NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON
STOCK PURCHASE WARRANT
NEURALSTEM,
INC.
Warrant
Shares:
[_______] Initial
Exercise Date: December ___, 2008
THIS
COMMON STOCK PURCHASE WARRANT (the “
Warrant
”) certifies
that, for value received, _________________ (the “
Holder
”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after __________(the “
Initial Exercise
Date
”) and on or prior to the close of business on the five year
anniversary of the Initial Exercise Date (the “
Termination Date
”)
but not thereafter, to subscribe for and purchase from Neuralstem, Inc., a
Delaware corporation (the “
Company
”), up to
_____________ shares (the “
Warrant Shares
”) of
Common Stock. The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in Section
2(b).
Section
1
.
Definitions
.
“
Affiliate
” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as such terms are
used in and construed under Rule 405 under the Securities Act. 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.
“
Board of Directors
”
means the board of directors of the Company.
“
Business Day
” means
any day except any Saturday, any Sunday, any day which is a federal legal
holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.
“
Commission
” means the
Securities and Exchange Commission.
“
Common Stock
” means
the common stock of the Company, par value $0.01 per share, and any other class
of securities into which such securities may hereafter be reclassified or
changed into.
“
Exchange Act
” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“
Market Price
” means:
(a) the closing bid price reported on the Company’s Trading Market on the
Trading Day immediately preceding any applicable measuring date, (b) if the
Company’s Common Shares are not then listed on a Trading Market, the price
offered by any acquirer in a Fundamental Transaction, or (b) in all other
cases, the fair market value of a share of Common Stock as determined by the
Company’s Board of Directors.
“
Rule 144
” means Rule
144 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.
“
Securities Act
” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“
Trading Day
” means a
day on which the New York Stock Exchange is open for trading.
“
Trading Market
” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the American Stock Exchange, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange, the OTC Bulletin Board, and the “Pink
Sheets”.
“
Transfer Agent
” means
American Stock Transfer and Trust Company, the current transfer agent of the
Company with a mailing address of 59 Maiden Lane, New York, New York 10038 and a
facsimile number of (718) 921-8336, and any successor transfer agent of the
Company.
Section
2
.
Exercise
.
a)
Exercise of
Warrant
. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto; and, within 3 Business Days of the date
said Notice of Exercise is delivered to the Company, the Company shall have
received payment of the aggregate Exercise Price of the shares
thereby purchased by wire transfer or cashier’s check drawn on a United States
bank. Notwithstanding anything herein to the contrary, the Holder
shall not be required to physically surrender this Warrant to the Company until
the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender
this Warrant to the Company for cancellation within 3 Business Days of the date
the final Notice of Exercise is delivered to the Company. Partial
exercises of this Warrant resulting in purchases of a portion of the total
number of Warrant Shares available hereunder shall have the effect of lowering
the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased. The
Holder and the Company shall maintain records showing the number of Warrant
Shares purchased and the date of such purchases. The Company shall
deliver any objection to any Notice of Exercise Form within 1 Business Day of
receipt of such notice. In the event of any dispute or discrepancy,
the records of the Holder shall be controlling and determinative in the absence
of manifest error.
The Holder
and any assignee, by acceptance of this Warrant, acknowledge and agree that, by
reason of the provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares available for
purchase hereunder at any given time may be less than the amount stated on the
face hereof.
b)
Exercise
Price
. The exercise price per share of the Common Stock under
this Warrant shall be
$1.50,
subject to adjustment hereunder (the “
Exercise
Price
”).
c)
Exercise Limitations
.
The Company shall not effect any exercise of this Warrant, and a Holder shall
not have the right to exercise any portion of this Warrant, pursuant to Section
2 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together
with the Holder’s Affiliates, and any other person or entity acting as a group
together with the Holder or any of the Holder’s Affiliates), would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below).
For purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which such determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (A) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by the Holder or any of
its Affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation,
any other Common Stock Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its affiliates. Except as set forth in the
preceding sentence, for purposes of this Section 2(c), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder, it being acknowledged by the
Holder that the Company is not representing to the Holder that such calculation
is in compliance with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance
therewith. To the extent that the limitation contained in this
Section 2(c) applies, the determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable shall be in the
sole discretion of the Holder, and the submission of a Notice of Exercise shall
be deemed to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder together with
any Affiliates) and of which portion of this Warrant is exercisable, in each
case subject to the Beneficial Ownership Limitation, and the Company shall have
no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 2(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 (x) the Company’s most recent
periodic or annual report, as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or the
Transfer Agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder, the Company
shall within five Trading Days confirm orally and in writing to the Holder the
number of shares of Common Stock then outstanding. In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Warrant,
by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The “
Beneficial Ownership
Limitation
” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Holder, upon not
less than 61 days’ prior notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 2(c), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(c) shall continue to
apply. Any such increase or decrease will not be effective until the
61
st
day after such notice is delivered to the Company. The provisions of
this paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 2(c) to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of
this Warrant.
d)
Mechanics of
Exercise
.
i.
