UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): March 10, 2015

 

CHAMPIONS ONCOLOGY, INC.

 

(Exact name of registrant as specified in its charter)

 

Delaware   0-17263   52-1401755
(State or Other Jurisdiction   (Commission File Number)   (IRS Employer
of Incorporation)       Identification No.)

 

1 University Plaza, Suite 307, Hackensack, New Jersey 07601

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s telephone number, including area code: (201) 808-8400

 

Not applicable

(Former Name or Former Address if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

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

 

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

 

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

 

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

 

 

 

 
 

 

INFORMATION TO BE INCLUDED IN THE REPORT

 

Item 1.01. Entry into a Material Definitive Agreement.

 

As previously disclosed, on March 11, 2015, Champions Oncology, Inc. (the “ Company ”) executed a Securities Purchase Agreement (the “ 2015 Securities Purchase Agreement ”) with Battery Ventures IX, L.P. and Battery Investment Partners IX, LLC (collectively, “ Battery ”), New Enterprise Associates 14, Limited Partnership (“ NEA ”), Joel Ackerman, Chief Executive Officer and a director of the Company (“ Ackerman ”), Dr. Ronnie Morris, President and a director of the Company (“ Morris ”), Daniel Mendelson, a director of the Company (“ Mendelson ”) and certain other investors (collectively with Battery, NEA, Ackerman, Morris and Mendelson, the “ Investors ”).

 

On March 13, 2015, the Company and the Investors consummated the sale contemplated by the 2015 Securities Purchase Agreement by the Company to the Investors of units, each unit consisting of one share of the Company’s Common Stock, par value $0.001 per share (the “ Common Stock ”) and a warrant to buy 0.55 shares of Common Stock at $0.48 per share (the “ Warrants ”), at a purchase price of $0.40 per unit, for an aggregate of $14,000,000. The Warrants expire five years after the closing date. Ackerman and Morris converted convertible promissory notes dated December 1, 2014 in the principal amounts of $1 million each, plus accrued interest, into the units at a 5% discount, pursuant to the terms of the convertible promissory notes, and received 2,710,526 units each.

 

The Investors have the right to require the Company to repurchase the purchased shares (the “ Put Option ”) for cash for $0.40 per share upon a change of control or sale or exclusive license of substantially all of the Company’s assets approved by the Company’s board of directors. The Put Option will terminate upon the achievement of certain financial and other milestones.

 

The Investors have certain participation rights with respect to future financings of the Company. The Company covenanted to register the resale of the shares of Common Stock to be issued to the Investors and the shares of Common Stock issuable upon exercise of the Warrants pursuant to a 2015 Amended and Restated Registration Rights Agreement, and to pay certain liquidated damages if the Company fails to file such registration statement by a certain deadline, have it declared effective by a certain deadline or keep it effective for a certain period of time.

 

The shares of Common Stock and the Warrants sold pursuant to the 2015 Securities Purchase Agreement were sold to accredited investors only in a private placement in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933 and Regulation D promulgated thereunder.

 

The issuance of the shares of Common Stock and the Warrants will result in the Company issuing 1,865,853 shares of Common Stock to investors who purchased shares of Common Stock pursuant to a Securities Purchase Agreement dated as of March 24, 2011 (the “ 2011 Securities Purchase Agreement ”) due to contractual antidilution provisions in that 2011 Securities Purchase Agreement. The Company and certain other parties entered into an Amended and Restated 2011 Securities Purchase Agreement, which eliminates these antidilution provisions going forward, and conform aspects of the put option in that 2011 Securities Purchase Agreement to the Put Option in the 2015 Securities Purchase Agreement.

 

 
 

 

The Company and certain investors entered into an Amended and Restated 2013 Securities Purchase Agreement, which conforms aspects of the put option in the Company’s Securities Purchase Agreement dated January 28, 2013 (the “ 2013 Securities Purchase Agreement ”) with certain investors to the Put Option in the 2015 Securities Purchase Agreement.

 

The Company and certain investors executed amendments to the Company’s warrants issued in connection with the 2011 Securities Purchase Agreement and the 2013 Securities Purchase Agreement to eliminate the antidilution rights for future transactions, extend the terms by one year each, revise the exercise price and increase the number of warrant shares.

 

The foregoing description is qualified in its entirety by the terms of the agreements attached hereto as Exhibit 10.1, Exhibit 10.2, Exhibit 10.3, Exhibit 10.4, Exhibit 10.5 and Exhibit 10.6, which are incorporated herein by reference.

 

Item 3.02. Unregistered Sales of Equity Securities.

 

The information required by this Item is described in Item 1.01 above.

 

Item 5.07 Submission of Matters to a Vote of Security Holders.

 

Effective March 10, 2015, holders of 38,943,002 shares of the Company’s Common Stock, which constituted a majority of the Company’s outstanding shares of Common Stock, executed a written consent in lieu of a meeting, pursuant to which the stockholders approved (a) an amendment to the Company’s certificate of incorporation to increase its authorized shares of common stock from 125,000,000 to 200,000,000 shares and (b) an amendment to the Company’s certificate of incorporation to effect a reverse split of the Company’s common stock at a ratio ranging from three into one to fifteen into one, such ratio and whether to effect such reverse split and, if so, at what date, to be determined by the Company’s board of directors.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

The following exhibits are filed herewith:

 

Exhibit No.    
10.1   2015 Amended and Restated Registration Rights Agreement dated as of March 13, 2015
10.2   Form of 2015 Warrant to Purchase Common Stock dated March 13, 2015
10.3   Amended and Restated 2011 Securities Purchase Agreement dated as of March 13, 2015
10.4   Amended and Restated 2013 Securities Purchase Agreement dated as of March 13, 2015
10.5   Amendment No. 1 to 2011 Warrants dated as of March 13, 2015
10.6   Amendment No. 1 to 2013 Warrants dated as of March 13, 2015

 

 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

      CHAMPIONS ONCOLOGY, INC.
      (Registrant)
       
Date: March 16, 2015   By: /s/ Joel Ackerman
      Joel Ackerman
      Chief Executive Officer

 

 

 

 

Exhibit 10.1

 

Execution Version

 

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

This 2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”), dated as of March 13, 2015 is by and between Champions Oncology, Inc., a Delaware corporation (the “ Company ”), and each of the persons and entities (each referred to herein as an “ Investor ” and, collectively, as the “ Investors ”) who are signatories to the 2011 Securities Purchase Agreement (as defined below), the 2013 Securities Purchase Agreement (as defined below) and the 2015 Securities Purchase Agreement (as defined below), including those persons and entities whose names appear on the signature pages hereof.

 

A.           The Company sold to certain of the Investors (the “ 2011 Investors ”) (i) shares (the “ 2011 Shares ”) of the Company’s common stock, par value $0.001 per share (the “ Common Stock ”) and, to some of the 2011 Investors, Warrants (the “ 2011 Warrants ”) to purchase additional shares of Common Stock (the “ 2011 Warrant Shares ”), pursuant to a Securities Purchase Agreement dated as of March 24, 2011, as amended on January 29, 2014 (the “ 2011 Securities Purchase Agreement ”);

 

B.           In connection with the 2011 Securities Purchase Agreement, the Company and the 2011 Investors entered into a Registration Rights Agreement dated as of April 4, 2011 (the “ 2011 Registration Rights Agreement ”), whereby the Company granted the 2011 Investors certain registration rights under the Securities Act of 1933, as amended (the “ Securities Act ”) with respect to their 2011 Shares and 2011 Warrant Shares;

 

C.           The Company has agreed, on the terms and subject to the conditions set forth in a Securities Purchase Agreement dated as of January 28, 2013, as amended on January 29, 2014 (the “ 2013 Securities Purchase Agreement ”), to issue and sell to certain of the Investors (the “ 2013 Investors ”) (i) shares (the “ 2013 Shares ”) of Common Stock, and (ii) Warrants (the “ 2013 Warrants ”) to purchase additional shares of Common Stock (the “ 2013 Warrant Shares ”);

 

D.           In connection with the 2013 Securities Purchase Agreement, the Company, the 2011 Investors and the 2013 Investors entered into an Amended and Restated Registration Rights Agreement dated as of January 28, 2013 (the “ 2013 Amended and Restated Registration Rights Agreement ”), which amended and restated the 2011 Registration Rights Agreement and whereby the Company granted the 2011 Investors certain registration rights under the Securities Act with respect to their 2011 Shares and 2011 Warrant Shares, and the Company granted the 2013 Investors certain registration rights under the Securities Act with respect to their 2013 Shares and 2013 Warrant Shares;

 

E.           The Company has agreed, on the terms and subject to the conditions set forth in a Securities Purchase Agreement dated as of March 11, 2015 (the “ 2015 Securities Purchase Agreement ”), to issue and sell to certain of the Investors (the “ 2015 Investors ”) units (the “ Units ”) each consisting of (i) one share (each, a “ 2015 Share ” and collectively, the “ 2015 Shares ”) of Common Stock, and (ii) one warrant (each, a “ 2015 Warrant ” and collectively, the “ 2015 Warrants ”) to purchase 0.55 shares of Common Stock (such shares of Common Stock issuable upon exercise of 2015 Warrants, the “ 2015 Warrant Shares ”);

 

 
 

 

F.           In order to induce the 2015 Investors to enter into the 2015 Securities Purchase Agreement, the Company has agreed to grant the 2015 Investors certain registration rights under the Securities Act with respect to their 2015 Shares and 2015 Warrant Shares; and

 

G.           The 2011 Investors who hold a majority of the 2011 Registrable Securities (as defined below) and the 2013 Investors who hold a majority of the 2013 Registrable Securities (as defined below) have agreed to amend and restate the 2013 Amended and Restated Registration Rights Agreement in its entirety in accordance with Section 9(b) of the 2013 Amended and Restated Registration Rights Agreement to document the respective registration rights of the 2011 Investors, the 2013 Investors and 2015 Investors;

 

In consideration of the 2011 Investors entering into the 2011 Securities Purchase Agreement, the 2013 Investors entering into the 2013 Securities Purchase Agreement and the 2015 Investors entering into the 2015 Securities Purchase Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to and hereby amend and restate the 2013 Amended and Restated Registration Rights Agreement as follows:

 

1.           Definitions . For purposes of this Agreement, the following terms shall have the meanings specified:

 

Agreement ” has the meaning specified in the preamble.

 

Battery ” means Battery Ventures IX, L.P.

 

Black-out Period ” has the meaning specified in Section 5(a) of this Agreement.

 

Business Day ” means any day other than a Saturday, a Sunday or a day on which the Commission is closed or on which banks in the City of New York are authorized by law to be closed.

 

Commission ” means the Securities and Exchange Commission.

 

Common Stock ” has the meaning specified in the recitals to this Agreement.

 

Cut Back Shares ” has the meaning specified in Section 2(d)(i) .

 

Demand Date ” means a 2011 Demand Date, 2013 Demand Date or a 2015 Demand Date.

 

Effective Date ” means the date on which a Registration Statement is declared effective by the Commission.

 

Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

Exchange Listing ” has the meaning specified in Section 2(a) of this Agreement.

 

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Holder ” means any person owning or having the right to acquire, through exercise of the 2011 Warrants, 2013 Warrants, 2015 Warrants or otherwise, 2011 Registrable Securities, 2013 Registrable Securities or 2015 Registrable Securities, including initially each Investor and thereafter any permitted assignee thereof.

 

Investor ” and “ Investors ” have the meanings specified in the preamble to this Agreement.

 

Losses ” has the meaning specified in Section 7(a) of this Agreement.

 

NEA ” means New Enterprise Associates 14, Limited Partnership.

 

NYSE ” means the New York Stock Exchange.

 

PAR ” means PAR Investment Partners, L.P.

 

Proposed Registration ” has the meaning specified in Section 3 of this Agreement.

 

Registration Expenses ” has the meaning specified in Section 9(a) of this Agreement.

 

Registrable Securities ” means the 2011 Registrable Securities, the 2013 Registrable Securities and the 2015 Registrable Securities.

 

Registration Period ” means, with respect to a particular Registration Statement, the period beginning on the Closing Date (as defined in the 2015 Securities Purchase Agreement) and ending on the earlier to occur of (i) the date on which all of the Registrable Securities eligible for resale under such Registration Statement have been publicly sold pursuant to either such Registration Statement or Rule 144 or (ii) the date on which any and all of the Registrable Securities remaining to be sold under such Registration Statement (in the reasonable opinion of legal counsel to the Company) may be sold to the public under Rule 144 under the Securities Act or any successor provision in a 90 day period without volume limitations.

 

Registration Statement ” means a 2011 Registration Statement or 2013 Registration Statement or 2015 Registration Statement, prepared in compliance with the Securities Act.

 

Rule 415 ” means Rule 415 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 purpose and effect as such Rule.

 

Securities Act ” has the meaning specified in the recitals to this Agreement.

 

2011 Demand Date ” means the date upon which Battery submits notice to the Company requesting registration of the 2011 Registrable Securities.

 

2011 Filing Deadline ” means the forty-fifth (45 th ) calendar day following a 2011 Demand Date in the event the Company is eligible to register securities on Form S-3 or the sixtieth (60 th ) calendar following a 2011 Demand Date in the event the Company is only eligible to register securities on Form S-1.

 

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2011 Investors ” has the meaning specified in the recitals to this Agreement.

 

2011 Purchase Price ” has the meaning specified in the 2011 Securities Purchase Agreement.

 

2011 Registration Deadline ” means the earlier to occur of (i) the one hundred twentieth (120 th ) calendar day following a 2011 Demand Date and (ii) the tenth (10 th ) Business Day following the day on which the Commission informs the Company that no review of a 2011 Registration Statement will be made by the staff of the Commission or that the staff of the Commission has no further comments on a 2011 Registration Statement.

 

2011 Registration Default ” has the meaning specified in Section 2(b)(iv) .

 

2011 Registrable Securities ” means (i) the 2011 Shares and the 2011 Warrant Shares and any other shares of Common Stock issuable pursuant to the terms of the 2011 Securities Purchase Agreement or the 2011 Warrants and (ii) any shares of capital stock issued or issuable from time to time (with any adjustments) in replacement of, in exchange for or otherwise with respect of the 2011 Shares or the 2011 Warrant Shares.

 

2011 Registration Rights Agreement ” has the meaning specified in the recitals to this Agreement.

 

2011 Registration Statement ” means a registration statement filed by demand of Battery pursuant to Section 2(b) .

 

2011 Securities Purchase Agreement ” has the meaning specified in the recitals to this Agreement.

 

2011 Shares ” has the meaning specified in the recitals to this Agreement.

 

2011 Warrants ” has the meaning specified in the recitals to this Agreement.

 

2011 Warrant Shares ” has the meaning specified in the recitals to this Agreement.

 

2013 Demand Date ” means the date upon which Battery or PAR submits notice to the Company requesting registration of the 2013 Registrable Securities.

 

2013 Filing Deadline ” means the forty-fifth (45 th ) calendar day following a 2013 Demand Date in the event the Company is eligible to register securities on Form S-3 or the sixtieth (60 th ) calendar following a 2013 Demand Date in the event the Company is only eligible to register securities on Form S-1.

 

2013 Investors ” has the meaning specified in the recitals to this Agreement.

 

2013 Purchase Price ” has the meaning specified in the 2013 Securities Purchase Agreement.

 

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2013 Registration Deadline ” means the earlier to occur of (i) the one hundred twentieth (120 th ) calendar day following a 2013 Demand Date and (ii) the tenth (10 th ) Business Day following the day on which the Commission informs the Company that no review of a 2013 Registration Statement will be made by the staff of the Commission or that the staff of the Commission has no further comments on a 2013 Registration Statement.

 

2013 Registration Default ” has the meaning specified in Section 2(c)(iv) .

 

2013 Registrable Securities ” means (i) the 2013 Shares and the 2013 Warrant Shares and any other shares of Common Stock issuable pursuant to the terms of the 2013 Securities Purchase Agreement or the 2013 Warrants and (ii) any shares of capital stock issued or issuable from time to time (with any adjustments) in replacement of, in exchange for or otherwise with respect of the 2013 Shares or the 2013 Warrant Shares.

 

2013 Registration Statement ” means a registration statement filed by demand of Battery or PAR pursuant to Section 2(c) .

