Exhibit 1.1
PLACEMENT AGENCY AGREEMENT
May 12, 2011
William Blair & Company, L.L.C.
222 West Adams
Chicago, IL 60606
JMP Securities LLC
600 Montgomery Street, Suite 1100
San Francisco, CA 94111
Ladies and Gentlemen:
Biodel Inc., a Delaware corporation (the “
Company
”), proposes, subject to the terms and
conditions herein, to issue and sell to certain investors (each an “
Investor
” and collectively the
"
Investors
”) an aggregate of up to (i) 12,074,945 shares (the “
Common Shares
”) of the Company’s
common stock, par value $0.01 per share (the “
Common
Stock
”), (ii) 1,813,944 shares (the “
Preferred
Shares
” and, together with the Common Shares, the “
Shares
”) of the Company’s Series A Convertible
Preferred Stock, par value $.01 per share (the “
Preferred Stock
”), and (iii) warrants to purchase
up to an additional 9,027,772 shares of Common Stock (the “
Warrants
”), in an offering under its
registration statement on Form S-3 (Registration No. 333-153167). The Shares and Warrants will be
sold to the several Investors as Units (the “
Units
”), each Unit consisting of (i) one Common Share
and (ii) one warrant to purchase 0.65 of a share of Common Stock;
provided
,
however
, that, in the
event that any Investor (together with any other Investors whose beneficial ownership of Common
Stock would be aggregated with such Investor’s for purposes of Section 13(d) of the Exchange Act
(as defined below) and the applicable rules of the Commission (as defined below)) purchases in
excess of an aggregate of 3,849,435 Units, all Units in excess of that amount shall consist of (i)
one Preferred Share and (ii) one Warrant to purchase 0.65 of a share of Common Stock. Units will
not be issued or certificated. The Shares and Warrants are immediately separable and will be
issued separately.
The Preferred Stock shall have the rights, preferences, privileges and restrictions set forth
in the Certificate of Designations substantially in the form attached hereto as
Exhibit F
(the “
Certificate of Designation
”). The shares of Common Stock issuable upon exercise of the
Warrants are referred to herein as the “
Warrant Shares
” and the shares of Common Stock issuable
upon conversion of the Preferred Shares are referred to herein as the “
Conversion Shares
.” The
Shares, the Warrants, the Warrant Shares and the Conversion Shares are referred to herein,
collectively, as the “
Securities.
” The Securities are more fully described in the Prospectus (as
defined in
Section 2(a)(iii)
hereof). The Company desires to engage William Blair &
Company, L.L.C. (“
William Blair
”) and JMP Securities LLC (“
JMP
”) 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 Placement Agency Agreement
(this “
Agreement
”), among the Company and each of you, William Blair and JMP shall be the Company’s
exclusive sole lead placement agent and co-placement agent, respectively (in such capacity,
together, the “
Placement Agents
”), on a reasonable best 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 in
Section 2(a)(i)
hereof), with the terms of the
offering to be subject to market conditions and negotiations among the Company, the Placement
Agents 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 in
Section 1(c)
hereof) of the
Offering, the Company shall pay to the Placement Agents an amount in the aggregate equal to 6% 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 subscription agreements in the form included as
Exhibit A
hereto (each, a “
Subscription Agreement
” and collectively, the “
Subscription
Agreements
”) 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 to
accept offers to purchase the Securities. Each of the Placement Agents shall act on a reasonable
best efforts basis and does not guarantee that it 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 their
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, the Company shall not, without the prior written consent of the Placement Agents, solicit or
accept offers to purchase Securities (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) Payment of the purchase price for, and delivery of, the Securities shall be made at a
closing (the “
Closing
”) at the offices of Morrison & Foerster LLP, counsel for the Placement
Agents, located at 1290 Avenue of the Americas, New York, New York, at 10:00 a.m., New York City
time, on or before
May 18, 2011
or at such time on such other date as may be agreed upon in writing
by the Placement Agents and the Company (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 Shares and Warrants which the Company has agreed to sell pursuant to this
Agreement and the Subscription Agreements shall be deemed to have been purchased and paid for, or
sold by the Company, until such Shares and Warrants shall have been delivered to the Investor
thereof against payment therefor by such Investor. If the Company shall default in its obligations
to deliver the Shares and Warrants 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.
(d) On the Closing Date, (i) the Company shall deliver, or cause to be delivered, the
Securities to the Investors, with the delivery of the Common Shares to be made through the
facilities of The Depository Trust Company’s DWAC system, and the delivery of the Warrants and the
Preferred Shares in physical, certificated form to be made by courier to the Investors to the
addresses set forth on the applicable Subscription Agreement,
provided
, that the Placement Agents
(and their counsel) have a right to inspect such Warrants and Preferred Shares in physical form at
least one business day before the Closing Date and (ii) the Investors will wire the purchase price
for their respective Securities to the Company pursuant to the terms of the Subscription Agreements
and the Company will wire the amounts owed to the Placement Agents as provided in this Agreement.
-2-
(e) 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, 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.
333-153167) 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 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
462(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 pursuant to General
Instruction I.B.I. The Offering 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 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 to the 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
reference herein to the Base 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 pursuant to Rule 424(b) under the Securities
Act, and prior to the termination of the Offering.
(iv) For purposes of this Agreement, all references to the Registration Statement, the Base
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 or the Prospectus shall be deemed to
-3-
mean and
include the subsequent filing of any document under the Securities Exchange Act of 1934
(collectively with the rules and regulations promulgated thereunder, the “
Exchange Act
”), and which
is deemed to be incorporated 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), at the time of each amendment thereto for the purposes of complying with
Section 10(a)(3) of the Act (whether by post-effective amendment, incorporated report or form of
prospectus) 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. 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
hereof).
(c)
Disclosure Package
. As of the Applicable Time (as defined in
Section 2(c)(1)
hereof) and as of the Closing Date, neither (A) the Issuer General Free Writing Prospectus(es) (as
defined in
Section 2(c)(3)
hereof) issued at or prior to the Applicable Time, the
Prospectus, 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 in
Section 2(c)(4)
hereof), 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. As used in this paragraph and elsewhere in this Agreement:
(1)
“Applicable Time”
means
5:45 p.m,
New York City time, on the date of this
Agreement.
(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.
(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.
-4-
(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 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)
hereof. The Company will file with the Commission all Issuer Free Writing Prospectuses that are
required to be filed 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 is solely the
property of the Company.
(f)
Not an Ineligible Issuer
. (i) At the time of filing the Registration Statement and
(ii) as of the date of the execution and delivery of this Agreement, the Company is not 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 as contemplated by the Registration
Statement.
(g)
Incorporated Documents
. The documents incorporated by reference in the Disclosure Package
and in the Prospectus, when they were filed with the Commission, conformed in all material respects
to the requirements of the Exchange Act 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.
(h)
Due Incorporation and Good Standing
. The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State of Delaware and has
corporate power and authority to own or lease, as the case may be, and operate its properties and
to conduct its business as described in the Registration Statement, Disclosure Package and the
Prospectus and to enter into and perform its obligations under this Agreement and the Subscription
Agreements. The Company is duly qualified as a foreign corporation to transact business and is in
good standing in Connecticut, the only jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of business, except for
such jurisdictions where the failure to so qualify or to be in good standing would not,
individually or in the aggregate, result in a material adverse effect, on the condition, financial
or otherwise, or on the earnings, business, properties, operations or prospects, whether or not
arising from transactions in the ordinary course of business, of the Company (a “
Material Adverse
Effect
”). The Company does not own of record or beneficially, directly or indirectly, (i) any
shares of outstanding capital stock or securities convertible into capital stock of any other
corporation, or (ii) any equity, voting or participating interest in any limited liability company,
partnership, joint venture or other non-corporate business enterprises.
(i)
Capitalization
. The Common Stock (including the Common Shares), the Preferred Stock
(including the Preferred Shares) and the Warrants conform in all material respects to the
description thereof contained in the Registration Statement, Disclosure Package and the Prospectus.
The
-5-
Warrant Shares and the Conversion Shares, when so issued, will conform in all material
respects to the description thereof in the Prospectus. All of the issued and outstanding shares of
Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and
have been issued in compliance with federal and state securities laws. None of the outstanding
shares of Common Stock were issued in violation of any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase securities of the Company. 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 is bound. There are no authorized or outstanding options,
warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any capital stock of the Company
other than those accurately described in the Registration Statement, Disclosure Package and the
Prospectus. The description of the Company’s 2004 Stock Incentive Plan, the Company’s 2005 Employee
Stock Purchase Plan, the Company’s 2005 Non-Employee Directors Stock Option Plan and the Company’s
2010 Stock Incentive Plan and the awards granted thereunder, set forth in the Disclosure Package
and the Prospectus accurately and fairly presents the information required to be shown with respect
to each such plan.
