject any such offer in whole or in
part. Notwithstanding the foregoing, it is understood and agreed that the Placement Agents or any
of their respective affiliates may, solely at their discretion and without any obligation to do so,
purchase
Securities as principal;
provided, however
, that any such purchases by the Placement Agents
(or their respective affiliates) shall be fully disclosed to the Company and approved by the
Company in accordance with the previous sentence.
(b) This Agreement shall not give rise to any commitment by the Placement Agents to purchase
any of the Securities, and the Placement Agents shall have no authority to bind the Company. The
Placement Agents shall act on a reasonable efforts basis and do not guarantee that they will be
able to raise new capital in the Offering. The Placement Agents may retain other brokers or
dealers to act as sub-agents on its behalf in connection with the Offering, the fees of which shall
be paid out of the Placement Fee. Prior to the earlier of (i) the date on which this Agreement is
terminated and (ii) the Closing Date (as defined below), the Company shall not, without the prior
written consent of the Placement Agents, solicit or accept offers to purchase Securities of the
Company (other than pursuant to the exercise of options or warrants to purchase shares of Common
Stock that are outstanding at the date hereof) otherwise than through the Placement Agents in
accordance herewith.
(c) The Company acknowledges and agrees that the Placement Agents shall act as independent
contractors, and not as fiduciaries, and any duties of the Placement Agents with respect to
investment banking services to the Company, including the offering of the Securities contemplated
hereby (including in connection with determining the terms of the Offering), shall be contractual
in nature, as expressly set forth herein, and shall be owed solely to the Company. Each party
disclaims any intention to impose any fiduciary or similar duty on the other. Additionally, the
Placement Agents have not advised, nor are advising, the Company or any other person as to any
legal, tax, investment, accounting or regulatory matters in any jurisdiction with respect to the
transactions contemplated hereby. The Company shall consult with its own advisors concerning such
matters and shall be responsible for making its own independent investigation and appraisal of the
transactions contemplated hereby, and the Placement Agents shall have no responsibility or
liability to the Company with respect thereto. Any review by the Placement Agents of the Company,
the transactions contemplated hereby or other matters relating to such transactions has been and
will be performed solely for the benefit of the Placement Agents and has not been and shall not be
on behalf of the Company or any other person. It is understood that the Placement Agents have not
and will not be rendering an opinion to the Company as to the fairness of the terms of the
Offering. Notwithstanding anything in this Agreement to the contrary, the Company acknowledges that
the Placement Agents may have financial interests in the success of the Offering contemplated
hereby that are not limited to the Placement Fee. The Company hereby waives and releases, to the
fullest extent permitted by law, any claims that the Company may have against the Placement Agents
with respect to any breach or alleged breach of fiduciary duty.
(d) Payment of the purchase price for, and delivery of, the Securities shall be made at a
closing (the “
Closing
”) at the offices of Lowenstein Sandler P.C., counsel for the Placement
Agents, located at 65 Livingston Avenue, Roseland, NJ 07068 at 10:00 a.m., local time, as soon as
practicable after the determination of the public offering price of the Securities, but not later
than on October 5, 2009 (such date of payment and delivery being herein called the “
Closing Date
”).
All such actions taken at the Closing shall be deemed to have occurred simultaneously. No
Securities which the Company has agreed to sell pursuant to this Agreement and the Purchase
Agreement shall be deemed to have been purchased and paid for, or sold by the Company, until such
Securities shall have been delivered to the Investor thereof against payment therefore by such
Investor. If the Company shall default in its obligations to deliver Securities to an Investor
whose offer it has accepted, the Company shall indemnify and hold the Placement Agents harmless
against any loss, claim or damage incurred by the Placement Agents arising from or as a result of
such default by the Company.
-2-
(e) On or before the Closing Date, each Investor shall pay by wire transfer of immediately
available funds to an account previously specified by the Company an amount equal to the product of
(x) the number of Securities such Investor has agreed to purchase and (y) the purchase price per
unit as set forth on the cover page of the Prospectus (as defined below) (the “
Purchase Amount
”).
On the Closing Date, upon confirmation of the receipt of the Purchase Amounts from the Investors,
the Company shall (i) deliver or cause to be delivered the Securities to the Investors, with the
delivery of the Shares to be made, if possible, through the facilities of The Depository Trust
Company’s DWAC system, and the delivery of the Warrants to be made by mail to the Investors to the
addresses set forth on the Purchase Agreement and (ii) pay to the Placement Agents (A) the
Placement Fee as directed by the Placement Agents and (B) the out-of-pocket expense reimbursement
to which the Placement Agents are entitled pursuant to Section 4 hereof.
(f) The Securities shall be registered in such names and in such denominations as the
Placement Agents shall request by written notice to the Company.
Section 2. Representations, Warranties and Agreements of the Company
.
The Company hereby represents, warrants and covenants to the Placement Agents as of the date
hereof, and as of the Closing Date of the Offering, as follows:
(a)
Registration Statement
. (i) The Company has prepared and filed with the Securities and
Exchange Commission (the
“Commission"
) a registration statement on Form S-3 (File No. 333-150675)
under the Securities Act of 1933, as amended, and the rules and regulations of the Commission
thereunder (collectively, the “
Securities Act
”), and such amendments to such registration statement
as may have been required to the date of this Agreement. Such registration statement has been
declared effective by the Commission. Each part of such registration statement, at any given time,
including amendments thereto at such time, the exhibits and any schedules thereto at such time, the
documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities
Act at such time and the documents and information otherwise deemed to be a part thereof or
included therein by Rule 430A, 430B or 430C under the Securities Act or otherwise pursuant to the
Securities Act at such time, is herein called the
“Registration Statement.”
Any registration
statement filed by the Company pursuant to Rule 462(b) under the Securities Act is called the “
Rule
4
62(b)
Registration Statement
” and, from and after the date and time of filing of the Rule 462(b)
Registration Statement, the term “
Registration Statement
” shall include the Rule 462(b)
Registration Statement. The Company and the transactions contemplated by this Agreement meet the
requirements and comply with the conditions for the use of Form S-3 under the Securities Act. The
offering of the Securities by the Company complies with the applicable requirements of Rule 415
under the Securities Act. The Company has complied with all requests of the Commission for
additional or supplemental information.
(ii) No stop order preventing or suspending use of the Registration Statement, any
Preliminary Prospectus or the Prospectus or the effectiveness of the Registration Statement, has
been issued by the Commission, and no proceedings for such purpose have been instituted or, to the
Company’s knowledge, are contemplated or threatened by the Commission.
(iii) The Company proposes to file with the Commission pursuant to Rule 424 under the
Securities Act a final prospectus supplement relating to the Securities to a form of prospectus
included in the Registration Statement relating to the Securities in the form heretofore delivered
to the Placement Agents. Such prospectus included in the Registration Statement at the time it was
declared effective by the Commission or in the form in which it has been most recently filed with
the Commission on or prior to the date of this Agreement is hereinafter called the
“Base
Prospectus.”
Such prospectus supplement, in the form in which it shall be filed with the
Commission pursuant to Rule 424(b) (including the Base Prospectus as so supplemented) is
hereinafter called the
“Prospectus.”
Any preliminary form of Prospectus which is filed or used
prior to filing of the Prospectus is hereinafter called a
“Preliminary
Prospectus.”
Any reference herein to the Base Prospectus, any Preliminary Prospectus or the
Prospectus or to any amendment or supplement to any of the foregoing shall be deemed to include any
documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities
Act as of the date of such prospectus, and, in the case of any reference herein to the Prospectus,
also shall be deemed to include any documents incorporated by reference therein, and any
supplements or amendments thereto, filed with the Commission after the date of filing of the
Prospectus under Rule 424(b) under the Securities Act, and prior to the termination of the offering
of the Securities by the Placement Agents.
-3-
(iv) For purposes of this Agreement, all references to the Registration Statement, the Base
Prospectus, any Preliminary Prospectus, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System (
“EDGAR”
). All references in this Agreement to
amendments or supplements to the Registration Statement, the Base Prospectus, any Preliminary
Prospectus or the Prospectus shall be deemed to mean and include the subsequent filing of any
document under the Securities Exchange Act of 1934, as amended (collectively with the rules and
regulations promulgated thereunder, the “
Exchange Act
”)) and which is deemed to be incorporated
therein by reference therein or otherwise deemed to be a part thereof.
(b)
Compliance with Registration Requirements
. As of the time of filing of the Registration
Statement or any post-effective amendment thereto, at the time it became effective (including each
deemed effective date with respect to the Placement Agents pursuant to Rule 430B under the
Securities Act) and as of the Closing Date, the Registration Statement complied and will comply, in
all material respects, with the requirements of the Securities Act and did not and will not contain
any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. Each Preliminary Prospectus and
the Prospectus, at the time of filing or the time of first use and as of the Closing Date, complied
and will comply, in all material respects, with the requirements of the Securities Act and did not
and will not contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading;
provided
, that the Company makes no representations or warranty in
this paragraph with respect to any Placement Agent Information (as defined in
Section 7
).
(c)
Disclosure Package
. As of the Time of Sale (as defined below) and as of the Closing Date,
neither (A) the Issuer General Free Writing Prospectus(es) (as defined below) issued at or prior to
the Time of Sale, the Prospectus (as amended or supplemented as of the Time of Sale) and the
information included on
Exhibit C
hereto, all considered together (collectively, the
“Disclosure Package”
), nor (B) any individual Issuer Limited-Use Free Writing Prospectus (as
defined below), when considered together with the Disclosure Package, included or will include any
untrue statement of a material fact or omitted or will omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under which they were made,
not misleading;
provided
, that the Company makes no representations or warranty in this paragraph
with respect to any Placement Agent Information. No statement of material fact included in the
Prospectus has been omitted from the Disclosure Package and no statement of material fact included
in the Disclosure Package that is required to be included in the Prospectus has been omitted
therefrom. As used in this paragraph and elsewhere in this Agreement:
(1)
“Time of Sale”
means the time of execution and delivery of the Purchase
Agreement by the Company and each Investor.
(2)
“Issuer Free Writing Prospectus”
means any “issuer free writing
prospectus,” as defined in Rule 433 under the Securities Act (“
Rule 433
”), relating
to the
Securities in the form filed or required to be filed with the Commission or, if not
required to be filed, in the form retained in the Company’s records pursuant to Rule
433(g) under the Securities Act.
-4-
(3)
“Issuer General Free Writing Prospectus”
means any Issuer Free Writing
Prospectus that is intended for general distribution to prospective investors as
identified on
Schedule I
hereto, and does not include a “bona fide
electronic road show” as defined in Rule 433.
(4)
“Issuer Limited-Use Free Writing Prospectus”
means any Issuer Free Writing
Prospectus that is not an Issuer General Free Writing Prospectus, including any
“bona fide electronic road show” as defined in Rule 433, that is made available
without restriction pursuant to Rule 433(d)(8)(ii), even though not required to be
filed with the Commission.
(d)
Conflict with Registration Statement
. Each Issuer Free Writing Prospectus, as of its
issue date and at all subsequent times through the completion of the offering and sale of the
Securities or until any earlier date that the Company notified or notifies the Placement Agents,
did not, does not and will not include any information that conflicted, conflicts or will conflict
with the information contained in the Registration Statement or the Prospectus including any
document incorporated by reference therein and any prospectus supplement deemed to be a part
thereof that has not been superseded or modified; provided, that the Company makes no
representations or warranty in this paragraph with respect to any Placement Agent Information.
(e)
Distributed Materials
. The Company has not, directly or indirectly, distributed and will
not distribute any prospectus or other offering material in connection with the offering and sale
of the Securities other than any Preliminary Prospectus, the Disclosure Package or the Prospectus,
and other materials, if any, permitted under the Securities Act to be distributed and consistent
with
Section 3(d)
below. The Company will file with the Commission all Issuer Free Writing
Prospectuses in the time required under Rule 433(d) under the Securities Act. The Company has
satisfied or will satisfy the conditions in Rule 433 under the Securities Act to avoid a
requirement to file with the Commission any electronic road show. The parties hereto agree and
understand that the content of any and all “road shows” related to the offering of the Securities
contemplated hereby is solely the property of the Company.
(f)
Not an Ineligible Issuer
. (1) At the time of filing the Registration Statement and (2) at
the date hereof and at the Closing Date, the Company was not, is not and will not be an “ineligible
issuer,” as defined in Rule 405 under the Securities Act, without taking account of any
determination by the Commission pursuant to Rule 405 that it is not necessary that the Company be
considered an ineligible issuer including, without limitation, for purposes of Rules 164 and 433
under the Securities Act with respect to the offering of the Securities as contemplated by the
Registration Statement.
(g)
Incorporated Documents
. The documents incorporated by reference in the Disclosure Package
and in the Prospectus, when they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and were filed on a timely basis with the Commission and none of such
documents contained an untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading.
-5-
(h)
Due Incorporation
. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with the corporate power and
authority to own its properties and to conduct its business as currently being carried on and as
described in the Registration Statement, the Disclosure Package and the Prospectus. The Company is
duly qualified to transact business as a foreign corporation and is in good standing under the laws
of each other jurisdiction in which its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so qualified and in good
standing would not, individually or in the aggregate, result in any material adverse effect upon,
or material adverse change in, the general affairs, business, operations, prospects, properties,
financial condition, or results of operations of the Company and the Subsidiaries (as defined
below) taken as a whole (a “
Material Adverse Effect
”).
(i)
Subsidiaries
. The Company has no subsidiaries. All references herein to “Subsidiary” and
“Subsidiaries” shall be disregarded and have no effect. The Company owns no beneficial interest,
directly or indirectly, in any corporation, partnership, joint venture or other business entity.
(j)
Capitalization
. The Company has duly and validly authorized capital stock as set forth in
each of the Registration Statement, Disclosure Package and Prospectus; all outstanding shares of
Common Stock of the Company conform, or when issued will conform, to the description thereof in the
Registration Statement, the Disclosure Package and the Prospectus and have been, or, when issued
and paid for in the manner described herein will be, duly authorized, validly issued, fully paid
and non-assessable; and except as disclosed in the Registration Statement, the Disclosure Package
and the Prospectus, the issuance of the Securities to be purchased from the Company hereunder is
not subject to preemptive or other similar rights, or any restriction upon the voting or transfer
thereof pursuant to applicable law or the Company’s Certificate of Incorporation, Bylaws or
governing documents or any agreement to which the Company is a party or by which it may be bound.
(k)
Authorization, Issuance
. All corporate action required to be taken by the Company for the
authorization, issuance and sale of the Securities has been duly and validly taken. The Shares and
the Warrant Shares have been duly and validly authorized. When the Shares and the Warrant Shares
have been issued and delivered against payment therefor as provided herein and in the Warrant, as
the case may be, the Shares, when so issued and sold, and the Warrant Shares, when issued upon
exercise of the Warrants, will be duly and validly issued, fully paid and non-assessable and the
Investors or other persons in whose names Shares or Warrant Shares are registered will acquire good
and valid title to such Shares or Warrant Shares, in each case free and clear of all liens,
encumbrances, equities, preemptive rights and other claims. The Shares and the Warrant Shares will
conform in all material respects to the description thereof contained in the Registration
Statement, the Disclosure Package and the Prospectus. No further approval or authority of the
shareholders or the Board of Directors of the Company will be required for the issuance and sale of
the Shares, the Warrants or the Warrant Shares as contemplated herein and in the Purchase
Agreement. The Warrants conform, or when issued will conform, to the description thereof contained
in the Disclosure Package and the Prospectus and have been duly and validly authorized by the
Company and upon delivery to the Investors at the Closing Date will be valid and binding
obligations of the Company, enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights and remedies of creditors generally or subject to general principles of
equity. Except as disclosed in each of the Disclosure Package and Prospectus, there are no
outstanding subscriptions, rights, warrants, options, calls, convertible securities, commitments of
sale or rights related to or entitling any person to purchase or otherwise to acquire any shares
of, or any security convertible into or exchangeable or exercisable for, the capital stock of, or
other ownership interest in, the Company, except for such options or rights as may have been
granted by the Company to employees, directors or consultants pursuant to its stock option or stock
purchase plans.
-6-
(l)
No Registration Rights
. Except as described in the Prospectus, neither the filing of the
Registration Statement nor the offering or sale of the Securities as contemplated by this Agreement
gives rise to any rights, other than those which have been waived or satisfied, for or relating to
the registration of any shares of Common Stock or other securities of the Company.