 

2013 Securities Purchase Agreement ” has the meaning specified in the recitals to this Agreement.

 

2013 Shares ” has the meaning specified in the recitals to this Agreement.

 

2013 Warrants ” has the meaning specified in the recitals to this Agreement.

 

2013 Warrant Shares ” has the meaning specified in the recitals to this Agreement.

 

2015 Additional Registration Statement ” has the meaning set forth in Section 2(d)(i) .

 

2015 Demand Date ” means the date upon which a 2015 Investor submits notice to the Company requesting registration of the 2015 Registrable Securities.

 

2015 Demand Filing Deadline ” means the forty-fifth (45 th ) calendar day following a 2015 Demand Date in the event the Company is eligible to register securities on Form S-3 or the sixtieth (60 th ) calendar following a 2015 Demand Date in the event the Company is only eligible to register securities on Form S-1.

 

2015 Effectiveness Period ” shall have the meaning set forth in Section 2(d)(ii) .

 

2015 Filing Deadline ” means the date that is sixty (60) days after the Closing or, with respect to a 2015 Additional Registration Statement, the tenth day after such day that represents the first opportunity that the SEC allows the 2015 Additional Registration Statement to be filed without the shares registered thereunder being deemed a primary offering.

 

2015 Initial Registration Statement ” means the initial registration statement filed by the Company pursuant to Section 2(d) .

 

2015 Investors ” has the meaning specified in the recitals to this Agreement.

 

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2015 Registrable Securities ” means (i) the 2015 Shares and the 2015 Warrant Shares and any other shares of Common Stock issuable pursuant to the terms of the 2015 Securities Purchase Agreement or the 2015 Warrants and (ii) any shares of capital stock issued or issuable from time to time (with any adjustments) in replacement of, in exchange for or otherwise with respect of the 2015 Shares or the 2015 Warrant Shares.

 

2015 Registration Deadline ” means, with respect to the 2015 Initial Registration Statement, (i) if the 2015 Initial Registration Statement does not become subject to review by the SEC, ninety (90) days after the Closing Date or, if the 2015 Initial Registration Statement becomes subject to review by the SEC, one hundred thirty-five (135) days after the filing of the 2015 Initial Registration Statement. In addition to the foregoing, “ 2015 Registration Deadline ” means, with respect to any 2015 Additional Registration Statement, five (5) Trading Days after the Company receives notification from the SEC that the 2015 Additional Registration Statement will not become subject to review or, if the 2015 Additional Registration Statement becomes subject to review by the SEC, one hundred thirty-five (135) days after the filing thereof.

 

2015 Registration Statement ” means a registration statement filed pursuant to Section 2(d) .

 

2015 S-3 Registration Statement ” has the meaning set forth in Section 2(d)(i) .

 

2015 Securities Purchase Agreement ” has the meaning specified in the recitals to this Agreement.

 

2015 Shares ” has the meaning specified in the recitals to this Agreement.

 

2015 Warrants ” has the meaning specified in the recitals to this Agreement.

 

2015 Warrant Shares ” has the meaning specified in the recitals to this Agreement.

 

Capitalized terms used herein and not otherwise defined shall have the respective meanings specified in the 2015 Securities Purchase Agreement.

 

2.           Registration .

 

(a)           Exchange Listing . Promptly following the Closing, the Company shall (a) exercise commercially reasonable efforts to take all necessary actions and obtain all required approvals to effect within eighteen (18) months from the date of Closing either the listing of the Company’s Common Stock on the NYSE or Nasdaq Global Market or, if listing on neither of these stock markets is available, on the NYSE MKT or Nasdaq Capital Market, (b) take all actions necessary and obtain all required approvals to register the Common Stock under the Exchange Act and (c) pay all fees and expenses related to the Exchange Listing, and all Registration Expenses of the Company and the Investors (collectively, an “ Exchange Listing ”). The Company shall also exercise commercially reasonable efforts to continue the Exchange Listing and trading of its Common Stock on the applicable Trading Market and, in accordance, therewith, will use commercially reasonable efforts to comply in all respects with the Company’s reporting, filing and other obligations applicable to issuers whose securities are listed on such Trading Market. The Company also agrees to promptly notify Holders upon completion of the Exchange Listing. The Company hereby acknowledges that the Investors shall have the rights set forth in this Agreement with respect to the registration under the Securities Act for resale of the Registrable Securities of the Investors in the event of and immediately effective upon such Exchange Listing.

 

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(b)           2011 Registrable Securities Demand Registration Rights .

 

(i)           Form S-1 Demand . If at any time after the date of this Agreement, (A) the Company does not qualify to register the resale of the 2011 Registrable Securities on a continuous basis pursuant to Rule 415 on Form S-3 and (B) the Company receives a request from Battery that the Company file a Form S-1 registration statement with respect to the 2011 Registrable Securities, then the Company shall as soon as practicable, and in any event by the 2011 Filing Deadline, file a Form S-1 registration statement under the Securities Act covering the resale on a continuous basis pursuant to Rule 415 of all 2011 Registrable Securities that Battery requested to be registered, and in each case, subject to the limitations set forth herein; provided , however , that Battery shall only have the right to make two demands for registration of the 2011 Registrable Securities on Form S-1 for so long as the Company does not qualify to register the resale of the 2011 Registrable Securities on a continuous basis pursuant to Rule 415 on Form S-3.

 

(ii)          Form S-3 Demand . If at any time after the date of this Agreement, (A) the Company qualifies to register the resale of the 2011 Registrable Securities on a continuous basis pursuant to Rule 415 on Form S-3 and (B) the Company receives a request from Battery that the Company file a Form S-3 registration statement with respect to 2011 Registrable Securities, then the Company shall as soon as practicable, and in any event by the 2011 Filing Deadline, file a Form S-3 registration statement under the Securities Act covering the resale on a continuous basis pursuant to Rule 415 of all 2011 Registrable Securities that Battery requested to be registered, and in each case, subject to the limitations set forth herein; provided , however , that Battery shall only have the right to make two demands for registration on Form S-3 per year.

 

(iii)         Participation Right . In the event a registration demand is made pursuant to Section 2(b)(i) or Section 2(b)(ii) above, the Company shall promptly, but in any event no later than two (2) Business Days following the 2011 Demand Date send a written notice to each of the Holders of 2013 Registrable Securities and 2015 Registrable Securities indicating that such registration demand has been made and in reasonable detail any material information relating to the desired offering known to the Company at such time. Each Holder of 2013 Registrable Securities and 2015 Registrable Securities shall have ten (10) Business Days from its receipt of such notice to deliver to the Company a written request specifying the amount of Registrable Securities that such Holder intends to sell and such Holder’s intended method of distribution. Upon receipt of such request, the Company shall use its best efforts to cause all Registrable Securities which the Company has been requested to register to be registered under the Securities Act to the extent necessary to permit their sale or other disposition in accordance with the intended methods of distribution specified in the request of such Holder. If, in connection with any underwritten public offering for the account of the Holders of 2011 Registrable Securities, the managing underwriter(s) thereof shall impose in writing a limitation on the number of shares of Common Stock which may be included in a registration statement because, in the good faith judgment of such underwriter(s), marketing or other factors dictate such limitation is necessary to facilitate such offering, then the Company shall be obligated to include in the registration statement only such limited portion of the Registrable Securities with respect to which each Holder has requested inclusion hereunder as such underwriter(s) shall permit. Any exclusion of Registrable Securities shall be made first, to the 2013 Registrable Securities and the 2015 Registrable Securities pro rata amongst the Holders thereof seeking to include 2013 Registrable Securities and 2015 Registrable Securities in such registration statement, in proportion to the number of 2013 Registrable Securities and 2015 Registrable Securities sought to be included by such Holders of 2013 Registrable Securities and 2015 Registrable Securities and second, to the 2011 Registrable Securities pro rata amongst the Holders thereof seeking to include 2011 Registrable Securities in such registration statement, in proportion to the number of 2011 Registrable Securities sought to be included by such Holders of 2011 Registrable Securities; provided, however , that the Company shall not exclude any Registrable Securities unless the Company has first excluded all securities sought to be offered on account of the Company and any non-Registrable Securities.

 

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(iv)         Registration Default . If (i) a 2011 Registration Statement is not filed on or before the 2011 Filing Deadline or declared effective by the Commission on or before the 2011 Registration Deadline, (ii) after the 2011 Registration Statement has been declared effective by the Commission, sales of 2011 Registrable Securities (other than such 2011 Registrable Securities as are then freely saleable pursuant to Rule 144) cannot be made by Battery under such 2011 Registration Statement for any reason not within the exclusive control of Battery, and for a reason that is under the control of the Company (other than during a Black-out Period (as defined below)), (iii) the Common Stock ceases to be traded on the electronic Bulletin Board or listed on the Nasdaq Stock Market or the New York Stock Exchange, or (iv) an amendment or supplement to a 2011 Registration Statement, or a new registration statement, required to be filed pursuant to the terms of Section 4(i) below, is not filed on or before the date required by such Section (each of the foregoing clauses (i), (ii), (iii) or (iv) being referred to herein as a “ 2011 Registration Default ”), the Company shall make cash payments to Battery equal to one percent (1%) of the aggregate 2011 Purchase Price paid by Battery, as applicable, for its 2011 Registrable Securities requested to be included in such 2011 Registration Statement, for each thirty (30) day period in which a 2011 Registration Default exists, such payment to be pro-rated for any portion of any such thirty (30) day period; provided that such payment may not exceed 10% of the aggregate 2011 Purchase Price paid by Battery for its 2011 Registrable Securities requested to be included in such 2011 Registration Statement. Each such payment required to be made under this Section 2(b)(iv) shall be made within five (5) Business Days following the last day of each calendar month in which a 2011 Registration Default exists. The foregoing represents the sole monetary remedy to Battery for a 2011 Registration Default. In no event shall the Company be required to pay cash payments in excess of the applicable amount set forth above, regardless of whether one or multiple 2011 Registration Defaults exist.

 

(c)           2013 Registrable Securities Demand Registration Rights.

 

(i)           Form S-1 Demand . If at any time after the date of this Agreement, (A) the Company does not qualify to register the resale of the 2013 Registrable Securities on a continuous basis pursuant to Rule 415 on Form S-3 and (B) the Company receives a request from Battery or PAR that the Company file a Form S-1 registration statement with respect to the 2013 Registrable Securities, then the Company shall as soon as practicable, and in any event by the 2013 Filing Deadline, file a Form S-1 registration statement under the Securities Act covering the resale on a continuous basis pursuant to Rule 415 of all 2013 Registrable Securities that Battery or PAR requested to be registered, and in each case, subject to the limitations set forth herein; provided , however , that each of Battery and PAR shall only have the right to make two demands for registration on Form S-1 for so long as the Company does not qualify to register the resale of the Registrable Securities on a continuous basis pursuant to Rule 415 on Form S-3.

 

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(ii)          Form S-3 Demand . If at any time after the date of this Agreement, (A) the Company qualifies to register the resale of the 2013 Registrable Securities on a continuous basis pursuant to Rule 415 on Form S-3 and (B) the Company receives a request from Battery or PAR that the Company file a Form S-3 registration statement with respect to the 2013 Registrable Securities, then the Company shall as soon as practicable, and in any event by the Filing Deadline, file a Form S-3 registration statement under the Securities Act covering the resale on a continuous basis pursuant to Rule 415 of all 2013 Registrable Securities that Battery or PAR requested to be registered, and in each case, subject to the limitations set forth herein; provided , however , that each of Battery and PAR shall only have the right to make two demands for registration on Form S-3 per year.

 

(iii)         Participation Right . In the event a registration demand is made pursuant to Section 2(c)(i) or Section 2(c)(ii) above, the Company shall promptly, but in any event no later than two (2) Business Days following the 2013 Demand Date send a written notice to each of the Holders of 2011 Registrable Securities and 2015 Registrable Securities indicating that such registration demand has been made and in reasonable detail any material information relating to the desired offering known to the Company at such time. Each Holder of 2011 Registrable Securities and 2015 Registrable Securities shall have ten (10) Business Days from its receipt of such notice to deliver to the Company a written request specifying the amount of Registrable Securities that such Holder intends to sell and such Holder’s intended method of distribution. Upon receipt of such request, the Company shall use its best efforts to cause all Registrable Securities which the Company has been requested to register to be registered under the Securities Act to the extent necessary to permit their sale or other disposition in accordance with the intended methods of distribution specified in the request of such Holder. If, in connection with any underwritten public offering for the account of the Holders of 2011 Registrable Securities, the managing underwriter(s) thereof shall impose in writing a limitation on the number of shares of Common Stock which may be included in a registration statement because, in the good faith judgment of such underwriter(s), marketing or other factors dictate such limitation is necessary to facilitate such offering, then the Company shall be obligated to include in the registration statement only such limited portion of the Registrable Securities with respect to which each Holder has requested inclusion hereunder as such underwriter(s) shall permit. Any exclusion of Registrable Securities shall be made first, to the 2011 Registrable Securities and 2015 Registrable Securities pro rata amongst the Holders thereof seeking to include 2011 Registrable Securities and 2015 Registrable Securities in such registration statement, in proportion to the number of 2011 Registrable Securities and 2015 Registrable Securities sought to be included by such Holders of 2011 Registrable Securities and 2015 Registrable Securities and second, to the 2013 Registrable Securities pro rata amongst the Holders thereof seeking to include 2013 Registrable Securities in such registration statement, in proportion to the number of 2013 Registrable Securities sought to be included by such Holders of 2013 Registrable Securities; provided, however , that the Company shall not exclude any Registrable Securities unless the Company has first excluded all securities sought to be offered on account of the Company and any non-Registrable Securities.

 

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(iv)         Registration Default . If (i) a 2013 Registration Statement is not filed on or before the 2013 Filing Deadline or declared effective by the Commission on or before the 2013 Registration Deadline, (ii) after the 2013 Registration Statement has been declared effective by the Commission, sales of 2013 Registrable Securities (other than such 2013 Registrable Securities as are then freely saleable pursuant to Rule 144) cannot be made by Battery or PAR under such 2013 Registration Statement for any reason not within the exclusive control of Battery or PAR, as applicable, and for a reason that is under the control of the Company (other than during a Black-out Period (as defined below)), (iii) the Common Stock ceases to be traded on the electronic Bulletin Board or listed on the Nasdaq Stock Market or the New York Stock Exchange, or (iv) an amendment or supplement to a 2013 Registration Statement, or a new registration statement, required to be filed pursuant to the terms of Section 4(i) below, is not filed on or before the date required by such Section (each of the foregoing clauses (i), (ii), (iii) or (iv) being referred to herein as a “ 2013 Registration Default ”), the Company shall make cash payments to Battery or PAR, as applicable, equal to one percent (1%) of the aggregate 2013 Purchase Price paid by Battery or PAR, as applicable, for its 2013 Registrable Securities requested to be included in such 2013 Registration Statement, for each thirty (30) day period in which a 2013 Registration Default exists, such payment to be pro-rated for any portion of any such thirty (30) day period; provided that such payment may not exceed 10% of the aggregate 2013 Purchase Price paid by Battery or PAR, as applicable, for its 2013 Registrable Securities requested to be included in such 2013 Registration Statement. Each such payment required to be made under this Section 2(c)(iv) shall be made within five (5) Business Days following the last day of each calendar month in which a 2013 Registration Default exists. The foregoing represents the sole monetary remedy to Battery or PAR, as applicable, for a 2013 Registration Default. In no event shall the Company be required to pay cash payments in excess of the applicable amount set forth above, regardless of whether one or multiple 2013 Registration Defaults exist.

 

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(d)           2015 Registrable Securities Registration Rights .