Delivery of Certificates
Upon Exercise
. Certificates for shares purchased hereunder
shall be transmitted by the transfer agent by physical delivery to the address
specified by the Holder in the Notice of Exercise within 5 Business Days from
the delivery to the Company of the Notice of Exercise Form, surrender of this
Warrant (if required) and payment of the aggregate Exercise Price as set forth
above (the “
Warrant
Share Delivery Date
”). This Warrant shall be deemed to have
been exercised on the date the Exercise Price is received by the
Company. The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the Warrant has been exercised by payment to the Company of the Exercise Price
and all taxes required to be paid by the Holder, if any, pursuant to Section
2(d)(v) prior to the issuance of such shares, have been paid.
ii.
Delivery of New Warrants
Upon Exercise
. If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.
iii.
Rescission
Rights
. If the Company fails to cause the transfer agent of
the Company to transmit to the Holder a certificate or the certificates
representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share
Delivery Date, then, the Holder will have the right to rescind such
exercise.
iv.
No Fractional Shares or
Scrip
. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall, at its election, either pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
v.
Charges, Taxes and
Expenses
. Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder;
provided
,
however
, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
vi.
Closing of
Books
. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
Section
3
.
Certain
Adjustments
.
a)
Stock Dividends and
Splits
. If the Company, at any time while this Warrant is outstanding:
(i) pays a stock dividend or otherwise make a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares or (iv)
issues by reclassification of shares of the Common Stock any shares of capital
stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding immediately before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.
b)
Fundamental
Transaction
. If, at any time while this Warrant is outstanding, (i) the
Company effects any merger or consolidation of the Company with or into another
Person, (ii) the Company effects any sale of all or substantially all of its
assets in one or a series of related transactions, (iii) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property or (iv) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (each “
Fundamental
Transaction
”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “
Alternate
Consideration
”) receivable as a result of such merger, consolidation or
disposition of assets by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event. For purposes
of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with the
foregoing provisions and evidencing the Holder’s right to exercise such warrant
into Alternate Consideration. The terms of any agreement 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 3(b)
and insuring that this Warrant (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction. Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction that is (1) an all cash transaction, or (2) a “Rule
13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, the Company
or any successor entity shall pay at the Holder’s option, exercisable at any
time concurrently with or within 30 days after the consummation of the
Fundamental Transaction, an amount of cash, per share, equal to the (A) Exercise
Price, less (B) the Market Price, on the date the Fundamental Transaction is
consummated. In the event the product of the forgoing is negative, no
payment by the Company shall be required.
c)
Calculations
. All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.
d)
Notice to
Holder
.
i.
Adjustment to Exercise
Price
. Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall mail to the Holder a notice setting forth
the Exercise Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment. Any public statement of riling made by the
Company referencing the adjustment shall serve as notice.
ii.
Notice to Allow Exercise by
Holder
. If (A) the Company shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. The Holder is
entitled to exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such
notice.
Section
4
.
Transfer of
Warrant
.
a)
Transferability
. Subject
to compliance with any applicable securities laws and the conditions set forth
in Section 4(d) hereof, this Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in
part, upon surrender of this Warrant at the principal office of the Company or
its designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its
agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required,
such payment, the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees, as applicable, and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. The Warrant, if
properly assigned, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.
b)
New Warrants
. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance
with Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated
the original Issue Date and shall be identical with this Warrant except as to
the number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register
. The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “
Warrant Register
”),
in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.
d)
Transfer
Restrictions
. This Warrant shall not be sold during the offering
contained in the prospectus supplement filed on December ____, 2008, or sold,
transferred, assigned, pledged, or hypothecated, or be the subject of any
hedging, short sale, derivative, put, or call transaction that would result in
the effective economic disposition of the securities by any person for a period
of 180 days immediately following the date of effectiveness or commencement of
sales of such offering, except as provided for pursuant to the Rules of
FINRA.
Section
5
.
Miscellaneous
.
a)
No Rights as Stockholder
Until Exercise
. This Warrant does not entitle the Holder to
any voting rights or other rights as a stockholder of the Company prior to the
exercise hereof as set forth in Section 2(d)(i).
b)
Loss, Theft, Destruction or
Mutilation of Warrant
. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant, shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays,
Holidays, etc
. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then, such action may be taken or such right may be exercised
on the next succeeding Business Day.
d)
Authorized
Shares
.
The
Company covenants that, during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will
take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of the Trading Market upon which the
Common Stock may be listed. The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (ii) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be,
necessary to enable the Company to perform its obligations under this
Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
e)
Governing Law and
Venue
. All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware, without
regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Warrant (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced exclusively in the U.S.