(m)
Due Authorization and Enforceability
. This Agreement and the Purchase Agreement have been
duly authorized, executed and delivered by the Company, and each constitutes a valid, legal and
binding obligation of the Company, enforceable against the Company in accordance with its terms,
except as rights to indemnity hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization
or similar laws affecting the rights of creditors generally and subject to general principles of
equity.
(n)
No Violation
. Neither the Company nor any of the Subsidiaries is in breach or violation
of or in default (nor has any event occurred which with notice, lapse of time or both would result
in any breach or violation of, or constitute a default) (i) under the provisions of its Certificate
of Incorporation, Bylaws or other governing documents or (ii) except as set forth in the
Registration Statement, the Disclosure Package and the Prospectus, in the performance or observance
of any term, covenant, obligation, agreement or condition contained in any indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license,
lease, contract or other agreement or instrument to which the Company or any of the Subsidiaries is
a party or by which any of them or any of their properties may be bound or affected, or (iii) in
the performance or observance of any statute, law, rule, regulation, ordinance, judgment, order or
decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company, the Subsidiaries or any of their respective
properties (including, without limitation, those administered by the Food and Drug Administration
of the U.S. Department of Health and Human Services (the “
FDA
”) or by any foreign, federal, state
or local regulatory authority performing functions similar to those preformed by the FDA), except,
with respect to clauses (ii) and (iii) above, to the extent any such contravention would not result
in a Material Adverse Effect.
(o)
No Conflict
. Except as set forth in the Registration Statement, the Disclosure Package
and the Prospectus, the execution, delivery and performance by the Company of this Agreement and
the Purchase Agreement and the consummation of the transactions herein contemplated, including the
issuance and sale by the Company of the Securities, will not conflict with or result in a breach or
violation of, or constitute a default under (nor constitute any event which with notice, lapse of
time or both would result in any breach or violation of or constitute a default under) (i) the
provisions of the Certificate of Incorporation, Bylaws or other governing documents of the Company
or any of the Subsidiaries, (ii) any material indenture, mortgage, deed of trust, bank loan or
credit agreement or other evidence of indebtedness, or any material license, lease, contract or
other agreement or instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound or affected, or (iii) any
federal, state, local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or any of the Subsidiaries.
(p)
No Consents Required
. No approval, authorization, consent or order of or filing with any
federal, state, local or foreign governmental or regulatory commission, board, body, authority or
agency, or of or with any self-regulatory organization or other non-governmental regulatory
authority (including, without limitation, the NYSE Amex), or approval of the stockholders of the
Company (including as may be required pursuant to NYSE Amex Rules), is required in connection with
the issuance and sale of the Securities or the consummation by the Company of the transactions
contemplated hereby other than (i) as may be required under the Securities Act, and (ii) under the
rules and regulations of the Financial Industry Regulatory Authority (“
FINRA
”). The Company has
full power
and authority to enter into this Agreement and the Purchase Agreement and to authorize, issue
and sell the Securities as contemplated by this Agreement and the Purchase Agreement.
-7-
(q)
Absence of Material Changes.
Subsequent to the respective dates as of which information is
given in the Disclosure Package, (a) neither the Company nor any of its subsidiaries has incurred
any material liability or obligation, direct or contingent, or entered into any material
transaction not in the ordinary course of business; (b) neither the Company nor any of its
subsidiaries has purchased any of the Company’s outstanding capital stock, or declared, paid or
otherwise made any dividend or distribution of any kind on the Company’s capital stock; (c) there
has not been any change in the capital stock (other than a change in the number of outstanding
shares of Common Stock due to the issuance of such share of Common Stock upon the exercise of
outstanding options or warrants), or material change in the short-term debt or long-term debt of
the Company and its Subsidiaries or any issue of options, warrants, convertible securities or other
rights to purchase the capital stock (other than grants of stock options under the Company’s stock
option plans existing on the date hereof) of the Company, or (d) there has not been any material
adverse change, or any development involving a prospective material adverse change, in the
business, properties, management, financial condition or results of operations of the Company and
the Subsidiaries, taken as a whole, from that set forth in the Disclosure Package (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement).
(r)
Permits
. The Company and each of the Subsidiaries possess all necessary licenses,
authorizations, consents and approvals and have made all necessary filings required under any
federal, state, local or foreign law, regulation or rule (including, without limitation, those from
the FDA and any other foreign, federal, state or local government or regulatory authorities
performing functions similar to those performed by the FDA) in order to conduct its business.
Neither the Company nor any of the Subsidiaries is in violation of, or in default under, or has
received notice of any proceedings relating to revocation or modification of, any such license,
authorization, consent or approval. The Company and each of the Subsidiaries is in compliance in
all material respects with all applicable federal, state, local and foreign laws, regulations,
orders or decrees.
(s)
Legal Proceedings
. There are no legal or governmental proceedings pending or, to the
Company’s knowledge, threatened or contemplated to which the Company or any of the Subsidiaries is
or would be a party or of which any of their respective properties is or would be subject at law or
in equity, before or by any federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency, or before or by any self-regulatory organization or other
non-governmental regulatory authority (including, without limitation, NYSE Amex), except (i) as
described in the Registration Statement, the Disclosure Package and the Prospectus, (ii) any such
proceeding, which if resolved adversely to the Company or any Subsidiary, would not result in a
judgment, decree or order having, individually or in the aggregate, a Material Adverse Effect or
(iii) any such proceeding that would not prevent or materially and adversely affect the ability of
the Company to consummate the transactions contemplated hereby. The Disclosure Package contains in
all material respects the same description of the foregoing matters contained in the Prospectus.
(t)
Statutes; Contracts
. There are no statutes or regulations applicable to the Company or
contracts or other documents of the Company which are required to be described in the Registration
Statement, the Disclosure Package or the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act which have not been so described or filed.
(u)
Independent Accountants
. Reznick Group, P.C., who has audited the financial statements of
the Company and the Subsidiaries, is an independent registered public accounting firm (as defined
in Section 2(a)(12) of the Sarbanes-Oxley Act of 2002 (the “
Sarbanes-Oxley Act
”)) with respect to
the Company within the meaning of the Securities Act and the applicable rules and regulations
thereunder adopted by the Commission and the Public Company Accounting Oversight Board (United
States).
-8-
(v)
Financial Statements
. The financial statements of the Company, together with the related
schedules and notes thereto, set forth or incorporated by reference in the Registration Statement,
the Disclosure Package and the Prospectus comply in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as applicable, and present fairly in all
material respects (i) the financial condition of the Company and the Subsidiaries, taken as a
whole, as of the dates indicated and (ii) the consolidated results of operations, stockholders’
equity and changes in cash flows of the Company and the Subsidiaries, taken as a whole, for the
periods therein specified; and such financial statements and related schedules and notes thereto
have been prepared in conformity with generally accepted accounting principles as in effect in the
United States, consistently applied throughout the periods involved (except as otherwise stated
therein and subject, in the case of unaudited financial statements, to the absence of footnotes and
normal year-end adjustments). There are no other financial statements (historical or pro forma)
that are required to be included in the Registration Statement, the Disclosure Package and the
Prospectus; and the Company and the Subsidiaries do not have any material liabilities or
obligations, direct or contingent (including any off-balance sheet obligations), not disclosed in
the Registration Statement, the Disclosure Package and the Prospectus; and all disclosures
contained in the Registration Statement, the Disclosure Package and the Prospectus regarding
“non-GAAP financial measures” (as such term is defined by the rules and regulations of the
Commission), if any, comply with Regulation G of the Exchange Act and Item 10(e) of Regulation S-K
of the Commission, to the extent applicable, and present fairly the information shown therein and
the Company’s basis for using such measures.
(w) [reserved].
(x)
Not an Investment Company
. Neither the Company nor any of the Subsidiaries is or, after
giving effect to the offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will be required to register as an “investment company” as
defined in the Investment Company Act of 1940, as amended.
(y)
Good Title to Property
. The Company and each of the Subsidiaries has good and valid title
to all property (whether real or personal) described in the Registration Statement, the Disclosure
Package and the Prospectus as being owned by each of them, in each case free and clear of all
liens, claims, security interests, other encumbrances or defects except such as are described in
the Registration Statement, the Disclosure Package and the Prospectus and those that would not,
individually or in the aggregate materially and adversely affect the value of such property and do
not materially and adversely interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries. All of the property described in the Registration Statement,
the Disclosure Package and the Prospectus as being held under lease by the Company or a Subsidiary
is held thereby under valid, subsisting and enforceable leases, without any liens, restrictions,
encumbrances or claims, except those that, individually or in the aggregate, are not material and
do not materially interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries.
-9-
(z)
Intellectual Property Rights
. The Company and the Subsidiaries own, or have obtained
valid and enforceable licenses for, or other rights to use, the inventions, patent applications,
patents, trademarks (both registered and unregistered), tradenames, copyrights, trade secrets and
other proprietary information described in the Registration Statement, the Disclosure Package and
the Prospectus as being owned or licensed by them or which are necessary for the conduct of their
respective businesses (collectively, “
Intellectual Property
”), except where the failure to own,
license or have such rights would not, individually or in the aggregate, result in a Material
Adverse Effect. Except as
described in the Registration Statement, the Disclosure Package and the Prospectus (i) there
are no third parties who have or, to the Company’s knowledge, will be able to establish rights to
any Intellectual Property, except for the ownership rights of the owners of the Intellectual
Property which is licensed to the Company; (ii) to the Company’s knowledge, there is no
infringement by third parties of any Intellectual Property; (iii) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the
Company’s rights in or to, or the validity, enforceability, or scope of, any Intellectual Property
owned by or licensed to the Company, and the Company is unaware of any facts which could form a
reasonable basis for any such claim; (iv) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others that the Company or any of the Subsidiaries
infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary
rights of others, and the Company is unaware of any facts which could form a reasonable basis for
any such claim; (v) to the Company’s knowledge, there is no patent or patent application that
contains claims that interfere with the issued or pending claims of any of the Intellectual
Property; and (vi) to the Company’s knowledge, there is no prior art that may render any patent
owned by the Company invalid, nor is there any prior art known to the Company that may render any
patent application owned by the Company unpatentable.
(aa)
Taxes
. The Company and each of the Subsidiaries has timely filed all material federal,
state, local and foreign income and franchise tax returns (or timely filed applicable extensions
therefore) that have been required to be filed and are not in default in the payment of any taxes
which were payable pursuant to said returns or any assessments with respect thereto, other than any
which the Company or any of the Subsidiaries is contesting in good faith and for which adequate
reserves have been provided and reflected in the Company’s financial statements included in the
Registration Statement, the Disclosure Package and the Prospectus. Neither the Company nor any of
its Subsidiaries has any tax deficiency that has been or, to the knowledge of the Company, might be
asserted or threatened against it that would result in a Material Adverse Effect.
(bb)
Insurance
. The Company and each of the Subsidiaries maintains insurance in such amounts
and covering such risks as is adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in similar industries.
All such insurance is fully in force on the date hereof and will be fully in force as of the
Closing Date. Neither the Company nor any of the Subsidiaries has any reason to believe that it
will not be able to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue its business at a
cost that would not have a Material Adverse Effect.
(cc)
Accounting Controls
. The Company and each of the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with generally
accepted accounting principles as in effect in the United States and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to any differences.
-10-
(dd)
Disclosure Controls
. The Company has established, maintains and evaluates “disclosure
controls and procedures” (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange Act), which (i) are designed to ensure that material information relating to the Company
is made known to the Company’s principal executive officer and its principal financial officer by
others within those entities, particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared, (ii) have been evaluated for effectiveness as
of the end of the last
fiscal period covered by the Registration Statement; and (iii) such disclosure controls and
procedures are effective to perform the functions for which they were established. There are no
significant deficiencies and material weaknesses in the design or operation of internal controls
which could adversely affect the Company’s ability to record, process, summarize, and report
financial data to management and the Board of Directors. The Company is not aware of any fraud,
whether or not material, that involves management or other employees who have a role in the
Company’s internal controls; and since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no significant changes in internal controls or in other
factors that could significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
(ee)
Corrupt Practices
. Neither the Company nor, to the Company’s knowledge, any other person
associated with or acting on behalf of the Company, including without limitation any director,
officer, agent or employee of the Company or its Subsidiaries has, directly or indirectly, while
acting on behalf of the Company or its Subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds, (iii) violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended or (iv) made any other unlawful payment.
(ff)
No Price Stabilization
. Neither the Company nor any of the Subsidiaries nor, to the
Company’s knowledge, any of their respective officers, directors, affiliates or controlling persons
has taken or will take, directly or indirectly, any action designed to cause or result in, or which
has constituted or which might reasonably be expected to constitute the stabilization or
manipulation of the price of any security of the Company to facilitate the sale or resale of the
Securities.
(gg)
No Undisclosed Relationships
. No relationship, direct or indirect, exists between or
among the Company on the one hand and the directors, officers, stockholders, customers or suppliers
of the Company on the other hand which is required to be described in the Registration Statement,
the Disclosure Package and the Prospectus which has not been so described. There are no outstanding
loans, advances (except normal advances for business expenses in the ordinary course of business)
or guarantees of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any member of their respective immediate families, except as disclosed
in the Registration Statement, the Disclosure Package and the Prospectus. The Company has not, in
violation of the Sarbanes Oxley Act, directly or indirectly, extended or maintained credit,
arranged for the extension of credit, or renewed an extension of credit, in the form of a personal
loan to or for any director or executive officer of the Company.
(hh)
Sarbanes-Oxley Act
. The Company, and to its knowledge after due inquiry, all of the
Company’s directors or officers, in their capacities as such, are in compliance in all material
respects with all applicable effective provisions of the Sarbanes-Oxley Act and any related rules
and regulations promulgated by the Commission.
(ii)
Brokers Fees
. Neither the Company nor any of the Subsidiaries is a party to any
contract, agreement or understanding with any person (other than this Agreement) that would give
rise to a valid claim against the Company or the Subsidiaries or the Placement Agents for a
brokerage commission, finder’s fee or other like payment in connection with the offering and sale
of the Securities.
(jj)
Exchange Act Requirements
. The Company has filed in a timely manner (or received an
extension and has filed prior to the expiration of any such extension) all reports required to be
filed pursuant to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act during the preceding 12
months.
-11-
(kk)
FINRA Affiliations
. To the Company’s knowledge, there are no affiliations or
associations between (i) any member of FINRA and (ii) the Company or any of the Company’s officers,
directors or 5% or greater securityholders or any beneficial owner of the Company’s unregistered
equity securities that were acquired at any time on or after the one hundred eightieth
(180
th
) day immediately preceding the date the Registration Statement was initially
filed with the Commission, except as set forth in the Registration Statement, the Disclosure
Package and the Prospectus.
(ll)
Compliance with Environmental Laws
. The Company and the Subsidiaries (a) are in
compliance with any and all applicable foreign, federal, state and local laws, orders, rules,
regulations, directives, decrees and judgments relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants
(“
Environmental Laws
”), (b) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and (c) are in
compliance with all terms and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits, licenses or approvals
would not, individually or in the aggregate, result in a Material Adverse Effect. There are no
costs or liabilities associated with Environmental Laws (including, without limitation, any capital
or operating expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) which would, individually or in the
aggregate, result in a Material Adverse Effect.
(mm)
No Labor Disputes
. Neither the Company nor any Subsidiary is engaged in any unfair labor
practice; except for matters that would not, individually or in the aggregate, result in a Material
Adverse Effect. (i) There is (A) no unfair labor practice complaint pending or, to the Company’s
knowledge after due inquiry, threatened against the Company or any Subsidiary before the National
Labor Relations Board, and no grievance or arbitration proceeding arising out of or under
collective bargaining agreements is pending or threatened, (B) no strike, labor dispute, slowdown
or stoppage pending or, to the Company’s knowledge after due inquiry, threatened against the
Company or any Subsidiary and (C) no union representation dispute currently existing concerning the
employees of the Company or any Subsidiary, and (ii) to the Company’s knowledge (A) no union
organizing activities are currently taking place concerning the employees of the Company or any
Subsidiary and (B) there has been no violation of any federal, state, local or foreign law relating
to discrimination in the hiring, promotion or pay of employees or any applicable wage or hour laws
concerning the employees of the Company or any Subsidiary.
(nn)
ERISA
. The Company is in compliance in all material respects with all presently
applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder (“
ERISA
”); no “reportable event” (as
defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which
the Company would have any liability; the Company has not incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any
“pension plan” or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the “
Code
”); and each “pension
plan” for which the Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.