 

(i)          As promptly as possible, and in any event on or prior to the applicable 2015 Filing Deadline, the Company shall prepare and file with the SEC the 2015 Initial Registration Statement on Form S-1 covering the resale of all 2015 Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415; provided , however , that if at any time the SEC takes the position that the offering of some or all of the Registrable Securities in the 2015 Initial Registration Statement are not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 as a result of a characterization by the SEC of the transaction described by the 2015 Registration Statement as a primary offering by the Company, the Company shall use commercially reasonable efforts to persuade the SEC that the offering contemplated by the 2015 Registration Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415. In the event that, despite the Company’s commercially reasonable efforts and compliance with the terms of this Section 2(d)(i) , the SEC refuses to alter its position, the Company shall (i) remove from the 2015 Initial Registration Statement such portion of the 2015 Registrable Securities (the “ Cut Back Shares ”) and/or (ii) agree to such restrictions and limitations on the registration and resale of the 2015 Registrable Securities as the SEC may require to assure the Company’s compliance with the requirements of Rule 415. Any 2015 Registrable Securities not able to be included in the 2015 Initial Registration Statement shall reduce the number of 2015 Registrable Securities of each 2015 Investor covered by such 2015 Initial Registration Statement on a pro-rata basis based on the number of 2015 Registrable Securities issued or issuable to each 2015 Investor, and the Company shall have no liability to any 2015 Investor pursuant to Section 2(d) or otherwise as a result of the filing of the 2015 Initial Registration Statement covering less than all of the 2015 Registrable Securities under the circumstances described in this Section 2(d)(i) . As soon as practicable following such intervening period of time as shall be required by the SEC or SEC guidance prior to the filing thereof, the Company shall file one or more additional registration statements covering the resale of as many Cut Back Shares allowed by the SEC or SEC guidance to be so registered while maintaining the Company’s compliance with Rule 415 (each, a “ 2015 Additional Registration Statement ”). The Company shall use its commercially reasonable efforts to promptly file each 2015 Additional Registration Statement and cause it to be declared effective. With regard to any such 2015 Additional Registration Statement, all of the provisions of this Section 2(d)(i) shall again be applicable to the Cut Back Shares. The Company shall give the 2015 Investors prompt notice of the amount of 2015 Registrable Securities excluded from each 2015 Additional Registration Statement. Each 2015 Registration Statement shall be on Form S-1 except that the Company shall use reasonable efforts, subject to receipt of necessary information from the Investors after prompt request from the Company to the Investors to provide such information, to prepare and file with the SEC, within 60 days after the Company first becomes eligible to file a registration statement on Form S-3 (or an amendment to the 2015 Initial Registration Statement on Form S-3) (the “ 2015 S-3 Registration Statement ”) to enable the resale of the 2015 Shares and the 2015 Warrant Shares by the 2015 Investors from time to time in compliance with the Securities Act; and to use reasonable efforts to cause the 2015 S-3 Registration Statement to become effective, such efforts to include, without limiting the generality of the foregoing, preparing and filing with the SEC as promptly as practicable any financial statements that are required to be filed prior to the effectiveness of such 2015 S-3 Registration Statement. Each successive 2015 Registration Statement shall then be on Form S-3 (except if the Company is not then eligible to register for resale the 2015 Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance with the Securities Act and the Exchange Act). Each 2015 Registration Statement shall contain (except if otherwise directed by the 2015 Investors or requested by the SEC) the “Plan of Distribution” in substantially the form attached hereto as Exhibit B (except if otherwise required pursuant to written comments received from the SEC upon a review of such 2015 Registration Statement).

 

(ii)         The Company shall use its commercially reasonable efforts to cause the 2015 Initial Registration Statement to be declared effective by the SEC as promptly as possible after the filing thereof, but in any event prior to the 2015 Registration Deadline, and shall use commercially reasonable efforts to keep the 2015 Registration Statement(s) continuously effective under the Securities Act until the later of (i) the date that all 2015 Registrable Securities covered by such 2015 Registration Statement(s) have been sold or can be sold without volume restriction under Rule 144 during any 90-day period and (ii) two (2) years after the Closing (the “ 2015 Effectiveness Period ”); provided , that the Company shall not be obligated to keep such 2015 Registration Statement effective if all of the 2015 Registrable Securities registered thereunder have been sold.

 

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(iii)        The Company shall notify the 2015 Investors in writing or by electronic mail promptly after receiving notification from the SEC that the 2015 Initial Registration Statement has been declared effective.

 

(iv)        If any 2015 Registration Statement is not (i) filed on or prior to the applicable 2015 Filing Deadline, (ii) declared effective by its applicable 2015 Registration Deadline, or (iii) maintained such that the 2015 Registrable Securities can be sold without restriction under Rule 144 without the requirement to be in compliance with the public information requirements, as applicable, then for each month (or pro rata for the portion of the month) until the 2015 Registration Statement is filed or declared effective, as applicable, the Company shall pay to each Investor, as liquidated damages and not as a penalty, 2015 Warrants exercisable for that number of 2015 Warrant Shares equal to two and a half percent (2.5%) of the total number of 2015 Shares issued to each such Investor on the Closing Date, provided , however , that the total amount of 2015 Warrant Shares so paid shall not exceed twenty percent (20%) of the total number of 2015 Shares purchased by such 2015 Investor pursuant to the 2015 Securities Purchase Agreement. The payments to which a 2015 Investor shall be entitled pursuant to this Section 2(d)(iv) are referred to herein as “ 2015 Registration Payments .”

 

(v)         If any 2015 Filing Date or 2015 Registration Deadline occurs on a Saturday, Sunday or any other day on which the SEC is not open and/or the SEC’s EDGAR system is not accepting filings with the same filing date, the Company’s obligations relating to such dates, shall be postponed to the immediately succeeding day on which the SEC is open and/or the SEC’s EDGAR system is accepting filings with the same filing date.

 

(vi)        It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Section 2(d) with respect to the 2015 Registrable Securities of any particular Investor or to make any 2015 Registration Payments to such Investor that such Investor furnish to the Company the information specified in Exhibit A hereto and such other information regarding itself, the 2015 Registrable Securities and other shares of Common Stock held by it and the intended method of disposition of the 2015 Registrable Securities held by it (if different from the Plan of Distribution set forth on Exhibit B hereto) as shall be reasonably required to effect the registration of such 2015 Registrable Securities and shall complete and execute such documents in connection with such registration as the Company may reasonably request.

 

(e)           2015 Demand Rights.

 

(i)           Form S-1 Demand . If at any time after the date of this Agreement, (A) the Company does not qualify to register the resale of the 2015 Registrable Securities on a continuous basis pursuant to Rule 415 on Form S-3 and (B) the Company receives a request from NEA that the Company file a Form S-1 registration statement with respect to the 2015 Registrable Securities, then the Company shall as soon as practicable, and in any event by the 2015 Demand Filing Deadline, file a Form S-1 registration statement under the Securities Act covering the resale on a continuous basis pursuant to Rule 415 of all 2015 Registrable Securities that NEA requested to be registered, and in each case, subject to the limitations set forth herein; provided , however , that NEA shall only have the right to make three demands for registration on Form S-1 for so long as the Company does not qualify to register the resale of the Registrable Securities on a continuous basis pursuant to Rule 415 on Form S-3.

 

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(ii)          Form S-3 Demand . If at any time after the date of this Agreement, (A) the Company qualifies to register the resale of the 2015 Registrable Securities on a continuous basis pursuant to Rule 415 on Form S-3 and (B) the Company receives a request from NEA that the Company file a Form S-3 registration statement with respect to the 2015 Registrable Securities, then the Company shall as soon as practicable, and in any event by the 2015 Demand Filing Deadline, file a Form S-3 registration statement under the Securities Act covering the resale on a continuous basis pursuant to Rule 415 of all 2015 Registrable Securities that NEA requested to be registered, and in each case, subject to the limitations set forth herein; provided , however , that NEA shall only have the right to make two demands for registration on Form S-3 per year.

 

(iii)         Participation Right . In the event a registration demand is made pursuant to Section 2(e)(i) or Section 2(e)(ii) above, the Company shall promptly, but in any event no later than two (2) Business Days following the 2015 Demand Date send a written notice to each of the Holders of 2011 Registrable Securities and 2013 Registrable Securities indicating that such registration demand has been made and in reasonable detail any material information relating to the desired offering known to the Company at such time. Each Holder of 2011 Registrable Securities and 2013 Registrable Securities shall have ten (10) Business Days from its receipt of such notice to deliver to the Company a written request specifying the amount of Registrable Securities that such Holder intends to sell and such Holder’s intended method of distribution. Upon receipt of such request, the Company shall use its best efforts to cause all Registrable Securities which the Company has been requested to register to be registered under the Securities Act to the extent necessary to permit their sale or other disposition in accordance with the intended methods of distribution specified in the request of such Holder. If, in connection with any underwritten public offering, the managing underwriter(s) thereof shall impose in writing a limitation on the number of shares of Common Stock which may be included in a registration statement because, in the good faith judgment of such underwriter(s), marketing or other factors dictate such limitation is necessary to facilitate such offering, then the Company shall be obligated to include in the registration statement only such limited portion of the Registrable Securities with respect to which each Holder has requested inclusion hereunder as such underwriter(s) shall permit. Any exclusion of Registrable Securities shall be made first, to the 2011 Registrable Securities and 2013 Registrable Securities pro rata amongst the Holders thereof seeking to include 2011 Registrable Securities and 2013 Registrable Securities in such registration statement, in proportion to the number of 2011 Registrable Securities and 2013 Registrable Securities sought to be included by such Holders of 2011 Registrable Securities and 2013 Registrable Securities and second, to the 2015 Registrable Securities pro rata amongst the Holders thereof seeking to include 2015 Registrable Securities in such registration statement, in proportion to the number of 2015 Registrable Securities sought to be included by such Holders of 2015 Registrable Securities; provided, however , that the Company shall not exclude any Registrable Securities unless the Company has first excluded all securities sought to be offered on account of the Company and any non-Registrable Securities.

 

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(f)           Effectiveness . Except as otherwise specifically provided in Section 2(d) hereof, the Company shall use its best efforts to cause each Registration Statement to become effective as soon as practicable following the filing thereof, but in no event later than the Registration Deadline. The Company shall respond promptly to any and all comments made by the staff of the Commission with respect to a Registration Statement. Subject to Section 2(d) hereof, the Company will maintain the effectiveness of each Registration Statement filed pursuant to this Agreement for the Registration Period.

 

(g)           Registration of Other Securities . The Company shall not, from the date hereof until the Effective Date for the first Registration Statement filed hereunder, prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than any registration statement or post-effective amendment to a registration statement (or supplement thereto) relating to the Company’s employee benefit plans registered on Form S-8. In no event shall the Company include any securities other than Registrable Securities on any Registration Statement filed by the Company on behalf of Battery, PAR or NEA pursuant to the terms hereof without the consent of such requesting Investor.

 

3.           Piggyback Registration . If, at any time prior to the termination of the Registration Period, (i) the Company proposes to register shares of Common Stock under the Securities Act in connection with the public offering of such shares for cash (a “ Proposed Registration ”) other than a registration statement on Form S-8 or Form S-4 or any successor or other forms promulgated for similar purposes and (ii) a Registration Statement covering the sale of all of the Registrable Securities is not then effective and available for sales thereof by the Holders, the Company shall, at such time, promptly give each Holder written notice of such Proposed Registration. Each Holder shall have ten (10) Business Days from its receipt of such notice to deliver to the Company a written request specifying the amount of Registrable Securities that such Holder intends to sell and such Holder’s intended method of distribution. Upon receipt of such request, the Company shall use its best efforts to cause all Registrable Securities which the Company has been requested to register to be registered under the Securities Act to the extent necessary to permit their sale or other disposition in accordance with the intended methods of distribution specified in the request of such Holder; provided , however , that the Company shall have the right to postpone or withdraw any registration effected pursuant to this Section 3 without obligation to the Holders. If, in connection with any underwritten public offering for the account of the Company or for stockholders of the Company that have contractual rights to require the Company to register shares of Common Stock, the managing underwriter(s) thereof shall impose in writing a limitation on the number of shares of Common Stock which may be included in a registration statement because, in the good faith judgment of such underwriter(s), marketing or other factors dictate such limitation is necessary to facilitate such offering, then the Company shall be obligated to include in the registration statement only such limited portion of the Registrable Securities with respect to which each Holder has requested inclusion hereunder as such underwriter(s) shall permit. Any exclusion of Registrable Securities shall be made pro rata among the Holders seeking to include Registrable Securities in a registration statement, in proportion to the number of Registrable Securities sought to be included by such Holders; provided , however , that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities that are not entitled to inclusion in the registration statement or are not entitled to pro rata inclusion with the Registrable Securities; and provided , further , that, after giving effect to the immediately preceding proviso, any exclusion of Registrable Securities shall be made pro rata with Holders of other securities having the right to include such securities in the registration statement. For additional clarification, a 2015 Registration Statement shall not be considered a Proposed Registration.

 

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4.           Obligations of the Company . In addition to performing its obligations hereunder, including without limitation those pursuant to Sections 2 and 3 above, the Company shall, with respect to each Registration Statement:

 

(a)          prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act or to maintain the effectiveness of such Registration Statement during the Registration Period, or as may be reasonably requested by a Holder in order to incorporate information concerning such Holder or such Holder’s intended method of distribution;

 

(b)          so long as a Registration Statement is effective covering the resale of the applicable Registrable Securities owned by a Holder, furnish to each Holder such number of copies of the prospectus included in such Registration Statement, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as such Holder may reasonably request in order to facilitate the disposition of such Holder’s Registrable Securities;

 

(c)          use commercially reasonable efforts to register or qualify the Registrable Securities under the securities or “blue sky” laws of such jurisdictions within the United States as shall be reasonably requested from time to time by a Holder, and do any and all other acts or things which may reasonably be necessary or advisable to enable such Holder to consummate the public sale or other disposition of the Registrable Securities in such jurisdictions; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such jurisdiction;

 

(d)          notify each Holder immediately after becoming aware of the occurrence of any event (but shall not, without the prior written consent of such Holder, disclose to such Holder any facts or circumstances constituting material non-public information) as a result of which the prospectus included in such Registration Statement, as then in effect, contains an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and as promptly as practicable prepare and file with the Commission and furnish to each Holder a reasonable number of copies of a supplement or an amendment to such prospectus as may be necessary so that such prospectus does not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

(e)          use commercially reasonable efforts to prevent the issuance of any stop order or other order suspending the effectiveness of such Registration Statement and, if such an order is issued, to use commercially reasonable efforts to obtain the withdrawal thereof at the earliest possible time and to notify each Holder in writing of the issuance of such order and the resolution thereof;

 

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(f)          furnish to each Holder, on the date that such Registration Statement, or any successor registration statement, becomes effective, a letter, dated such date, signed by an officer of the Company or of outside counsel to the Company (and reasonably acceptable to such Holder) addressed to such Holder, confirming such effectiveness and, to the knowledge of such officer or counsel, the absence of any stop order;

 

(g)          provide to each Holder and its representatives the reasonable opportunity to conduct, subject to confidentiality agreements reasonably acceptable to the Company, a reasonable inquiry of the Company’s financial and other records during normal business hours and make available during normal business hours and with reasonable advance notice its officers, directors and employees for questions regarding information which such Holder may reasonably request in order to fulfill any due diligence obligation on its part;

 

(h)          permit counsel for Battery (if such Registration Statement is pursuant to a demand by Battery), PAR (if such Registration Statement is pursuant to a demand by PAR) or NEA (if such Registration Statement is pursuant to a demand by the 2015 Investors) to review such Registration Statement and all amendments and supplements thereto, and any comments made by the staff of the Commission concerning such Holder and/or the transactions contemplated by the Transaction Documents and the Company’s responses thereto, within a reasonable period of time prior to the filing thereof with the Commission (or, in the case of comments made by the staff of the Commission, within a reasonable period of time following the receipt thereof by the Company); and

 

(i)          in the event that, at any time, the number of shares available under the Registration Statement is insufficient to cover the Registrable Securities, the Company shall promptly amend such Registration Statement or file a new registration statement, in any event as soon as practicable, but not later than the tenth (10 th ) day following notice from a Holder of the occurrence of such event, so that such Registration Statement or such new registration statement, or both, covers no less than the total number of Registrable Shares. The Company shall use its best efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. Unless and until such amendment or new Registration Statement becomes effective, each Holder shall have the rights described in Section 2 above.