District Court for the District of Maryland. Each party hereby
irrevocably submits to the exclusive jurisdiction of the U.S. District Court for
the District of Maryland for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any other manner permitted by
law. If either party shall commence an action or proceeding to
enforce any provisions of this Warrant, then the prevailing party in such action
or proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceedings or questions
concerning the construction, validity, enforcement and interpretation of this
Warrant.
f)
Restrictions
. The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.
g)
Nonwaiver and
Expenses
. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date. If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
h)
Notices
. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Trading Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and
communications shall be: (i) if to Holder, at its address of records
as contained in the Warrant Register, and (ii) if to Company, at its corporate
headquarters.
i)
Limitation of
Liability
. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
j)
Remedies
. The
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law
would be adequate.
k)
Successors and
Assigns
. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment
. This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and Holder.
m)
Severability
. Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.
n)
Headings
. The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above
indicated.
NOTICE
OF EXERCISE
TO: NEURALSTEM,
INC.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
(2) Payment
shall take the form of lawful money of the United States.
(3) Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be physical delivered to:
_______________________________
_______________________________
_______________________________
(4)
Accredited
Investor
. The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
______________________________________________________________________________
Signature of Authorized Signatory of
Investing Entity
:
________________________________________________________
Name of
Authorized Signatory:
__________________________________________________________________________
Title of
Authorized Signatory:
___________________________________________________________________________
Date:
_______________________________________________________________________________________________
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this form
and supply required information.
Do not
use this form to exercise the warrant.)
FOR VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________,
_______
Holder’s
Signature: _____________________________
Holder’s
Address: _____________________________
_____________________________
Signature
Guaranteed: ___________________________________________
NOTE: The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “
Agreement
”) is dated
as of December 16, 2008, by and between Neuralstem, Inc., a Delaware corporation
(the “
Company
”), and
Seaside 88, LP, a Florida limited partnership (such investor, including its
successors and assigns, “
Seaside
”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement, the Company
desires to issue and sell to Seaside, and Seaside desires to purchase from the
Company, $2,000,000 of shares of Common Stock on the Closing Date pursuant to an
effective Registration Statement on Form S-3, file no. 333-153387;
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and Seaside agree as follows:
ARTICLE
I.
DEFINITIONS
1.1
Definitions
. In
addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms have the meanings indicated in this Section
1.1:
“
Action
” shall have
the meaning ascribed to such term in Section 3.1(j).
“
Affiliate
” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person as such terms are
used in and construed under Rule 144.
“
Closing
” means the
closing of the purchase and sale of the Common Stock pursuant to Section
2.1.
“
Closing Date
” means
December 16, 2008 or such later date when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) Seaside’s obligations to pay the Subscription Amount
and (ii) the Company’s obligations to deliver the Securities have been satisfied
or waived.
“
Commission
” means the
Securities and Exchange Commission.
“
Common Stock
” means
the common stock of the Company, par value $.01 per share, and any securities
into which such common stock may hereafter be reclassified.
“
Common Stock
Equivalents
” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“
Company Counsel
”
means The Law Offices of Raul Silvestre & Associates, APLC.
“
Disclosure Schedules
”
means the Disclosure Schedules of the Company delivered concurrently
herewith.
“
Effective Date
” means
the date that the Registration Statement was first declared effective by the
Commission.
“
Evaluation Date
”
shall have the meaning ascribed to such term in Section 3.1(l).
“
Exchange Act
” means
the Securities Exchange Act of 1934, as amended.
“
Exempt Issuance
”
means the issuance of (a) shares of Common Stock or options to employees,
officers, directors or consultants of the Company pursuant to any stock or
option plan duly adopted by a majority of the non-employee members of the Board
of Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise of or conversion of any Securities issued hereunder or convertible
securities, options or warrants issued and outstanding on the date of this
Agreement, provided that the terms of such securities have not been amended
since the date of this Agreement to increase the number of such securities or to
decrease the exercise or conversion price of any such securities, and (c)
securities issued pursuant to acquisitions or strategic transactions, provided
any such issuance shall only be to a Person which is, itself or through its
subsidiaries, an operating company in a business synergistic with the business
of the Company and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities.
“
GAAP
” shall have the
meaning ascribed to such term in Section 3.1(h).
“
Liens
” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.
“
Material Adverse
Effect
” shall have the meaning ascribed to such term in Section
3.1(b).
“
Per Share Purchase
Price
” equals $1.25.
“
Person
” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“
Proceeding
” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.
“
Prospectus
Supplement
” means the supplement to the base prospectus contained in the
Registration Statement to be filed in connection with the sale to Seaside of the
Securities.