(j)
Authorization, Issuance
. The Common Shares to be purchased by the Investors from the
Company pursuant to the Subscription Agreements have been duly authorized for issuance and sale
pursuant to the Subscription Agreements and, when issued and delivered by the Company to the
Investors pursuant to the Subscription Agreements on the Closing Date, will be validly issued,
fully paid and nonassessable. Subject only to the filing of the Certificate of Designation with
the Secretary of State of the State of Delaware, the Preferred Shares to be purchased by the
Investors from the Company pursuant to the Subscription Agreements have been duly authorized for
issuance and sale pursuant to the Subscription Agreements and, when issued and delivered by the
Company to the Investors pursuant to the Subscription Agreements on the Closing Date, will be
validly issued, fully paid and nonassessable. The Company shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the purpose of effecting the
conversion of the Preferred Shares, the full number of shares of Common Stock issuable upon the
conversion of all the Preferred Shares from time to time outstanding. The Conversion Shares have
been duly authorized for issuance upon conversion of the Preferred Shares, and, upon such issuance
in accordance with the terms of the Certificate of Designation, will be validly issued, fully paid
and nonassessable and no preemptive rights or other rights to subscribe for or purchase any shares
of Common Stock of the Company exist with respect to the issuance of such shares. The Warrants to
be purchased by the Investors from the Company pursuant to the Subscription Agreements have been
duly authorized for issuance and sale pursuant to the Subscription Agreements and, when issued and
delivered by the Company to the Investors pursuant to the Subscription Agreements on the Closing
Date, will be valid and legally binding obligations of the Company, enforceable against the Company
in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization and other laws of general applicability relating to or affecting
creditors’ rights and relating to general principles of equity. The Warrant Shares have been duly
authorized and reserved for issuance pursuant to the terms of the Warrants and, when issued and
delivered by the Company upon valid exercise of the Warrants and payment of the exercise price,
will be validly issued, fully paid and nonassessable, and will not be subject to preemptive or
similar rights. The Warrant Shares, when so issued, will conform in all material respects to the
description thereof in the Prospectus.
(k)
No Registration Rights
. There are no persons with registration or other similar rights to
have any equity or debt securities registered for sale under the Registration Statement or included
in the offering contemplated by this Agreement, except for such rights as have been duly waived, or
such rights, the failure with which to comply would not reasonably be expected to have a Material
Adverse
-6-
Effect (as defined below) or adversely affect the consummation of the transactions
contemplated by this Agreement, the Subscription Agreements or the Warrants.
(l)
Due Authorization and Enforceability
. This Agreement has been duly authorized, executed
and delivered by the Company. Each of the Subscription Agreements has been duly authorized by the
Company and, when executed and delivered by the Company, will be a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors’ rights and relating to general principles
of equity. The Subscription Agreements, when executed and delivered, will conform in all material
respects to the description thereof in the Prospectus.
(m)
No Violation
. The Company is not 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, (ii) 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 is a party or by which any of them or any of their properties may
be bound or affected, except as set forth in the Registration Statement, the Disclosure Package and
the Prospectus, 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 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.
(n)
No Conflict
. Except as set forth in the Registration Statement, the Disclosure Package or
the Prospectus, the execution, delivery and performance by the Company of this Agreement and each
Subscription 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,
(ii) any 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 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; 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 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 Nasdaq Global Market), or approval of the
stockholders of the Company (including as may be required pursuant to the rules and regulations of
the Nasdaq Global Market), is required in connection with the issuance and sale of the Shares or
the consummation by the Company of the transactions contemplated hereby, except as have been
obtained or made and other than (i) as may be required under the Securities Act, (ii) under the
rules and regulations of the Financial Industry Regulatory Authority (“
FINRA
”), (iii) as may be
required under the Exchange Act or state “blue
-7-
sky” laws and (iv) the filing of the Certificate of
Designation with the Secretary of State of the State of Delaware. As of the Closing Date, the
Certificate of Designation will have been filed with the Secretary of State of Delaware and will be
in full force and effect and enforceable against the Company in accordance with its terms.
(p)
Absence of Material Changes.
Except as otherwise disclosed in the Registration Statement,
Disclosure Package and the Prospectus, subsequent to the respective dates as of which information
is given in the Disclosure Package: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business, properties, operations or
prospects, whether or not arising from transactions in the ordinary course of business, of the
Company (any such change is called a “Material Adverse Change”); (ii) the Company has not incurred
any material liability or obligation, indirect, direct or contingent, nor entered into any material
transaction or agreement; (iii) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of capital stock or any repurchase or redemption by the
Company of any class of capital stock; and (v) there has not been any change in the capital stock
outstanding on the date hereof, or material change in the short-term debt or long-term debt of the
Company or any issue of options, warrants, convertible securities or other rights to purchase the
capital stock (other than grants or exercises of stock options under the Company’s stock incentive
plans).
(q)
Permits
. Except as disclosed in the Disclosure Package and the Prospectus, the Company
possesses such valid and current licenses, certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct its
business, including, without limitation, all such certificates, authorizations and permits required
by the FDA or any other state, federal or foreign agencies or bodies engaged in the regulation of
pharmaceuticals or biohazardous materials, and the Company has not received any notice of
proceedings relating to the revocation or modification of, or non-compliance with, any such
license, certificate, authorization or permit which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could have a Material Adverse Effect. The
FDA accepted for review the Company’s new drug application (“NDA”) seeking approval to market
Linjeta (formerly known as VIAject) for the treatment of diabetes and issued a Complete Response
letter determining that the NDA cannot be approved in its present form
,
and the Placement Agents’
(or their counsel) have been provided with accurate and complete copies of all correspondence
,
including minutes and telephone conference reports, between the FDA and the Company relating to
Linjeta since the date of the filing of the NDA.
(r)
Legal Proceedings
. There are no legal or governmental proceedings pending or, to the
Company’s knowledge, threatened or contemplated to which the Company 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, Nasdaq Global Market), 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, 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.
(s)
Independent Accountants
. To the Company’s knowledge, BDO USA, LLP, who has audited the
financial statements of the Company, 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
-8-
thereunder adopted by the Commission and the Public Company Accounting Oversight Board
(United States).
(t)
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 in accordance with generally accepted accounting principles as in effect in the
United States (“
GAAP
”) (i) the financial condition of the Company, as of the dates indicated and
(ii) the results of operations, stockholders’ equity and changes in cash flows of the Company, for
the periods therein specified; and such financial statements and related schedules and notes
thereto have been prepared in conformity with GAAP, 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 does 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.
(u)
Not an Investment Company
. The Company has been advised of the rules and requirements
under the Investment Company Act of 1940, as amended (the “Investment Company Act”). The Company is
not, and after receipt of payment for the Securities and the application of the proceeds thereof as
contemplated under the caption “Use of Proceeds” in the Base Prospectus and the Prospectus will not
be, an “investment company” within the meaning of the Investment Company Act and will conduct its
business in a manner so that it will not become subject to the Investment Company Act.
(v)
Good Title to Property
. The Company does not own any real property. The Company has good
and valid title to, or has valid rights to lease or otherwise use, all personal property described
in the Registration Statement, the Disclosure Package and the Prospectus, which are material to
their respective businesses, 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 except as would not, individually or in the aggregate,
have a Material Adverse Effect. All of the property described in the Registration Statement, the
Disclosure Package and the Prospectus as being held under lease by the Company is held thereby
under valid, subsisting and enforceable leases, without any liens, restrictions, encumbrances or
claims, except as would not, individually or in the aggregate, result in a Material Adverse Effect.
(w)
Intellectual Property Rights
. The Company owns, possesses, licenses or has other rights
to use, on reasonable terms, all patents, patent applications, trade and service marks, trade and
service mark registrations, trade names, copyrights, licenses, inventions, trade secrets,
technology, know-how and other intellectual property (collectively, the “Intellectual Property”)
necessary for the conduct of the Company’s business as now conducted or as proposed in the
Disclosure Package and the Prospectus to be conducted. Except as set forth in the Disclosure
Package and the Prospectus, (a) no party has been granted an exclusive license to use any portion
of such Intellectual Property owned by the Company; (b) there is no material infringement by third
parties of any such Intellectual Property owned by or exclusively licensed to the Company; (c)
there is no pending or threatened action, suit, proceeding or claim by others challenging the
Company’s rights in or to any material Intellectual Property, and the
-9-
Company is unaware of any
facts which would form a reasonable basis for any such claim; (d) there is no pending or threatened
action, suit, proceeding or claim by others challenging the validity or scope of any such
Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis
for any such claim; (e) there is no pending or threatened action, suit, proceeding or claim by
others that the Company’s business as now conducted infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others, and the Company is
unaware of any other fact which would form a reasonable basis for any such claim.