 

5.           Permitted Suspension .

 

(a)           Black-Out Period . Notwithstanding the Company’s obligations under this Agreement, if in the good faith judgment of the Company, following consultation with legal counsel, it would be detrimental to the Company or its stockholders for resales of Registrable Securities to be made pursuant to the Registration Statement due to the existence of a material development involving the Company which the Company would be obligated to disclose in the Registration Statement, which disclosure would be premature or otherwise inadvisable at such time or would have a Material Adverse Effect upon the Company and its stockholders, the Company shall have the right to suspend the use of the Registration Statement for a period of not more than thirty (30) days (the “ Black-out Period ”); provided , however , that the Company may so defer or suspend the use of the Registration Statement for no more than thirty (30) days in any twelve-month period and not within 30 days of the end of any prior Black-out Period.

 

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(b)           Suspension . Notwithstanding anything to the contrary contained herein or in the 2011 Securities Purchase Agreement, the 2013 Securities Purchase Agreement or the 2015 Securities Purchase Agreement, if the use of the Registration Statement is suspended by the Company, the Company shall promptly give written notice of the suspension to the Holders and shall promptly notify the Holders in writing as soon as the use of the Registration Statement may be resumed.

 

6.           Obligations of Each Holder . In connection with the registration of Registrable Securities pursuant to a Registration Statement, and as a condition to the Company’s obligations under Section 2 hereof, each Holder shall:

 

(a)          timely furnish to the Company in writing (i) a completed selling securityholder questionnaire and (ii) such information in writing regarding itself and the intended method of disposition of such Registrable Securities as the Company shall reasonably request in order to effect the registration thereof;

 

(b)          upon receipt of any notice from the Company of the happening of any event of the kind described in Sections 4(d) or 4(e) or of the commencement of a Black-out Period, immediately discontinue any sale or other disposition of such Registrable Securities pursuant to such Registration Statement until the filing of an amendment or supplement as described in Section 4(d) or withdrawal of the stop order referred to in Section 4(e) , or the termination of the Black-out Period, as the case may be, and use commercially reasonable efforts to maintain the confidentiality of such notice and its contents;

 

(c)          to the extent required by applicable law, deliver a prospectus to the purchaser of such Registrable Securities;

 

(d)          notify the Company when it has sold all of the Registrable Securities held by it; and

 

(e)          notify the Company in the event that any information supplied by such Holder in writing for inclusion in such Registration Statement or related prospectus is untrue or omits to state a material fact required to be stated therein or necessary to make such information not misleading in light of the circumstances then existing; immediately discontinue any sale or other disposition of such Registrable Securities pursuant to such Registration Statement until the filing of an amendment or supplement to such prospectus as may be necessary so that such prospectus does not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; and use commercially reasonable efforts to assist the Company as may be appropriate to make such amendment or supplement effective for such purpose.

 

7.           Indemnification . In the event that any Holder’s Registrable Securities are included in a Registration Statement under this Agreement:

 

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(a)          To the extent permitted by law, the Company shall indemnify and hold harmless such Holder, the officers, directors, employees, agents and representatives of such Holder, and each person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, liabilities or reasonable out-of-pocket expenses (whether joint or several) (collectively, including reasonable legal expenses or other expenses reasonably incurred in connection with investigating or defending same, “ Losses ”), insofar as any such Losses arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement under which such Registrable Securities were registered, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Subject to the provisions of Section 7(c) below, the Company will reimburse such Holder, and each such officer, director, employee, agent, representative or controlling person, for any reasonable legal expenses or other out-of-pocket expenses as reasonably incurred by any such entity or person in connection with investigating or defending any Loss; provided, however , that the foregoing indemnity shall not apply to amounts paid in settlement of any Loss if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be obligated to indemnify any person for any Loss to the extent that such Loss is (i) based upon and is in conformity with written information furnished by a Holder expressly for use in such Registration Statement or (ii) based on a failure of such person to deliver or cause to be delivered the final prospectus contained in the Registration Statement and made available by the Company, if such delivery is required by applicable law. The Company shall not enter into any settlement of a Loss that does not provide for the unconditional release of such Holder from all liabilities and obligations relating to such Loss.

 

(b)          To the extent permitted by law, each Holder who is named in such Registration Statement as a selling stockholder, acting severally and not jointly, shall indemnify and hold harmless the Company, the officers, directors, employees, agents and representatives of the Company, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act, against any Losses to the extent (and only to the extent) that any such Losses are based upon and in conformity with written information furnished by such Holder expressly for use in such Registration Statement. Subject to the provisions of Section 7(c) below, such Holder will reimburse any legal or other expenses as reasonably incurred by the Company and any such officer, director, employee, agent, representative, or controlling person, in connection with investigating or defending any such Loss; provided, however , that the foregoing indemnity shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided, further , that, in no event shall any indemnity under this Section 7(b) exceed the net proceeds resulting from the sale of the Registrable Securities sold by such Holder under such Registration Statement.

 

18
 

 

(c)          Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 7 , promptly deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in and to assume the defense thereof with counsel selected by the indemnifying party and reasonably acceptable to the indemnified party; provided , however , that an indemnified party shall have the right to retain its own counsel, with the reasonably incurred fees and expenses of one such counsel for all indemnified parties to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate under applicable standards of professional conduct due to actual or potential conflicting interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, to the extent prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 7 with respect to such action, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 7 or with respect to any other action unless the indemnifying party is materially prejudiced as a result of not receiving such notice.

 

(d)          In the event that the indemnity provided in paragraph (a) or (b) of this Section 7 is unavailable or insufficient to hold harmless an indemnified party for any reason, the Company and each Holder agree, severally and not jointly, to contribute to the aggregate Losses to which the Company or such Holder may be subject in such proportion as is appropriate to reflect the relative fault of the Company and such Holder in connection with the statements or omissions which resulted in such Losses; provided , however , that in no case shall such Holder be responsible for any amount in excess of the net proceeds resulting from the sale of the Registrable Securities sold by it under the Registration Statement. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the Company or by such Holder. The Company and each Holder agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. For purposes of this Section 7 , each person who controls a Holder within the meaning of either the Securities Act or the Exchange Act and each officer, director, employee, agent or representative of such Holder shall have the same rights to contribution as such Holder, and each person who controls the Company within the meaning of either the Securities Act or the Exchange Act and each officer, director, employee, agent or representative of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d).

 

(e)          The obligations of the Company and each Holder under this Section 7 shall survive the exercise of the 2011 Warrants, the 2013 Warrants or the 2015 Warrants (to the degree held by such Holder) in full, the completion of any offering or sale of Registrable Securities pursuant to a Registration Statement under this Agreement, or otherwise.

 

19
 

 

8.           Reports . With a view to making available to each Holder the benefits of Rule 144 and any other similar rule or regulation of the Commission that may at any time permit such Holder to sell securities of the Company to the public without registration, the Company agrees (until all of the Registrable Securities have been sold under a Registration Statement or pursuant to Rule 144) to:

 

(a)          make and keep public information available, as those terms are understood and defined in Rule 144;

 

(b)          file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

 

(c)          furnish to such Holder, so long as such Holder owns any Registrable Securities, promptly upon written request (i) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) to the extent not publicly available through the Commission’s EDGAR database, a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company with the Commission, and (iii) such other information as may be reasonably requested by such Holder in connection with such Holder’s compliance with any rule or regulation of the Commission which permits the selling of any such securities without registration.

 

9.           Miscellaneous .

 

(a)           Expenses of Registration . Except as otherwise provided in the 2011 Securities Purchase Agreement, the 2013 Securities Purchase Agreement and the 2015 Securities Purchase Agreement, all reasonable expenses, other than underwriting discounts and commissions, incurred in connection with the registrations, filings or qualifications described herein, including (without limitation) all registration, filing and qualification fees, printers’ and accounting fees, the fees and disbursements of counsel for the Company, reasonable legal fees of one counsel for the Investors, and the fees and disbursements incurred in connection with the opinion or letter described in Section 4(f) hereof, shall be borne by the Company (collectively, “ Registration Expenses ”).

 

(b)           Amendment; Waiver . Except as expressly provided herein, neither this Agreement nor any term hereof may be amended or waived except pursuant to a written instrument executed by the Company and the Holders of a majority of the Registrable Securities that are either then outstanding or are issuable on exercise of the 2011 Warrants, the 2013 Warrants or the 2015 Warrants then outstanding (without regard to any limitation on such exercise); provided that (i) any amendment or waiver that adversely affects the 2011 Registrable Securities or the Holders thereof must be approved by the Holders of a majority of the 2011 Registrable Securities that are either then outstanding or are issuable on exercise of the 2011 Warrants then outstanding (without regard to any limitation on such exercise) and (ii) any amendment or waiver that adversely affects the 2013 Registrable Securities or the Holders thereof must be approved by the Holders of a majority of the 2013 Registrable Securities that are either then outstanding or are issuable on exercise of the 2013 Warrants then outstanding (without regard to any limitation on such exercise) and (iii) any amendment or waiver that adversely affects the 2015 Registrable Securities or the Holders thereof must be approved by (A) NEA, so long as it holds at least twenty-five percent (25%) of the original 2015 Registrable Securities purchased under the 2015 Securities Purchase Agreement, and (B) the Holders of a majority of the 2015 Registrable Securities that are either then outstanding or are issuable on exercise of the 2015 Warrants then outstanding (without regard to any limitation on such exercise). Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder, each future Holder and the Company. The failure of any party to exercise any right or remedy under this Agreement or otherwise, or the delay by any party in exercising such right or remedy, shall not operate as a waiver thereof.

 

20
 

 

(c)           Notices . Any notice, demand or request required or permitted to be given by the Company or a Holder pursuant to the terms of this Agreement shall be in writing and shall be deemed delivered (i) when delivered personally or by verifiable facsimile transmission, unless such delivery is made on a day that is not a Business Day, in which case such delivery will be deemed to be made on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to a reputable overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed as follows:

 

If to the Company:

 

Joel Ackerman, Chief Executive Officer

Champions Oncology, Inc.

One University Plaza

Suite 307

Hackensack, NJ 07601

Tel (201) 808-8400

Fax (201) 357-5216

jackerman@championsoncology.com

 

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

 

Adam D. So, Esquire

Epstein Becker & Green, P.C.

250 Park Avenue

New York, NY 10177-1211

Tel (212) 351-8600

Fax (212) 878-8693

aso@ebglaw.com

 

and if to a Holder, to such address as set forth in the 2011 Securities Purchase Agreement, the 2013 Securities Purchase Agreement or the 2015 Securities Purchase Agreement (as applicable) or as otherwise shall be designated by such Holder in writing to the Company.

 

21
 

 

(d)           Assignment . Upon the transfer of any Registrable Securities by a Holder, the rights of such Holder hereunder with respect to such securities so transferred shall be assigned automatically to the transferee thereof, and such transferee shall thereupon be deemed to be a “Holder” for purposes of this Agreement, as long as: (i) the Company is, within a reasonable period of time following such transfer, furnished with written notice of the name and address of such transferee, (ii) the transferee agrees in writing with the Company to be bound by all of the provisions hereof, and (iii) such transfer is made in accordance with the applicable requirements of the 2011 Securities Purchase Agreement, the 2013 Securities Purchase Agreement or the 2015 Securities Purchase Agreement, as applicable.

 

(e)           Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall be deemed one and the same instrument. This Agreement, once executed by a party, may be delivered to any other party hereto by facsimile transmission.

 

(f)           Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York.

 

(g)           Holder of Record . A person is deemed to be an Holder whenever such person owns or is deemed to own of record Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the record owner of such Registrable Securities.

 

(h)           Entire Agreement . This Agreement and the other Transaction Documents referenced in the 2011 Securities Purchase Agreement, the 2013 Securities Purchase Agreement or the 2015 Securities Purchase Agreement, as applicable, constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement and the other Transaction Documents referenced in the 2011 Securities Purchase Agreement, the 2013 Securities Purchase Agreement or the 2015 Securities Purchase Agreement, as applicable, supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof. In particular, this Agreement amends and restates the 2013 Amended and Restated Registration Rights Agreement in its entirety.

 

(i)           Headings . The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

(j)           Third Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

[Signature Pages to Follow]

 

22
 

 

IN WITNESS WHEREOF, the undersigned have executed this 2015 Amended and Restated Registration Rights Agreement as of the date first-above written.

 

CHAMPIONS ONCOLOGY, INC.  
     
By: /s/ Joel Ackerman  
  Joel Ackerman  
  Chief Executive Officer  

 

 
 

 

CHAMPIONS ONCOLOGY, INC.

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

Counterpart Signature Page

 

FOR ENTITY INVESTORS :   FOR INDIVIDUAL INVESTORS :
     
NEW ENTERPRISE ASSOCIATES 14, L.P.   Signature: __________________________________
[Name of Entity]   Name: _____________________________________
       
By: /s/ Louis S. Citron    
Name: Louis S. Citron    
Title: Vice President    

 

 
 

 

CHAMPIONS ONCOLOGY, INC.

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

Counterpart Signature Page

 

FOR ENTITY INVESTORS :   FOR INDIVIDUAL INVESTORS :
     
BATTERY VENTURES IX, L.P.   Signature: __________________________________
[Name of Entity]   Name: _____________________________________
       
By: Battery Partners IX, LLC    
  General Partner    
       

  By: /s/ Scott Tobin    

  Name: Scott Tobin    

  Title: Managing Member    

 

 
 

 

CHAMPIONS ONCOLOGY, INC.

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

Counterpart Signature Page

 

FOR ENTITY INVESTORS :   FOR INDIVIDUAL INVESTORS :
     
BATTERY INVESTMENT PARTNERS IX, LLC   Signature: __________________________________
[Name of Entity]   Name: _____________________________________
       
By: Battery Investment Partners IX, LLC    
  Managing Member    
       

  By: /s/ Scott Tobin    

  Name: Scott Tobin    

  Title: Managing Member    

 

 
 

 

CHAMPIONS ONCOLOGY, INC.

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

Counterpart Signature Page

 

FOR ENTITY INVESTORS :   FOR INDIVIDUAL INVESTORS :
     
PERCEPTIVE LIFE SCIENCES MASTER FUND LTD.   Signature: __________________________________
[Name of Entity]   Name: _____________________________________
       
By: /s/ James Mannix    
Name:   James Mannix    
Title: Chief Operating Officer    

 

 
 

 

CHAMPIONS ONCOLOGY, INC.

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

Counterpart Signature Page

 

FOR ENTITY INVESTORS :   FOR INDIVIDUAL INVESTORS :
     
TITAN PERC, LTD.   Signature: __________________________________
[Name of Entity]   Name: _____________________________________
       
By: /s/ Darren Ross    
Name:   Darren Ross    
Title: Director    

 

 
 

 

CHAMPIONS ONCOLOGY, INC.

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

Counterpart Signature Page

 

FOR ENTITY INVESTORS :   FOR INDIVIDUAL INVESTORS :
     
SABBY HEALTHCARE MASTER FUND, LTD.   Signature: __________________________________
[Name of Entity]   Name: _____________________________________
       
By: /s/ Robert Grundstein    
Name: Robert Grundstein    
Title: COO of Investment Manager    

 

 
 

 

CHAMPIONS ONCOLOGY, INC.

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

Counterpart Signature Page

 

FOR ENTITY INVESTORS :   FOR INDIVIDUAL INVESTORS :
     
    Signature: __________________________________
    Name: _____________________________________

 

PAR INVESTMENT PARTNERS, L.P.  
By: PAR Group, L.P.  
  General Partner  
  By: PAR Capital Management, Inc.  
    General Partner  

 

    By: /s/ Arthur Epker, III    
      Name: Arthur Epker, III    
      Title: Vice President    

 

 
 

 

CHAMPIONS ONCOLOGY, INC.

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

Counterpart Signature Page

 

FOR ENTITY INVESTORS :   FOR INDIVIDUAL INVESTORS :
       
    Signature: /s/ Ronnie Morris

[Name of Entity]   Name: Ronnie Morris
         
By:        
Name:          
Title:        

 

 
 

 

CHAMPIONS ONCOLOGY, INC.

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

Counterpart Signature Page

 

FOR ENTITY INVESTORS :   FOR INDIVIDUAL INVESTORS :
       
    Signature: /s/ Joel Ackerman

[Name of Entity]   Name: Joel Ackerman
         
By:        
Name:          
Title:        

 

 
 

 

CHAMPIONS ONCOLOGY, INC.