“
Registration
Statement
” means the registration statement of the Company, Commission
File No. 333-153387, as amended, covering the sale to Seaside of the
Securities.
“
Required Approvals
”
shall have the meaning ascribed to such term in Section 3.1(e).
“
Rule 144
” means Rule
144 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.
“
Seaside Party
” shall
have the meaning ascribed to such term in Section 4.6.
“
SEC Reports
” shall
have the meaning ascribed to such term in Section 3.1(h).
“
Securities
” means the
Shares.
“
Securities Act
” means
the Securities Act of 1933, as amended.
“
Shares
” means the
shares of Common Stock issued or issuable to Seaside pursuant to this
Agreement.
“
Short Sales
” shall
include, without limitation, all “short sales” as defined in Rule 200 of
Regulation SHO of the Exchange Act, but does not include any reservation or
location of borrowable shares.
“
Subscription Amount
”
means, as to Seaside, the amounts set forth below such Seaside’s signature block
on the signature page hereto, in United States dollars and in immediately
available funds.
“
Subsidiary
” shall
mean the subsidiaries of the Company, if any, set forth on
Schedule
3.1(a)
.
“
Trading Day
” means a
day on which the Common Stock is traded on a Trading Market.
“
Trading Market
” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE Alternext Exchange, the
New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market,
the Nasdaq Global Select Market or the Over-the Counter Bulletin
Board.
“
Transaction
Documents
” means this Agreement and any other documents or agreements
executed in connection with the transactions contemplated
hereunder.
ARTICLE
II.
PURCHASE
AND SALE
2.1
Closing
. On
the Closing Date, Seaside shall purchase from the Company, and the Company shall
issue and sell to Seaside, a number of Shares equal to $2,000,000 divided by the
Per Share Purchase Price. Upon satisfaction of the conditions set
forth in Sections 2.2, 2.3 and 2.4, the Closing shall occur at the offices of
White White & Van Etten PC, 55 Cambridge Parkway, Cambridge, MA 02142, or
such other location as the parties shall mutually agree.
2.2
Deliveries by the
Company
. On the Closing Date, the Company shall deliver or
cause to be delivered to Seaside the following:
(a) the
receipt by Seaside, via the DTC DWAC system, as specified on the signature pages
hereto, of the number of Shares equal to $2,000,000 divided by the Per Share
Purchase Price, registered in the name of Seaside;
(b) an
officer’s certificate of the Company’s Chief Executive Officer or Chief
Financial Officer, in form reasonably acceptable to Seaside, certifying the
accuracy of the Company’s representations and warranties made in this Agreement
as of the Closing Date and the Company’s performance of the covenants to be
performed by it pursuant to this Agreement at or prior to
Closing; and
(c) a
legal opinion of Company Counsel, in the form of
Exhibit A
attached
hereto.
2.3
Deliveries by
Seaside
. On the Closing Date, Seaside shall deliver or
cause to be delivered to the Company $2,000,000 by wire transfer to the account
as specified in writing by the Company. The Company agrees that
Seaside may deduct from such wire transfer the amount due Seaside for
reimbursement of its expenses as described in Section 5.2 hereof.
2.4
Closing
Conditions
.
(a) The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:
(i) the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of Seaside contained herein;
(ii) all
obligations, covenants and agreements of Seaside required to be performed at or
prior to the Closing Date shall have been performed; and
(iii) the
delivery by Seaside of the items set forth in Section 2.3 of this
Agreement.
(b) The
respective obligations of Seaside hereunder in connection with the Closing are
subject to the following conditions being met:
(i) the
accuracy in all material respects on the Closing Date of the representations and
warranties of the Company contained herein;
(ii) all
obligations, covenants and agreements of the Company required to be performed at
or prior to the Closing Date shall have been performed;
(iii) the
delivery by the Company of the items set forth in Section 2.2 of this
Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the Company since the
date hereof, that has not been cured by the Company; and
(v) from
the date hereof to the Closing Date, trading in the Common Stock shall not have
been suspended by the Commission (except for any suspension of trading of
limited duration agreed to by the Company, which suspension shall be terminated
prior to the Closing), and, at any time prior to the Closing Date, trading in
securities generally as reported by Bloomberg Financial Markets shall not have
been suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any Trading Market,
nor shall a banking moratorium have been declared either by the United States or
New York State authorities nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of Seaside, makes it
impracticable or inadvisable to purchase the Shares at the Closing.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1
Representations and
Warranties of the Company
. Except as set forth under the
corresponding section of the Disclosure Schedules, which Disclosure Schedules
shall be deemed a part hereof, the Company hereby makes the representations and
warranties set forth below to Seaside:
(a)
Subsidiaries
. All
of the direct and indirect subsidiaries of the Company are set forth on
Schedule 3.1(a)
(each
a “Subsidiary”). The Company owns, directly or indirectly, all of the
capital stock or other equity interests of each Subsidiary free and clear of any
Liens, and all the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase
securities. If the Company has no subsidiaries, then references in
the Transaction Documents to the Subsidiaries will be disregarded.