(x)
Patent Applications
. The Company has duly and properly filed or caused to be filed with
the U.S. Patent and Trademark Office (the “PTO”) and applicable foreign and international patent
authorities all patent applications owned by the Company (the “Company Patent Applications”). To
the knowledge of the Company, the Company has complied with the PTO’s duty of candor and disclosure
for the Company Patent Applications and has made no material misrepresentation in the Company
Patent Applications. To the Company’s knowledge, except as disclosed in the Disclosure Package and
the Prospectus, the Company Patent Applications disclose patentable subject matters, and the
Company has not been notified of any inventorship challenges nor has any interference been declared
or provoked nor is any material fact known by the Company that would preclude the issuance of
patents with respect to the Company Patent Applications or would render such patents invalid or
unenforceable. To the Company’s knowledge, except as disclosed in the Disclosure Package and the
Prospectus, no third party possesses rights to the Company’s Intellectual Property, that, if
exercised, could enable such party to develop products competitive to those the Company intends to
develop as described in each of the Disclosure Package and the Prospectus.
(y)
Tests and Preclinical Trials.
The studies, tests and preclinical and clinical trials
conducted by or on behalf of the Company that are described in the Disclosure Package and the
Prospectus were and, if still pending, are being, conducted in all material respects in accordance
with the protocols submitted to the FDA or any foreign government exercising comparable authority,
procedures and controls pursuant to, where applicable, accepted professional and scientific
standards, and all applicable laws and regulations; the descriptions of the studies, tests and
preclinical and clinical trials conducted by or on behalf of the Company, and the results thereof,
contained in the Disclosure Package and the Prospectus are accurate and complete in all material
respects; the Company is not aware of any other studies, or tests or preclinical and clinical
trials, the results of which reasonably call into question the results described or referred to in
the Disclosure Package and the Prospectus; and the Company has not received any notices or
correspondence from the FDA, any foreign, state or local governmental body exercising comparable
authority or any Institutional Review Board requiring the termination, suspension, material
modification or clinical hold of any studies, tests or preclinical or clinical trials conducted by
or on behalf of the Company, which termination, suspension, modification or clinical hold would
reasonably be expected to have a Material Adverse Effect.
(z)
Taxes
. The Company has filed all necessary federal, state, local and foreign income and
franchise tax returns in a timely manner and has paid all taxes shown thereon and, if due and
payable, any related or similar assessment, fine or penalty levied against it, except for any
taxes, assessments, fines or penalties as may be being contested in good faith and by appropriate
proceedings. The Company has made appropriate provisions in the applicable financial statements
referred to in Section 1(a)(x) above in respect of all federal, state, local and foreign income and
franchise taxes for all current or prior periods as to which the tax liability of the Company has
not been finally determined.
(aa)
Insurance
. The Company is insured by recognized, financially sound and reputable
institutions with policies in such amounts and with such deductibles and covering such risks as are
generally deemed adequate and customary for its business including, but not limited to, policies
covering real and personal property owned or leased by the Company against theft, damage,
destruction, acts of
-10-
vandalism and earthquakes. All policies of insurance and fidelity or surety
bonds insuring the Company or its business, assets, employees, officers and directors are in full
force and effect; the Company is in compliance with the terms of such policies and instruments in
all material respects; and there are no claims by the Company under any such policy or instrument
as to which any insurance company is denying liability or defending under a reservation of rights
clause; and the Company has not been refused any insurance coverage sought or applied for. The
Company has no reason to believe that it will not be able (i) to renew its existing insurance
coverage as and when such policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now conducted and at a
cost that would not have a Material Adverse Effect.
(bb)
Accounting Controls
. The Company 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, or any other criteria applicable to such statements,
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 the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(cc)
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 the Company, 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 or 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.
(dd)
Corrupt Practices
. The Company has not, and, to the Company’s knowledge, its officers,
directors, agents or employees have not, directly or indirectly, while acting on behalf of the
Company (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 or (iii) violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended.
(ee)
No Price Stabilization
. The Company nor, to the Company’s knowledge, any of their
respective officers or directors, has taken or will take, directly or indirectly, any action
designed to cause or result in the stabilization or manipulation of the Common Stock to facilitate
the sale or resale of the Securities.
(ff)
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,
-11-
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.
(gg)
Sarbanes-Oxley Act
. There is no failure on the part of the Company and, to the best of
the Company’s knowledge, any of the Company’s directors or officers, in their capacities as such,
to comply with any applicable provision of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”) in any material respect,
including Section 402 related to loans and Sections 302 and 906 related to certifications.
(hh)
Brokers Fees
. Except as disclosed in the Disclosure Package and the Prospectus, neither
the Company 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 Placement Agents for a
brokerage commission, finder’s fee or other like payment in connection with the Offering.
(ii)
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 (A) the date the Registration Statement was initially
filed with the Commission and (B) the date the Prospectus was filed with the Commission, except as
set forth in the Registration Statement, the Disclosure Package and the Prospectus.
(jj)
Compliance with Environmental Laws
. Except as may otherwise be disclosed in the
Disclosure Package and the Prospectus, (i) the Company is not in violation of any federal, state,
local or foreign law, regulation, order, permit or other requirement relating to pollution or
protection of human health or the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including without limitation,
laws and regulations relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, “Materials of Environmental Concern”), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling
of Materials of Environment Concern (collectively, “Environmental Laws”), which violation includes,
but is not limited to, noncompliance with any permits or other governmental authorizations required
for the operation of the business of the Company under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the Company received any written
communication, whether from a governmental authority, citizens group, employee or otherwise, that
alleges that the Company is in violation of any Environmental Law, except as would not,
individually or in the aggregate, have a Material Adverse Effect; (ii) there is no claim, action or
cause of action filed with a court or governmental authority, no investigation with respect to
which the Company has received written notice, and no written notice by any person or entity
alleging potential liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, attorneys’ fees or penalties
arising out of, based on or resulting from the presence, or release into the environment, of any
Material of Environmental Concern at any location owned, leased or operated by the Company, now or
in the past (collectively, “Environmental Claims”), pending or, to the Company’s knowledge,
threatened against the Company or any person or entity whose liability for any Environmental Claim
the Company has retained or assumed either contractually or by operation of law, except as would
not, individually or in the aggregate, have a Material Adverse Effect; (iii) to the Company’s
knowledge, there are no past, present or anticipated future actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that
-12-
reasonably could result in a
violation of any Environmental Law, require expenditures to be incurred pursuant to Environmental
Law, or form the basis of a potential Environmental Claim against the Company or against any person
or entity whose liability for any Environmental Claim the Company has retained or assumed either
contractually or by operation of law, except as would not, individually or in the aggregate, have a
Material Adverse Effect; and (iv) the Company is not subject to any pending or threatened
proceeding under Environmental Law to which a governmental authority is a party and which is
reasonably likely to result in monetary sanctions of $100,000 or more.
(kk)
No Labor Disputes
. No labor problem or dispute with the employees of the Company exists
or, to the best of the Company’s knowledge, is threatened or imminent, and the Company is not aware
of any existing or imminent labor disturbance by the employees of any of its principal suppliers or
contractors, that could have a Material Adverse Effect.
(ll)
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 reasonably 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 could reasonably be expected to cause the loss of such
qualification.
(mm)
Nasdaq Global Market; Exchange Act Registration
. The Common Stock is registered pursuant
to Section 12(b) of the Exchange Act and accepted for listing on the Nasdaq Global Market, 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
Nasdaq Global Market, nor has the Company received any notification that the Commission or the
Nasdaq Global Market is contemplating terminating such registration or listing. The Company has
complied in all material respects with the applicable requirements of the Nasdaq Global Market for
maintenance of listing of the Common Stock thereon.
(nn)
Statistical or Market-Related Data
. Nothing has come to the attention of the Company
that has caused the Company to believe that the statistical and market-related data included in the
Registration Statement, Disclosure Package and the Prospectus is not based on or derived from
sources that are reliable and accurate in all material respects.
(oo)
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 where the Company conducts its business, 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.
(pp)
Accuracy of Statements in Prospectus.
The statements in (i) the Company’s Quarterly
Report on Form 10-Q for the periods ended December 31, 2010 and March 31, 2011 under the heading
-13-
“Risk Factors — Risks Related to Our Intellectual Property,” (ii) the Company’s Annual Report on
Form 10-K for the fiscal year ended September 30, 2010 under the headings “Business — Government
Regulation” and “Business — Intellectual Property and Proprietary Technology,” and (iii) the Base
Prospectus under the headings “Description of Capital Stock,” “Description of Warrants” and “Plan
of Distribution” insofar as such statements summarize legal matters, agreements, documents or
proceedings discussed therein, are accurate and fair summaries of such legal matters, agreements,
documents or proceedings.
(qq)
OFAC.
The Company nor, to the knowledge of the Company, any director, officer, agent or
employee of the Company 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, knowingly use the proceeds of the Offering, or knowingly 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 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 Prospectus
with the Commission within the time periods specified by Rule 424(b) and Rules 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) 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 in connection with the Offering (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 Securities Act.
(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.
-14-
(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 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) of the receipt of any comments of,
or requests for additional information from, the Commission; (ii) of 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) of 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 prospectus included in 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 they are 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 reasonable 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
-15-
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.