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

Counterpart Signature Page

 

FOR ENTITY INVESTORS :   FOR INDIVIDUAL INVESTORS :
       
    Signature: /s/ Richard Molinsky

[Name of Entity]   Name: Richard Molinsky
         
By:        
Name:          
Title:        

 

 
 

 

CHAMPIONS ONCOLOGY, INC.

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

Counterpart Signature Page

 

FOR ENTITY INVESTORS :   FOR INDIVIDUAL INVESTORS :
       
    Signature: /s/ Samuel A. Morse

[Name of Entity]   Name: Samuel A. Morse
         
By:        
Name:          
Title:        

 

 
 

 

CHAMPIONS ONCOLOGY, INC.

2015 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

Counterpart Signature Page

 

FOR ENTITY INVESTORS :   FOR INDIVIDUAL INVESTORS :
       
    Signature: /s/ Daniel Mendelson

[Name of Entity]   Name: Daniel Mendelson
         
By:        
Name:          
Title:        

 

 
 

 

EXHIBIT A

 

CHAMPIONS ONCOLOGY, INC.
REGISTRATION STATEMENT QUESTIONNAIRE

 

In connection with the Registration Statement, please provide us with the following information regarding the Investor.

 

1.          Please state your organization’s name exactly as it should appear in the Registration Statement:

 

   

 

Except as set forth below, your organization does not hold any equity securities of the Company on behalf of another person or entity.

 

State any exceptions here:

 

   

 

If the Investor is not a natural person, please identify the natural person or persons who will have voting and investment control over the Securities owned by the Investor:

 

   

 

2.          Address of your organization:

 

       
       
  Telephone:    
       
       
  Fax:    
  Contact Person:    

 

3.          Have you or your organization had any position, office or other material relationship within the past three years with the Company or its affiliates? (Include any relationships involving you or any of your affiliates, officers, directors, or principal equity holders (5% or more) that has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.)

 

_______ Yes _______ No

 

If yes, please indicate the nature of any such relationship below:

 

 
 

 

4.          Are you the beneficial owner of any other securities of the Company? (Include any equity securities that you beneficially own or have a right to acquire within sixty (60) days after the date hereof, and as to which you have sole voting power, shared voting power, sole investment power or shared investment power.)

 

_______ Yes _______ No

 

If yes, please describe the nature and amount of such ownership as of a recent date.

 

5.          Except as set forth below, you wish that all the shares of the Company’s common stock beneficially owned by you or that you have the right to acquire from the Company be offered for your account in the Registration Statement.

 

State any exceptions here:

 

6.          Have you made or are you aware of any arrangements relating to the distribution of the shares of the Company pursuant to the Registration Statement?

 

_______ Yes _______ No

 

If yes, please describe the nature and amount of such arrangements.

 

7.          FINRA Matters

 

(a)          State below whether (i) you or any associate or affiliate of yours are a member of the FINRA, a controlling shareholder of an FINRA member , a person assoc i ated with a member , a direct or indirect affiliate of a member , or an underwriter or related person with respect to the proposed offering; (ii) you or any associate or affiliate of yours owns any stock or other securities of any FINRA member not purchased in the open market; or (iii) you or any associate or affiliate of yours has made any outstanding subordinated loans to any FINRA member . If you are a general or limited partnership, a no answer asserts that no such relationship exists for you as well as for each of your general or limited partners.

 

_______ Yes _______ No

 

If “yes,” please identify the FINRA member and describe your relationship, including, in the case of a general or limited partner, the name of the partner:

 

If you answer “no” to Question 7(a), you need not respond to Question 7(b).

 

(b)          State below whether you or any associate or affiliate of yours has been an underwriter, or a controlling person or member of any investment banking or brokerage firm which has been or might be an underwriter for securities of the Corporation or any affiliate thereof including, but not limited to, the common stock now being registered.

 

_______ Yes _______ No

 

If “yes,” please identify the FINRA member and describe your relationship, including, in the case of a general or limited partner, the name of the partner.

 

 
 

 

ACKNOWLEDGEMENT

 

The undersigned hereby agrees to notify the Company promptly of any changes in the foregoing information which should be made as a result of any developments, including the passage of time. The undersigned also agrees to provide the Company and the Company’s counsel any and all such further information regarding the undersigned promptly upon request in connection with the preparation, filing, amending, and supplementing of the Registration Statement (or any prospectus contained therein). The undersigned hereby consents to the use of all such information in the Registration Statement.

 

The undersigned understands and acknowledges that the Company will rely on the information set forth herein for purposes of the preparation and filing of the Registration Statement.

 

The undersigned understands that the undersigned may be subject to serious civil and criminal liabilities if the Registration Statement, when it becomes effective, either contains an untrue statement of a material fact or omits to state a material fact required to be stated in the Registration Statement or necessary to make the statements in the Registration Statement not misleading. The undersigned represents and warrants that all information it provides to the Company and its counsel is currently accurate and complete and will be accurate and complete at the time the Registration Statement becomes effective and at all times subsequent thereto, and agrees during the effectiveness period of the Registration Statement and any additional period in which the undersigned is making sales of Shares under and pursuant to the Registration Statement to notify the Company immediately of any misstatement of a material fact in the Registration Statement, and of the omission of any material fact necessary to make the statements contained therein not misleading.

 

Dated: ___________    
     
  Name of Investor:  
     
     
  By:    
  Name:  
  Title:  

 

 
 

 

EXHIBIT B

 

PLAN OF DISTRIBUTION

 

The selling stockholders may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

 

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

 

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

 

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

 

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

 

· privately negotiated transactions;

 

· short sales;

 

· broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

 

· a combination of any such methods of sale; and

 

· any other method permitted pursuant to applicable law.

 

The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

 

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. Any profits on the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by a selling stockholder. The selling stockholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act.

 

The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b) or other applicable provision of the Securities Act of 1933 supplementing or amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

 

 
 

 

The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b) or other applicable provision of the Securities Act of 1933 supplementing or amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

 

The selling stockholders and any broker-dealers or agent that are involved in selling the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agent and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

 

We are required to pay all fees and expenses incident to the registration of the shares of common stock. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

 

The selling stockholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by any selling stockholder. If we are notified by any selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will file a supplement to this prospectus. If the selling stockholders use this prospectus for any sale of the shares of common stock, they will be subject to the prospectus delivery requirements of the Securities Act.

 

The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934 may apply to sales of our common stock and activities of the selling stockholders.

 

 

 

 

Exhibit 10.2

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.

 

Champions Oncology, Inc.

 

WARRANT

 

Warrant No. [•]   Dated: March 13, 2015

 

Champions Oncology, Inc., a Delaware corporation (the “ Company ”), hereby certifies that, for value received, [Name_of_Investor] or its registered assigns (the “ Holder ”), is entitled to purchase from the Company up to a total of [•] fully paid and non-assessable shares of common stock, $0.001 par value per share (the “ Common Stock ”), of the Company (each such share, a “ Warrant Share ” and all such shares, the “ Warrant Shares ”) at an exercise price equal to $0.48 per share (subject to appropriate adjustment provided in Section 9 herein, the “ Exercise Price ”), at any time after the date hereof (the “ Initial Exercise Date ”) and through and including the date that is sixty (60) months from the date hereof (or, if such date is not a Business Day, on the Business Day immediately following such date) (the “ Expiration Date ”), subject to the following terms and conditions. This Warrant (this “ Warrant ”) is one of a series of similar warrants issued pursuant to that certain Securities Purchase Agreement, dated as of March 11, 2015, by and among the Company and the Investors identified therein (the “ Purchase Agreement ”). All such warrants are referred to herein, collectively, as the “ Warrants .”

 

1. Definitions . In addition to the terms defined elsewhere in this Warrant, capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement.

 

2. Registration of Warrant . 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 record 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.

 

3. Transfers and Registration of Transfers . The Holder may sell, transfer, assign, pledge or otherwise dispose of this Warrant, in whole or in part, as long as such sale or other disposition is made pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act, in which case the Holder shall provide an opinion of counsel reasonably acceptable to the Company that such transfer or other disposition is so exempt. Upon such transfer or other disposition (other than a pledge), the Holder shall deliver this Warrant to the Company together with a written notice to the Company, substantially in the form of the Transfer Notice attached hereto as Exhibit A (the “ Transfer Notice ”), indicating the person or persons to whom this Warrant shall be transferred and, if less than all of this Warrant is transferred, the number of Warrant Shares to be covered by the part of this Warrant to be transferred to each such person. The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Transfer Notice duly completed and signed, to the Company at its address specified in the Purchase Agreement. Within three (3) Business Days of any such registration of transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “ New Warrant ”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

 

 
 

 

4. Exercise and Duration of Warrants .

 

(a) This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after the Initial Exercise Date and including the Expiration Date, as to all or any part of the Warrant Shares covered hereby. At 6:00 p.m., New York City time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value.

 

(b) A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form attached hereto (the “ Exercise Notice ”), appropriately completed and duly signed, and (ii) either (A) in the case of a cash exercise in immediately available funds (“ Cash Exercise ”), payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised, or (B) in the event of a Cashless Exercise (as defined below), no payment is required; and the date such items are delivered to the Company (as determined in accordance with the notice provisions hereof) is an “ Exercise Date .” The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

 

(c) In the case of a dispute between the Company and the Holder as to the calculation of the Exercise Price or the number of Warrant Shares issuable hereunder (including, without limitation, the calculation of any adjustment pursuant to Section 9 below), the Company shall issue to the Holder the number of Warrant Shares that are not disputed within the time periods specified in Section 5 below and shall submit the disputed calculations to a certified public accounting firm of national recognition (other than the Company’s regularly retained accountants) within three (3) Business Days following the Company’s receipt of the Holder’s Exercise Notice. The Company shall cause such accountant to calculate the Exercise Price and/or the number of Warrant Shares issuable hereunder and to notify the Company and the Holder of the results in writing no later than three (3) Business Days following the day on which such accountant received the disputed calculations (the “ Dispute Procedure ”). Such accountant’s calculation shall be deemed conclusive absent manifest error. The fees of any such accountant shall be borne by the party whose calculations were most at variance with those of such accountant.

 

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5. Delivery of Warrant Shares .

 

(a) Upon exercise of this Warrant, the Company shall, (A) in the case of a Cash Exercise, no later than the close of business on the later to occur of (i) the third (3rd) Business Day following the Exercise Date set forth in such Exercise Notice and (ii) such later date on which the Company shall have received payment of the Exercise Price, (B) in the case of a Cashless Exercise, no later than the close of business on the third (3rd) Business Day following the Exercise Date set forth in such Exercise Notice, and (C) with respect to Warrant Shares that are the subject of a Dispute Procedure, the close of business on the third (3rd) Business Day following the determination made pursuant to Section 4(c) (each of the dates specified in (A), (B) or (C) being referred to as a “ Delivery Date ”), the Company shall promptly issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate for the Warrant Shares issuable upon such exercise, free of restrictive legends unless a legend is required to be placed on the certificate pursuant to Section 2.1(f) of the Purchase Agreement. The Holder, or any Person so designated by the Holder to receive Warrant Shares, shall be deemed to have become the holder of record of such Warrant Shares as of the Exercise Date. The Company shall, provided that the Transfer Agent is participating in The Depository Trust Company (“ DTC ”) Fast Automated Securities Transfer Program (“ FAST ”), use its commercially reasonable efforts to credit such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system (“ DWAC ”); provided further , that the Holder provides the Company the reasonably necessary details to effect the foregoing DWAC delivery. In the event that the Transfer Agent is not a participant in FAST, or if the Warrant Shares are not otherwise eligible for delivery through FAST, or if the Holder so specifies in an Exercise Notice or otherwise in writing on or before the Exercise Date, the Company shall effect delivery of Warrant Shares by delivering to the Holder or its nominee physical certificates representing such Warrant Shares, no later than the close of business on such Delivery Date. Warrant Shares delivered to the Holder shall not contain any restrictive legend as long as such Warrant Shares have been resold (as certified in writing by the Holder to the Company (x) pursuant to an effective Registration Statement (as defined in the 2015 Amended and Restated Registration Rights Agreement) or (y) pursuant to Rule 144 under the Securities Act.

 

(b) This Warrant is exercisable, either in its entirety or, from time to time, for a portion of the number of Warrant Shares. Upon surrender of this Warrant following one or more partial exercises, the Company shall issue or cause to be issued, at its expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares; provided, however, that the Holder shall be entitled to exercise all or any portion of such New Warrant at any time following the time at which this Warrant is exercised, regardless of whether the Company has actually issued such New Warrant or delivered to the Holder a certificate therefor.

 

(c) The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares.

 

(d) In the event that the Company fails for any reason to deliver to the Holder the number of Warrant Shares specified in the applicable Exercise Notice on or before the Delivery Date therefor (an “ Exercise Default ”), the Company shall pay to the Holder payments (“ Exercise Default Payments ”) in the amount of (i) (N/365) multiplied by (ii) the aggregate Exercise Price of the Warrant Shares which are the subject of such Exercise Default multiplied by (iii) the lower of twelve percent (12%) per annum and the maximum rate permitted by applicable law (the “ Default Interest Rate ”), where “N” equals the number of days elapsed between the original Delivery Date of such Warrant Shares and the date on which all of such Warrant Shares are issued and delivered to the Holder. Cash amounts payable hereunder shall be paid on or before the fifth (5th) Business Day of each calendar month following the calendar month in which such amount has accrued.

 

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(e) In the event of an Exercise Default, the Holder may, upon written notice to the Company, regain on the date of such notice the rights of the Holder under the exercised portion of this Warrant that is the subject of such Exercise Default. In such event, the Holder shall retain all of the Holder’s rights and remedies with respect to the Company’s failure to deliver such Warrant Shares (including without limitation the right to receive the cash payments specified in Section 5(d) above); provided, however, that such cash payments shall cease to accrue effective as of the date of such notice.

 

(f) The Holder’s rights and remedies hereunder are cumulative, and no right or remedy is exclusive of any other. In addition to the amounts specified herein, the Holder shall have the right to pursue all other remedies available to it at law or in equity (including, without limitation, a decree of specific performance and/or injunctive relief). Nothing herein shall limit the Holder’s right to pursue actual damages for the Company’s failure to issue and deliver Warrant Shares on the applicable Delivery Date (including, without limitation, damages relating to any purchase of Common Stock by the Holder to make delivery on a sale effected in anticipation of receiving Warrant Shares upon exercise, such damages to be in an amount equal to (A) the aggregate amount paid by the Holder for the Common Stock so purchased minus (B) the aggregate amount of net proceeds, if any, received by the Holder from the sale of the Warrant Shares issued by the Company pursuant to such exercise).

 

6. Charges, Taxes and Expenses . Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

7. Replacement of Warrant . If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable bond or indemnity, if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.

 

8. Reservation of Warrant Shares . The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (after giving effect to the adjustments and restrictions of Section 9, if any). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed.

 

9. Certain Adjustments . The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.

 

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(a) Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 9(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) Pro Rata Distributions . If the Company, at any time while this Warrant is outstanding, distributes to holders of Common Stock (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe for or purchase any security, or (iv) cash or any other asset, or rights to acquire such assets, as a partial liquidating dividend or otherwise, including without limitation any dividend or distribution to the Company’s stockholders in shares (or rights to acquire shares) of capital stock of a subsidiary (in each case, “ Distributed Property ”), then in each such case the Holder shall be entitled, upon exercise of this Warrant for the purchase of any or all of the Warrant Shares, to receive the amount of Distributed Property which would have been payable to the Holder had such Holder been the holder of such Warrant Shares on the record date for the determination of stockholders entitled to such Distributed Property. The Company will at all times set aside in escrow and keep available for distribution to such holder upon exercise of this Warrant a portion of the Distributed Property to satisfy the distribution to which such Holder is entitled pursuant to the preceding sentence. The Company shall deliver written notice of such distribution of Distributed Property (a “ Distribution Notice ”) to the Holder at least thirty (30) days prior to the earlier to occur of (i) the record date for determining stockholders entitled to such Distribution and (ii) the date on which such distribution is made (the “ Distribution Date ”). In the Distribution Notice to a Holder, the Company must indicate whether the Company has elected (A) to deliver to such Holder the same amount and type of Distributed Property as though the Holder were a holder on the determination date therefor of a number of shares of Common Stock into which the this Warrant is exercisable as of such determination date (such number of shares to be determined at the Exercise Price then in effect and without giving effect to any limitations on such exercise) or (B) to reduce the Exercise Price as of the determination date therefor by an amount equal to the fair market value of the Distributed Property divided by the number of shares of Common Stock as to which such distribution is to be made, such fair market value to be reasonably determined in good faith by the independent members of the Company’s Board of Directors. If the Company does not notify the Holders of its election pursuant to the preceding sentence within two (2) Business Days following the date on which the Company publicly announces a distribution, the Company shall be deemed to have elected clause (A) of the preceding sentence.