(b)
Organization and
Qualification
. The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or
default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or financial condition of the Company and the Subsidiaries, taken as a
whole, or (iii) a material adverse effect on the Company’s ability to perform in
any material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “
Material Adverse
Effect
”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.
(c)
Authorization;
Enforcement
. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and its stockholders and no further action is required by
the Company or its stockholders in connection therewith other than in connection
with the Required Approvals. Each Transaction Document has been (or
upon delivery will have been) duly executed by the Company and, when delivered
in accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.
(d)
No
Conflicts
. The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Shares and
the consummation by the Company of the other transactions contemplated thereby
do not and will not (i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, violate or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse
Effect.
(e)
Filings, Consents and
Approvals
. The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority, the Trading Market or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than the filing of the Prospectus supplement and any notice
filings as are required to be made following the Closing Date under applicable
federal and state securities laws or under applicable rules and regulations of
the Trading Market (collectively, the “
Required
Approvals
”).
(f)
Issuance of the
Securities
. The Shares are duly authorized and, when issued
and paid for in accordance with the Transaction Documents, will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents or applicable federal and state securities
laws. The Company has reserved from its duly authorized capital stock
the maximum number of shares of Common Stock issuable pursuant to this
Agreement. The issuance by the Company of the Shares has been
registered under the Securities Act and all of the Shares when delivered will be
freely transferable and tradable on the Trading Market by Seaside without
restriction (other than any restrictions arising solely from an act or omission
of a Seaside). The Registration Statement is effective and available for the
issuance of the Shares thereunder and the Company has not received any notice
that the Commission has issued or intends to issue a stop-order with respect to
the Registration Statement or that the Commission otherwise has suspended or
withdrawn the effectiveness of the Registration Statement, either temporarily or
permanently, or intends or has threatened in writing to do so. The
“Plan of Distribution” section under the Registration Statement permits the
issuance and sale of the Shares hereunder. The Shares constitute less
than 10% of the issued and outstanding shares of Common Stock.
(g)
Capitalization
. The
capitalization of the Company is as set forth in its most recently filed
periodic report under the Exchange Act. The Company has not issued
any capital stock since its most recently filed periodic report under the
Exchange Act, other than pursuant to the exercise of employee stock options
under the Company’s stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company’s employee stock purchase plan and pursuant
to the conversion or exercise of outstanding Common Stock
Equivalents. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as
disclosed in the SEC Reports or Schedule 3.1(g), there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common Stock
Equivalents. Except as disclosed in the SEC Reports or Schedule 3.1(g), the
issue and sale of the Securities will not obligate the Company to issue shares
of Common Stock or other securities to any Person (other than Seaside) and will
not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such
securities. All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable, have been issued in
material compliance with all federal and state securities laws and requirements
of the Trading Market, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. No further approval or authorization of any
stockholder or the Board of Directors of the Company is required for the
issuance and sale of the Shares. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s
stockholders.
(h)
SEC Reports; Financial
Statements
. The Company has filed or furnished all reports,
schedules, forms, statements and other documents required to be filed or
furnished by it under the Securities Act and the Exchange Act (including all
required exhibits thereto), including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as
the Company was required by law to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “
SEC Reports
”) and any
notices, reports or other filings pursuant to requirements of the Trading Market
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“
GAAP
”), except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, year-end audit
adjustments.
(i)
Material
Changes
. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that has
had or that could reasonably be expected to result in a Material Adverse Effect,
except as has been reasonably cured by the Company (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option and
incentive plans. The Company does not have pending before the
Commission any request for confidential treatment of
information.
(j)
Litigation
. Except
as disclosed in the SEC Reports, there is no action, suit, notice of violation,
or proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “
Action
”)
which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor, to the knowledge of the Company, any director or officer
thereof, is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been and, to the knowledge of the Company, there
is not currently pending or contemplated, any investigation by the Commission
involving the Company or any current or former director or officer of the
Company. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
or any Subsidiary under the Exchange Act or the Securities Act and, to the
Company’s knowledge, no proceeding for such purpose is pending before or
threatened by the Commission.
(k)
Compliance
. Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, could reasonably be expected to result in a default by the Company
or any Subsidiary under), nor has the Company or any Subsidiary received notice
of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) is in violation of
any statute, rule or regulation of any governmental authority or the Trading
Market, including without limitation all foreign, federal, state and local laws
applicable to its business, except in each case as would not have a Material
Adverse Effect.