(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 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 (such consent not to be unreasonably withheld, delayed or conditioned) 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 60 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, contract to sell, or otherwise transfer or dispose of, directly or indirectly,
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 (except in connection
with the Offering or in connection with a registration statement on Form S-8 relating to employee
benefit plans) 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 William Blair
(which consent may be withheld in its sole discretion), other than (i) the Securities to be sold
hereunder, (ii) the issuance of Common Stock, options to acquire Common Stock or other equity
awards for Common Stock pursuant to the Company’s employee benefit plans, qualified stock option
plans or other employee compensation plans as such plans are in existence on the date
-16-
hereof and
the issuance of Common Stock pursuant to the exercise, vesting or settlement of such options or
other equity awards; (iii) the issuance of Common Stock pursuant to the exercise of the Warrants
and other warrants or rights to purchase the Common Stock outstanding or in existence on the date
hereof; (iv) the issuance by the Company of any shares of Common Stock as consideration for
mergers, acquisitions, other business combinations, or strategic alliances (including joint
ventures, marketing or distribution arrangements, collaboration agreements or intellectual property
license agreements), 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
Section 3(k)
. 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 agrees 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)
Nasdaq Global Market.
The Company will use its reasonable best efforts to maintain the
listing of the Shares and the Warrant Shares on the Nasdaq Global Market for so long as the Common
Stock is listed thereon.
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 costs and
expenses incident to the performance of the Company’s obligations 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, 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, shipping of the certificates representing the Securities,
(iii) the fees and expenses of any transfer agent or registrar for the Securities, (iv) the filing
-17-
fees required to be paid by the Placement Agents or 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 Nasdaq Global Market,
(vii) fees and disbursements of the Company’s auditor incurred in delivering the letters described
in
Section 5(j)
hereof, and (viii) the costs and expenses of the Company 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 (other than the Placement Agents) engaged
by 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.
It is understood that except as provided in this
Section 4
,
Section 6
and
Section 8(b)
hereof, 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.
(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, in the
reasonable opinion of counsel for the Placement Agents, an untrue statement of fact which, in their
reasonable opinion, is material, or omits to state a fact which, in their reasonable opinion, is
material and is required to be
-18-
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 markets 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 Nasdaq Global Market 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 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 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 in all material respects.
(h)
Opinion of Counsel to the Company
. The Placement Agents shall have received from Wilmer
Cutler Pickering Hale and Dorr LLP, counsel to the Company, such counsel’s written opinion,
addressed to the Placement Agents and dated the Closing Date, in form and substance as set forth in
Exhibit E
attached hereto.
(i)
Opinion of Regulatory Counsel
. The Placement Agents shall have received from Venable LLP,
regulatory counsel to the Company, such counsel’s written opinion, addressed to the Placement
Agents and dated the Closing Date, in form and substance as set forth in
Exhibit E1
attached hereto.
(j)
Opinion of Intellectual Property Counsel
. The Placement Agents shall have received from
Pabst Patent Group LLP, intellectual property counsel to the Company, such counsel’s written
opinion, addressed to the Placement Agents and dated the Closing Date, in form and substance as set
forth in
Exhibit E2
attached hereto.
-19-
(k)
Opinion of Counsel to the Placement Agents
. The Placement Agents shall have received a
favorable opinion of Morrison & Foerster LLP, counsel for the Placement Agents, dated the Closing
Date, in form and substance reasonably satisfactory to the Placement Agents.
(l)
Comfort Letter
. The Placement Agents shall have received from BDO Seidman, LLP letters
dated, respectively, the date of the Prospectus and the Closing Date, and addressed to the
Placement Agents in customary forms reasonably satisfactory to the Placement Agents, which letters
shall cover, without limitation, the various financial disclosures contained in the Registration
Statement, the Prospectus and the Permitted Free Writing Prospectuses relating to the Company, if
any.
(m)
Officers’ Certificate
. The Placement Agents shall have received on the Closing Date a
certificate of the Company, addressed to the Placement Agents and dated the Closing Date, signed by
the chief executive officer and the chief financial 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 when originally made and are true and correct as of the
Applicable Time and the Closing Date (except that those representations and warranties that
address matters only as of a particular date shall remain true and correct 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, (B) any
transaction that is material to the Company, except transactions entered into in the
ordinary course of business, (C) any obligation, direct or contingent, that is material to
the Company, incurred by the Company, 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,
(E) any dividend or distribution of any kind declared, paid or made on the capital stock of
the Company or (F) any loss or damage (whether or not insured) to the property of the
Company 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) (1) 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 (2) as of the Applicable Time, neither the Disclosure
Package nor any individual
-20-
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 the
circumstances under which they were made, not misleading and (3) 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 Applicable Time,
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.
(n)
Secretary’s Certificate
. On the Closing Date, the Company shall have furnished to the
Placement Agents a Secretary’s Certificate of the Company.
(o)
Company Corporate Documents.
On the Closing Date, the Company shall have delivered to the
Placement Agents a certificate evidencing the incorporation and good standing of the Company in the
State of Delaware issued by the Secretary of State of the State of Delaware, dated as of a recent
date, as well as written bring-down confirmation from a reputable corporate service agency, dated
as of the Closing Date, as to the good standing of the Company on the Closing Date.
(p)
Foreign Qualifications
. On the Closing Date, the Company shall have delivered to the
Placement Agents certificates evidencing (i) the Company’s qualification as a foreign corporation
in good standing issued by the Secretary of State (or comparable office) of each jurisdiction in
which the Company conducts business and is required to so qualify, dated as of a recent date.
(q)
Certified Charter
. On the Closing Date, the Company shall have delivered to the Placement
Agents a certified copy of the Certificate of Incorporation of the Company as certified by the
Secretary of State of the State of Delaware as of a recent date.
(r)
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.
(s)
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.
(t)
Nasdaq Global Market.
The Company shall have filed a Notification Form: Listing of
Additional Shares with the Nasdaq Global Market with regard to the Shares and Warrant Shares and
shall have received no objection thereto from the Nasdaq Global Market.
(u)
Lock-Up Agreements
. On or before the Closing Date, the Company shall have obtained for
the benefit of the Placement Agents the agreement, in the form set forth as
Exhibit D
hereto, of its directors and officers listed on
Schedule II
hereto (each a “
Lock-Up
Agreement
” and collectively, the “
Lock-Up Agreements
”).
-21-
(v)
Certificate of Designation
. On or before the Closing Date, the Company shall have filed
the Certificate of Designation with the Secretary of State of the State of Delaware;
(w)
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
hereof 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, each of its respective directors and officers, and each
person, if any, who controls such Placement Agents 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 Agents 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 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 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 Agents 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 Agents 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 Agents
furnished in writing by or on behalf of such Placement Agents 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
hereof), or (iii) 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
-22-
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 the
Placement Agents), 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 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, 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 the Placement Agents under this
Section 6(b)
exceed its pro
rata share of the Placement Fee.
(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 Agents (as applicable, the “
indemnifying party
”) pursuant to
Section 6(a)
or
6(b)
, respectively, 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
-23-
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, unless such failure to reimburse the indemnified
party is based on a dispute with a good faith basis as to either the obligation of the indemnifying
party arising under this
Section 6
to indemnify the indemnified party or the amount of such
obligation and the indemnifying party shall have notified the indemnified party of such good faith
dispute prior to the date of such settlement. 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.
(d)
Contribution
. If the indemnification provided for in this
Section 6
is
unavailable to an indemnified party under
Sections 6(a)
or
6(b)
, 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, 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
Sections 6(a)
or
6(b)
, (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
Section 6(d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of
-24-
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)
, the Placement Agents shall not be required to contribute any amount in excess
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.
(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 the Placement Agents, any person who controls the
Placement Agents within the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act or any affiliate of the Placement Agents, 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 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.
Section 7. Information Furnished by Placement Agents
.
The Company acknowledges that the statements set forth (i) in the first paragraph under the
heading “Electronic Distribution”, (ii) under the heading “Regulation M Restrictions” and (iii) in
the second sentence under the heading “Affiliations” in the section entitled “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
-25-
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 and the Prospectus. 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 any
Subscription 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, documented and actual out-of-pocket disbursements
(including, but not limited to, the reasonable and documented fees and disbursements of its outside
counsel).
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:
William Blair & Company, L.L.C.
222 West Adams
Chicago, IL 60606
Attention: Arthur Simon, Principal
Facsimile No.: (312) 551-4646
with a copy (which shall not constitute notice) to:
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, NY 10104
Attention: Anna Pinedo, Esq.
Facsimile No.: (212) 468-7900
(b) if to the Company shall be delivered or sent by mail, telex or facsimile
transmission to:
Biodel Inc.
100 Saw Mill Road
Danbury, Connecticut 06810
Attention: President and Chief Executive Officer
Facsimile: (203) 796-5000
-26-
with a copy (which shall not constitute notice) to:
Wilmer Cutler Pickering Hale and Dorr LLP
399 Park Avenue
New York, NY 10022
Attention: Stuart R. Nayman, Esq.
Facsimile: (212) 230-8888
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
hereof. 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.