 

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(c) Fundamental Transactions . 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 owning more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the Person or Persons making or affiliated with the Persons making the tender or exchange offer) 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 or any other transaction pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property of the Company or another entity (other than as a result of a subdivision or combination of shares of Common Stock covered by Section 9(a) above) (in any such case, a “ Fundamental Transaction ”), then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, on a per share basis, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise of this Warrant (the “ Alternate Consideration ”). The aggregate Exercise Price for this Warrant will not be affected by any such Fundamental Transaction, but the Company shall apportion such aggregate 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. At the Holder’s request, 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 purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. 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 paragraph (c) and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

 

(e) Number of Warrant Shares . Simultaneously with any adjustment to the Exercise Price pursuant to Section 9(a), the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be adjusted proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares, as applicable, shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment. In the event that at any time, as a result of an adjustment made pursuant to this Section 9, the Holder of this Warrant shall, upon exercise of this Warrant, become entitled to receive securities or assets (other than Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 9. Any adjustment made herein pursuant to Section 9(a) that results in a decrease in the Exercise Price shall also effect a proportional increase in the number of shares of Common Stock into which this Warrant is exercisable.

 

(f) Calculations . The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

 

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(g) Notice of Adjustments . Upon the occurrence of each adjustment pursuant to this Section 9 or any change in the number or type of stock, securities and/or other property issuable upon exercise of this Warrant, the Company at its expense will promptly compute such adjustment or change in accordance with the terms of this Warrant and prepare a certificate (an “ Adjustment Notice ”) setting forth such adjustment or change, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments or changes and showing in detail the facts upon which such adjustment or change is based and, on or before the time that it delivers an Adjustment Notice, publicly disclose the contents thereof. Upon written request, the Company will promptly deliver a copy of each such Adjustment Notice to the Holder and to the Transfer Agent. The failure of the Company to deliver an Adjustment Notice shall not affect the validity of any such adjustment.

 

(h) Notice of Corporate Events . If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction, at least ten (10) Business Days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction (or if no such date is applicable, at least ten (10) Business Days prior to the closing or effectiveness of the transaction), and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided , however , that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice. The notice requirements in this Section 9(h) shall be in addition to the requirements for notice in connection with Distributed Property as set forth in Section 9(b) hereof.

 

10. Payment of Exercise Price . The Holder shall pay the Exercise Price (i) through a Cash Exercise or (ii) if an effective Registration Statement is not available for the resale of all of the Warrant Shares issuable hereunder at the time an exercise notice, in the form attached hereto as Exhibit B (the “ Exercise Notice ”), is delivered to the Company, through a “cashless exercise” (a “ Cashless Exercise ”) in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows:

 

     
    X = Y * [(A-B)/A]
   
where:    
   
    X = the number of Warrant Shares to be issued to the Holder.
   
    Y = the number of Warrant Shares with respect to which this Warrant is being exercised.
   
    A = the Market Price (as defined below) as of the Exercise Date.
   
    B = the Exercise Price.

 

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For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Purchase Agreement. “ Market Price ” shall mean for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a stock exchange, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the stock exchange on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Investors of a majority in interest of the Shares then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

11. Fractional Shares . The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant. If any fraction of a Warrant Share would, except for the provisions of this Section 11, be issuable upon exercise of this Warrant, the Company shall, in lieu of issuing any such fractional share, pay to the Holder an amount in cash equal to the product resulting from multiplying such fraction by the Market Price as of the Exercise Date.

 

12. Notices . Any and all notices or other communications or deliveries hereunder (including without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in the Purchase Agreement prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in the Purchase Agreement on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices or communications shall be as set forth in the Purchase Agreement with respect to the Company and, with respect to the Holder, the Holder’s last address as shown on the Warrant Register.

 

13. Warrant Agent . The Company shall serve as warrant agent under this Warrant. Upon thirty (30) days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholder services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

 

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14. Limitation on Exercise .

 

[(a) The Company shall not effect the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, such Person (together with such Person's affiliates) would beneficially own in excess of 9.99% (the " Maximum Percentage ") of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Person and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within two (2) Business 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 and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the Holder may waive the provisions of this Section 14 or increase or decrease the Maximum Percentage to any other percentage specified in such notice, but (i) any such waiver or increase will not be effective until the sixty-first (61 st ) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and not to any other holder of Warrants.

 

(b) The Company’s obligation to issue shares of Common Stock in excess of any limitation referred to in this Section 14 shall be suspended (and shall not terminate or expire notwithstanding any contrary provisions hereof) until such time, if any, as such shares of Common Stock may be issued in compliance with such limitation, but in no event later than the Expiration Date.

 

(c) The provisions of this Section 14 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 14 to correct this Section 14 (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.] 1

 

15. Miscellaneous .

 

(a) Subject to the restrictions on transfer set forth on the first page hereof, this Warrant may be assigned by the Holder. This Warrant may not be assigned by the Company except to a successor in the event of a Fundamental Transaction. This Warrant shall be binding on the parties hereto and their respective successors and assigns. This Warrant shall be for the sole and exclusive benefit of the Holder of this Warrant and nothing in this Warrant shall be construed to confer upon any person other than the Holder of this Warrant any legal or equitable right, remedy or claim hereunder.

 

 

1 ONLY WITH RESPECT TO NEA.

 

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(b) The Company will not, by amendment of its governing documents 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 action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any Warrant Shares above the amount payable therefor on such exercise, (ii) will take all such action as may be reasonably necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares on the exercise of this Warrant, and (iii) will not close its stockholder books or records in any manner which interferes with the timely exercise of this Warrant.

 

(c) Nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Until the exercise of this Warrant, the Holder shall not have nor exercise any rights by virtue hereof as a stockholder of the Company. Notwithstanding the foregoing, in the event (a) the Company effects a split of the Common Stock by means of a stock dividend and the Exercise Price of and the number of Shares are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), and (b) the Holder exercises this Warrant between the record date and the distribution date for such stock dividend, the Holder shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

 

(d) All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the laws of the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the city of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the transaction documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, or that such suit, action or proceeding is improper. 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 to it under Section 12 hereof 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 manner permitted by law. The Company hereby waives all rights to a trial by jury.

 

(e) The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

 

(f) In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

 

(g) No amendment, modification or other change to, or waiver of any provision of, this Warrant may be made unless such amendment, modification or change is (i) set forth in writing and is signed by the Company and (ii) agreed to in writing by the holders of Warrants exercisable for a majority of the number of shares into which the all of the then outstanding Warrants issued pursuant to the Purchase Agreement are exercisable (without regard to any limitation contained herein on such exercise), it being understood that upon the satisfaction of the conditions described in (i) and (ii) above, each Warrant (including any Warrant held by the Holder who did not execute the agreement specified in (ii) above) shall be deemed to incorporate any amendment, modification, change or waiver effected thereby as of the effective date thereof.

 

SIGNATURE PAGE FOLLOWS

 

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

 

 

       
  CHAMPIONS ONCOLOGY, INC.
     
  By:  

/s/ Joel Ackerman 

  Name:  

 Joel Ackerman

  Title:  

 Chief Executive Officer

 

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EXHIBIT A

 

TRANSFER NOTICE

 

[To be completed and signed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                      the right represented by the within Warrant to purchase                      shares of Common Stock of Champions Oncology, Inc. to which the within Warrant relates and appoints                      attorney to transfer said right on the books of Champions Oncology, Inc. with full power of substitution in the premises.

 

Dated:                      ,             
     
    (Signature must conform in all respects to name of holder as specified on the face of the Warrant)
     
     
     
    Address of Transferee
     
     
     
     
     
     
    Taxpayer Identification Number

 

 

 
 

 

EXHIBIT B

 

(To be executed by the Holder to exercise the right to purchase shares of

 

Common Stock under the foregoing Warrant)

 

To Champions Oncology, Inc.:

 

The undersigned is the Holder of Warrant No.              (the “ Warrant ”) issued by Champions Oncology, Inc., a Delaware corporation (the “ Company ”). [The undersigned Holder acknowledges that the sale, transfer, assignment or hypothecation of the Warrant Shares to be issued upon exercise of this Warrant is subject to the terms and conditions contained in Section 14 of this Warrant.] 2 Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.

 

1. The Warrant is currently exercisable to purchase a total of                      Warrant Shares.

 

2. The undersigned Holder hereby exercises its right to purchase                      Warrant Shares pursuant to the Warrant.

 

3. The Holder intends that payment of the Exercise Price shall be made as (check one):

 

             “Cash Exercise” under Section 10       

 

             “Cashless Exercise” under Section 10

 

4. If the holder has elected a Cash Exercise, the holder shall pay the sum of $          to the Company in accordance with the terms of the Warrant.

 

5. Pursuant to this exercise, the Company shall deliver to the holder                      Warrant Shares in accordance with the terms of the Warrant.

 

6. Following this exercise, the Warrant shall be exercisable to purchase a total of                      Warrant Shares.

 

 

2 Include in NEA warrant only.

 

 
 

 

Dated:                      ,                Name of Holder:
    (Print)    
    By:    
    Name:    
    Title:    

 

    (Signature must conform in all respects to name of holder as specified on the face of the Warrant)
     
    Taxpayer Identification Number
     

ACKNOWLEDGED AND AGREED TO this      day of              , 20     

   
     
CHAMPIONS ONCOLOGY, INC.    
     
By:        
Name:        
Title:        

 

 

 

Exhibit 10.3

 

AMENDED AND RESTATED 2011 SECURITIES PURCHASE AGREEMENT

 

This AMENDED AND RESTATED 2011 SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of March 13, 2015, by and between Champions Oncology, Inc. (the “ Company ”) (previously known as Champions Biotechnology, Inc.), Battery Ventures IX, L.P. (“ Ventures ”), Battery Investment Partners IX, LLC (together with Ventures, “ Battery ”), Joel Ackerman (“ Ackerman ”) and Ronnie Morris (“ Morris ”) amends and restates in its entirety the Securities Purchase Agreement dated as of March 24, 2011 (the “ Original 2011 Securities Purchase Agreement ”) between the Company, Battery, Ackerman, Morris and the other parties to the Original 2011 Securities Purchase Agreement (such parties, Battery, Ackerman and Morris being the “ Investors ”), as amended by the Amendment No. 1 to 2011 Securities Purchase Agreement dated January 29, 2014.

 

A.         Pursuant to the Original 2011 Securities Purchase Agreement, the Company sold to each Investor, and each Investor purchased, on the terms and subject to the conditions set forth in the Original 2011 Securities Purchase Agreement, (i) shares (the “Shares”) of the Company’s common stock, $.001 par value per share (the “Common Stock”), and (ii) a Warrant in the form attached thereto as Exhibit A (each, a “Warrant” and, collectively with the other Warrants issued thereunder, the “Warrants”). The shares of Common Stock into which the Warrants are exercisable are referred to herein as the “Warrant Shares”, and the Shares, the Warrants, the Warrant Shares and the Put Option Shares (as defined below) are collectively referred to herein as the “Securities”.

 

B.          Battery, Ackerman and Morris constitute the holders of at least a majority of the number of Shares and Warrant Shares into which all of the Warrants then outstanding are exercisable, and thus this Agreement is binding upon all of the parties, including all of the Investors, to the Original 2011 Securities Purchase Agreement pursuant to Section 7.12 of the Original 2011 Securities Purchase Agreement.

 

C.          The Company, Battery, Ackerman and Morris wish to amend and restate the Original 2011 Securities Purchase Agreement, including to add a limitation with respect to the Put Right (as defined herein) and to delete the provisions of the Original 2011 Securities Purchase Agreement regarding the issuance of anti-dilution shares for financings executed after the date of this Agreement.

 

In consideration of the mutual promises made herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Investor hereby agree as follows:

 

1
 

 

1.            Purchase and Sale of Shares and Warrants and Put Shares.

 

1.1.          Closing of Purchase and Sale; Purchase Price. Upon the terms and subject to the satisfaction or waiver of the conditions set forth in the Original 2011 Securities Purchase Agreement, the Company agreed to sell and each Investor agreed to purchase (i) the number of Shares set forth below such Investor’s name on the signature pages thereof, and (ii) a Warrant, if such Investor received a Warrant, as indicated below such Investor’s name on the signature page thereof. The date on which the initial closing of a purchase and sale pursuant to the terms of the Original 2011 Securities Purchase Agreement occurred (the “Initial Closing”) is hereinafter referred to as the “Initial Closing Date”. The Initial Closing was deemed to occur at the offices of Neuberger, Quinn, Gielen, Rubin & Gibber, P.A., One South Street, 27 th Floor, Baltimore, Maryland 21202, when (A) the Original 2011 Securities Purchase Agreement and the other Transaction Documents (as defined below) were executed and delivered by the Company and, to the extent applicable, by each Investor, (B) each of the conditions to the Closing described in Section 6 hereof was satisfied or waived as specified therein and (C) full payment of each Investor’s Purchase Price (as defined below) was made by such Investor to the Company by wire transfer of immediately available funds against physical delivery by the Company of duly executed certificates representing the Shares and Warrant being purchased by such Investor. If, subsequent to the Initial Closing Date, additional Investors purchase Shares pursuant to the terms of this Agreement, the closings of such additional purchases shall hereinafter be referred to as “Additional Closings” and the date on which each such Additional Closing takes place is hereinafter referred to as “Additional Closing Dates”.

 

1.2.          Exercise of Investor Put Option.

 

(a)           Subject to adjustments pursuant to Section 1.2(b), if any, upon the occurrence of a Put Option Trigger Event, each Investor shall have the right to elect to require the Company to acquire, severally and not jointly, from such Investor the Shares held by such Investor (the “ Put Shares ”) for an amount equal to the number of Put Shares times the Per Share Price (the “ Put Right ”). An Investor may exercise their Put Right by delivering written notice to the Company (the “ Put Option Exercise Notice ”) within thirty (30) days of a Put Option Trigger Event (the “Put Option Exercise Deadline ”), which shall indicate (x) the total number of Put Shares to be acquired from the exercising Investor and (y) the Business Day on which the closing of the purchase of the Put Shares subject to the Put Option Exercise Notice shall occur (the “ Put Option Closing ”); provided, however, that the Put Option Closing shall occur at least five (5) Business Days following the Put Option Exercise Deadline and no later than ninety (90) Business Days following the Put Option Exercise Deadline.

 

(b)           Adjusted Put Shares . In the event that the Company does not have sufficient Legally Available Cash (as defined below) to satisfy all of its put right obligations in this Agreement and the Other Securities Purchase Agreements, the Put Right for an Investor shall be limited to a number of Put Shares (“ Adjusted Put Shares ”) equal to the following (rounded to the nearest whole number):

 

APS = [(X * [(A*Y)/((A*Y)+(B*Z)+(C*W))]] / Y

 

APS = Adjusted Put Shares

 

X = Legally Available Cash

 

A = total number of Put Shares that an Investor elects to have repurchased pursuant to such Investor’s Put Right in connection with the relevant Put Option Triggering Event

 

B = total number of put shares that 2013 Investors elect to have repurchased pursuant to such investors’ put rights in the Amended and Restated 2013 Purchase Agreement in connection with the relevant Put Option Triggering Event

 

2
 

 

C = total number of put shares that 2015 Investors elect to have repurchased pursuant to such investors’ put rights in the 2015 Purchase Agreement in connection with the relevant Put Option Triggering Event

 

Y = Per Share Price

 

Z = Per Share Price (as defined in the Amended and Restated 2013 Purchase Agreement)

 

W = Per Share Price (as defined in the 2015 Purchase Agreement)

 

Legally Available Cash ” means the maximum of amount of cash that the Company is legally permitted (as determined by an opinion of counsel) to spend on the repurchase of shares of Common Stock from the Investors, the 2013 Investors and/or the 2015 Investors, whether or not such maximum amount of cash is then actually available to the Company.  If there are no legal restrictions on the repurchase of Common Stock held by the Investors, the 2013 Investors and/or the 2015 Investors, then “Legally Available Cash” shall be deemed to be in excess of the amount necessary to satisfy all of the Company’s put right obligations under this Agreement and the Other Securities Purchase Agreements, and as such this clause (b) shall not apply.