-12-
(oo)
NYSE Amex; Exchange Act Registration
. The Common Stock is registered pursuant to Section
12(b) of the Exchange Act and accepted for listing on the NYSE Amex, and the Company has taken no
action designed to, or likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act or delisting the Common Stock from the NYSE Amex, nor, except as
described in the Prospectus, has the Company received any notification that the Commission or NYSE
Amex is contemplating terminating such registration or listing. The Company has complied in all
material respects with the applicable requirements of the NYSE Amex for maintenance of listing of
the Common Stock thereon.
(pp)
PFIC Status
. The Company is not, for the taxable year ended December 31, 2008, and upon
consummation of the transactions described hereby and the application of the proceeds as described
in the Registration Statement, the Disclosure Package and the Prospectus is not expected to become,
a Passive Foreign Investment Company within the meaning of Section 1297 of the Internal Revenue
Code, as amended.
(qq)
Statistical or Market-Related Data
. Any statistical, industry-related and market-related
data included or incorporated by reference in the Registration Statement, the Disclosure Package
and the Prospectus, are based on or derived from sources that the Company reasonably and in good
faith believes to be reliable and accurate, and such data agree with the sources from which they
are derived.
(rr)
Clinical Studies
. All studies, tests and preclinical and clinical trials conducted by,
or on behalf of, the Company or any Subsidiary have been conducted in material compliance with
experimental protocols, procedures and controls pursuant to accepted professional scientific
standards and applicable local, state and federal laws, rules, regulations and guidances,
including, but not limited to the applicable requirements of Good Laboratory Practices or Good
Clinical Practices, as applicable. To the knowledge of the Company, there are no studies, tests or
trials the results of which call into question the clinical results described or referred to in the
Registration Statement. Neither the Company nor any Subsidiary has received any notices,
correspondence or other communication from the FDA or any other governmental authority requiring
the termination, suspension or material modification of any ongoing or planned clinical trials
conducted by, or on behalf of, the Company or any Subsidiary, or in which the Company or any
Subsidiary has participated, and the Company has no knowledge or reason to believe that the FDA or
any other governmental authority is considering such action. Neither the Company nor any
Subsidiary, nor, to the knowledge of the Company, any officer, employee or agent of the Company or
any Subsidiary has been convicted of any crime or engaged in any conduct that would reasonably be
expected to result in debarment under 21 U.S.C. Section 335a or any similar law or regulation. The
descriptions in the Registration Statement, the Disclosure Package and the Prospectus of the
results of such studies and tests are accurate and complete in all material respects and fairly
present the published data derived from such studies and tests.
(ss)
Descriptions of Documents
. The statements set forth in each of the Registration
Statement, the Disclosure Package and the Prospectus describing the Securities and this Agreement,
insofar as they purport to describe the provisions of the laws and documents referred to therein,
are accurate, complete and fair in all material respects.
(tt)
Money Laundering Laws.
The operations of the Company are and have been conducted at all
times in compliance in all material respects with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by any governmental
agency (collectively, the “
Money Laundering Laws
”) and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator involving the Company with
respect to the Money Laundering Laws is pending, or to the knowledge of the Company, threatened.
-13-
(uu)
OFAC.
Neither the Company nor any of its Subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company or any of its
Subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“
OFAC
”); and the Company will not directly or
indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person or entity that, to the Company’s
knowledge, will use such proceeds, for the purpose of financing the activities of any person
currently subject to any U.S. sanctions administered by OFAC.
Any certificate signed by any officer of the Company or a Subsidiary and delivered to the
Placement Agents or to counsel for the Placement Agents in connection with the offering of the
Securities shall be deemed a representation and warranty by the Company (and not such officer in an
individual capacity) to the Placement Agents as to the matters covered thereby.
Section 3. Covenants
.
The Company covenants and agrees with the Placement Agents as follows:
(a)
Reporting Obligations; Exchange Act Compliance
. The Company will (i) file the Preliminary
Prospectus, if any, and the Prospectus with the Commission within the time periods specified by
Rule 424(b) and Rules 430A, 430B and 430C, as applicable under the Securities Act, (ii) file any
Issuer Free Writing Prospectus to the extent required by Rule 433 under the Securities Act, if
applicable, (iii) file promptly all reports required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act subsequent to the date of the
Prospectus and during such period as the Prospectus would be required by law to be delivered
(whether physically or through compliance with Rule 172 under the Securities Act or any similar
rule) (the “
Prospectus Delivery Period
”), and (iv) furnish copies of each Issuer Free Writing
Prospectus, if any, (to the extent not previously delivered) to the Placement Agents prior to 11:00
a.m. Eastern time, on the second business day next succeeding the date of this Agreement in such
quantities as the Placement Agents shall reasonably request.
(b)
Abbreviated Registration Statement
. If the Company elects to rely upon Rule 462(b) under
the Securities Act, the Company shall file a registration statement under Rule 462(b) with the
Commission in compliance with Rule 462(b) by 8:00 a.m., Eastern time, on the business day next
succeeding the date of this Agreement, and the Company shall at the time of filing either pay to
the Commission the filing fee for such Rule 462(b) registration statement or give irrevocable
instructions for the payment of such fee pursuant to the Rules and Regulations.
(c)
Amendments or Supplements
. The Company will not, during the Prospectus Delivery Period in
connection with the Offering contemplated by this Agreement, file any amendment or supplement to
the Registration Statement or the Prospectus unless a copy thereof shall first have been submitted
to the Placement Agents within a reasonable period of time prior to the filing thereof and the
Placement Agents shall not have reasonably objected thereto in good faith.
(d)
Free Writing Prospectuses
. The Company will (i) not make any offer relating to the
Securities that would constitute an “issuer free writing prospectus” (as defined in Rule 433) or
that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 under the
Securities Act) required to be filed by the Company with the Commission under Rule 433 under the
Securities Act unless the Placement Agents approve its use in writing prior to first use (each, a
“
Permitted Free Writing Prospectus
”); provided that the prior written consent of the Placement
Agents hereto shall be deemed to have been given in
-14-
respect of the Issuer Free Writing
Prospectus(es) included in
Schedule I
hereto, (ii) treat each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, (iii)
comply with the requirements of Rules 164 and 433 under the Securities Act applicable to any Issuer
Free Writing Prospectus, including the requirements relating to timely filing with the Commission,
legending and record keeping and (iv) not take any action that would result in the Placement Agents
or the Company being required to file with the Commission pursuant to Rule 433(d) under the
Securities Act a free writing prospectus prepared by or on behalf of such Placement Agents that
such Placement Agents otherwise would not have been required to file thereunder. The Company will
satisfy the conditions in Rule 433 under the Securities Act to avoid a requirement to file with the
Commission any electronic road show.
(e)
Notice to Placement Agents
. The Company will notify the Placement Agents promptly, and
will, if requested, confirm such notification in writing: (i) the receipt of any comments of, or
requests for additional information from, the Commission; (ii) the time and date of any filing of
any post-effective amendment to the Registration Statement or any amendment or supplement to the
Disclosure Package or the Prospectus, (iii) the time and date when any post-effective amendment to
the Registration Statement becomes effective; (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, or any post-effective amendment
thereto or any order preventing or suspending the use of any Preliminary Prospectus, the Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus, or the initiation of any proceedings
for that purpose or the threat thereof; (v) of receipt by the Company of any notification with
respect to any suspension or the approval of the Shares and Warrant Shares from any securities
exchange upon which it is listed for trading or included or designated for quotation, or the
initiation or threatening of any proceeding for such purpose. The Company will use its reasonable
best efforts to prevent the issuance or invocation of any such stop order or suspension by the
Commission and, if any such stop order or suspension is so issued or invoked, to obtain as soon as
possible the withdrawal or removal thereof.
(f)
Filing of Amendments or Supplements
. If, during the Prospectus Delivery Period, any event
shall occur or condition exist as a result of which it is necessary to amend or supplement the
Prospectus (or, if the Prospectus is not yet available to prospective purchasers, the Disclosure
Package) in order to make the statements therein, in the light of the circumstances when the
Prospectus (or, if the Prospectus is not yet available to prospective purchasers, the Disclosure
Package) is delivered to an Investor, not misleading, or if, in the opinion of counsel for the
Placement Agents, it is necessary to amend or supplement the Prospectus (or, if the Prospectus is
not yet available to prospective purchasers, the Disclosure Package) to comply with applicable law,
forthwith to prepare, file with the Commission and furnish, at its own expense, to the Placement
Agents, either amendments or supplements to the Prospectus (or, if the Prospectus is not yet
available to prospective purchasers, the Disclosure Package) so that the statements in the
Prospectus (or, if the Prospectus is not yet available to prospective purchasers, the Disclosure
Package) as so amended or supplemented will not, in the light of the circumstances when the
Prospectus (or, if the Prospectus is not yet available to prospective purchasers, the Disclosure
Package) is delivered to an Investor, be misleading or so that the Prospectus (or, if the
Prospectus is not yet available to prospective purchasers, the Disclosure Package), as amended or
supplemented, will comply with law. If at any time following issuance of an Issuer Free Writing
Prospectus there occurred or occurs an event or development as a result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the information contained in the Registration
Statement relating to the Securities or included or would include an untrue statement of a material
fact or omitted or would omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the
Company promptly will notify the Placement Agents and will promptly amend or supplement, at its own
expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue
statement or omission.
-15-
(g)
Delivery of Copies
. The Company will deliver promptly to the Placement Agents and their
counsel such number of the following documents as the Placement Agents shall reasonably request:
(i) conformed copies of the Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits), (ii) copies of any Preliminary Prospectus or
Issuer Free Writing Prospectus, (iii) during the Prospectus Delivery Period, copies of the
Prospectus (or any amendments or supplements thereto); (iii) any document incorporated by reference
in the Prospectus (other than any such document that is filed with the Commission electronically
via EDGAR or any successor system) and (iv) all correspondence to and from, and all documents
issued to and by, the Commission in connection with the registration of the Securities under the
Securities Act.
(h)
Earnings Statement
. As soon as practicable, but in any event not later than 15 months
after the end of the Company’s current fiscal quarter, the Company will make generally available to
holders of its securities and deliver to the Placement Agents, an earnings statement of the Company
(which need not be audited) that will satisfy the provisions of Section 11(a) and Rule 158 of the
Securities Act.
(i)
Use of Proceeds
. The Company will apply the net proceeds from the sale of the Securities
in the manner set forth in the Registration Statement, Disclosure Package and the Prospectus under
the heading “Use of Proceeds”.
(j)
Public Communications
. Prior to the Closing Date, the Company will not issue any press
release or other communication directly or indirectly or hold any press conference with respect to
the Company, its condition, financial or otherwise, or the earnings, business, operations or
prospects of any of them, or the offering of the Securities, without the prior written consent of
the Placement Agents, unless in the reasonable judgment of the Company and its counsel, and after
notification to the Placement Agents, such press release or communication is required by law, in
which case the Company shall use its reasonable best efforts to allow the Placement Agents
reasonable time to comment on such release or other communication in advance of such issuance.
(k)
Lock-Up Period
. For a period of 30 days after the date hereof (the “
Lock-Up Period
”), the
Company will not directly or indirectly, (1) offer to sell, hypothecate, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract to purchase (to the extent
such option or contract to purchase is exercisable within one year from the Closing Date), purchase
any option or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, or establish or increase a put equivalent position
or liquidate or decrease a call equivalent position within the meaning of Section 16 of the
Exchange Act, with respect to, any shares of Common Stock, or any securities convertible into or
exercisable or exchangeable for shares of Common Stock; (2) file or cause to become effective a
registration statement under the Securities Act relating to the offer and sale of any shares of
Common Stock or securities convertible into or exercisable or exchangeable for shares of Common
Stock or (3) enter into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such transaction described in
clauses (1), (2) or (3) above is to be settled by delivery of shares of Common Stock or such other
securities, in cash or otherwise, without the prior written consent of the Placement Agents (which
consent may be withheld in their sole discretion), other than (i) the Securities to be sold
hereunder, (ii) the issuance of stock options or shares of restricted stock to employees, directors
and consultants pursuant to equity compensation plans described in the Registration Statement
(excluding the exhibits thereto) and the Disclosure Package and the Prospectus, (iii) issuances of
shares of Common Stock upon the exercise of options or warrants disclosed as outstanding in the
Registration Statement (excluding the exhibits thereto) and the Disclosure Package and the
Prospectus or upon the conversion or exchange of convertible or exchangeable securities outstanding
as of the date of this Agreement; (iv) the issuance by the
-16-
Company of any shares of Common Stock as
consideration for mergers, acquisitions, other business combinations, or strategic alliances, occurring after the date of this Agreement;
provided
that each recipient of shares pursuant to this clause (iv) agrees that all such shares remain
subject to restrictions substantially similar to those contained in this
subsection 3(k)
;
(v) the purchase or sale of the Company’s securities pursuant to a plan, contract or instruction
that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) that was in effect prior to the
date hereof; or (vi) the sale of shares and warrants to one or more affiliates of the Sigma Tau
Group in a transaction on substantially the same terms as the transaction contemplated by the
Purchase Agreement pursuant to which Sigma Tau Group and its affiliates do no more than maintain
their collective pro rata ownership of the Company’s securities as in effect as of the date hereof
and for which such securities shall not be registered. Notwithstanding the foregoing, for the
purpose of allowing the Placement Agents to comply with FINRA Rule 2711(f)(4), if (1) during the
last 17 days of the Lock-Up Period, the Company releases earnings results or publicly announces
other material news or a material event relating to the Company occurs or (2) prior to the
expiration of the Lock-Up Period, the Company announces that it will release earnings results
during the 16 day period beginning on the last day of the Lock-Up Period, then in each case the
Lock-Up Period will be extended until the expiration of the 18 day period beginning on the date of
release of the earnings results or the public announcement regarding the material news or the
occurrence of the material event, as applicable, unless the Placement Agents waive, in writing,
such extension. The Placement Agents agree to waive such extension if the provisions of FINRA Rule
2711(f)(4) are not applicable to the Offering. The Company agrees not to accelerate the vesting of
any option or warrant or the lapse of any repurchase right prior to the expiration of the Lock-Up
Period.
(l)
Stabilization
. The Company will not take directly or indirectly any action designed, or
that might reasonably be expected to cause or result in, or that will constitute, stabilization or
manipulation of the price of any security of the Company to facilitate the sale or resale of any of
the Securities.
(m)
Transfer Agent
. The Company shall engage and maintain, at its expense, a transfer agent
and, if necessary under the jurisdiction of incorporation of the Company, a registrar for the
Shares and Warrant Shares.
(n)
Investment Company Act
. The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Securities in such a manner as would require the
Company to register as an investment company under the Investment Company Act.
(o)
Sarbanes-Oxley Act
. The Company will comply with all effective applicable provisions of
the Sarbanes Oxley Act.
(p)
Periodic Reports
. The Company will file with the Commission such periodic and special
reports as required by the Exchange Act.
(q)
NYSE Amex.
The Company will use its reasonable best efforts to obtain approval for, and
maintain the listing of the Shares and the Warrant Shares on the NYSE Amex for so long as the
Common Stock is listed thereon.
-17-
Section 4. Costs and Expenses
.
The Company, whether or not the transactions contemplated hereunder are consummated or this
Agreement is terminated, will pay or reimburse if paid by the Placement Agents all actual
out-of-pocket costs and expenses incident to the performance of the obligations of the Company
under this Agreement and in connection with the transactions contemplated hereby, including but not
limited to costs and expenses of or relating to (i) the preparation, printing, filing, delivery and
shipping of the Registration
Statement, any Issuer Free Writing Prospectus, each Preliminary Prospectus, the Disclosure
Package and the Prospectus, and any amendment or supplement to any of the foregoing and the
printing and furnishing of copies of each thereof to the Placement Agents and dealers (including
costs of mailing and shipment), (ii) the registration, issue, sale and delivery of the Securities
including any stock or transfer taxes and stamp or similar duties payable upon the sale, issuance
or delivery of the Securities and the printing, delivery, and shipping of the certificates
representing the Securities, (iii) the fees and expenses of any transfer agent or registrar for the
Shares and Warrant Shares, (iv) the filing fees required to be paid by the Placement Agents or the
Company with FINRA (including all COBRADesk fees), (v) fees, disbursements and other charges of
counsel to the Company (vi) listing fees, if any, for the listing or quotation of the Shares and
Warrant Shares on the NYSE Amex, (vii) reasonable fees and disbursements of counsel to the
Placement Agents, and (viii) the costs and expenses of the Company and the Placement Agents in
connection with the marketing of the offering and the sale of the Securities to prospective
investors including, but not limited to, those related to any presentations or meetings undertaken
in connection therewith including, without limitation, expenses associated with the production of
road show slides and graphics, fees and expenses of any consultants engaged with the written
consent of the Company in connection with the road show presentations, travel, lodging and other
expenses incurred by the officers of the Company and any such consultants, and the cost of any
aircraft or other transportation chartered by the Company in connection with the road show.