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 acknowledges and agrees that each of the Placement Agents shall act as an
independent contractor, and not as a fiduciary, and any duties of the Placement Agents with respect
to providing 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 hereto disclaims any intention to impose any fiduciary or similar duty on any other
party hereto. 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 performed 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.
-27-
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.
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 and the Placement Agents hereby waive 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 and the Placement Agents agree that a final judgment in any such Proceeding
brought in any such court shall be conclusive and binding upon such party and may be enforced in
any other courts in the jurisdiction of which such party 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,
BIODEL INC.
|
|
|
|
By:
|
/s/
Gerard Michel
|
|
|
|
|
Name:
|
Gerard Michel
|
|
|
|
|
Title:
|
CFO & VP of Corporate Development
|
|
|
|
|
|
|
|
|
|
Accepted as of the date first above written:
WILLIAM BLAIR & COMPANY, L.L.C.
|
|
|
|
By:
|
/s/
Art Simon
|
|
|
|
|
Name:
|
Art Simon
|
|
|
|
|
Title:
|
Principal and General Counsel
|
|
|
|
|
|
JMP SECURITIES LLC
|
|
|
|
By:
|
/s/
Janet L. Tarkoff
|
|
|
|
|
Name:
|
Janet L. Tarkoff
|
|
|
|
|
Title:
|
Chief Legal Officer
|
|
[Signature Page to Placement Agency Agreement]
Schedules and Exhibits
|
|
|
|
|
Schedule I:
|
|
Issuer General Free Writing Prospectuses
|
|
|
|
|
|
Schedule II:
|
|
Directors and Officers Executing Lock-Up Agreements
|
|
|
|
|
|
Exhibit A:
|
|
Form of Subscription Agreement
|
|
|
|
|
|
Exhibit B:
|
|
Pricing Information
|
|
|
|
|
|
Exhibit C:
|
|
Disclosure Materials
|
|
|
|
|
|
Exhibit D:
|
|
Form of Lock-up Agreement
|
|
|
|
|
|
Exhibit E:
|
|
Form of Legal Opinion of Wilmer Cutler Pickering Hale and Dorr LLP
|
|
|
|
|
|
Exhibit E1:
|
|
Form of Legal Opinion of Venable LLP
|
|
|
|
|
|
Exhibit E2:
|
|
Form of Legal Opinion of Pabst Patent Group LLP
|
|
|
|
|
|
Exhibit F:
|
|
Form of Certificate of Designation
|
Schedule I
Issuer General Free Writing Prospectuses
None
Schedule II
Directors and Officers Executing Lock-Up Agreements
Charles Sanders
Donald M. Casey Jr.
Errol De Souza
Barry Ginsberg
Ira W. Lieberman
Daniel Lorber
Brian Pereira
Gerard J. Michel
Alan S. Krasner
Paul S. Bavier
Erik Steiner
Arthur Urciuoli
Exhibit A
Form of Subscription Agreement
Exhibit B
Pricing Information
Number of Units Containing Common Shares: 12,074,945
Number of Units Containing Preferred Shares: 1,813,944
Offering Price per Unit: $2.16
Exercise Price of Warrants: $2.48
Placement Fee: $1,800,000.00
Exhibit C
Disclosure Materials
None
Exhibit D
Form of Lock-Up Agreement
Exhibit E
Form of Legal Opinion of Wilmer Cutler Pickering Hale and Dorr LLP
Exhibit F
Certificate of Designation
Exhibit 4.6
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
BIODEL INC.
PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW
BIODEL INC.
, a Delaware corporation (the “
Corporation
”), in accordance with the
provisions of Section 103 of the Delaware General Corporation Law (the “DGCL”) does hereby certify
that, in accordance with Sections 141(c) and 151 of the DGCL, the following resolution was duly
adopted by a duly authorized committee of the Board of Directors of the Corporation by the
unanimous written consent of that committee duly effected on May 12, 2011:
RESOLVED
, that pursuant to the authority granted to and vested in the Board of Directors of
the Corporation in accordance with the provisions of the Second Amended and Restated Certificate of
Incorporation of the Corporation (the “
Certificate of Incorporation
”), there is hereby
established a series of the Corporation’s authorized Preferred Stock, par value $.01 per share,
which series shall be designated as the Series A Convertible Preferred Stock, par value $.01 per
share, of the Corporation, with the designation, number of shares, powers, preferences, rights,
qualifications, limitations and restrictions thereof (in addition to any provisions set forth in
the Certificate of Incorporation of the Corporation which are applicable to the Preferred Stock of
all classes and series) as follows:
SERIES A CONVERTIBLE PREFERRED STOCK
Section 1
.
Definitions
. For the purposes hereof, the following terms shall
have the following meanings:
“
Affiliate
”
means any person or entity that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control with a person
or entity, as such terms are used in and construed under Rule 144 under the Securities Act .
With respect to a Holder, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Holder will be deemed to be an
Affiliate of such Holder.
“
Alternate Consideration
”
shall have the meaning set forth in Section 7(b).
“
Beneficial Ownership Limitation
”
shall have the meaning set forth in Section 6(c).
“
Business Day
” means any day except Saturday, Sunday, any day which shall be 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.
“
Buy-In
”
shall have the meaning set forth in Section 6(d)(iii).
“
Closing Sale Price
”
means, for any security as of any date, the last closing trade
price for such security prior to 4:00 p.m., New York City time, on the principal securities
exchange or trading market where such security is listed or traded, as reported by
Bloomberg, L.P. (or an equivalent, reliable reporting service mutually acceptable to and
hereafter designated by Holders of a majority of the then-outstanding Series A Preferred
Stock and the Corporation), or if the foregoing do not apply, the last trade price of such
security in the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg, L.P., or, if no last trade price is reported for such security by
Bloomberg, L.P., the average of the bid prices of any market makers for such security as
reported on the OTC Pink Market by OTC Markets Group, Inc. If the Closing Sale Price cannot
be calculated for a security on a particular date on any of the foregoing bases, the Closing
Sale Price of such security on such date shall be the fair market value as determined in
good faith by the Board of Directors of the Corporation.
“
Commission
”
means the Securities and Exchange Commission.
“
Common Stock
”
means the Corporation’s Common Stock, par value $.01 per share, and
stock of any other class of securities into which such securities may hereafter be
reclassified or changed into.
“
Conversion Date
”
shall have the meaning set forth in Section 6(a).
“
Conversion Price
”
shall mean $2.16, as adjusted pursuant to paragraph 7 hereof.
“
Conversion Ratio
”
shall have the meaning set forth in Section 6(b).
“
Conversion Shares
”
means, collectively, the shares of Common Stock issuable upon
conversion of the shares of Series A Preferred Stock in accordance with the terms hereof.
“
Daily Failure Amount
”
means the product of (x) .005 multiplied by (y) the Closing
Sale Price of the Common Stock on the applicable Share Delivery Date.
“
DGCL
”
shall mean the Delaware General Corporation Law.
“
Distributions
”
shall have the meaning set forth in Section 5(a).
“
DWAC Delivery
”
shall have the meaning set forth in Section 6(a).
“
Exchange Act
”
means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
2
“
Fundamental Transaction
”
shall have the meaning set forth in Section 7(b).
“
Holder
”
means any holder of Series A Preferred Stock.
“
Junior Securities
”
shall have the meaning set forth in Section 5(a).
“
Notice of Conversion
”
shall have the meaning set forth in Section 6(a).
“
Parity Securities
”
shall have the meaning set forth in Section 5(a).
“
Person
”
means any 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.
“
Securities Act
”
means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“
Senior Securities
”
shall have the meaning set forth in Section 5(a).
“
Series A Preferred Stock Register
”
shall have the meaning set forth in Section
2(b).
“
Share Delivery Date
”
shall have the meaning set forth in Section 6(d).
“
Stated Value
”
shall mean $2.16.
“
Trading Day
”
means a day on which the Common Sock is traded for any period on the
principal securities exchange or if the Common Stock is not traded on a principal securities
exchange, on a day that the Common Stock is traded on another securities market on which the
Common Stock is then being traded.
Section 2
.
Designation, Amount and Par Value; Assignment
.
a) The series of preferred stock designated by this Certificate shall be designated as the
Corporation’s “Series A Convertible Preferred Stock” (the “
Series A Preferred Stock
”) and
the number of shares so designated shall be 2,000,000. Each share of Series A Preferred Stock
shall have a par value of $.01 per share.
b) The Corporation shall register shares of the Series A Preferred Stock, upon records to be
maintained by the Corporation for that purpose (the “
Series A Preferred Stock Register
”),
in the name of the Holders thereof from time to time. The Corporation may deem and treat the
registered Holder of shares of Series A Preferred Stock as the absolute owner thereof for the
purpose of any conversion thereof and for all other purposes. The Corporation shall register, or
cause the Corporation’s transfer agent to register, the transfer of any shares of Series A
Preferred Stock in the Series A Preferred Stock Register, upon surrender of the certificates
evidencing such shares to be transferred, duly endorsed by the Holder thereof, to the Corporation
at its principal place of business. Upon any such registration or transfer, a new
3
certificate
evidencing the shares of Series A Preferred Stock so transferred shall be issued to the transferee
and a new certificate evidencing the remaining portion of the shares not so transferred, if any,
shall be issued to the transferring Holder, in each case, within three Business Days. The
provisions of this Certificate are intended to be for the benefit of all Holders from time to time
and shall be enforceable by any such Holder.