 

(a)           The Put Right shall terminate for all Investors if one of the following events (each a “Put Option Termination Event”) has occurred:

 

(i)          the daily VWAP of the Common Stock is greater than or equal to two hundred and fifty percent (250%) of the Per Share Price for any consecutive forty trading-day period (the “Measurement Period”) and (y) the daily volume traded in Common Stock has averaged at least 250,000 shares during such Measurement Period, provided that such daily volume shall be adjusted proportionately to account for any stock splits or reverse stock splits of the Common Stock;

 

(ii)         (x) the Company completes a public offering of its Common Stock with gross proceeds of at least fifteen million dollars ($15,000,000) at a price per share that equals or exceeds two hundred and fifty percent (250%) of the Per Share Price and (y) the Shares held by the Investors at such time are registered on an effective registration statement;

 

(iii)        a sale by one of the Investors of twenty-five percent (25%) of the Share held by such investor, provided, however, that a sale by such Investor will only affect such Investor and will not affect the Put Right of any other Investor; or

 

(iv)        both Battery (or, if the Put Option has terminated as to Battery but not as to HHG, HHG) and the Company consent in writing to terminate the Put Right as set forth in this Section 1.02.

 

(c)           Put Option Closing. Upon the terms and subject to the satisfaction or waiver of the conditions set forth herein, the Company shall purchase from each Investor delivering a Put Option Exercise Notice, severally, but not jointly, at the Put Option Closing, the number of Put Shares to be purchased from such Investor in accordance with Section 1.2(a). Each Put Option Closing shall occur at 10:00 a.m., New York City time, on the date specified in the Put Option Exercise Notice (or such later date as is mutually agreed to by the Company and each Investor) after notification of satisfaction (or waiver) of the conditions to such Closing set forth in Section 6 below at the offices of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP, 850 Winter Street, Waltham, MA 02451 or such other place as the Company and the affected Investor may agree. The date on which any such Closing occurs is hereinafter referred to herein as the “Put Option Closing Date.”

 

3
 

 

1.3.           Intentionally Omitted .

 

1.4.           Certain Definitions. When used herein, the following terms shall have the respective meanings indicated:

 

“Adjusted Put Shares” shall have the meaning set forth in Section 1.2(b).

 

“Affiliate” means, as to any Person (the “subject Person”), any other Person (a) that directly or indirectly through one or more intermediaries controls or is controlled by, or is under direct or indirect common control with, the subject Person, (b) that directly or indirectly beneficially owns or holds ten percent (10%) or more of any class of voting equity of the subject Person, or (c) ten percent (10%) or more of the voting equity of which is directly or indirectly beneficially owned or held by the subject Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, through representation on such Person’s board of directors or other management committee or group, by contract or otherwise.

 

Amended and Restated 2013 Purchase Agreement ” means the Amended and Restated 2013 Securities Purchase Agreement between the Company and certain investors dated the date hereof.

 

Amended Charter” means the amendment and restatement of the Company’s Certificate of Incorporation approved by the Board of Directors as of February 18, 2011 and by the shareholders of the Company by written consent of a majority of the issued and outstanding Shares as of February 18, 2011.

 

“Battery Member” has the meaning specified in Section 4.3 hereof.

 

“Board of Directors” means the Company’s board of directors.

 

“Business” means the consolidated business, properties, assets, operations, results of operations or financial condition of the Company and its Subsidiaries taken as a whole.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which the New York Stock Exchange is closed or on which banks in the City of New York are required or authorized by law to be closed.

 

“Change of Control” means the occurrence of any one or more of the following events: (i) the sale or other disposition to an unrelated party of all or substantially all of the assets of the Company, in one transaction or a series of transactions (other than financing arrangements); or (ii) a merger, consolidation or share exchange involving the Company and any other person or entity (other than for the purposes of reincorporation), in which the Company or one of its subsidiaries is not the surviving entity, after approval of the Board of Directors.

 

4
 

 

“Closing” shall mean the Initial Closing, Additional Closing or Put Option Closing, as applicable.

 

“Closing Date” shall mean the Initial Closing Date, Additional Closing Date or Put Option Closing Date, as applicable.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” has the meaning specified in the preamble to this Agreement.

 

“Debt” means, as to any Person at any time: (a) all indebtedness, liabilities and obligations of such Person for borrowed money; (b) all indebtedness, liabilities and obligations of such Person to pay the deferred purchase price of Property or services (except trade accounts payable, accrued compensation, accrued expenses, and unearned revenue and customer deposits of such Person that, in any such case, arise in the ordinary course of business and are not more than sixty (60) days past due); (c) all capital lease obligations of such Person; (d) all indebtedness, liabilities and obligations of others guaranteed by such Person; (e) all indebtedness, liabilities and obligations secured by a Lien existing on Property owned by such Person, whether or not the indebtedness, liabilities or obligations secured thereby have been assumed by such Person or are non-recourse to such Person; (f) all reimbursement obligations of such Person (whether contingent or otherwise) in respect of letters of credit, bankers’ acceptances, surety or other bonds and similar instruments; and (g) all indebtedness, liabilities and obligations of such Person to redeem or retire shares of capital stock of such Person.

 

“Disclosure Documents” means all SEC Documents filed by the Company at least two (2) Business Days prior to the date of this Agreement via the Commission’s Electronic Data Gathering, Analysis and Retrieval system (EDGAR) in accordance with the requirements of Regulation S-T under the Exchange Act.

 

“Effective Date” has the meaning set forth in the Registration Rights Agreement.

 

“Environmental Law” means any federal, state, provincial, local or foreign law, statute, code or ordinance, principle of common law, rule or regulation, as well as any Permit, order, decree, judgment or injunction issued, promulgated, approved or entered thereunder, relating to pollution or the protection, cleanup or restoration of the environment or natural resources, or to the public health or safety, or otherwise governing the generation, use, handling, collection, treatment, storage, transportation, recovery, recycling, discharge or disposal of hazardous materials.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder.

 

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

 

5
 

 

“Execution Date” means the date of the Original 2011 Securities Purchase Agreement.

 

“Filed Registration Statement Effective Date” means the date on which the Company’s registration statement on either Form S-1 or Form S-3 is declared effective by the Commission.

 

“FINRA” means Financial Industry Regulatory Authority.

 

“GAAP” means generally accepted accounting principles, applied on a consistent basis, as set forth in (i) opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements of the Financial Accounting Standards Board and (iii) interpretations of the Commission and the staff of the Commission. Accounting principles are applied on a “consistent basis” when the accounting principles applied in a current period are comparable in all material respects to those accounting principles applied in a preceding period.

 

“Governmental Authority” means any nation or government, any state, provincial or political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including without limitation any stock exchange, securities market or self-regulatory organization.

 

“Governmental Requirement” means any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, license or other directive or requirement of any federal, state, county, municipal, parish, provincial or other Governmental Authority or any department, commission, board, court, agency or any other instrumentality of any of them.

 

“Intellectual Property” means any U.S. or foreign patents, patent rights, patent applications, trademarks, trade names, service marks, brand names, logos and other trade designations (including unregistered names and marks), trademark and service mark registrations and applications, copyrights and copyright registrations and applications, inventions, invention disclosures, protected formulae, formulations, processes, methods, trade secrets, computer software, computer programs and source codes, manufacturing research and similar technical information, engineering know-how, customer and supplier information, assembly and test data drawings or royalty rights.

 

Legally Available Cash ” shall have the meaning set forth in Section 1.2(b) .

 

Lien ” means, with respect to any Property, any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, tax lien, financing statement, pledge, charge, or other lien, charge, easement, encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such Property (including, without limitation, any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing).

 

“Material Adverse Effect” means an effect that is material and adverse to (i) the Business, (ii) the ability of the Company to perform its obligations under this Agreement or the other Transaction Documents (as defined below) or (iii) the rights and benefits to which an Investor is entitled under this Agreement and the other Transaction Documents.

 

6
 

 

“Material Contracts” means, as to the Company, any agreement required pursuant to Item 601 of Regulation S-B or Item 601 of Regulation S-K, as applicable, promulgated under the Securities Act to be filed as an exhibit to any report, schedule, registration statement or definitive proxy statement filed or required to be filed by the Company with the Commission under the Exchange Act or any rule or regulation promulgated thereunder, and any and all amendments, modifications, supplements, renewals or restatements thereof.

 

“Measurement Period” has the meaning specified in Section 1.2(b) hereof.

 

“New Securities” shall mean, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

 

“Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

 

Original 2011 Securities Purchase Agreement ” has the meaning specified in the preamble to this Agreement.

 

“OTCBB” has the meaning specified in Section 3.22 hereof.

 

Other Securities Purchase Agreements ” means, each and jointly, the Amended and Restated 2013 Purchase Agreement and the 2015 Purchase Agreement.

 

“Pension Plan” means an employee benefit plan (as defined in ERISA) maintained by the Company for employees of the Company or any of its Affiliates.

 

“Permitted Liens” means the following:

 

(h)          encumbrances consisting of easements, rights-of-way, zoning restrictions or other restrictions on the use of Real Property or imperfections to title that do not (individually or in the aggregate) materially impair the ability of the Company to use such Property in its businesses, and none of which is violated in any material respect by existing or proposed structures or land use;

 

(i)          Liens for taxes, assessments or other governmental charges (including without limitation in connection with workers’ compensation and unemployment insurance) that are not delinquent or which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the Property subject to such Liens, and for which adequate reserves (as determined in accordance with GAAP) have been established; and

 

(j)          Liens of mechanics, materialmen, warehousemen, carriers, landlords or other similar statutory Liens securing obligations that are not yet due and are incurred in the ordinary course of business or which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the Property subject to such Liens, for which adequate reserves (as determined in accordance with GAAP) have been established.

 

7
 

 

“Per Share Price” shall mean $0.75 per Share, as adjusted for any dividend, stock split, reverse stock split, split-up or other distribution on shares of Common Stock.

 

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

 

“Principal Market” means the principal exchange or market on which the Common Stock is listed or traded.

 

“Property” means property and/or assets of all kinds, whether real, personal or mixed, tangible or intangible (including, without limitation, all rights relating thereto).

 

“Pro Rata Share” means, with respect to an Investor, the ratio determined by dividing (i) the number of Shares purchased hereunder by such Investor by (ii) the aggregate number of Shares purchased hereunder by all of the Investors.

 

“Purchase Price” means, with respect to an Investor, the number of Shares purchased by such Investor at the Closing times the Per Share Price.

 

“Put Option Closing” has the meaning specified in Section 1.2(a) hereof.

 

“Put Option Closing Date” has the meaning specified in Section 1.2(c) hereof.

 

“Put Option Exercise Notice” has the meaning specified in Section 1.2(a) hereof.

 

“Put Option Exercise Deadline” has the meaning specified in Section 1.2(a) hereof.

 

“Put Option Termination Event” has the meaning specified in Section 1.2(c) hereof.

 

“Put Option Trigger Event” shall mean the occurrence of any of the following events: (i) any Change of Control of the Company, or (ii) the sale or exclusive license of substantially all of the Company’s assets, or similar transaction, involving all or substantially all of the Company’s assets.

 

“Put Right” has the meaning specified in Section 1.2(a) hereof.

 

“Put Shares ” has the meaning specified in Section 1.2(a) hereof.

 

“Real Property” has the meaning specified in Section 3.22 hereof.

 

“Registrable Securities” has the meaning set forth for “2011 Registrable Securities” in the Registration Rights Agreement.

 

8
 

 

Registration Rights Agreement ” means the 2015 Amended and Restated Registration Rights Agreement dated as of the date of this Agreement.

 

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

 

“SEC Documents” has the meaning specified in Section 3.4 hereof.

 

“Securities” has the meaning specified in the preamble to this Agreement.

 

“Subsequent Financing” means any planned issuance by the Company or any of its Subsidiaries of Common Stock, common stock equivalents, indebtedness or a combination of units thereof for cash consideration, except for public offerings of Common Stock or other securities of the Company.

 

“Subsequent Financing Share” means a fraction, the numerator of which is the number of Shares purchased by such Investor pursuant to this Agreement held by such Investor on the date of a Pre-Notice (as defined in Section 4.4(a)), and the denominator of which is the total number of Shares issued to all Investors pursuant to the terms of this Agreement outstanding on the date of such Pre-Notice.

 

“Subsidiary” means, with respect to the Company, any corporation or other entity (other than an entity having no material operations or business during the twelve month period immediately preceding the Execution Date) of which at least a majority of the outstanding shares of stock or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors (or Persons performing similar functions) of such corporation or entity (regardless of whether or not at the time, in the case of a corporation, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the Company or one or more of its Affiliates.

 

“Termination Date” means the first date on which there are no Warrants outstanding.

 

“Trading Day” means any day on which the Common Stock may be purchased and sold on the Principal Market.

 

“Transaction Documents” means, collectively, this Agreement, the Registration Rights Agreement, the Warrants, and all other agreements, documents and other instruments executed and delivered by or on behalf of the Company or any of its officers at the Closing.

 

2013 Investors ” means collectively, the several investors party to the 2013 Purchase Agreement.

 

2013 Purchase Agreement ” means the Securities Purchase Agreement between the Company and certain investors dated January 28, 2013.

 

2015 Investors ” means collectively, the several investors party to the 2015 Purchase Agreement.

 

9
 

 

2015 Purchase Agreement ” means the Securities Purchase Agreement between the Company and certain investors dated the date of this Agreement.

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a stock exchange, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the stock exchange on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Investors of a majority in interest of the Shares then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

1.5.           Other Definitional Provisions. All definitions contained in this Agreement are equally applicable to the singular and plural forms of the terms defined. The words “hereof’, “herein” and “hereunder” and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.

 

2.            Representations and Warranties of Each Investor. Each Investor (with respect to itself only) hereby represents and warrants to the Company and agrees with the Company that, as of the Execution Date and as of the Closing Date:

 

2.1            Authorization; Enforceability. Such Investor is duly and validly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization as set forth below such Investor’s name on the signature page hereof with the requisite corporate power and authority to purchase the Shares and Warrant to be purchased by it hereunder and to execute and deliver this Agreement and the other Transaction Documents to which it is a party. This Agreement constitutes, and upon execution and delivery thereof, each other Transaction Document to which such Investor is a party will constitute, such Investor’s valid and legally binding obligation, enforceable in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) general principles of equity.

 

2.2            Accredited Investor. Such Investor (i) is an “accredited investor” as that term is defined in Rule 501 of Regulation D, (ii) is acquiring the Securities in the ordinary course of its business, solely for its own account, and not with a view to the public resale or distribution of all or any part thereof, except pursuant to sales that are registered under the Securities Act or are exempt from the registration requirements of, the Securities Act and does not have any agreement or understanding with any person to distribute any of the Securities; provided, however, that, in making such representation, such Investor does not agree to hold the Securities for any minimum or specific term and reserves the right to sell, transfer or otherwise dispose of the Securities at any time in accordance with the provisions of this Agreement and with Federal and state securities laws applicable to such sale, transfer or disposition.

 

10
 

 

2.3            Information. The Company has, prior to the Execution Date, provided such Investor with information regarding the business, operations and financial condition of the Company and has, prior to the Execution Date, granted to such Investor the opportunity to ask questions of and receive satisfactory answers from representatives of the Company, its officers, directors, employees and agents concerning the Company and materials relating to the terms and conditions of the purchase and sale of the Securities hereunder, as such Investor deems relevant in making an informed decision with respect to its investment in the Securities. Such Investor 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. Neither such information nor any other investigation conducted by such Investor or any of its representatives shall modify, amend or otherwise affect such Investor’s right to rely on the Company’s representations and warranties contained in this Agreement.

 

2.4            Limitations on Disposition. Such Investor acknowledges that, except as provided in the Registration Rights Agreement, the Securities have not been and are not being registered under the Securities Act and may not be transferred or resold without registration under the Securities Act or unless pursuant to an exemption therefrom.