Notwithstanding the foregoing, the expenses of the Placement Agents (other than the filing fees set
forth in clause (iv) above), including attorneys fees and expenses, which the Company shall be
obligated to reimburse hereunder shall not exceed the lesser of (i) an amount equal to $55,000 in
the aggregate less the Advance (as defined below) without the Company’s consent, which shall not be
unreasonably withheld or (ii) 8% of the gross proceeds received by the Company from the sale of the
Securities, less the Placement Fee and the Advance if the Offering is consummated. The Placement
Agents hereby acknowledge receipt of an expense advance of $25,000 (the “Advance”). It is
understood that except as provided in this
Section 4
,
Section 6
and
Section
8(b)
, the Placement Agents shall pay all of their own expenses.
Section 5. Conditions of Placement Agents’ Obligations
.
The obligations of the Placement Agents hereunder are subject to the following conditions:
(a)
Filings with the Commission
. The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) under the Securities Act at or before 5:30 p.m., Eastern time, on the
second full business day after the date of this Agreement (or such earlier time as may be required
under the Securities Act).
(b)
Abbreviated Registration Statement
. If the Company has elected to rely upon Rule 462(b),
the registration statement filed under Rule 462(b) shall have become effective under the Securities
Act by 8:00 a.m., Eastern time, on the business day next succeeding the date of this Agreement.
(c)
No Stop Orders
. Prior to the Closing: (i) no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the Securities Act and no proceedings
initiated under Section 8(d) or 8(e) of the Securities Act for that purpose shall be pending or
threatened by the Commission, and (ii) any request for additional information on the part of the
Commission (to be included in the Registration Statement, the Disclosure Package, the Prospectus or
any Issuer Free Writing Prospectus or otherwise) shall have been complied with to the reasonable
satisfaction of the Placement Agents.
-18-
(d)
Action Preventing Issuance
. No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any governmental agency or body
which would, as of the Closing Date, prevent the issuance or sale of the Securities; and no
injunction, restraining order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which would prevent the
issuance or sale of the Securities.
(e)
Objection of Placement Agents
. No Prospectus or amendment or supplement to the
Registration Statement shall have been filed to which the Placement Agents shall have objected in
writing, which objection shall not be unreasonable. The Placement Agents shall not have advised
the Company that the Registration Statement, the Disclosure Package or the Prospectus, or any
amendment thereof or supplement thereto, or any Issuer Free Writing Prospectus contains an untrue
statement of fact which, in their opinion, is material, or omits to state a fact which, in their
opinion, is material and is required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading.
(f)
No Material Adverse Change
. (i) Prior to the Closing, there shall not have occurred any
change, or any development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company from that set forth in the
Disclosure Package and the Prospectus that, in the Placement Agents’ judgment, is material and
adverse and that makes it, in the Placement Agents’ judgment, impracticable to market the
Securities on the terms and in the manner contemplated in the Disclosure Package.
(ii) There shall not have occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York Stock Exchange, the NASDAQ Stock
Market, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, the
NYSE Amex or the over the counter market or the establishing on such exchanges or market by the SEC
or by such exchanges or markets of minimum or maximum prices that are not in force and effect on
the date hereof; (ii) a suspension or material limitation in trading in the Company’s securities on
the NYSE Amex or any other exchange or market or the establishing on any such market or exchange by
the SEC or by such market of minimum or maximum prices that are not in force and effect on the date
hereof; (iii) a general moratorium on commercial banking activities declared by either federal or
any state authorities; (iv) the outbreak or escalation of hostilities involving the United States
or the declaration by the United States of a national emergency or war, which in the Placement
Agents’ judgment makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities in the manner contemplated in the Prospectus; or (v) any calamity or
crisis, change in national, international or world affairs, act of God, change in the international
or domestic markets, or change in the existing financial, political or economic conditions in the
United States or elsewhere, that in the Placement Agents’ judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Securities in the manner
contemplated in each of the Disclosure Package and the Prospectus.
(g)
Representations and Warranties
. Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects when made and on and as of the
Closing Date, as if made on such date (except that those representations and warranties that
address matters only as of a particular date shall remain true and correct in all material respects
as of such date), and all covenants and agreements herein contained to be performed on the part of
the Company and all conditions herein contained to be fulfilled or complied with by the Company at
or prior to the Closing Date shall have been duly performed, fulfilled or complied with.
(h)
Opinion of Counsel to the Company
. The Placement Agents shall have received from, Cooley
Godward Kronish LLP, counsel to the Company, such counsel’s written opinion, addressed to the
Placement Agents and the Investors and dated the Closing Date, in form and substance reasonably
satisfactory to the Placement Agents.
-19-
(i)
[reserved]
.
(j)
Officer’s Certificate
. The Placement Agents shall have received on the Closing Date a
certificate, addressed to the Placement Agents and dated the Closing Date, of the chief executive
or chief operating officer and the chief financial officer or chief accounting officer of the
Company to the effect that:
(i) each of the representations, warranties and agreements of the Company in this
Agreement were true and correct in all material respects when originally made and are true
and correct in all material respects as of the Time of Sale and the Closing Date (except
that those representations and warranties that address matters only as of a particular date
shall remain true and correct in all material respects as of such date); and the Company has
complied with all agreements and satisfied all the conditions on its part required under
this Agreement to be performed or satisfied at or prior to the Closing Date;
(ii) subsequent to the respective dates as of which information is given in the
Disclosure Package, there has not been (A) a material adverse change or any development
involving a prospective material adverse change in the general affairs, business,
properties, management, financial condition or results of operations of the Company and the
Subsidiaries taken as a whole, (B) any transaction that is material to the Company and the
Subsidiaries taken as a whole, except transactions entered into in the ordinary course of
business, (C) any obligation, direct or contingent, that is material to the Company and the
Subsidiaries taken as a whole, incurred by the Company or the Subsidiaries, except
obligations incurred in the ordinary course of business, (D) except as disclosed in the
Disclosure Package and in the Prospectus, any change in the capital stock (other than a
change in the number of outstanding shares of Common Stock due to the issuance of shares
upon the exercise of outstanding options or warrants) or any material change in the short
term or long term indebtedness of the Company or any of the Subsidiaries taken as a whole,
(E) any dividend or distribution of any kind declared, paid or made on the capital stock of
the Company or any of the Subsidiaries or (F) any loss or damage (whether or not insured) to
the property of the Company or any of its Subsidiaries which has been sustained or will have
been sustained which has had or is reasonably likely to result in a Material Adverse Effect;
(iii) no stop order suspending the effectiveness of the Registration Statement or any
part thereof or any amendment thereof or the qualification of the Securities for offering or
sale, nor suspending or preventing the use of the Disclosure Package, the Prospectus or any
Issuer Free Writing Prospectus shall have been issued, and no proceedings for that purpose
shall be pending or to their knowledge, threatened by the Commission or any state or
regulatory body; and
(iv) the signers of said certificate have reviewed the Registration Statement, the
Disclosure Package and the Prospectus, and any amendments thereof or supplements thereto
(and any documents filed under the Exchange Act and deemed to be incorporated by reference
into the Disclosure Package and the Prospectus), and (A) (i) each part of the Registration
Statement and any amendment thereof do not and did not contain when the Registration
Statement (or such amendment) became effective, any untrue statement of a material fact or
omit to state, and did not omit to state when the Registration Statement (or such amendment)
became effective, any material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) as of the Time of Sale, neither the Disclosure
Package nor any individual Issuer Limited Use Free Writing Prospectus, when considered
together with the Disclosure Package, contained any untrue statement of material fact or
omits to state any material fact necessary to make the statements therein, in light of
-20-
the
circumstances under which they were
made, not misleading and (iii) the Prospectus, as amended or supplemented, does not and
did not contain, as of its issue date and as of the Closing Date, any untrue statement of
material fact or omit to state and did not omit to state as of such date, a material fact
necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading, and (B) since the Time of Sale, there has occurred no event
required to be set forth in an amendment or supplement to the Registration Statement, the
Disclosure Package or the Prospectus which has not been so set forth and there has been no
document required to be filed under the Exchange Act that upon such filing would be deemed
to be incorporated by reference in to the Disclosure Package and into the Prospectus that
has not been so filed.
(k)
Secretary’s Certificate
. On the Closing Date, the Company shall have furnished to the
Placement Agents a Secretary’s Certificate of the Company.
(l)
Other Filings with the Commission
. The Company shall have prepared and filed with the
Commission a Current Report on Form 8-K with respect to the transactions contemplated hereby,
including as an exhibit thereto this Agreement and any other documents relating thereto.
(m)
No FINRA Objection
. FINRA shall not have raised any objection with respect to the
fairness and reasonableness of the placement agency terms and arrangements relating to the issuance
and sale of the Securities; provided that if any such objection is raised, the Company and the
Placement Agents shall negotiate promptly and in good faith appropriate modifications to such
placement agency terms and arrangements in order to satisfy such objections.
(n)
NYSE Amex.
The Shares and the Warrant Shares shall have been approved for listing on the
NYSE Amex, subject to official notice of issuance.
(o)
Additional Documents
. Prior to the Closing Date, the Company shall have furnished to the
Placement Agents such further information, certificates or documents as the Placement Agents shall
have reasonably requested for the purpose of enabling them to pass upon the issuance and sale of
the Securities as contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or agreements, herein
contained.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they are in form and
substance reasonably satisfactory to counsel for the Placement Agents.
If any condition specified in this
Section 5
is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Placement Agents by notice to the Company at any
time prior to the Closing Date, which termination shall be without liability on the part of any
party to any other party, except that
Section 4
,
Section 6
and
Section 8
shall at all times be effective and shall survive such termination.
Section 6. Indemnification and Contribution
.
(a)
Indemnification of the Placement Agents
. The Company agrees to indemnify, defend and hold
harmless each of the Placement Agents, its respective directors and officers, and each person, if
any, who controls such Placement Agent within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing
persons, from and against any loss, damage, claim or liability, which, jointly or severally, such
Placement Agent or
-21-
any such person may become subject under the Securities Act, the Exchange Act,
or other federal or state
statutory law or regulation, the common law or otherwise, (including in settlement of any
litigation, if such settlement is effected with the written consent of the Company), insofar as
such loss, damage, claim or liability (or actions in respect thereof as contemplated below) arises
out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto or the omission or alleged
omission to state a material fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus (or
any amendment or supplement thereto), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading; and, in the case of (i) and
(ii) above, to reimburse such Placement Agent and each such controlling person for any and all
reasonable expenses (including reasonable fees and disbursements of counsel) as such expenses are
incurred by such Placement Agent or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage, liability, expense or
action;
provided, however
, that the foregoing indemnity shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, it arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact contained in or omitted from, and
in conformity with information concerning such Placement Agent furnished in writing by or on behalf
of such Placement Agent to the Company expressly for use therein, which information the parties
hereto agree is limited to the Placement Agent Information (as defined in
Section 7
), (iii)
any untrue statement or alleged untrue statement made by the Company in
Section 3
hereof or
the failure by the Company to perform when and as required any agreement or covenant contained
herein or (iv) any untrue statement or alleged untrue statement of any material fact contained in
any audio or visual materials provided to Investors by or with the approval of the Company or based
upon written information furnished by or on behalf of the Company with its approval including,
without limitation, slides, videos, films or tape recordings used in any road show or investor
presentations made to investors by the Company (whether in person or electronically) or in
connection with the marketing of the Securities.
(b)
Indemnification of the Company
. Each Placement Agent, severally and not jointly, will
indemnify, defend and hold harmless the Company, its directors and officers, and any person, if
any, who controls the Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons,
from and against any loss, claim, damage, liability or expense, as incurred to which, jointly or
severally, the Company or any such person may become subject under the Securities Act, the Exchange
Act, or other federal or state statutory law or regulation, the common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written consent of such
Placement Agent), insofar as such loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or any amendment
thereto, or the omission or alleged omission therefrom to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; (ii) any untrue
statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus,
any Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), or
the omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances under which they were
made, not misleading, in the case of each of (i) and (ii) above, to the extent but only to the
extent, that such untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, any Preliminary Prospectus, Issuer Free Writing Prospectus or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with
information concerning such Placement Agent furnished in writing by or on behalf of such Placement
Agent to the Company expressly for use therein and to reimburse the Company, or any such director,
officer or controlling person for any legal and other expense reasonably incurred by the Company,
or any
such director, officer or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability, expense or action;
provided
, that the parties hereto hereby agree that such written information provided by the
Placement Agents consists solely of the Placement Agent Information. Notwithstanding the
provisions of this
Section 6(b)
, in no event shall any indemnity by any Placement Agent
under this
Section 6(b)
exceed its pro rata share of the Placement Fee.
-22-
(c)
Notice and Procedures
. If any action, suit or proceeding (each, a “
Proceeding
”) is
brought against a person (an “
indemnified party
”) in respect of which indemnity may be sought
against the Company or any Placement Agent (as applicable, the “
indemnifying party
”) pursuant to
subsection (a)
or
(b)
, respectively, of this
Section 6
, such indemnified
party shall promptly notify such indemnifying party in writing of the institution of such
Proceeding and such indemnifying party shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and payment of all fees and
expenses;
provided, however
, that the omission to so notify such indemnifying party shall not
relieve such indemnifying party from any liability which such indemnifying party may have to any
indemnified party or otherwise, except to the extent the indemnifying party does not otherwise
learn of the Proceeding and such failure results in the forfeiture by the indemnifying party of
substantial rights or defenses. The indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel shall be at the
expense of such indemnified party or parties unless (i) the employment of such counsel shall have
been authorized in writing by the indemnifying party in connection with the defense of such
Proceeding, (ii) the indemnifying party shall not have, within a reasonable period of time in light
of the circumstances, employed counsel to defend such Proceeding or (iii) such indemnified party or
parties shall have reasonably concluded that there may be defenses available to it or them which
are different from, additional to or in conflict with those available to such indemnifying party,
in any of which events such reasonable fees and expenses shall be borne by such indemnifying party
and paid as incurred (it being understood, however, that such indemnifying party shall not be
liable for the expenses of more than one separate counsel (in addition to any local counsel) in any
one Proceeding or series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). An indemnifying party shall not be liable
for any settlement of any Proceeding (including by consent to the entry of any judgment) effected
without its written consent but, if settled with its written consent or if there be a final
judgment for the plaintiff, such indemnifying party agrees to indemnify and hold harmless the
indemnified party or parties from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel
(which fees and expenses shall be reasonably documented) as contemplated by the second sentence of
this
Section 6(c)
, then the indemnifying party agrees that it shall be liable for any
settlement of any Proceeding effected without its written consent if (i) such settlement is entered
into more than 90 days after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have fully reimbursed the indemnified party in accordance with such
request prior to the date of such settlement and (iii) such indemnified party shall have given the
indemnifying party at least 30 days’ prior notice of its intention to settle. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any settlement,
compromise or consent to the entry of judgment in any pending or threatened Proceeding in respect
of which any indemnified party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter of such Proceeding
and does not include an admission of fault or culpability or a failure to act by or on behalf of
such indemnified party.
-23-
(d)
Contribution
. If the indemnification provided for in this
Section 6
is
unavailable to an indemnified party under
subsections (a)
or
(b)
of this
Section 6
or insufficient to hold an indemnified
party harmless in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each applicable indemnifying party shall, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages, liabilities or expenses referred to in
subsection (a)
or
(b)
above, (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Placement Agents on the other from the offering of
the Securities or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the indemnifying party or parties on
the one hand and the indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Placement Agents on the other hand shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the Securities (before
deducting expenses) received by the Company and the Placement Fee received by the Placement Agents,
in each case as set forth on the cover of the Prospectus, bear to the aggregate public offering
price of the Securities. The relative fault of the Company on the one hand and the Placement
Agents on the other hand 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 Company, on the one hand, or by the
Placement Agents, on the other hand, and the parties’ relevant intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or omission. The Company
and the Placement Agents agree that it would not be just and equitable if contribution pursuant to
this
subsection (d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to in the first
sentence of this
Section 6(d)
. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first sentence of this
Section 6(d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending against any action or claim
which is the subject of this
Section 6(d)
. Notwithstanding the provisions of this
Section 6(d)
, no Placement Agent shall be required to contribute any amount in excess of
its pro rata share of the Placement Fee less the amount of any damages which such Placement Agent
has otherwise paid or become liable to pay by reason of such untrue statement or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Placement Agents’
obligations to contribute as provided in this Section 6(b) are several and not joint.