Section 3
.
Dividends
. Holders shall not be
entitled to receive any dividends in respect of the Series A Preferred Stock, unless and until
specifically declared by the Board of Directors of the Corporation to be payable to the Holders of
the Series A Preferred Stock.
Section 4
.
Voting Rights
. Except as otherwise provided herein or as otherwise
required by the DGCL, the Series A Preferred Stock shall have no voting rights. However, as long as
any shares of Series A Preferred Stock are outstanding, the Corporation shall not, without the
affirmative vote of the Holders of a majority of the then outstanding shares of the Series A
Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the
Series A Preferred Stock or alter or amend this Certificate of Designation, (b) increase the number
of authorized shares of Series A Preferred Stock, or (c) enter into any agreement with respect to
any of the foregoing.
Section 5
.
Rank; Liquidation
.
a) The Series A Preferred Stock shall rank (i) senior to all of the Common Stock; (ii) senior
to any class or series of capital stock of the Corporation hereafter created specifically ranking
by its terms junior to any Series A Preferred Stock (“
Junior Securities
”); (iii) on parity
with any class or series of capital stock of the Corporation hereafter created specifically ranking
by its terms on parity with the Series A Preferred Stock (“
Parity Securities
”); and
(iv) junior to any class or series of capital stock of the Corporation hereafter created
specifically ranking by its terms senior to any Series A Preferred Stock (“
Senior
Securities
”), in each case, as to dividends, distributions of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntarily or involuntarily (all such
distributions being referred to collectively as “
Distributions
”).
b) Subject to the prior and superior rights of the holders of any Senior Securities of the
Corporation, upon liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary (each, a “
Liquidation Event
”), each holder of shares of Series A Preferred
Stock shall be entitled to receive, in preference to any distributions of any of the assets or
surplus funds of the Corporation to the holders of the Common Stock and Junior Securities and pari
passu with any distribution to the holders of Parity Securities, an amount equal to $.01 per share
of Series A Preferred Stock, plus an additional amount equal to any dividends declared but unpaid
on such shares, before any payments shall be made or any assets distributed to holders of any class
of Common Stock or Junior Securities. If, upon any such Liquidation Event, the assets of the
Corporation shall be insufficient to pay the holders of shares of the Series A Preferred Stock the
amount required under the preceding sentence, then all remaining assets of the Corporation shall be
distributed ratably to holders of the shares of the Series A Preferred Stock and Parity Securities.
4
c) After payment to the holders of shares of the Series A Preferred Stock of the amount
required under Section 5(b) and subject to the prior and superior rights of the holders of any
Senior Securities of the Corporation, the remaining assets or surplus funds of the Corporation, if
any, available for distribution to stockholders shall be distributed ratably among the holders of
the Series A Preferred Stock, any other class or series of capital stock that participates with the
Common Stock in the distribution of assets upon any Liquidation Event and the Common Stock, with
the holders of the Series A Preferred Stock deemed to hold that number of shares of Common Stock
into which such shares of Series A Preferred Stock are then convertible (without giving effect for
such purposes to the Beneficial Ownership Limitation contemplated by Section 6(c)).
Section 6
.
Conversion
.
a)
Conversions at Option of Holder
. Each share of Series A Preferred Stock shall be
convertible, at any time and from time to time from and after the date of the issuance thereof, at
the option of the Holder thereof, into a number of shares of Common Stock equal to the Conversion
Ratio in effect at the time of such conversion. Holders shall effect conversions by providing the
Corporation with the form of conversion notice attached hereto as
Annex A
(a “
Notice of
Conversion
”), duly completed and executed. Other than a conversion following a Fundamental
Transaction or following a notice provided for under Section 7(d)(ii) hereof, the Notice of
Conversion must specify at least a number of shares of Series A Preferred Stock to be converted
equal to the lesser of (x) 100 shares (such number subject to appropriate adjustment following the
occurrence of an event specified in Section 7(a) hereof) and (y) the number of shares of Series A
Preferred Stock then held by the Holder. Provided the Corporation’s transfer agent is participating
in the Depository Trust Company (“
DTC
”) Fast Automated Securities Transfer program, the
Notice of Conversion may specify, at the Holder’s election, whether the applicable Conversion
Shares shall be credited to the account of the Holder’s prime broker with DTC through its Deposit
Withdrawal Agent Commission system (a “
DWAC Delivery
”). The “
Conversion Date
”, or
the date on which a conversion shall be deemed effective, shall be defined as the Trading Day that
the Notice of Conversion, completed and executed, is sent by facsimile to, and received during
regular business hours by, the Corporation; provided that the original certificate(s) representing
such shares of Series A Preferred Stock being converted, duly endorsed, and the accompanying Notice
of Conversion, are received by the Corporation within two (2) Trading Days thereafter. In all other
cases, the Conversion Date shall be defined as the Trading Day on which the original stock
certificates representing the shares of Series A Preferred Stock being converted, duly endorsed,
and the accompanying Notice of Conversion, are received by the Corporation. The calculations set
forth in the Notice of Conversion shall control in the absence of manifest or mathematical error.
b)
Conversion Ratio
. The “
Conversion Ratio
” for each share of Series A
Preferred Stock shall be equal to the Stated Value divided by the Conversion Price.
c)
Beneficial Ownership Limitation
. Notwithstanding anything herein to the contrary,
the Corporation shall not effect any conversion of the Series A Preferred Stock, and a Holder shall
not have the right to convert any portion of its Series A Preferred Stock, to the extent that,
after giving effect to an attempted conversion set forth on an applicable Notice of
5
Conversion,
such Holder (together with such Holder’s Affiliates, and any other Person whose beneficial
ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of
the Exchange Act and the applicable rules and regulations of the Commission, including any “group”
of which the Holder is a member) would beneficially own a number of shares of Common Stock in
excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by such Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon conversion of the
Series A Preferred Stock subject to the Notice of Conversion with respect to which the
determination of such sentence is being made, but shall exclude the number of shares of Common
Stock which are issuable upon (A) conversion of the remaining, unconverted shares of Series A
Preferred Stock beneficially owned by such Holder or any of its Affiliates, and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of the Corporation
beneficially owned by such Holder or any of its Affiliates (including, without limitation, any
convertible notes, convertible stock or warrants) that are subject to a limitation on conversion or
exercise analogous to the limitation contained herein. Except as set forth in the preceding
sentence, for purposes of this Section 6(c), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission.
In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the
Exchange Act and the applicable rules and regulations of the Commission. For purposes of this
Section 6(c), 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 Corporation’s most recent
Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Commission, as the
case may be, (B) a more recent public announcement by the Corporation or (C) a more recent notice
by the Corporation or the Corporation’s transfer agent to the Holder setting forth the number of
shares of Common Stock then outstanding. For any reason at any time, upon the written or oral
request of a Holder (which may be by email), the Corporation shall, within two (2) Business Days of
such request, confirm orally and in writing to such Holder (which may be via email) the number of
shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to any actual conversion or exercise of securities of
the Corporation, including shares of Series A Preferred Stock, by such Holder or its Affiliates
since the date as of which such number of outstanding shares of Common Stock was last publicly
reported or confirmed to the Holder. The “
Beneficial Ownership Limitation
” shall be 9.98%
of the number of shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock pursuant to such Notice of Conversion (to the extent permitted
pursuant to this Section 6(c)). The Corporation shall be entitled to rely on representations made
to it by the Holder in any Notice of Conversion regarding its Beneficial Ownership Limitation.
d)
Mechanics of Conversion
i.
Delivery of Certificate or Electronic Issuance Upon Conversion
. Not later
than three Trading Days after the applicable Conversion Date, or if the Holder requests the
issuance of physical certificate(s), two Trading Days after receipt by the Corporation of
the original certificate(s) representing such shares of Series A Preferred Stock being
converted, duly endorsed, and the accompanying Notice of Conversion (the “
Share
6
Delivery Date
”), the Corporation shall (a) deliver, or cause to be delivered, to the converting
Holder a physical certificate or certificates representing the number of Conversion Shares
being acquired upon the conversion of shares of Series A Preferred Stock (which certificate
or certificates shall not have any legends on it) or (b) in the case of a DWAC Delivery,
electronically transfer such Conversion Shares by crediting the account of the Holder’s
prime broker with DTC through its DWAC system. If in the case of any Notice of Conversion
such certificate or certificates are not delivered to or as directed by or, in the case of a
DWAC Delivery, such shares are not electronically delivered to or as directed by, the
applicable Holder by the Share Delivery Date, the applicable Holder shall be entitled to
elect to rescind such Conversion Notice by written notice to the Corporation at any time on
or before its receipt of such certificate or certificates for Conversion Shares or
electronic receipt of such shares, as applicable, in which event the Corporation shall
promptly return to such Holder any original Series A Preferred Stock certificate delivered
to the Corporation and such Holder shall promptly return to the Corporation any Common Stock
certificates or otherwise direct the return of any shares of Common Stock delivered to the
Holder through the DWAC system, representing the shares of Series A Preferred Stock
unsuccessfully tendered for conversion to the Corporation.
ii.