(l)
Sarbanes-Oxley; Internal
Accounting Controls
. The Company is in material compliance
with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it
as of the Closing Date. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including its Subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company’s most recently filed periodic report under the Exchange Act,
as the case may be, is being prepared. The Company’s certifying
officers have evaluated the effectiveness of the Company’s disclosure controls
and procedures as of a date prior to the filing date of the most recently filed
periodic report under the Exchange Act (such date, the “
Evaluation
Date
”). The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the Company’s disclosure controls and
procedures based on their evaluations as of the Evaluation
Date. Since the Evaluation Date, there have been no changes in the
Company’s internal controls over financial reporting (as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
controls over financial reporting.
(m)
Listing and Maintenance
Requirements
. The Company’s Common Stock is registered
pursuant to Section 12(b) of the Exchange Act, and the Company has taken no
action designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
the Company received any notification that the Commission is contemplating
terminating such registration. The Company has not, in the 12 months
preceding the date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of such Trading
Market. The Company is, and immediately after the consummation of the
transactions contemplated hereby will be, in compliance with all such listing
and maintenance requirements.
(n)
Application of Takeover
Protections
. The Company and its Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to Seaside as a result
of Seaside and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including without limitation the
Company’s issuance of the Securities and Seaside’s ownership of the
Securities.
(o)
Disclosure
. The
Company confirms that, neither the Company nor any officer, director or employee
of the Company acting on its behalf has provided Seaside or its agents or
counsel with any information that constitutes or might constitute material,
non-public information. The Company understands and confirms that
Seaside will rely on the foregoing representations and covenants in effecting
transactions in securities of the Company. All disclosure provided to
Seaside regarding the Company, its business and the transactions contemplated
hereby furnished by or on behalf of the Company with respect to the
representations and warranties made herein are true and correct with respect to
such representations and warranties and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The Company acknowledges and agrees that Seaside does not
make and has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3.2 hereof.
(p)
Effective Registration
Statement
. The Registration Statement has been declared
effective by the Commission and the Company knows of no reason why the
Registration Statement will not continue to remain effective for the foreseeable
future. The Company is eligible to use Form S-3 registration
statements for the issuance of securities.
(q)
Acknowledgment Regarding
Seaside’s Purchase of Shares
. The Company acknowledges and
agrees that Seaside is acting solely in the capacity of an arm’s length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby. The Company further acknowledges that Seaside is
not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by Seaside or any of its respective representatives
or agents in connection with this Agreement and the transactions contemplated
hereby is merely incidental to Seaside’s purchase of the Shares. The
Company further represents to Seaside that the Company’s decision to enter into
this Agreement has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its
representatives.
(r)
Approvals
. The
issuance and listing on the Trading Market of the Shares requires no further
approvals, including but not limited to, the approval of
shareholders.
(s)
Intellectual
Property
. The Company possesses such right, title and interest
in and to, patents, patent rights, trade secrets, inventions, know-how,
trademarks, trade names, copyrights, service marks and other proprietary rights
(“
Intellectual
Property
”) material to the conduct of the Company’s business except
Intellectual Property the failure to possess of which would not have a Material
Adverse Effect. Except as disclosed in the SEC Reports, the Company has not
received any notice of infringement, misappropriation of conflict from any third
party as to such that has not been resolved or disposed of, which infringement,
misappropriation or conflict would if adversely decided individually or in the
aggregate have a Material Adverse Effect. To the Company’s knowledge,
it has not infringed, misappropriated, or otherwise conflicted with Intellectual
Property of any third parties, which infringement, misappropriation of conflict
would individually or in the aggregate have a Material Adverse
Effect.
(t)
Permits
. The
Company has made all filings, applications and submissions required by, and
possesses all
approvals, licenses, certificates, certifications, clearances, consents,
exemptions, marks, notifications, orders, permits and other authorizations
issued by,
the
appropriate federal, state or foreign regulatory authorities (including, without
limitation, the U.S. Food and Drug Administration of the Department of Health
and Human Services (the “
FDA
”), and
any other foreign, federal, state or local government or regulatory authorities
performing functions similar to those performed by the FDA, not including
Required Approvals) necessary to own or lease its properties or to conduct its
businesses (collectively, “
Permits
”),
except for such Permits the failure of which to possess, obtain or make the same
would not reasonably be expected to have a Material Adverse Effect; and the
Company has not received any written notice of proceedings relating to the
limitation, revocation, cancellation, suspension, modification or non-renewal of
any such Permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect,
and has no reason to believe that any such license, certificate, permit or
authorization will not be renewed in the ordinary course.
(u)
Clinical
Studies
. The clinical, pre-clinical and other studies and
tests conducted by or on behalf of or sponsored by the Company were and, if
still pending, are being conducted in accordance in all material respects with
all statutes, laws, rules and regulations, as applicable (including,
without limitation, those administered by the FDA or by any foreign, federal,
state or local governmental or regulatory authority performing functions similar
to those performed by the FDA) except as would not have a Material Adverse
Effect. The Company has not received any notices or other
correspondence from the FDA or any other foreign, federal, state or local
governmental or regulatory authority performing functions similar to those
performed by the FDA with respect to any ongoing clinical or pre-clinical
studies or tests requiring the termination or suspension of such studies or
tests, except as would not have a Material Adverse Effect.