(e)
Representations and Agreements to Survive Delivery
. The obligations of the Company under
this
Section 6
shall be in addition to any liability which the Company may otherwise have.
The indemnity and contribution agreements of the parties contained in this
Section 6
and
the covenants, warranties and representations of the Company contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Placement Agent, any person who controls any
Placement Agent within the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act or any affiliate of any Placement Agent, or by or on behalf of the Company, its
directors or officers or any person who controls the Company within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, and (iii) the issuance and delivery of
the Securities. The Company and each of the Placement Agents agree promptly to notify each other of
the commencement of any Proceeding against it and, in the case of the Company, against any of the
Company’s officers or directors in connection with the issuance and sale of the Securities, or in
connection with the Registration Statement, the Disclosure Package or the Prospectus.
-24-
Section 7. Information Furnished by Placement Agents
.
The Company acknowledges that the statements set forth in the second paragraph under the
subheading “Fees” under the heading “Plan of Distribution” in the Prospectus (the “
Placement Agent
Information
”) constitute the only information relating to the Placement Agents furnished in writing
to the Company by the Placement Agents as such information is referred to in
Sections 2
and
6
hereof.
Section 8. Termination
.
(a) The Placement Agents shall have the right to terminate this Agreement by giving notice as
hereinafter specified at any time at or prior to the Closing Date, without liability on the part of
the Placement Agents to the Company, if (i) prior to delivery and payment for the Securities (A)
trading in securities generally shall have been suspended or materially limited on or by the New
York Stock Exchange, the NASDAQ Stock Market, the NASDAQ Global Select Market, the NASDAQ Global
Market, the NASDAQ Capital Market or the NYSE Amex (each, a “
Trading Market
”), (B) trading in the
shares of Common Stock of the Company shall have been suspended or materially limited on any
exchange or in the over-the-counter market, (C) a general moratorium on commercial banking
activities shall have been declared by federal or New York state authorities, (D) there shall have
occurred any outbreak or material escalation of hostilities or acts of terrorism involving the
United States or there shall have been a declaration by the United States of a national emergency
or war, (E) there shall have occurred any other calamity or crisis or any material change in
general economic, political or financial conditions in the United States or elsewhere, if the
effect of any such event specified in clause (D) or (E), in the judgment of the Placement Agents,
makes it impractical or inadvisable to proceed with the completion of the sale of and payment for
the Securities on the Closing Date on the terms and in the manner contemplated by this Agreement,
the Disclosure Package and the Prospectus, or (ii) since the time of execution of this Agreement or
the earlier respective dates as of which information is given in the Disclosure Package, there has
been (A) any Material Adverse Effect or (B) the Company shall have sustained a loss by strike,
fire, flood, earthquake, accident or other calamity of such character that in the judgment of the
Placement Agents would, individually or in the aggregate, result in a Material Adverse Effect and
which would, in the judgment of the Placement Agents, make it impracticable or inadvisable to
proceed with the offering or the delivery of the Securities on the terms and in the manner
contemplated in the Disclosure Package. Any such termination shall be without liability of any
party to any other party except that the provisions of
Section 4
,
Section 6
,
Section 8(b)
and
Section 11
hereof shall at all times be effective notwithstanding
such termination.
(b) If (1) this Agreement shall be terminated by the Placement Agents pursuant to
Section
5
,
Section 8(a)(i)(B)
or
Section 8(a)(ii)(A)
or (2) the sale of the Securities
to Investors is not consummated because of any failure, refusal or inability on the part of the
Company to comply with the terms or perform any agreement or obligation of this Agreement or the
Purchase Agreement, other than by reason of a default by the Placement Agents, the Company will, in
addition to paying the amounts described in
Section 4
hereof, reimburse the Placement
Agents for all of their reasonable and actual out-of-pocket disbursements (including, but not
limited to, the reasonable fees and disbursements of its counsel).
-25-
Section 9. Notices.
All statements, requests, notices and agreements hereunder shall be in writing or by
facsimile, and:
(a) if to the Placement Agents, shall be delivered or sent by mail, telex or facsimile
transmission to:
Roth Capital Partners, LLC
24 Corporate Plaza
Newport Beach, California 92660
Attention: Managing Director
Facsimile No.: (949) 720-7223
And
Boenning & Scattergood, Inc.
4 Tower Bridge
200 Bar Harbor Drive, Suite 300
West Conshohocken, Pennsylvania 19428
Attention: Stephen A. Hurly
Facsimile No.: (610) 832-5301
with a copy (which shall not constitute notice) to:
Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Attention: John D. Hogoboom
Facsimile No.: (973) 597-2383
(b) if to the Company shall be delivered or sent by mail, telex or facsimile transmission
to:
RegeneRx Biopharmaceuticals, Inc.
3 Bethesda Metro Center, Suite 630
Bethesda, Maryland 20814
Attention: Chief Executive Officer
Facsimile No.: (301) 280-1996
with a copy (which shall not constitute notice) to:
Cooley Godward Kronish LLP
One Freedom Square, Reston Town Center
11951 Freedom Drive
Reston, Virginia 20190
Attention: Darren K. DeStefano
Facsimile No.: (703) 456-8100
Any such notice shall be effective only upon receipt. Any party to this Agreement may change such
address for notices by sending to the parties to this Agreement written notice of a new address for
such purpose.
Section 10. Persons Entitled to Benefit of Agreement
.
This Agreement shall inure to the benefit of and shall be binding upon the Placement Agents,
the Company and their respective successors and assigns and the controlling persons, officers and
directors referred to in
Section 6
. Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation, other than the persons, firms or
corporations mentioned in the preceding sentence, any legal or equitable remedy or claim under or
in respect of this Agreement, or any provision
herein contained. The term “successors and assigns” as herein used shall not include any
purchaser of the Securities by reason merely of such purchase.
-26-
Section 11. Governing Law
.
This Agreement shall be governed by and construed in accordance with the laws of the State of
New York, without giving effect to the conflicts of laws provisions thereof.
Section 12. No Fiduciary Relationship
.
The Company hereby acknowledges that the Placement Agents are acting solely as placement
agents in connection with the offering of the Company’s securities. The Company further
acknowledges that the Placement Agents are acting pursuant to a contractual relationship created
solely by this Agreement entered into on an arm’s length basis and in no event do the parties
intend that the Placement Agents act or be responsible as a fiduciary to the Company, its
management, stockholders, creditors or any other person in connection with any activity that the
Placement Agents may undertake or have undertaken in furtherance of the offering of the Company’s
securities, either before or after the date hereof. The Placement Agents hereby expressly disclaim
any fiduciary or similar obligations to the Company, either in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions, and the Company
hereby confirms its understanding and agreement to that effect. The Company and the Placement
Agents agree that they are each responsible for making their own independent judgments with respect
to any such transactions, and that any opinions or views expressed by the Placement Agents to the
Company regarding such transactions, including but not limited to any opinions or views with
respect to the price or market for the Company’s securities, do not constitute advice or
recommendations to the Company. The Company hereby waives and releases, to the fullest extent
permitted by law, any claims that the Company may have against the Placement Agents with respect to
any breach or alleged breach of any fiduciary or similar duty to the Company in connection with the
transactions contemplated by this Agreement or any matters leading up to such transactions.
Section 13. Headings.
The Section headings in this Agreement have been inserted as a matter of convenience of
reference and are not a part of this Agreement.
Section 14. Amendments and Waivers
.
No supplement, modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The failure of a party to exercise any right or remedy
shall not be deemed or constitute a waiver of such right or remedy in the future. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (regardless of whether similar), nor shall any such waiver constitute a continuing
waiver unless otherwise expressly provided.
-27-
Section 15. Submission to Jurisdiction
.
Except as set forth below, no Proceeding may be commenced, prosecuted or continued in any
court other than the courts of the State of New York located in the City and County of New York or
in the United States District Court for the Southern District of New York, which courts shall have
jurisdiction over the adjudication of such matters, and the Company hereby consents to the
jurisdiction of such courts and personal service with respect thereto. The Company hereby consents
to personal jurisdiction, service
and venue in any court in which any Proceeding arising out of or in any way relating to this
Agreement is brought by any third party against the Placement Agents. The Company hereby waives all
right to trial by jury in any Proceeding (whether based upon contract, tort or otherwise) in any
way arising out of or relating to this Agreement. The Company agrees that a final judgment in any
such Proceeding brought in any such court shall be conclusive and binding upon the Company and may
be enforced in any other courts in the jurisdiction of which the Company is or may be subject, by
suit upon such judgment.
Section 16. Counterparts
.
This Agreement may be executed in one or more counterparts and, if executed in more than one
counterpart, the executed counterparts shall each be deemed to be an original and all such
counterparts shall together constitute one and the same instrument. Delivery of an executed
counterpart by facsimile shall be effective as delivery of a manually executed counterpart thereof.
-28-
If the foregoing is in accordance with your understanding of the agreement between the Company
and the Placement Agents, kindly indicate your acceptance in the space provided for that purpose
below.
|
|
|
|
|
|
|
|
Very truly yours,
REGENERX BIOPHARMACEUTICALS, INC.
|
|
|
|
By:
|
/s/
J. J. Finkelstein
|
|
|
|
|
Name:
|
J. J. Finkelstein
|
|
|
|
|
Title:
|
President and Chief Executive Officer
|
|
Accepted as of
the date first above written:
|
|
|
|
|
|
|
ROTH CAPITAL PARTNERS, LLC
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ John M. Dalfonsi
|
|
|
|
|
|
Name: John M. Dalfonsi
Title: Managing Director
|
|
|
|
|
|
|
|
|
|
BOENNING & SCATTERGOOD, INC.
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Stephen A. Hurly
|
|
|
|
|
|
Name: Stephen A. Hurly
Title: Managing Director
|
|
|
Schedules and Exhibits
Schedule I: Issuer General Free Writing Prospectuses
Exhibit A: Form of Purchase Agreement
Exhibit B: Pricing Information
Exhibit C: Disclosure Materials
Schedule I
Issuer General Free Writing Prospectuses
None.
Exhibit A
Form of Purchase Agreement
[included
as Exhibit 10.1]
Exhibit B
Pricing Information
Number of Shares to be Sold: 4,512,195
Number of Warrants to be Sold: 2,256,098
Offering Price: $0.82 per Share
Per Share Exercise Price of Warrants: $1.12
Aggregate Placement Agency Fees: $259,000
Exhibit C
Disclosure Materials
In addition to the offering covered by the Prospectus, on September 30, 2009, the Company entered
into a securities purchase agreement with an affiliate of Sigma-Tau Group, the Company’s largest
stockholder, with respect to the private placement of an additional 1,219,512 shares of its common
stock at a price per share of $0.82, for gross proceeds of $1,000,000. No placement agent fees are
payable in connection with this transaction. In connection with this private placement, the
Company has agreed to issue to the purchaser a warrant to purchase an additional 609,756 shares of
common stock at an exercise price of $1.12 per share. The warrant will be exercisable beginning
six months from the date of issuance and will expire on September 30, 2014. Under the terms of the
private placement, the purchaser has agreed to vote the shares purchased, and any additional shares
issued pursuant to the exercise of the warrant, as directed by the Company’s board of directors
until September 30, 2012. The completion of the private placement to the affiliate of Sigma-Tau
Group is subject to the satisfaction of customary closing conditions, and the Company expects the
offering to close during the week of October 5, 2009.
Exhibit 4.1
COMMON STOCK PURCHASE WARRANT
REGENERX BIOPHARMACEUTICALS, INC.
|
|
|
|
|
Warrant Shares:
_____
|
|
Initial Exercise Date:
_____, 2009
|
THIS COMMON STOCK PURCHASE WARRANT (the “
Warrant
”) certifies that, for value received,
________
(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 hereof (the
“
Initial Exercise Date
”) and on or prior to the close of business on the five year
anniversary of the Initial Exercise Date (the “
Termination Date
”) but not thereafter, to
subscribe for and purchase from RegeneRx Biopharmaceuticals, Inc., a Delaware corporation (the
“
Company
”), up to
_____
shares (the “
Warrant Shares
”) of Common Stock.
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 September
30, 2009, 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 (or such
other office or agency of the Company as it may designate by notice in writing to the
registered Holder at the address of the Holder appearing on the books of the Company) of a
duly executed facsimile copy of the Notice of Exercise Form annexed hereto; and, within
three (3) Trading Days of the date said Notice of Exercise is delivered to the Company, the
Company shall have received payment of the aggregate Exercise Price of the shares thereby
purchased by wire transfer or cashier’s check drawn on a United States bank or, if
available, pursuant to the cashless exercise procedure specified in Section 2(c) below.
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 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 Form within 1 Business Day of receipt of
such notice. In the event of any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error.
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.
b)
Exercise Price
. The exercise price per share of the Common Stock under this
Warrant shall be
$1.12,
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 issuance of the Warrant Shares to the Holder and all of the Warrant Shares are not then
registered for resale by Holder into the market at market prices from time to time on an
effective registration statement for use on a continuous basis (or the prospectus contained
therein is not available for use), 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 certificate for the number of Warrant Shares equal to the quotient obtained by
dividing [(A-B) (X)] by (A), where:
|
|
|
|
|
|
|
|
|
|
|
(A)
|
|
=
|
|
the VWAP on the Trading Day immediately preceding the date
on which Holder elects to exercise this Warrant by means of a “cashless
exercise,” as set forth in the applicable Notice of Exercise;
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
“
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 L.P. (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 the OTC Bulletin Board is not a Trading Market, the
volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for
trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in
the “Pink Sheets” published by Pink OTC Markets, Inc. (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 Holders
of a majority in interest of the Securities then outstanding and reasonably acceptable to
the Company, the fees and expenses of which shall be paid by the Company.
2
d)
Mechanics of Exercise
.
i.
Delivery of Certificates Upon Exercise
. Certificates for
shares purchased hereunder shall be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder’s prime broker with the
Depository Trust Company through its Deposit Withdrawal Agent Commission
(“
DWAC
”) system 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 Holder
or (B) this Warrant is being exercised via cashless exercise, and otherwise
by physical delivery to the address specified by the Holder in the Notice of
Exercise by the date that is three (3) Trading Days after the latest of (A)
the delivery to the Company of the Notice of Exercise Form, (B) surrender of
this Warrant (if required) and (C) payment of the aggregate Exercise Price
as set forth above (including by cashless exercise, if permitted) (such
date, the “
Warrant Share Delivery Date
”). This Warrant shall be
deemed to have been exercised on the first date on which all of the
foregoing have been delivered to the Company. The Warrant Shares shall be
deemed to have been issued, and Holder or any other person so designated to
be named therein shall be deemed to have become a holder of record of such
shares for all purposes, as of the date the Warrant has been exercised, with
payment to the Company of the Exercise Price (or by cashless exercise, if
permitted) and all taxes required to be paid by the Holder, if any, pursuant
to Section 2(d)(vi) prior to the issuance of such shares, having been paid.
If the Company fails for any reason to deliver to the Holder certificates
evidencing the Warrant Shares subject to a Notice of Exercise by the Warrant
Share Delivery Date, the Company shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of Warrant Shares
subject to such exercise (based on the VWAP of the Common Stock on the date
of the applicable Notice of Exercise), $10 per Trading Day (increasing to
$20 per Trading Day on the fifth Trading Day after such liquidated damages
begin to accrue) for each Trading Day after such Warrant Share Delivery Date
until such certificates are delivered or Holder rescinds such exercise.
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 certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of 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.
3
iii.
Rescission Rights
. If the Company fails to cause the
Transfer Agent to transmit to the Holder a certificate or the certificates
representing 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.
Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Exercise
. In addition to any other rights available
to the Holder, if the Company fails to cause the Transfer Agent to transmit
to the Holder a certificate or the certificates representing the Warrant
Shares pursuant to an exercise on or before the Warrant Share Delivery Date,
and if after such date the Holder is required by its broker to purchase (in
an open market transaction or otherwise) or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated
receiving upon such exercise (a “
Buy-In
”), then the Company shall
(A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (1) the number of Warrant Shares that the Company was required
to deliver to the Holder in connection with the exercise at issue times (2)
the price at which the sell order giving rise to such purchase obligation
was executed, and (B) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for which
such exercise was not honored (in which case such exercise shall be deemed
rescinded) or deliver to the Holder the number of shares of Common Stock
that would have been issued had the Company timely complied with its
exercise and delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common Stock with
an aggregate sale price giving rise to such purchase obligation of $10,000,
under clause (A) of the immediately preceding sentence the Company shall be
required to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of
the Buy-In and, upon request of the Company, evidence of the amount of such
loss. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant to
the terms hereof.
v.
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.
4
vi.
Charges, Taxes and Expenses
. Issuance of certificates for
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
certificate, all of which taxes and expenses shall be paid by the Company,
and such certificates 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 certificates for 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.
vii.
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
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), 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 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 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. 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 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
5
determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any Affiliates) 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 two Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company, including this
Warrant, by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The “
Beneficial Ownership
Limitation
” shall be [9.9/4.9%] 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 not less than 61 days’ prior 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 such increase or decrease 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.
6
b)
RESERVED
.
c)
RESERVED
.
d)
Pro Rata Distributions
. If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to the Holders)
evidences of its indebtedness or assets (including cash and cash dividends) or rights or
warrants to subscribe for or purchase any security other than the Common Stock), then in
each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to the record date fixed for determination of stockholders entitled
to receive such distribution by a fraction of which the denominator shall be the VWAP
determined as of the record date mentioned above, and of which the numerator shall be such
VWAP on such record date less the then per share fair market value at such record date of
the portion of such assets or evidence of indebtedness so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of Directors in good faith.
In either case the adjustments shall be described in a statement provided to the Holder of
the portion of assets or evidences of indebtedness so distributed or such subscription
rights applicable to one share of Common Stock. Such adjustment shall be made whenever any
such distribution is made and shall become effective immediately after the record date
mentioned above.
e)
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,
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 50% or more 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, (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 or scheme of arrangement) with another Person whereby such other
Person 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
7
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 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. Notwithstanding anything
to the contrary, in the event of a Fundamental Transaction that is (1) an all cash
transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act,
or (3) a Fundamental Transaction involving a person or entity not traded on a national
securities exchange, including, but not limited to, the Nasdaq Global Select Market, the
Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any Successor Entity (as
defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or
within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant
from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value
of the remaining unexercised portion of this Warrant on the date of the consummation of such
Fundamental Transaction. “
Black Scholes Value
” means the value of this Warrant
based on the Black and Scholes Option Pricing Model obtained from the “OV” function on
Bloomberg, L.P. (“
Bloomberg
”) determined as of the day of consummation of the
applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the time between
the date of the public announcement of the applicable Fundamental Transaction and the
Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day
volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately
following the public announcement of the applicable Fundamental Transaction, (C) the
underlying price per share used in such calculation shall be the sum of the price per share
being offered in cash, if any, plus the value of any non-cash consideration, if any, being
offered in such Fundamental Transaction and (D) a remaining option time equal to the time
between the date of the public announcement of the applicable Fundamental Transaction and
the Termination Date. 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(e) pursuant to
written agreements in form and substance reasonably satisfactory to the Holder and approved
by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall,
at the option of the holder of this Warrant, deliver to the Holder in exchange for this
Warrant a
8
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 date 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.
f)
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.
g)
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 mail to the Holder a notice setting forth the Exercise Price after
such adjustment and setting forth a brief statement of the facts requiring
such adjustment. If the Company enters into a Variable Rate Transaction,
despite the prohibition thereon in the Purchase Agreement, the Company shall
be deemed to have issued Common Stock or Common Stock Equivalents at the
lowest possible conversion or exercise price at which such securities may be
converted or exercised.
9
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 is a party, any sale or
transfer of all or substantially all of the assets of the
Company, 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 mailed to the Holder at its last 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 mail such
notice or any defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such notice.
To the extent that any notice provided hereunder 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.
Section 4
.
Transfer of Warrant
.
a)
Transferability
. 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. 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.
10
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 initial issuance date set forth on the first page
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)
Understandings or Arrangements
. Such Holder is acquiring this Warrant as
principal for its own account and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of such Warrant (this
representation and warranty not limiting such Holder’s right to sell the Warrant pursuant to
the Registration Statement or otherwise in compliance with applicable federal and state
securities laws.) Such Holder is acquiring this Warrant hereunder in the ordinary course of
its business.
Section 5
.
Miscellaneous
.
a)
No Rights as Stockholder Until Exercise
. 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).
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.
11
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 executing stock certificates to execute
and issue the necessary certificates for the 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.
12
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, and the Holder does not utilize
cashless exercise, 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 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 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 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 in accordance with the
notice provisions of the Purchase Agreement.
i)
Limitation of Liability
. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of Holder, shall give rise to any liability
of 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.
13
l)
Amendment
. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holder.
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.
********************
(Signature Pages Follow)
14
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.
|
|
|
|
|
|
|
|
REGENERX BIOPHARMACEUTICALS, INC
.
|
|
|
|
By:
|
|
|
|
|
|
Name:
|
|
|
|
|
|
Title:
|
|
|
15
NOTICE OF EXERCISE
TO:
REGENERX BIOPHARMACEUTICALS, 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):
o
in lawful money of the United States; or
o
[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 a certificate or certificates representing 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 or by physical delivery
of a certificate to:
[SIGNATURE OF HOLDER]
|
|
|
|
|
|
|
|
|
|
|
Name of Investing Entity:
|
|
|
Signature of Authorized Signatory of Investing Entity
:
|
|
|
|
|
|
|
|
|
|
|
|
Name of Authorized Signatory:
|
|
|
Title of Authorized Signatory:
|
|
|
Date:
|
|
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [_____] all of or [_____] shares of the foregoing Warrant and all rights
evidenced thereby are hereby assigned to
|
|
|
|
|
|
|
|
|
|
|
Holder’s Signature:
|
|
|
|
|
|
|
|
Holder’s Address:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing
Warrant.
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “
Agreement
”) is dated as of September 30,
2009, between RegeneRx Biopharmaceuticals, Inc., a Delaware corporation (the “
Company
”),
and each purchaser identified on the signature pages hereto (each, including its successors and
assigns, a “
Purchaser
” and collectively the “
Purchasers
”).
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an
effective registration statement under the Securities Act of 1933, as amended (the “
Securities
Act
”), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally
and not jointly, desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby acknowledged,
the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1
Definitions
. In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms have the meanings set forth in this Section
1.1:
“
Acquiring Person
” shall have the meaning ascribed to such term in Section
4.5.
“
Action
” shall have the meaning ascribed to such term in Section 3.1(j).
“
Affiliate
” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a Person as
such terms are used in and construed under Rule 405 under the Securities Act.
“
Board of Directors
” means the board of directors of the Company.
“
Business Day
” means any day except any Saturday, any Sunday, any day which is
a federal legal holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action to close.
“
Closing
” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.
“
Closing Date
” means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all conditions
precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Securities, in each case, have been satisfied or
waived, but in no event later than the third Trading Day following the date hereof.
“
Commission
” means the United States Securities and Exchange Commission.
“
Common Stock
” means the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may hereafter be
reclassified or changed.
“
Common Stock Equivalents
” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock.
“
Company
Counsel
” means Cooley Godward Kronish LLP, with offices located at
11951 Freedom Drive, Reston, VA 20190.
“
Disclosure Schedules
” means the Disclosure Schedules of the Company delivered
concurrently herewith.
“
Evaluation Date
” shall have the meaning ascribed to such term in Section
3.1(r).
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
“
Exempt Issuance
” means the issuance of (a) shares of Common Stock or options
to employees, officers or directors of the Company pursuant to any stock or option plan duly
adopted for such purpose, by a majority of the non-employee members of the Board of
Directors or a majority of the members of a committee of non-employee directors established
for such purpose, (b) securities upon the exercise or exchange of or conversion of any
Securities issued hereunder and/or other securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended since the date of this
Agreement to increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities, (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the disinterested directors
of the Company, provided that any such issuance shall only be to a Person (or to the
equityholders of a Person) which is, itself or through its subsidiaries, an operating
company or an asset in a business synergistic with the business of the Company and shall
provide to the Company additional benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily for the
purpose of raising capital or to an entity whose primary business is investing in securities
and (d) $1 million of shares and warrants to one or more affiliates of the Sigma Tau Group
in a transaction on substantially the same terms as the transaction contemplated by this
Agreement entered into on the date hereof and for which such securities shall not be
registered.
“
FDA
” shall have the meaning ascribed to such term in Section 3.1(gg).
“
FDCA
” shall have the meaning ascribed to such term in Section 3.1(gg).
2
“
GAAP
” shall have the meaning ascribed to such term in Section 3.1(h).
“
Indebtedness
” shall have the meaning ascribed to such term in Section 3.1(z).
“
Intellectual Property Rights
” shall have the meaning ascribed to such term in
Section 3.1(o).
“
Liens
” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
“
Material Adverse Effect
” shall have the meaning assigned to such term in
Section 3.1(b).
“
Material Permits
” shall have the meaning ascribed to such term in Section
3.1(m).
“
Participation Maximum
” shall have the meaning ascribed to such term in Section
4.11(a).
“
Per Share Purchase Price
” equals
$0.82
, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar transactions of
the Common Stock that occur after the date of this Agreement.
“
Person
” means an individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other entity of any kind.
“
Pharmaceutical Product
” shall have the meaning ascribed to such term in
Section 3.1(gg).
“
Pre-Notice
” shall have the meaning ascribed to such term in Section 4.11(b).
“
Pro Rata Portion
” shall have the meaning ascribed to such term in Section
4.11(e).
“
Proceeding
” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding, such as a
deposition), whether commenced or threatened.
“
Prospectus
” means the final prospectus filed for the Registration Statement.
“
Prospectus Supplement
” means the supplement to the Prospectus complying with
Rule 424(b) of the Securities Act that is filed with the Commission and delivered by the
Company to each Purchaser at the Closing.
“
Purchaser Party
” shall have the meaning ascribed to such term in Section 4.8.
3
“
Registration Statement
” means the effective registration statement with
Commission file No. 333-150675 which registers the sale of the Shares, the Warrants and the
Warrant Shares to the Purchasers.
“
Required Approvals
” shall have the meaning ascribed to such term in Section
3.1(e).
“
Rule 144
” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same effect as such
Rule.
“
Rule 424
” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“
SEC Reports
” shall have the meaning ascribed to such term in Section 3.1(h).
“
Securities
” means the Shares, the Warrants and the Warrant Shares.
“
Securities Act
” means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
“
Shares
” means the shares of Common Stock issued or issuable to each Purchaser
pursuant to this Agreement.
“
Short Sales
” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or reservation
of borrowable shares of Common Stock).
“
Subscription Amount
” means, as to each Purchaser, the aggregate amount to be
paid for Shares and Warrants purchased hereunder as specified below such Purchaser’s name on
the signature page of this Agreement and next to the heading “Subscription Amount,” in
United States dollars and in immediately available funds.
“
Subsequent Financing
” shall have the meaning ascribed to such term in Section
4.11(a).
“
Subsequent Financing Notice
” shall have the meaning ascribed to such term in
Section 4.11(b).
“
Subsidiary
” means any subsidiary of the Company as set forth on
Schedule
3.1(a)
, and shall, where applicable, also include any direct or indirect subsidiary of
the Company formed or acquired after the date hereof.
“
Trading Day
” means a day on which the principal Trading Market is open for
trading.
4
“
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 AMEX, 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).
“
Transaction Documents
” means this Agreement and the Warrants.
“
Transfer Agent
” means American Stock Transfer & Trust Company the current
transfer agent of the Company, with a mailing address of 59 Maiden Lane, New York, NY 10038
and a facsimile number of (718) 236-2641, and any successor transfer agent of the Company.
“
Variable Rate Transaction
” shall have the meaning ascribed to such term in
Section 4.12(b).
“
Warrants
” means, collectively, the Common Stock purchase warrants delivered to
the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall
be exercisable immediately and have a term of exercise equal to five years, in the form of
Exhibit A
attached hereto.
“
Warrant Shares
” means the shares of Common Stock issuable upon exercise of the
Warrants.
“
WS
” means Weinstein Smith LLP with offices located at 420 Lexington Avenue,
Suite 2620, New York, New York 10170-0002.
ARTICLE II.
PURCHASE AND SALE
2.1
Closing
. On the Closing Date, upon the terms and subject to the conditions set
forth herein, substantially concurrent with the execution and delivery of this Agreement by the
parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree
to purchase, up to an aggregate of $3,700,000 of Shares and Warrants. Each Purchaser shall deliver
to the Company, via wire transfer or a certified check of immediately available funds equal to such
Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such
Purchaser and the Company shall deliver to each Purchaser its respective Shares and a Warrant as
determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other
items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and
conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of WS or such
other location as the parties shall mutually agree.
2.2
Deliveries
.
(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered
to each Purchaser the following:
(i) this Agreement duly executed by the Company;
5
(ii) a legal opinion of Company Counsel, in a form reasonably satisfactory to
the Purchasers;
(iii) a copy of the irrevocable instructions to the Company’s transfer agent
instructing the transfer agent to deliver via the Depository Trust Company Deposit
Withdrawal Agent Commission System (“
DWAC
”) Shares equal to such Purchaser’s
Subscription Amount divided by the Per Share Purchase Price, registered in the name
of such Purchaser;
(iv) a Warrant registered in the name of such Purchaser to purchase up to a
number of shares of Common Stock equal to 50% of such Purchaser’s Shares, with an
exercise price equal to $1.12, subject to adjustment therein (such Warrant
certificate may be delivered within three Trading Days of the Closing Date); and
(v) the Prospectus and Prospectus Supplement (which may be delivered in
accordance with Rule 172 under the Securities Act).
(b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:
(i) this Agreement duly executed by such Purchaser; and
(ii) such Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company.
2.3
Closing Conditions
.
(a) The obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:
(i) the accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchasers contained herein (unless as of a
specific date therein);
(ii) all obligations, covenants and agreements of each Purchaser required to be
performed at or prior to the Closing Date shall have been performed; and
(iii) the delivery by each Purchaser of the items set forth in Section 2.2(b)
of this Agreement.
(b) The respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:
(i) the accuracy in all material respects when made and on the Closing Date of
the representations and warranties of the Company contained herein (unless as of a
specific date therein);
6
(ii) all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;
(iii) the delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;
(iv) there shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and
(v) from the date hereof to the Closing Date, trading in the Common Stock shall
not have been suspended by the Commission or the Company’s principal Trading Market
(except for any suspension of trading of limited duration agreed to by the Company,
which suspension shall be terminated prior to the Closing), and, at any time prior
to the Closing Date, trading in securities generally as reported by Bloomberg L.P.
shall not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material adverse change in, any
financial market which, in each case, in the reasonable judgment of each Purchaser,
makes it impracticable or inadvisable to purchase the Securities at the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1
Representations and Warranties of the Company
. Except as set forth in the
Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify
any representation or otherwise made herein to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules, the Company hereby makes the following
representations and warranties to each Purchaser:
(a)
Subsidiaries
. The Company has no subsidiaries. All other references to
the Subsidiaries or any of them in the Transaction Documents shall be disregarded and of no
effect.
(b)
Organization and Qualification
. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, with the requisite
power and authority to own and use its properties and assets and to carry on its business as
currently conducted. Neither the Company nor any Subsidiary is in violation nor default of
any of the provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may be,
could not have or reasonably be expected to result in: (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a material adverse
effect on the results of operations, assets, business, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material
adverse effect on the Company’s ability to perform in any material respect on a timely basis
its obligations under any Transaction Document (any of (i), (ii) or (iii), a “
Material
Adverse Effect
”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.
7
(c)
Authorization; Enforcement
. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and no further action is
required by the Company, the Board of Directors or the Company’s stockholders in connection
therewith other than in connection with the Required Approvals. Each Transaction Document
to which it is a party has been (or upon delivery will have been) duly executed by the
Company and, when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company 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.
(d)
No Conflicts
. The execution, delivery and performance by the Company of
the Transaction Documents, the issuance and sale of the Securities and the consummation by
it of the transactions contemplated hereby and thereby to which it is a party do not and
will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the creation of any Lien upon
any of the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with
or result in a violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii)
and (iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.