Obligation Absolute
. Subject to Section 6(c) hereof and subject to
Holder’s right to rescind a Conversion Notice pursuant to Section 6(d)(i) above, the
Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of
Series A Preferred Stock in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by a Holder to enforce the same, any waiver or
consent with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by such Holder or any other
Person of any obligation to the Corporation or any violation or alleged violation of law by
such Holder or any other Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Corporation to such Holder in connection with the
issuance of such Conversion Shares. Subject to Section 6(c) hereof and subject to a Holder’s
right to rescind a Conversion Notice pursuant to Section 6(d)(i) above, in the event a
Holder shall elect to convert any or all of its Series A Preferred Stock, the Corporation
may not refuse conversion based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of law, agreement or for any
other reason, unless an injunction from a court, on notice to such Holder, restraining
and/or enjoining conversion of all or part of the Series A Preferred Stock of such Holder
shall have been sought and obtained by the Corporation, and the Corporation posts a surety
bond for the benefit of such Holder in the amount of 150% of the value of the Conversion
Shares into which would be converted the Series A Preferred Stock which is subject to such
injunction, which bond shall remain in effect until the completion of arbitration/litigation
of the underlying dispute and the proceeds of which shall be payable to such Holder to the
extent it obtains judgment. In the absence of such injunction, the Corporation shall,
subject to Section 6(c) hereof and subject to a Holder’s right to rescind a Conversion
Notice pursuant to Section 6(d)(i) above, issue Conversion Shares upon a properly noticed
conversion. If the Corporation fails to deliver
7
to a Holder such certificate or
certificates, or electronically deliver (or cause its transfer agent to electronically
deliver) such shares in the case of a DWAC Delivery, pursuant to Section 6(d)(i) on or prior
to the fifth (5th) Trading Day after the Share Delivery Date applicable to such conversion
(other than a failure caused by incorrect or incomplete information provided by such Holder
to the Corporation), then, unless the Holder has rescinded the applicable Conversion Notice
pursuant to Section 6(d)(i) above, the Corporation shall pay (as liquidated damages and not
as a penalty) to such Holder an amount payable, at the Corporation’s option, either (a) in
cash or (b) in shares of Common Stock that are valued for these purposes at the Closing Sale
Price on the date of such calculation, in each case equal to the product of (x) the number
of Conversion Shares required to have been issued by the Corporation on such Share Delivery
Date, (y) an amount equal to the Daily Failure Amount and (z) the number of Trading Days
actually lapsed after such fifth (5th) Trading Day after the Share Delivery Date during
which such certificates have not been delivered, or, in the case of a DWAC Delivery, such
shares have not been electronically delivered; provided, however, the Holder shall only
receive up to such amount of shares of Common Stock such that Holder and any other persons
or entities whose beneficial ownership of Common Stock would be aggregated with the Holder’s
for purposes of Section 13(d) of the Exchange Act (including shares held by any “group” of
which the Holder is a member, but excluding shares beneficially owned by virtue of the
ownership of securities or rights to acquire securities that have limitations on the right
to convert, exercise or purchase similar to the limitation set forth herein) shall not
collectively beneficially own greater than 9.98% of the total number of shares of Common
Stock of the Corporation then issued and outstanding. Nothing herein shall limit a Holder’s
right to pursue actual damages for the Corporation’s failure to deliver Conversion Shares
within the period specified herein and such Holder shall have the right to pursue all
remedies available to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief; provided that Holder shall not
receive duplicate damages for the Corporation’s failure to deliver Conversion Shares within
the period specified herein. The exercise of any such rights shall not prohibit a Holder
from seeking to enforce damages pursuant to any other Section hereof or under applicable
law.
iii.
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion
. If the Corporation fails to deliver to a Holder the applicable certificate
or certificates or to effect a DWAC Delivery, as applicable, by the Share Delivery Date
pursuant to Section 6(d)(i) (other than a failure caused by incorrect or incomplete
information provided by such Holder to the Corporation), and if after such Share Delivery
Date such Holder is required by its brokerage firm 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 such Holder of the Conversion Shares
which such Holder was entitled to receive upon the conversion relating to such Share
Delivery Date (a “Buy-In”), then the Corporation shall (A) pay in cash to such Holder (in
addition to any other remedies available to or elected by such Holder) the amount by which
(x) such Holder’s total purchase price (including any brokerage commissions) for the shares
of Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares
of Common Stock that such Holder was
8
entitled to receive from the conversion at issue
multiplied by (2) the actual sale price at which the sell order giving rise to such purchase
obligation was executed (including any brokerage commissions) and (B) at the option of such
Holder, either reissue (if surrendered) the shares of Series A Preferred Stock equal to the
number of shares of Series A Preferred Stock submitted for conversion or deliver to such
Holder the number of shares of Common Stock that would have been issued if the Corporation
had timely complied with its delivery requirements under Section 6(d)(i). For example, if a
Holder purchases shares of Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of shares of Series A Preferred Stock with
respect to which the actual sale price (including any brokerage commissions) giving rise to
such purchase obligation was a total of $10,000 under clause (A) of the immediately
preceding sentence, the Corporation shall be required to pay such Holder $1,000. The Holder
shall provide the Corporation written notice, within three (3) Trading Days after the
occurrence of a Buy-In, indicating the amounts payable to such Holder in respect of such
Buy-In together with applicable confirmations and other evidence reasonably requested by the
Corporation. 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 Corporation’s failure to
timely deliver certificates representing shares of Common Stock upon conversion of the
shares of Series A Preferred Stock as required pursuant to the terms hereof; provided,
however, that the Holder shall not be entitled to both (i) require the reissuance of the
shares of Series A Preferred Stock submitted for conversion for which such conversion was
not timely honored and (ii) receive the number of shares of Common Stock that would have
been issued if the Corporation had timely complied with its delivery requirements under
Section 6(d)(i).
iv.
Reservation of Shares Issuable Upon Conversion
. The Corporation covenants
that it will at all times reserve and keep available out of its authorized and unissued
shares of Common Stock for the sole purpose of issuance upon conversion of the Series A
Preferred Stock, free from preemptive rights or any other actual contingent purchase rights
of Persons other than the Holders of the Series A Preferred Stock, not less than such
aggregate number of shares of the Common Stock as shall be issuable (taking into account the
adjustments of Section 7) upon the conversion of all outstanding shares of Series A
Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so
issuable shall, upon issue, be duly authorized, validly issued, fully paid and
nonassessable.
v.
Fractional Shares
. No fractional shares or scrip representing fractional
shares of Common Stock shall be issued upon the conversion of the Series A Preferred Stock.
As to any fraction of a share which a Holder would otherwise be entitled to receive upon
such conversion, the Corporation 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
Conversion Price or round up to the next whole share.
vi.
Transfer Taxes
. The issuance of certificates for shares of the Common
Stock upon conversion of the Series A Preferred Stock shall be made without charge to
9
any
Holder for any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificates, provided that the Corporation shall not be required
to pay any tax that may be payable in respect of any transfer involved in the issuance and
delivery of any such certificate upon conversion in a name other than that of the registered
Holder(s) of such shares of Series A Preferred Stock and the Corporation shall not be
required to issue or deliver such certificates unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Corporation the amount of such tax or
shall have established to the satisfaction of the Corporation that such tax has been paid.
e)
Status as Stockholder
. Upon each Conversion Date, (i) the shares of Series A
Preferred Stock being converted shall be deemed converted into shares of Common Stock and (ii) the
Holder’s rights as a holder of such converted shares of Series A Preferred Stock shall cease and
terminate, excepting only the right to receive certificates for such shares of Common Stock and to
any remedies provided herein or otherwise available at law or in equity to such Holder because of a
failure by the Corporation to comply with the terms of this Certificate of Designation. In all
cases, the holder shall retain all of its rights and remedies for the Corporation’s failure to
convert Series A Preferred Stock.
Section 7
.