Seaside
acknowledge and agree that the Company does not make or has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.1.
3.2
Representations and
Warranties of Seaside
. Seaside
represents and warrants as of the date hereof and as of the Closing Date to the
Company as follows:
(a)
Organization;
Authority
. Seaside is a limited partnership duly otherwise
organized, validly existing and in good standing under the laws of the state of
Florida, with full right, power and authority to own and use its properties and
assets and to carry on its business as currently conducted and to enter into and
to consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. The execution, delivery and
performance by Seaside of the transactions contemplated by this Agreement and
each other Transaction Document have been duly authorized by all necessary
action on the part of Seaside and no such further action is
required. Each Transaction Document to which it is a party has been
(or upon delivery will have been) duly executed by Seaside, and, when delivered
by Seaside in accordance with the terms thereof, will constitute the valid and
legally binding obligation of Seaside, enforceable against it in accordance with
its terms, except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.
(b)
Seaside
Representation
. Seaside does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities. Seaside is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act or otherwise.
(c)
Experience of
Seaside
. Seaside, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Seaside is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.
(d)
Short
Sales
. Seaside has not directly or indirectly executed any
Short Sales in the securities of the Company through the date
hereof.
The
Company acknowledges and agrees that Seaside does not make or has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1
No Transfer
Restrictions
.
Certificates
evidencing the Shares shall not contain any legend restricting their
transferability by Seaside. The Company shall cause its counsel to
issue a legal opinion to the Company’s transfer agent if required by the
Company’s transfer agent to effect a transfer of any of the Securities; such
opinion shall be provided by the Company’s counsel at no expense to
Seaside.
4.2
Furnishing of
Information
.
As long
as Seaside owns Securities, the Company covenants to use best efforts to timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date
hereof pursuant to the Exchange Act. As long as Seaside owns
Securities, if the Company is not required to file reports pursuant to the
Exchange Act, it will prepare and furnish to Seaside and make publicly available
in accordance with Rule 144(c) such information as is required for Seaside to
sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such Person to
sell such Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144. If at any time
from the Closing Date until 360 days thereafter, the Company fails to remain
current in its SEC reporting requirements, then in addition to Seaside’s other
available remedies, for each 30 day period or portion thereof in which the
Company is not in compliance with its SEC reporting requirements, the Company
shall pay to Seaside such number of shares of Common Stock equal to 10% of the
number of Shares then held by Seaside. Nothing herein shall limit
Seaside’s right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.
4.3
Securities Laws Disclosure;
Publicity
. The Company shall, by 9:00 a.m. Eastern time on the
Trading Day following the date hereof file a Current Report on Form 8-K which
attaches as exhibits all agreements relating to this transaction, in each case
reasonably acceptable to Seaside, if Seaside is readily available to review such
Form 8-K in a timely manner, disclosing the material terms of the transactions
contemplated hereby.
4.4
Shareholders Rights
Plan
. No claim will be made or enforced by the Company or, to
the knowledge of the Company, any other Person that Seaside is an “Acquiring
Person” under any shareholders rights plan or similar plan or arrangement in
effect or hereafter adopted by the Company, or that Seaside could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities under the Transaction Documents or under any other agreement between
the Company and Seaside. The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act of 1940,
as amended.
4.5
Non-Public
Information
. The Company covenants and agrees that neither it
nor any other Person acting on its behalf will provide Seaside or its agents or
counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto Seaside shall have executed a
written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that Seaside shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.
4.6
Indemnification of
Seaside
. Subject to the provisions of this Section 4.6,
the Company will indemnify and hold Seaside, Seaside’s Affiliates and their
respective directors, officers, shareholders, partners, members, employees and
agents (each, a “
Seaside Party
”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation reasonably incurred in connection with defending or investigating
any suit or action in respect thereof to which any Seaside Party may become a
party under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses
arise out of or are based on (a) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus Supplement, or (b) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading,
provided
that the
Company will not be liable in any such case to the extent that any such
liability, obligation, claim, contingency, damage, cost or expense arises out of
or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by and regarding Seaside expressly for
inclusion therein. If any action shall be brought against any Seaside
Party in respect of which indemnity may be sought pursuant to this Agreement,
such Seaside Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own
choosing. Any Seaside Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Seaside Party
except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Company and
the position of such Seaside Party. The Company will not be liable to
any Seaside Party under this Agreement (i) for any settlement by a Seaside Party
effected without the Company’s prior written consent, which consent shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the extent,
that a loss, claim, damage or liability is attributable to any Seaside Party’s
breach of any of the representations, warranties, covenants or agreements made
by Seaside in this Agreement or in the other Transaction Documents.