8
(e)
Filings, Consents and Approvals
. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other governmental authority
or other Person in connection with the execution, delivery and performance by the Company of
the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of
this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii)
application(s) to each applicable Trading Market for the listing of the Securities for
trading thereon in the time and manner required thereby and (iv) such filings as are
required to be made under applicable state securities laws (collectively, the “
Required
Approvals
”).
(f)
Issuance of the Securities; Registration
. The Securities are duly
authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company. The Warrant Shares, when issued in accordance with the
terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear
of all Liens imposed by the Company. The Company has reserved from its duly authorized
capital stock the maximum number of shares of Common Stock issuable pursuant to this
Agreement and the Warrants. The Company has prepared and filed the Registration Statement in
conformity with the requirements of the Securities Act, which became effective on May 16,
2008 (the “
Effective Date
”), including the Prospectus, and such amendments and
supplements thereto as may have been required to the date of this Agreement. The
Registration Statement is effective under the Securities Act and no stop order preventing or
suspending the effectiveness of the Registration Statement or suspending or preventing the
use of the Prospectus has been issued by the Commission and no proceedings for that purpose
have been instituted or, to the knowledge of the Company, are threatened by the Commission.
The Company, if required by the rules and regulations of the Commission, proposes to file
the Prospectus, with the Commission pursuant to Rule 424(b). At the time the Registration
Statement and any amendments thereto became effective, at the date of this Agreement and at
the Closing Date, the Registration Statement and any amendments thereto conformed and will
conform in all material respects to the requirements of the Securities Act and did not and
will not contain any 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;
and the Prospectus and any amendments or supplements thereto, at time the Prospectus or any
amendment or supplement thereto was issued and at the Closing Date, conformed and will
conform in all material respects to the requirements of the Securities Act and did not and
will not contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
9
(g)
Capitalization
. The capitalization of the Company is as set forth on
Schedule 3.1(g)
. The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act, other than pursuant to the exercise
of
employee stock options under the Company’s stock option plans, the issuance of shares
of Common Stock to employees pursuant to the Company’s employee stock purchase plans and
pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the
date of the most recently filed periodic report under the Exchange Act. No Person has any
right of first refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents. Except as a
result of the purchase and sale of the Securities, there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of
Common Stock, or contracts, commitments, understandings or arrangements by which the Company
or any Subsidiary is or may become bound to issue additional shares of Common Stock or
Common Stock Equivalents. The issuance and sale of the Securities will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under any of such securities. All of the
outstanding shares of capital stock of the Company are validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state securities laws,
and none of such outstanding shares was issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities. No further approval or
authorization of any stockholder, the Board of Directors or others is required for the
issuance and sale of the Securities. There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital stock to which
the Company is a party or, to the knowledge of the Company, between or among any of the
Company’s stockholders.
(h)
SEC Reports; Financial Statements
. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the Company under
the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (the foregoing materials, including
the exhibits thereto and documents incorporated by reference therein, together with the
Prospectus and the Prospectus Supplement, being collectively referred to herein as the
“
SEC Reports
”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As
of their respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading. The
Company has never been an issuer subject to Rule 144(i) under the Securities Act. 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
Commission with respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“
GAAP
”),
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 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, immaterial, year-end audit adjustments.
10
(i)
Material Changes; Undisclosed Events, Liabilities or Developments
. Since
the date of the latest audited financial statements included within the SEC Reports, except
as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i)
there has been no event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company’s financial statements pursuant to
GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its
method of accounting, (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 and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to existing Company
stock option plans. The Company does not have pending before the Commission any request for
confidential treatment of information. Except for the issuance of the Securities
contemplated by this Agreement or as set forth on
Schedule 3.1(i)
, no event,
liability, fact, circumstance, occurrence or development has occurred or exists or is
reasonably expected to occur or exist with respect to the Company or its Subsidiaries or
their respective business, prospects, properties, operations, assets or financial condition
that would be required to be disclosed by the Company under applicable securities laws at
the time this representation is made or deemed made that has not been publicly disclosed at
least 1 Trading Day prior to the date that this representation is made.
(j)
Litigation
. There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company, threatened against
or affecting the Company, any Subsidiary or any of their respective properties before or by
any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “
Action
”) which (i)
adversely affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) could, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of the
Company. The Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any Subsidiary under the
Exchange Act or the Securities Act.
11
(k)
Labor Relations
. No material labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the Company, which could
reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s relationship
with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is
a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive covenant in
favor of any third party, and the continued employment of each such executive officer does
not subject the Company or any of its Subsidiaries to any liability with respect to any of
the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S.
federal, state, local and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where the failure
to be in compliance could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(l)
Compliance
. Neither the Company nor any Subsidiary: (i) is in default
under or in violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of its properties
is bound (whether or not such default or violation has been waived), (ii) is in violation of
any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or
has been in violation of any statute, rule, ordinance or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws
applicable to its business and all such laws that affect the environment, except in each
case as could not have or reasonably be expected to result in a Material Adverse Effect.
(m)
Regulatory Permits
. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses as described
in the SEC Reports, except where the failure to possess such permits could not reasonably be
expected to result in a Material Adverse Effect (“
Material Permits
”), and neither
the Company nor any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
(n)
Title to Assets
. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and marketable title in all
personal property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for Liens as do not
materially affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company
and the Subsidiaries and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any real property and
facilities held under lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in
compliance.
12
(o)
Patents and Trademarks
. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark applications, service
marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to so have could
have a Material Adverse Effect (collectively, the “
Intellectual Property Rights
”).
Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any
of the Intellectual Property Rights used by the Company or any Subsidiary violates or
infringes upon the rights of any Person. To the knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no existing infringement by
another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality and value of
all of their intellectual properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(p)
Insurance
. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as are
prudent and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance coverage at least
equal to the aggregate Subscription Amount. Neither the Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business without a significant increase in cost.
(q)
Transactions With Affiliates and Employees
. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge of the
Company, none of the employees of the Company is presently 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 entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or partner, in each
case in excess of $120,000 other than for (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements under any stock option plan
of the Company.
13
(r)
Sarbanes-Oxley; Internal Accounting Controls
. The Company is in material
compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it
as of the Closing Date. The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management’s general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The Company has
established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and designed such disclosure controls and procedures to
ensure that information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the Commission’s rules and forms. The Company’s certifying
officers have evaluated the effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by the Company’s most recently filed periodic
report under the Exchange Act (such date, the “
Evaluation Date
”). The Company
presented in its most recently filed periodic report under the Exchange Act the conclusions
of the certifying officers about the effectiveness of the disclosure controls and procedures
based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no changes in the Company’s internal control over financial reporting (as such term is
defined in the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.
(s)
Certain Fees
. Except as set forth in the Prospectus Supplement, no
brokerage or finder’s fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by the Transaction Documents.
The Purchasers shall have no obligation with respect to any fees or with respect to any
claims made by or on behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by the Transaction
Documents.
(t)
Investment Company
. The Company is not, and immediately after receipt of
payment for the Securities, will not be an “investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become an “investment company” subject to registration under the
Investment Company Act of 1940, as amended.
(u)
Registration Rights
. Except as set forth in the SEC Reports, no Person has
any right to cause the Company to effect the registration under the Securities Act of any
securities of the Company.
14
(v)
Listing and Maintenance Requirements
. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no
action designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has the Company
received any notification that the Commission is contemplating terminating such
registration. Except as set forth in the SEC Reports, the Company has not, in the 12 months
preceding the date hereof, received notice from any Trading Market on which the Common Stock
is or has been listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market.
(w)
Application of Takeover Protections
. The Company and the Board of
Directors have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Purchasers as a result of the
Purchasers and the Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s issuance of
the Securities and the Purchasers’ ownership of the Securities.
(x)
Disclosure
. Except with respect to the material terms and conditions of
the transactions contemplated by the Transaction Documents, the Company confirms that
neither it nor any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or might
constitute material, non-public information which is not otherwise disclosed in the
Prospectus Supplement. The Company understands and confirms that the Purchasers will rely
on the foregoing representation in effecting transactions in securities of the Company. All
of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the
Company, its business and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, is true and correct and does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were made, not
misleading. The press releases disseminated by the Company during the twelve months
preceding the date of this Agreement taken as a whole do not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were
made and when made, not misleading. The Company acknowledges and agrees that no Purchaser
makes or has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2 hereof.
(y)
No Integrated Offering
. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company, nor any of its
Affiliates, nor 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 cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of any applicable shareholder approval provisions of
any Trading Market on which any of the securities of the Company are listed or designated.
15
(z)
Solvency
. Based on the consolidated financial condition of the Company as
of the Closing Date, after giving effect to the receipt by the Company of the proceeds from
the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent liabilities) as they
mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on
its business as now conducted and as proposed to be conducted through the six month
anniversary of the date hereof (including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and projected
capital requirements and capital availability thereof), and (iii) the current cash flow of
the Company, together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its liabilities when such amounts are
required to be paid. The Company does not intend to incur debts beyond its ability to pay
such debts as they mature (taking into account the timing and amounts of cash to be payable
on or in respect of its debt). The Company has no knowledge of any facts or circumstances
which lead it to believe that it will file for reorganization or liquidation under the
bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date.
Schedule 3.1(z)
sets forth as of the date hereof all outstanding secured and
unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments. For the purposes of this Agreement, “
Indebtedness
”
means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other
than trade accounts payable incurred in the ordinary course of business), (y) all
guaranties, endorsements and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the Company’s balance sheet
(or the notes thereto), except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of business; and (z)
the present value of any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default
with respect to any Indebtedness.
(aa)
Tax Status
. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse Effect, the
Company and each Subsidiary has filed all necessary federal, state and foreign income and
franchise tax returns and has paid or accrued all taxes shown as due thereon, and the
Company has no knowledge of a tax deficiency which has been asserted or threatened against
the Company or any Subsidiary.
(bb)
Foreign Corrupt Practices
. Neither the Company, nor to the knowledge of
the Company, any agent or other person acting on behalf of the Company, 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.
16
(cc)
Accountants
. The Company’s accounting firm is set forth on
Schedule
3.1(cc)
of the Disclosure Schedules. To the knowledge and belief of the Company, such
accounting firm (i) is a registered public accounting firm as required by the Exchange Act
and (ii) shall express its opinion with respect to the financial statements to be included
in the Company’s Annual Report for the year ending December 31, 2009.
(dd)
Acknowledgment Regarding Purchasers’ Purchase of Securities
. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Purchaser is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated thereby and any advice given by
any Purchaser or any of their respective representatives or agents in connection with the
Transaction Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of the Securities. The Company further represents to each Purchaser
that the Company’s decision to enter into this Agreement and the other Transaction Documents
has been based solely on the independent evaluation of the transactions contemplated hereby
by the Company and its representatives.
(ee)
Acknowledgement Regarding Purchaser’s Trading Activity
. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(e)
and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the
Purchasers have been asked by the Company to agree, nor has any Purchaser agreed, to desist
from purchasing or selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities for any
specified term; (ii) past or future open market or other transactions by any Purchaser,
specifically including, without limitation, Short Sales or “derivative” transactions, before
or after the closing of this or future private placement transactions, may negatively impact
the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a party,
directly or indirectly, presently may have a “short” position in the Common Stock, and (iv)
each Purchaser shall not be deemed to have any affiliation with or control over any arm’s
length counter-party in any “derivative” transaction. The Company further understands and
acknowledges that (y) one or more Purchasers may engage in hedging activities at various
times during the period that the Securities are outstanding, including, without limitation,
during the periods that the value of the Warrant Shares deliverable with respect to
Securities are being determined, and (z) such hedging activities (if any) could reduce the
value of the existing stockholders’ equity interests in the Company at and after the time
that the hedging activities are being conducted. The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the Transaction
Documents.
17
(ff)
Regulation M Compliance
. The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or
to result in the stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
purchased, or, paid any compensation for soliciting purchases of, any of the
Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company, other than, in the case of clauses
(ii) and (iii), compensation paid to the Company’s placement agent in connection with the
placement of the Securities.
(gg)
FDA
. As to each product subject to the jurisdiction of the U.S. Food and
Drug Administration (“
FDA
”) under the Federal Food, Drug and Cosmetic Act, as
amended, and the regulations thereunder (“
FDCA
”) that is manufactured, packaged,
labeled, tested, distributed, sold, and/or marketed by the Company or any of its
Subsidiaries (each such product, a “
Pharmaceutical Product
”), such Pharmaceutical
Product is being manufactured, packaged, labeled, tested, distributed, sold and/or marketed
by the Company in compliance with all applicable requirements under FDCA and similar laws,
rules and regulations relating to registration, investigational use, premarket clearance,
licensure, or application approval, good manufacturing practices, good laboratory practices,
good clinical practices, product listing, quotas, labeling, advertising, record keeping and
filing of reports, except where the failure to be in compliance would not have a Material
Adverse Effect. There is no pending, completed or, to the Company’s knowledge, threatened,
action (including any lawsuit, arbitration, or legal or administrative or regulatory
proceeding, charge, complaint, or investigation) against the Company or any of its
Subsidiaries, and none of the Company or any of its Subsidiaries has received any notice,
warning letter or other communication from the FDA or any other governmental entity, which
(i) contests the premarket clearance, licensure, registration, or approval of, the uses of,
the distribution of, the manufacturing or packaging of, the testing of, the sale of, or the
labeling and promotion of any Pharmaceutical Product, (ii) withdraws its approval of,
requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of
advertising or sales promotional materials relating to, any Pharmaceutical Product, (iii)
imposes a clinical hold on any clinical investigation by the Company or any of its
Subsidiaries, (iv) enjoins production at any facility of the Company or any of its
Subsidiaries, (v) enters or proposes to enter into a consent decree of permanent injunction
with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any
laws, rules or regulations by the Company or any of its Subsidiaries, and which, either
individually or in the aggregate, would have a Material Adverse Effect. The properties,
business and operations of the Company have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of the FDA. The
Company has not been informed by the FDA that the FDA will prohibit the marketing, sale,
license or use in the United States of any product proposed to be developed, produced or
marketed by the Company nor has the FDA expressed any concern as to approving or clearing
for marketing any product being developed or proposed to be developed by the Company.
18
3.2
Representations and Warranties of the Purchasers
. Each Purchaser, for itself and
for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing
Date to the Company as follows (unless as of a specific date therein):
(a)
Organization; Authority
. Such Purchaser is either an individual or an entity
duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with full right, corporate or partnership power and authority to enter
into and to consummate the transactions contemplated by this Agreement and otherwise to carry
out its obligations hereunder and thereunder. The execution and delivery of this Agreement and
performance by such Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate, partnership, limited liability company or similar
action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is
a party 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)
Understandings or Arrangements
. Such Purchaser is acquiring the Securities as
principal for its own account and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities (this
representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant
to the Registration Statement or otherwise in compliance with applicable federal and state
securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course
of its business.
(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 exercises any Warrants, 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. Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange 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.
19
(e)
Certain Transactions and Confidentiality
. Other than consummating the
transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on
behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed
any purchases or sales, including Short Sales, of the securities of the Company during the
period commencing as of the time that such Purchaser first received a term sheet (written or
oral) as of the Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to the execution
hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions of such
Purchaser’s assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the representation set forth above shall only apply with
respect to the portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement. Other than to other Persons
party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any actions, with respect to the
identification of the availability of, or securing of, available shares to borrow in order to
effect Short Sales or similar transactions in the future.
The Company acknowledges and agrees that the representations contained in Section 3.2 shall not
modify, amend or affect such Purchaser’s right to rely on the Company’s representations and
warranties contained in this Agreement or any representations and warranties contained in any other
Transaction Document or any other document or instrument executed and/or delivered in connection
with this Agreement or the consummation of the transaction contemplated hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1
Warrant Shares
. If all or any portion of a Warrant is exercised at a time when
there is an effective registration statement to cover the issuance or resale of the Warrant Shares
or if the Warrant is exercised via cashless exercise, the Warrant Shares issued pursuant to any
such exercise shall be issued free of all legends. If at any time following the date hereof the
Registration Statement (or any subsequent registration statement registering the sale or resale of
the Warrant Shares) is not effective or is not otherwise available for the sale or resale of the
Warrant Shares, the Company shall immediately notify the holders of the Warrants in writing that
such registration statement is not then effective and thereafter shall promptly notify such holders
when the registration statement is effective again and available for the sale or resale of the
Warrant Shares (it being understood and agreed that the foregoing shall not limit the ability of
the Company to issue, or any Purchaser to sell, any of the Warrant Shares in compliance with
applicable federal and state securities laws). The Company shall use best efforts to keep a
registration statement (including the Registration Statement) registering the issuance or resale of
the Warrant Shares effective during the term of the Warrants. Upon a cashless exercise of a
Warrant, the holding period for purposes of Rule 144 shall tack back to the original date of
issuance of such Warrant.