Certain Adjustments
.
a)
Stock Dividends and Stock Splits
. If the Corporation, at any time while the
Series A Preferred Stock is outstanding: (A) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock (which, for avoidance of doubt,
shall not include any shares of Common Stock issued by the Corporation upon conversion of shares of
Series A Preferred Stock) with respect to the then outstanding shares of Common Stock;
(B) subdivides outstanding shares of Common Stock into a larger number of shares; or (C) combines
(including by way of a reverse stock split) outstanding shares of Common Stock into a smaller
number of shares, then the Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding any treasury shares of the
Corporation) outstanding immediately before such event and of which the denominator shall be the
number of shares of Common Stock outstanding immediately after such event (excluding any treasury
shares of the Corporation). Any adjustment made pursuant to this Section 7(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 or combination.
b)
Fundamental Transaction
. If, at any time while the Series A Preferred Stock is
outstanding, (A) the Corporation effects any merger or consolidation of the Corporation with or
into another Person (other than a merger in which the Corporation is the surviving or continuing
entity and its Common Stock is not exchanged for or converted into other securities, cash or
property), (B) the Corporation effects any sale of all or substantially all of its assets in one
transaction or a series of related transactions, (C) any tender offer or exchange offer (whether by
the Corporation or another Person) is completed pursuant to which all of the Common Stock is
exchanged for or converted into other securities, cash or property, or (D) the Corporation effects
any reclassification of the Common Stock or any compulsory share exchange pursuant (other
10
than as a
result of a dividend, subdivision or combination covered by Section 7(a) above) to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property (in any
such case, a “
Fundamental Transaction
”), then, upon any subsequent conversion of this
Series A Preferred Stock the Holders shall have the right to receive, in lieu of the right to
receive Conversion Shares, for each Conversion Share that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and
amount of securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of one share of Common Stock (the “
Alternate Consideration
”). For
purposes of any such subsequent conversion, the determination of the Conversion Ratio 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 Corporation shall adjust the Conversion Ratio 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 Holders shall be given the same choice as to the Alternate Consideration it
receives upon any conversion of this Series A Preferred Stock following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the
Corporation or surviving entity in such Fundamental Transaction shall file a new Certificate of
Designation with the same terms and conditions and issue to the Holders new preferred stock
consistent with the foregoing provisions and evidencing the Holders’ right to convert such
preferred stock into Alternate Consideration. The terms of any agreement to which the Corporation
is a party and pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions of this Section 7(b)
and ensuring that the Series A Preferred Stock (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental Transaction. The Corporation
shall cause to be delivered to each Holder, at its last address as it shall appear upon the stock
books of the Corporation, written notice of any Fundamental Transaction at least 20 calendar days
prior to the date on which such Fundamental Transaction is expected to become effective or close.
c)
Calculations
. All calculations under this Section 7 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 7, 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 any treasury shares of the Corporation)
issued and outstanding.
d)
Notice to the Holders
.
i.
Adjustment to Conversion Price
. Whenever the Conversion Price is adjusted
pursuant to any provision of this Section 7, the Corporation shall promptly deliver to each
Holder a notice setting forth the Conversion Ratio after such adjustment and setting forth a
brief statement of the facts requiring such adjustment.
ii.
Other Notices
. If (A) the Corporation shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the Corporation shall
11
declare
a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Corporation shall authorize the granting to all holders of the Common Stock of 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 Corporation shall be required in
connection with any reclassification of the Common Stock, any consolidation or merger to
which the Corporation is a party, any sale or transfer of all or substantially all of the
assets of the Corporation, of any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property or (E) the Corporation shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs of the
Corporation, then, in each case, the Corporation shall cause to be filed at each office or
agency maintained for the purpose of conversion of this Series A Preferred Stock, and shall
cause to be delivered to each Holder at its last address as it shall appear upon the stock
books of the Corporation, at least 20 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a record is to
be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or
if a record is not to be taken, the date as of which the holders of the Common Stock of
record to be entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the date as of
which it is expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share exchange,
provided that the failure to deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action required to be specified in
such notice.
Section 8
.
Miscellaneous
.
a)
Notices
. Any and all notices or other communications or deliveries to be provided
by the Holders hereunder including, without limitation, any Notice of Conversion, shall be in
writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Corporation, at 100 Saw Mill Road, Danbury, Connecticut 06810,
facsimile number (203) 796-5002, or such other facsimile number or address as the Corporation may
specify for such purposes by notice to the Holders delivered in accordance with this Section. Any
and all notices or other communications or deliveries to be provided by the Corporation hereunder
shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized
overnight courier service addressed to each Holder at the facsimile number or address of such
Holder appearing on the books of the Corporation, or if no such facsimile number or address appears
on the books of the Corporation, at the principal place of business of such Holder. Any notice or
other communication or deliveries hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 5:30 p.m. (New York City time) on any date,
(ii) the date immediately following the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section between 5:30 p.m. and
11:59 p.m. (New York City time) on any date, (iii) the second
12
Business Day following the date of
mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given.
b)
Lost or Mutilated Series A Preferred Stock Certificate
. If a Holder’s Series A
Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall
execute and deliver, in exchange and substitution for and upon cancellation of a mutilated
certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new
certificate for the shares of Series A Preferred Stock so mutilated, lost, stolen or destroyed, but
only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the
ownership thereof, reasonably satisfactory to the Corporation and, in each case, customary and
reasonable indemnity, if requested. Applicants for a new certificate under such circumstances shall
also comply with such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Corporation may prescribe.
c)
Waiver
. Any waiver by the Corporation or a Holder of a breach of any provision of
this Certificate of Designation shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this Certificate of Designation
or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict
adherence to any term of this Certificate of Designation on one or more occasions shall not be
considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist
upon strict adherence to that term or any other term of this Certificate of Designation. Any waiver
by the Corporation or a Holder must be in writing.
d)
Severability
. If any provision of this Certificate of Designation is invalid,
illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect,
and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain
applicable to all other Persons and circumstances. If it shall be found that any interest or other
amount deemed interest due hereunder violates the applicable law governing usury, the applicable
rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest
permitted under applicable law.
e)
Next Business or Trading Day
. Whenever any payment or other obligation hereunder
shall be due on a day other than a Business Day or a Trading Day, such payment shall be made on the
next succeeding Business Day or Trading Day, as the case may be.
f)
Headings
. The headings contained herein are for convenience only, do not
constitute a part of this Certificate of Designation and shall not be deemed to limit or affect any
of the provisions hereof.
g)
Status of Converted Series A Preferred Stock
. If any shares of Series A Preferred
Stock shall be converted or reacquired by the Corporation, such shares shall resume the status of
authorized but unissued shares of preferred stock and shall no longer be designated as Series A
Preferred Stock.
13
********************
IN WITNESS WHEREOF
, the Corporation has caused this Certificate of Designation to be signed by
its duly authorized officer this 17th day of May 2011.
|
|
|
|
|
|
|
|
BIODEL INC.
|
|
|
|
By
|
/s/
Gerard Michel
|
|
|
|
Name:
|
Gerard Michel
|
|
|
|
|
Title:
|
Chief Financial Officer, VP Corporate
Development
and Treasurer
|
14
ANNEX A
NOTICE OF CONVERSION
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO
CONVERT SHARES OF SERIES A PREFERRED STOCK)
The undersigned Holder hereby irrevocably elects to convert the number of shares of Series A
Convertible Preferred Stock indicated below, represented by stock certificate No(s).
_______________ (the “
Preferred Stock Certificates
”), into shares of common stock, par
value $0.01 per share (the “
Common Stock
”), of Biodel Inc., a Delaware corporation (the
“
Corporation
”), as of the date written below. If securities are to be issued in the name of
a person other than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. Capitalized terms utilized but not defined herein shall have the meaning ascribed
to such terms in that certain Certificate of Designation of Preferences, Rights and Limitations of
Series A Convertible Preferred Stock (the “
Certificate of Designation
”) filed by the
Corporation on May , 2011.
As of the date hereof, the number of shares of Common Stock beneficially owned by the undersigned
Holder (together with such Holder’s Affiliates, and any other Person whose beneficial ownership of
Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange
Act and the applicable regulations of the Commission, including any “group” of which the Holder is
a member), including the number of shares of Common Stock issuable upon conversion of the Series A
Preferred Stock subject to this Notice of Conversion, but excluding the number of shares of Common
Stock which are issuable upon (A) conversion of the remaining, unconverted Series A Preferred Stock
beneficially owned by such Holder or any of its Affiliates, and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Corporation (including any
warrants) beneficially owned by such Holder or any of its Affiliates that are subject to a
limitation on conversion or exercise similar to the limitation contained in Section 6(c) of the
Certificate of Designation, is _______________. For purposes hereof, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and the applicable regulations of
the Commission. In addition, for purposes hereof, “group” has the meaning set forth in Section
13(d) of the Exchange Act and the applicable regulations of the Commission.
Conversion calculations:
Date to Effect Conversion: _______________
Number of shares of Series A Preferred Stock owned prior to Conversion: _______________
Number of shares of Series A Preferred Stock to be Converted: _______________
Number of shares of Common Stock to be Issued: _______________
Address for delivery of physical certificates:
________________________________________
Or for DWAC Delivery:
DWAC Instructions:
Broker no: _______________
Account no:
_______________
|
|
|
|
|
|
|
|
[HOLDER]
|
|
|
|
By:
|
|
|
|
|
|
Name:
|
|
|
|
|
|
Title:
|
|
|
|
|
|
Date:
|
|
|
A-1