4.7
Listing of Common
Stock
. The Company hereby agrees to use best efforts to
maintain the listing of the Common Stock on a Trading Market. The
Company further agrees, if the Company applies to have the Common Stock traded
on any other Trading Market, it will include in such application all of the
Shares and will take such other action as is necessary to cause all of the
Shares to be listed on such other Trading Market as promptly as
possible. The Company will take all action reasonably necessary to
continue the listing and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market.
4.8
Right of First
Refusal
. From the date hereof until six months after the
Closing Date, neither the Company nor any Subsidiary shall issue shares of
Common Stock or Common Stock Equivalents without first offering Seaside the
right to purchase such Common Stock or Common Stock Equivalents on the same
terms proposed to be sold to any third party.
4.9
Approval of Subsequent
Equity Sales
. The Company shall not issue shares of Common
Stock or Common Stock Equivalents if such issuance would require shareholder
approval pursuant to applicable rules of the Trading Market, unless and until
such shareholder approval is obtained.
4.10
Short
Sales
. Seaside covenants that neither it nor any affiliates
acting on its behalf or pursuant to any understanding with it will execute any
Short Sales during the period it owns any of the Shares.
4.11
Prospectus
Supplement
. The Company will use its best efforts to file the
Prospectus Supplement as soon as practicable following the Closing Date, but in
any event agrees to make such filing on or before December 16,
2008.
ARTICLE
V.
MISCELLANEOUS
5.1
Termination
. This
Agreement may be terminated by Seaside by written notice to the Company, if the
Closing has not been consummated on or before December 17, 2008, provided
however that no such termination will affect the right of any party to sue for
any breach by the other party (or parties).
5.2
Fees and
Expenses
. Except as otherwise set forth in this Agreement and
as set forth in this Section 5.2 below, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this
Agreement. The Company shall pay all stamp and other taxes and duties
levied in connection with the delivery of the
Securities. Notwithstanding the foregoing, at the Closing, the
Company shall reimburse Seaside for the fees and expenses of its counsel, White
White & Van Etten PC, in an amount equal to $18,000.
5.3
Entire
Agreement
. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.
5.4
Notices
. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 p.m. (Eastern time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Trading Day
or later than 5:30 p.m. (Eastern time) on any Trading Day, (c) the second
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.
5.5
Amendments;
Waivers
. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and Seaside or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
5.6
Headings
. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.
5.7
Successors and
Assigns
. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of
Seaside. Seaside may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the
Company.
5.8
No Third-Party
Beneficiaries
. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.6.
5.9
Governing
Law
. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof. The parties hereby waive all rights to a trial by
jury. If either party shall commence an action or proceeding to
enforce any provisions of the Transaction Documents, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
5.10
Survival
. The
representations and warranties herein shall survive the Closing and delivery of
the Shares.
5.11
Execution
. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.12
Severability
. If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
5.13
Rescission and
Withdrawal Right
. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever Seaside exercises a right, election, demand or option under
a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then Seaside may rescind or
withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
5.14
Replacement of
Securities
. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities.
5.15
Remedies
. In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, Seaside and the Company will be entitled to
specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of the obligations set forth herein and hereby
agree to waive in any such action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
5.16
Payment Set
Aside
. To the extent that the Company makes a payment or
payments to Seaside pursuant to any Transaction Document or Seaside enforces or
exercises its rights thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
5.17
Construction
.
The parties agree that each of them and/or their respective counsel has reviewed
and had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
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Neuralstem,
Inc.
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Address for Notice:
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By:
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9700
Great Seneca Highway
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Name:
Title:
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Rockville,
MD 20850
Attention: President
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With
a copy to (which shall not constitute notice):
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The
Law Offices of Raul Silvestre
&
Associates, APLC
21200
Via Colinas, Suite 200
Westlake
Village, CA, 91362
Attention: Raul
Silvestre,
Esq.
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Seaside
88, LP
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Address for Notice:
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By:
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750
Ocean Royale Way
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Name:
Title:
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Suite
805
North
Palm Beach, FL 33408
Attention: William
J. Ritger and
Denis
M. O’Donnell, M.D.
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With
a copy to (which shall not constitute notice):
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White
White & Van Etten PC
55
Cambridge Parkway
Cambridge,
MA 02142
Attention: David
A. White,
Esq.
|
Address
for Delivery of Securities for Seaside (if not same as above):
DWAC
Instructions for Common Stock:
DTC # -
0571 -
Account
number - G53-1348923
Subscription
Amount: $2,000,000.00
EIN
Number:
[PROVIDE
THIS UNDER SEPARATE COVER]