4.2
Furnishing of Information
. Until the earliest of the time that (i) no Purchaser
owns Securities, (ii) the Warrants have expired or (iii) the Purchasers may freely sell all
Securities held by them pursuant to Rule 144(b) and (d) without regard to the current public
information requirement of Rule 144(c), the Company covenants to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act even if the Company is not then
subject to the reporting requirements of the Exchange Act. As long as any Purchaser owns
Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will
prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c)
such information as is required for the Purchasers to sell the Securities, including without
limitation, under Rule 144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, to the extent required from time to time
to enable such Person to sell such Securities without registration under the Securities Act,
including without limitation, within the requirements of the exemption provided by Rule 144.
20
4.3
Integration
. The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act)
that would be integrated with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is obtained before the closing of
such subsequent transaction.
4.4
Securities Laws Disclosure; Publicity
. The Company shall, by 8:30 a.m. (New York
City time) on the Trading Day immediately following the date hereof, issue a press release
disclosing the material terms of the transactions contemplated hereby, and issue a Current Report
on Form 8-K disclosing the material terms of the transactions contemplated hereby, and including
the Transaction Documents as exhibits thereto within the time required by the Exchange Act. From
and after the issuance of such press release, the Company shall have publicly disclosed all
material, non-public information delivered to any of the Purchasers by the Company or any of its
subsidiaries, or any of their respective officers, directors, employees or agents in connection
with the transactions contemplated by the Transaction Documents. The Company and each Purchaser
shall consult with each other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release
nor otherwise make any such public statement without the prior consent of the Company, with respect
to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect
to any press release of the Company, which consent shall not unreasonably be withheld or delayed,
except if such disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser,
or include the name of any Purchaser in any filing with the Commission or any regulatory agency or
Trading Market, without the prior written consent of such Purchaser, except (a) as required by
federal securities law in connection with the filing of final Transaction Documents (including
signature pages thereto) with the Commission and (b) to the extent such disclosure is required by
law or Trading Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure permitted under this clause (b).
4.5
Shareholder Rights Plan
. No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person”
under any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such
plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and the Purchasers.
4.6
Non-Public Information
. Except with respect to the material terms and conditions
of the transactions contemplated by the Transaction Documents, the Company covenants and
agrees that neither it, nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto such Purchaser shall have executed a written agreement
with the Company regarding the confidentiality and use of such information. The Company
understands and confirms that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company.
21
4.7
Use of Proceeds
. Except as set forth on
Schedule 4.7
attached hereto, the
Company shall use the net proceeds from the sale of the Securities hereunder for working capital
purposes and shall not use such proceeds for: (a) 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
prior practices), (b) the redemption of any Common Stock or Common Stock Equivalents or (c) the
settlement of any outstanding litigation.
4.8
Indemnification of Purchasers
. Subject to the provisions of this Section 4.8,
the Company will indemnify and hold 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
persons (each, a “
Purchaser Party
”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any
such Purchaser Party may suffer or incur as a result of or relating to any breach of any of the
representations, warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents.
4.9
Reservation of Common Stock
. As of the date hereof, the Company has reserved and
the Company shall continue to reserve and keep available at all times, free of preemptive rights, a
sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares
pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants.
4.10
Listing of Common Stock
. The Company hereby agrees to use best efforts to
maintain the listing or quotation of the Common Stock on the Trading Market on which it is
currently listed, and concurrently with the Closing, the Company shall apply to list or quote all
of the Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of
the Shares and Warrant Shares on such Trading Market. The Company further agrees, if the Company
applies to have the Common Stock traded on any other Trading Market, it will then include in such
application all of the Shares and Warrant Shares, and will take such other action as is necessary
to cause all of the Shares and Warrant Shares to be listed or quoted on such other Trading Market
as promptly as possible. The Company will then take all action reasonably necessary to continue
the listing and trading of its Common Stock on a Trading Market and will comply in all respects
with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading
Market.
22
4.11
Participation in Future Financing
.
(a) From the date hereof until the date that is the 9 month anniversary of the Closing
Date, upon any issuance by the Company or any of its Subsidiaries of Common Stock or Common
Stock Equivalents for cash consideration, Indebtedness (or a combination of units hereof) (a
“
Subsequent Financing
”), each Purchaser shall have the right to participate in up to
an amount of the Subsequent Financing equal to 75% of the Subsequent Financing (but, as to
each purchaser, only up to such Purchaser’s Subscription Amount) (the “
Participation
Maximum
”) on the same terms, conditions and price provided for in the Subsequent
Financing, unless the Subsequent Financing is a registered public offering, in which case
the Company shall offer each Purchaser the right to participate in such registered public
offering when it is lawful for the Company to do so, but no Purchaser shall be entitled to
purchase any particular amount of such registered public offering.
(b) At least five (5) Trading Days prior to the closing of the Subsequent Financing,
the Company shall deliver to each Purchaser a written notice of its intention to effect a
Subsequent Financing (“
Pre-Notice
”), which Pre-Notice shall ask such Purchaser if it
wants to review the details of such financing (such additional notice, a “
Subsequent
Financing Notice
”). Upon the request of a Purchaser, and only upon a request by such
Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later than
one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such
Purchaser. The Subsequent Financing Notice shall describe in reasonable detail the proposed
terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder
and the Person or Persons through or with whom such Subsequent Financing is proposed to be
effected and shall include a term sheet or similar document relating thereto as an
attachment.
(c) Any Purchaser desiring to participate in such Subsequent Financing must provide
written notice to the Company by not later than 5:30 p.m. (New York City time) on the fifth
(5
th
) Trading Day after all of the Purchasers have received the Pre-Notice that
the Purchaser is willing to participate in the Subsequent Financing, the amount of the
Purchaser’s participation, and representing and warranting that the Purchaser has such funds
ready, willing, and available for investment on the terms set forth in the Subsequent
Financing Notice. If the Company receives no such notice from a Purchaser as of such fifth
(5
th
) Trading Day, such Purchaser shall be deemed to have notified the Company
that it does not elect to participate.
(d) If by 5:30 p.m. (New York City time) on the fifth (5
th
) Trading Day
after all of the Purchasers have received the Pre-Notice, notifications by the Purchasers of
their willingness to participate in the Subsequent Financing (or to cause their designees to
participate) is, in the aggregate, less than the total amount of the Subsequent Financing,
then the Company may effect the remaining portion of such Subsequent Financing on the terms
and with the Persons set forth in the Subsequent Financing Notice.
23
(e) If by 5:30 p.m. (New York City time) on the fifth (5
th
) Trading Day
after all of the Purchasers have received the Pre-Notice, the Company receives responses to
a
Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate
amount of the Participation Maximum, each such Purchaser shall have the right to purchase
its Pro Rata Portion (as defined below) of the Participation Maximum. “
Pro Rata
Portion
” means the ratio of (x) the Subscription Amount of Securities purchased on the
Closing Date by a Purchaser participating under this Section 4.11 and (y) the sum of the
aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchasers
participating under this Section 4.11.
(f) The Company must provide the Purchasers with a second Subsequent Financing Notice,
and the Purchasers will again have the right of participation set forth above in this
Section 4.11, if the Subsequent Financing subject to the initial Subsequent Financing Notice
is not consummated for any reason on the terms set forth in such Subsequent Financing Notice
within 30 Trading Days after the date of the initial Subsequent Financing Notice.
(g) In lieu of complying with the procedures set forth in paragraphs (a) through (f) of
this Section 4.11, if the Company determines in its reasonable discretion that the delay
caused by compliance with such procedures would materially jeopardize a Subsequent
Financing, the Company may elect to give notice a Subsequent Financing Notice pursuant to
Section 4.11(b) to the Purchasers not less than one (1) Trading Day prior to the execution
and public announcement of the Subsequent Financing. Each Purchaser shall have five (5)
Trading Days from the date of receipt of such notice to elect to purchase such Purchaser’s
Participation Maximum. Notwithstanding anything herein to the contrary, the Company shall
reserve such allocation hereunder in the Subsequent Financing for the participation of the
Purchaser hereunder.
(h) Notwithstanding the foregoing, this Section 4.11 shall not apply in respect of (i)
an Exempt Issuance or (ii) an underwritten public offering of Common Stock.
4.12
Subsequent Equity Sales
.
(a) From the date hereof until 45 days after the Closing Date, neither the Company nor
any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or
proposed issuance of any shares of Common Stock or Common Stock Equivalents at a price per
share less than $0.82, subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common Stock that occur
after the date of this Agreement;
provided
,
however
, that the 45 day period
set forth in this Section 4.12 shall be extended for the number of Trading Days during such
period in which (i) trading in the Common Stock is suspended by any Trading Market, or (ii)
the Registration Statement is not effective or the prospectus included in the Registration
Statement may not be used by the Purchasers for the resale of the Shares and Warrant Shares.
24
(b) From the date hereof until 45 days after the Closing Date, the Company shall be
prohibited from effecting or entering into an agreement to effect any issuance by the
Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash
consideration (or a combination of units hereof) involving a Variable Rate
Transaction. “
Variable Rate Transaction
” means a transaction in which the
Company (i) issues or sells any debt or equity securities that are convertible into,
exchangeable or exercisable for, or include the right to receive additional shares of Common
Stock either (A) at a conversion price, exercise price or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the shares of
Common Stock at any time after the initial issuance of such debt or equity securities, or
(B) with a conversion, exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock or (ii) enters into any agreement,
including, but not limited to, an equity line of credit, whereby the Company may sell
securities at a future determined price. Any Purchaser shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which remedy shall be
in addition to any right to collect damages.
(c) Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of an
Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance.
4.13
Equal Treatment of Purchasers
. No consideration (including any modification of
any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents. For clarification purposes, this
provision constitutes a separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class
and shall not in any way be construed as the Purchasers acting in concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.
4.14
Certain Transactions and Confidentiality
. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf
or pursuant to any understanding with it will execute any purchases or sales, including Short Sales
of any of the Company’s securities during the period commencing with the execution of this
Agreement and ending at such time that the transactions contemplated by this Agreement are first
publicly announced pursuant to the initial press release as described in Section 4.4. 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 pursuant to
the initial press release as described in Section 4.4, such Purchaser will maintain the
confidentiality of the existence and terms of this transaction and the information included in the
Disclosure Schedules. Notwithstanding the foregoing and notwithstanding anything contained in this
Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser
makes any representation, warranty or covenant hereby that it will not engage in effecting
transactions in any securities of the Company after the time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial press release as described in
Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in
any securities of the Company in accordance with applicable securities laws from and after the time
that the transactions contemplated by this Agreement are first publicly announced pursuant to the
initial press release as described in
25
Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the issuance
of the initial press release as described in Section 4.4. Notwithstanding the foregoing, in the
case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers
manage separate portions of such Purchaser’s assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion
of assets managed by the portfolio manager that made the investment decision to purchase the
Securities covered by this Agreement.
4.15
Delivery of Warrants After Closing
. The Company shall deliver, or cause to be
delivered, the respective Warrant certificates purchased by each Purchaser to such Purchaser within
3 Trading Days of the Closing Date.
4.16
Capital Changes
. Until the three month anniversary of the Closing Date, the
Company shall not undertake a reverse or forward stock split or reclassification of the Common
Stock without the prior written consent of the Purchasers holding a majority in interest of the
Shares.
ARTICLE V.
MISCELLANEOUS
5.1
Termination
. This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between
the Company and the other Purchasers, by written notice to the other parties, if the Closing has
not been consummated on or before October 6, 2009;
provided
,
however
, that no such
termination will affect the right of any party to sue for any breach by the other party (or
parties).
5.2
Fees and Expenses
. Except as expressly set forth in the Transaction Documents to
the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company shall pay all
Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery
of any Securities to the Purchasers.
5.3
Entire Agreement
. The Transaction Documents, together with the exhibits and
schedules thereto, the Prospectus and the Prospectus Supplement, contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties acknowledge have
been merged into such documents, exhibits and schedules.
5.4
Notices
. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of: (a) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2
nd
) Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight courier service or
(d) upon actual receipt by the party to whom such notice is required to be given. The address for
such notices and communications shall be as set forth on the signature pages attached hereto.
26
5.5
Amendments; Waivers
. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an amendment, by the
Company and the Purchasers holding at least 67% in interest of the Shares then outstanding or, in
the case of a waiver, by the party against whom enforcement of any such waived provision is sought.
No waiver of any default with respect to any provision, condition or requirement of this Agreement
shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of any such right.
5.6
Headings
. The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
5.7
Successors and Assigns
. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of each
Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this
Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that
such transferee agrees in writing to be bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the “Purchasers.”
5.8
No Third-Party Beneficiaries
. This Agreement is intended 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, except as otherwise set forth in
Section 4.8.
5.9
Governing Law
. All questions concerning the construction, validity, enforcement
and interpretation of the Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by this Agreement and any
other Transaction Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of
Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to the enforcement of
any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. Each party
27
hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law. If either party shall commence an action or proceeding to enforce
any provisions of the Transaction Documents, then, in addition to the obligations of the Company
under Section 4.8, the prevailing party in such action or proceeding shall be reimbursed by the
other party for its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
5.10
Survival
. The representations and warranties contained herein shall survive the
Closing and the delivery of the Securities.
5.11
Execution
. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, 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 “.pdf” signature
page were an original thereof.
5.12
Severability
. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.13
Rescission and Withdrawal Right
. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein
provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights;
provided
,
however
, that in the
case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to
return any shares of Common Stock subject to any such rescinded exercise notice concurrently with
the return to such Purchaser of the aggregate exercise price paid to the Company for such shares
and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s
Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
28
5.14
Replacement of Securities
. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued
in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in
lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant
for a new certificate or instrument under such circumstances shall also pay any reasonable
third-party costs (including customary indemnity) associated with the issuance of such replacement
Securities.
5.15
Remedies
. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Purchasers and the Company will be
entitled to specific performance under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and not to assert in
any action for specific performance of any such obligation the defense that a remedy at law would
be adequate.
5.16
Payment Set Aside
. To the extent that the Company makes a payment or payments to
any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent
of any such restoration the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
5.17
Independent Nature of Purchasers’ Obligations and Rights
. The obligations of
each Purchaser under any Transaction Document are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the performance or
non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing
contained herein or in any other Transaction Document, and no action taken by any Purchaser
pursuant thereto, 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 with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently
protect and enforce its rights including, without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in their review and negotiation of the
Transaction Documents. For reasons of administrative convenience only, each Purchaser and its
respective counsel have chosen to communicate with the Company through WS. WS does not represent
any of the Purchasers and only represents Alpha Capital. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by any of the Purchasers.
29
5.18
Liquidated Damages
. The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing obligation of the
Company and shall not terminate until all unpaid partial liquidated damages and other amounts have
been paid notwithstanding the fact that the instrument or security pursuant to which such partial
liquidated damages or other amounts are due and payable shall have been canceled.
5.19
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.
5.20
Construction
. The parties agree that each of them and/or their respective counsel
has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal
rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments
hereto. In addition, each and every reference to share prices and shares of Common Stock in any
Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.
5.21
WAIVER OF JURY TRIAL
.
IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION
BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE
GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND
EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
30
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.
|
|
|
|
|
|
|
|
|
REGENERX BIOPHARMACEUTICALS, INC.
|
|
|
|
Address for Notice:
3
Bethesda Metro Center, Suite 630
Bethesda, MD 20814
|
|
By:
|
|
/s/ J. J. Finkelstein
|
|
|
|
Fax: (301) 280-1996
|
|
|
|
Name: J. J. Finkelstein
|
|
|
|
|
|
|
|
Title: President and Chief Executive
Officer
|
|
|
|
|
|
|
|
With a copy to (which shall not constitute notice):
|
|
|
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER SIGNATURE PAGES TO RGN SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first indicated above.
|
|
|
|
|
|
|
Signature of Authorized Signatory of Purchaser
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Authorized Signatory:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title of Authorized Signatory:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Email Address of Authorized Signatory:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facsimile Number of Authorized Signatory:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Address for Notice of Purchaser:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Address for Delivery of
Securities for Purchaser (if not same as address for notice):
|
|
|
|
|
EIN Number:
[PROVIDE THIS UNDER SEPARATE COVER]
[SIGNATURE PAGES CONTINUE]