 

2.5            Legend. Such Investor understands that the certificates representing the Securities may bear at issuance a restrictive legend in substantially the following form:

 

(a)          “The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and may not be offered, transferred, pledged, hypothecated, sold or otherwise disposed of unless a registration statement under the Securities Act and applicable state securities laws shall have become effective with regard thereto, or an exemption from registration under the Securities Act and applicable state securities laws is available in connection with such offer or sale.”

 

2.6            Reliance on Exemptions. Such Investor understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of U.S. federal and state securities laws and that the Company is relying upon the truth and accuracy of the representations and warranties of such Investor set forth in this Section 2 in order to determine the availability of such exemptions and the eligibility of such Investor to acquire the Securities.

 

2.7            Non-Affiliate Status; Common Stock Ownership. Other than Battery, such Investor is not an Affiliate of the Company or of any other Investor and is not acting in association or concert with any other Person in regard to its purchase of the Securities or otherwise in respect of the Company. Such Investor’s investment in the Securities is not for the purpose of acquiring, directly or indirectly, control of, and it has no intent to acquire or exercise control of, the Company or to influence the decisions or policies of the Board of Directors.

 

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3.           Representations and Warranties of the Company. The Company hereby represents and warrants to each Investor that, except as expressly set forth on the disclosure schedules to this Agreement, as of the Execution Date and as of the Closing Date:

 

3.1            Organization, Good Standing and Qualification. The Company and each of its Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction under which it is incorporated, and has all requisite corporate power and authority to conduct its business as currently conducted and to execute, deliver and perform all of its obligations under this Agreement and to consummate the transactions contemplated hereby. The Company and each of its subsidiaries is qualified to do business as a foreign corporation in each jurisdiction where failure to be so qualified could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

3.2            Authorization; Consents. The Company has the requisite corporate power and authority to enter into and perform its obligations under the Transaction Documents, including, without limitation, its obligations to issue and sell the Securities to the Investors in accordance with the terms hereof and thereof, and to issue the Warrant Shares upon exercise of the Warrants. All corporate action on the part of the Company by its officers, directors and stockholders necessary for the authorization, execution and delivery of, and the performance by the Company of its obligations under, the Transaction Documents has been taken, and no further consent or authorization of the Company, its Board of Directors, stockholders, any Governmental Authority or organization (other than such approval as may be required under the Securities Act and applicable state securities laws in respect of the Registration Rights Agreement), or any other person or entity is required (pursuant to any rule of FINRA or otherwise).

 

3.3            Due Execution; Enforceability. This Agreement has been and, at or prior to the Closing, each other Transaction Document to be delivered at the Closing will be, duly executed and delivered by the Company. This Agreement constitutes and, upon the execution and delivery thereof by the Company, each other Transaction Document will constitute the valid and legally binding obligation of the Company, enforceable against it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or other similar laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) general principles of equity.

 

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3.4            Disclosure Documents; Agreements; Financial Statements; Other Information. The Company is subject to the reporting requirements of the Exchange Act and has filed with the Commission all reports, schedules, registration statements and definitive proxy statements that the Company was required to file with the Commission during the preceding twelve calendar months (collectively, the “SEC Documents”). The Company is not aware of any event occurring or expected to occur on or prior to the Closing Date (other than the transactions effected hereby and quarterly releases of financial results) that would require the filing of, or with respect to which the Company intends to file, a Form 8-K after the Closing. Each SEC Document, as of the date of the filing thereof with the Commission (or if amended or superseded by a filing prior to the Execution Date, then on the date of such amending or superseding filing), complied in all material respects with the requirements of the Securities Act or Exchange Act, as applicable, and the rules and regulations promulgated thereunder and, as of the date of such filing (or if amended or superseded by a filing prior to the Execution Date, then on the date of such filing), such SEC Document (including all exhibits and schedules thereto and documents incorporated by reference therein) did not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. All documents required to be filed as exhibits to the SEC Documents have been filed as required. Except as set forth in the Disclosure Documents, the Company has no liabilities, contingent or otherwise, other than liabilities incurred in the ordinary course of business which, under GAAP, are not required to be reflected in the financial statements included in the Disclosure Documents and which, individually or in the aggregate, are not material to the business or financial condition of the Company. As of their respective dates, the financial statements of the Company included in the SEC Documents have been prepared in accordance with GAAP (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end adjustments).

 

3.5            Capitalization; Debt Schedule. The capitalization of the Company as of the date hereof, including its authorized capital stock, the number of shares issued and outstanding, the number of shares issuable and reserved for issuance pursuant to the Company’s stock option plans and agreements, the number of shares issuable and reserved for issuance pursuant to securities (other than the Warrants) exercisable for, or convertible into or exchangeable for any shares of Common Stock and the number of shares initially to be reserved for issuance upon exercise of the Warrants, is set forth on Schedule 3.5 hereto. All issued and outstanding shares of capital stock of the Company have been, or upon issuance will be, validly issued, fully paid and non-assessable. No shares of the capital stock of the Company were issued in violation of preemptive rights or any other similar rights of security holders of the Company or any Liens created by or through the Company. Except as disclosed on Schedule 3.5 or as contemplated herein, there are no outstanding preemptive rights, rights of first refusal, shareholder rights, options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exercisable or exchangeable for, any shares of capital stock of the Company, or arrangements by which the Company is or may become (as a result of the transactions contemplated hereby or the other Transaction Documents or otherwise) bound to issue additional shares of capital stock of the Company (whether pursuant to anti-dilution, “reset” or other similar provisions). Except as described on Schedule 3.5 hereto, the Company has no material Debt outstanding as of the date hereof.

 

3.6            Due Authorization; Valid Issuance. The Shares and Warrants are duly authorized and, when issued, sold and delivered in accordance with the terms hereof, (i) the Shares and Warrants will be duly and validly issued, and the Shares will be fully paid and nonassessable; in each case, free and clear of any Liens imposed by or through the Company, and (ii) assuming the accuracy of each Investor’s representations in this Agreement, the Shares and Warrants will be issued, sold and delivered in compliance with all applicable Federal and state securities laws. The Warrant Shares are duly authorized and reserved for issuance and, when issued in accordance with the terms of the Warrants, will be duly and validly issued, fully paid and nonassessable, free and clear of any Liens imposed by or through the Company and, assuming the accuracy of each Investor’s representations in this Agreement at the time of exercise, will be issued, sold and delivered in compliance with all applicable Federal and state securities laws.

 

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3.7           No Conflict with Other Instruments. The Company is not in violation of any provisions of its charter, bylaws or any other governing document or in default (and no event has occurred which, with notice or lapse of time or both, would constitute a default) under any provision of any instrument or contract to which it is a party or by which it or any of its Property is bound, or in violation of any provision of any Governmental Requirement applicable to it, except for any violation or default under any such instrument or contract or any violation of any provision of a Governmental Requirement that, in either such case, has not had or would not reasonably be expected to have a Material Adverse Effect (any such violation or default being referred to herein as a “Current Violation”). Provided that the Amended Charter is duly filed with the Secretary of State of Delaware, the (i) execution, delivery and performance of this Agreement and the other Transaction Documents, and (ii) consummation of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Shares and the Warrants and the reservation for issuance and issuance of the Warrant Shares) will not result in any violation of any provisions of the Company’s charter, Bylaws or any other governing document or in a default under any provision of any instrument or contract to which it is a party or by which it or any of its Property is bound, or in violation of any provision of any Governmental Requirement applicable to the Company or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument or contract or an event which results in the creation of any Lien upon any assets of the Company.

 

3.8           Financial Condition; Taxes; Litigation.

 

(a)          The Company’s financial condition is, in all material respects, as described in the Disclosure Documents, except for changes in the ordinary course of business and normal year-end adjustments that are not, in the aggregate, materially adverse to the business or financial condition of the Company. There has been no (i) material adverse change to the Company’s business, operations, properties, financial condition, or results of operations since the date of the Company’s most recent audited financial statements contained in the Disclosure Documents or (ii) change by the Company in its accounting principles, policies and methods except as required by changes in GAAP or applicable law.

 

(b)          The Company (i) has prepared in good faith and duly and timely filed all tax returns required to be filed by it and such returns are complete and accurate in all material respects and (ii) has paid all taxes required to have been paid by it, except for taxes which it reasonably disputes in good faith or the failure of which to pay has not had or would not reasonably be expected to have a Material Adverse Effect, and has no liability with respect to accrued taxes in excess of the amounts that are described as accrued in the most recent financial statements included in the Disclosure Documents.

 

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(c)          Except as described in Schedule 3.8(c), the Company is not the subject of any pending or, to the Company’s knowledge, threatened inquiry, investigation or administrative or legal proceeding by the Internal Revenue Service, the taxing authorities of any state or local jurisdiction (other than with respect to taxes which it reasonably disputes in good faith or the failure of which to pay has not had or would not reasonably be expected to have a Material Adverse Effect), the Commission, FINRA, any state securities commission or other Governmental Authority.

 

(d)          Except as described in Schedule 3.8(d), there is no material claim, litigation or administrative proceeding pending or, to the Company’s knowledge, threatened or contemplated, against the Company or, to the Company’s knowledge, against any officer, director or employee of the Company in connection with such person’s employment therewith. The Company is not a party to or subject to the provisions of, any order, writ, injunction, judgment or decree of any court or Governmental Authority which has had or would reasonably be expected to have a Material Adverse Effect.

 

3.9           Acknowledgement of Dilution. The Company acknowledges that the issuance of Warrant Shares upon exercise of the Warrants may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligation to issue Warrant Shares upon exercise of the Warrants in accordance with the terms of the Warrants, is unconditional (other than with respect to the conditions set forth in the Warrants) regardless of the effect of any such dilution.

 

3.10         Intellectual Property. Except as set forth in Schedule 3.10:

 

(a)          The Company owns, free and clear of claims or rights or any other Person, with full right to use, sell, license, sublicense, dispose of, and bring actions for infringement of, or, to the knowledge of the Company, has acquired licenses or other rights to use, all Intellectual Property necessary for the conduct of its business as presently conducted (other than with respect to software which is generally commercially available and not used or incorporated into the Company’s products and open source software which may be subject to one or more “general public” licenses). All works that are used or incorporated into the Company’s services, products or services or products actively under development and which is proprietary to the Company was developed by or for the Company by the current or former employees, consultants or independent contractors of the Company or its predecessors in interest or purchased or licensed by the Company or its predecessors in interest.

 

(b)          The business of the Company as presently conducted and the production, marketing, licensing, use and servicing of any products or services of the Company do not, to the knowledge of the Company, infringe or conflict with any patent, trademark, copyright, or trade secret rights of any third parties or any other Intellectual Property of any third parties in any material respect. The Company has not received written notice from any third party asserting that any Intellectual Property owned or licensed by the Company, or which the Company otherwise has the right to use, is invalid or unenforceable by the Company and, to the Company’s knowledge, there is no valid basis for any such claim (whether or not pending or threatened).

 

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(c)          No claim is pending or, to the Company’s knowledge, threatened against the Company nor has the Company received any written notice or other written claim from any Person asserting that any of the Company’s present or contemplated activities infringe or may infringe in any material respect any Intellectual Property of such Person and the Company is not aware of any infringement by any other Person of any material rights of the Company under any Intellectual Property Rights.

 

(d)          All licenses or other agreements under which the Company is granted Intellectual Property (excluding licenses to use software utilized in the Company’s internal operations and which is generally commercially available) are in full force and effect and, to the Company’s knowledge, there is no material default by any party thereto. The Company has no reason to believe that the licensors under such licenses and other agreements do not have and did not have all requisite power and authority to grant the rights to the Intellectual Property purported to be granted thereby.

 

(e)          All licenses or other agreements under which the Company has granted rights to Intellectual Property to others (including all end-user agreements) since January 1, 2008, are in full force and effect, unless otherwise terminated in accordance with the terms of such licenses or arrangements, there has been no material default by the Company thereunder and, to the Company’s knowledge, there is no material default by any other party thereto.

 

(f)          The Company has taken all steps required in accordance with commercially reasonable business practice to establish and preserve its ownership in its owned Intellectual Property and to keep confidential all material technical information developed by or belonging to the Company which has not been patented or copyrighted. The Company is not making any material unlawful use of any Intellectual Property of any other Person, including, without limitation, any former employer of any past or present employees of the Company. To the Company’s knowledge, neither the Company nor any of its employees has any agreements or arrangements with former employers of such employees relating to any Intellectual Property of such employers, which materially interfere or conflict with the performance of such employee’s duties for the Company or result in any former employers of such employees having any rights in, or claims on, the Company’s Intellectual Property. Each current and former employee of the Company has executed agreements regarding confidentiality, proprietary information and assignment of inventions and copyrights to the Company, each independent contractor or consultant of the Company has executed agreements regarding confidentiality and proprietary information, and the Company has not received written notice that any employee, consultant or independent contractor is in violation of any agreement or in breach of any agreement or arrangement with former or present employers relating to proprietary information or assignment of inventions. Without limiting the foregoing: (i) the Company has taken reasonable security measures to guard against unauthorized disclosure or use of any of its Intellectual Property; and the Company has no reason to believe that any Person (including, without limitation, any former employee or consultant of the Company) has unauthorized possession of any of its Intellectual Property, or any part thereof, or that any Person has obtained unauthorized access to any of its Intellectual Property. The Company is in compliance in all material respects with its obligations pursuant to all agreements relating to Intellectual Property rights that are the subject of licenses granted by third parties, except for any non-compliance that has not had or would not reasonably be expected to have a Material Adverse Effect.

 

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3.11          Registration Rights; Rights of Participation. Except as described on Schedule 3.11 hereto, the Company has not granted or agreed to grant to any person or entity any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the Commission or any other governmental authority which has not been satisfied in full prior or waived to the date hereof.

 

3.12          Fees . Except as contemplated by Section 7.11 hereof and as set forth on Schedule 3.12 or disclosed in writing to the Investor by the Company, the Company is not obligated to pay any compensation or other fee, cost or related expenditure to any underwriter, broker, agent or other representative in connection with the transactions contemplated hereby. The Company will indemnify and hold harmless each Investor from and against any claim by any person or entity alleging that, as a result of any agreement or arrangement between such Person and the Company, such Investor is obligated to pay any such compensation, fee, cost or related expenditure in connection with the transactions contemplated hereby or the other Transaction Documents.

 

3.13          Solicitation; Other Issuances of Securities. Neither the Company nor any of its Subsidiaries or Affiliates, nor any person acting on its or their behalf, (i) has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities, or (ii) has, directly or indirectly, made any offers or sales of any security or the right to purchase any security, or solicited any offers to buy any security or any such right, under circumstances that would require registration of the Securities under the Securities Act.

 

3.14          Foreign Corrupt Practices. Neither the Company, nor to the Company’s knowledge any director, officer, agent, employee or other person acting on behalf of the Company, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee (including without limitation any bribe, rebate, payoff, influence payment, kickback or other unlawful payment), or (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

3.15          Key Employees. Each of the Company’s executive officers (as defined in Rule 501(f) of the Securities Act) (each, a “Key Employee”) is currently serving in the capacity described in the Disclosure Documents. The Company has no knowledge of any fact or circumstance (including without limitation (i) the terms of any agreement to which such person is a party or any litigation in which such person is or may become involved and (ii) any illness or medical condition that could reasonably be expected to result in the disability or incapacity of such person) that would limit or prevent any such person from serving in such capacity on a full- time basis in the foreseeable future, or of any intention on the part of any such person to limit or terminate his or her employment with the Company.

 

3.16          Employee Matters. There is no strike, labor dispute or union organization activities pending or, to the knowledge of the Company, threatened between it and its employees. No employees of the Company belong to any union or collective bargaining unit. The Company has complied in all material respects with all applicable federal and state equal opportunity and other laws related to employment.

 

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3.17          Environment. To the Company’s knowledge, the Company does not have any current liability under any Environmental Law, nor, to the knowledge of the Company, do any factors exist that are reasonably likely to give rise to any such liability that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect. To the Company’s knowledge, the Company has not violated any Environmental Law applicable to it now or previously in effect, other than such violations or infringements that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect.

 

3.18          ERISA. Except as described on Schedule 3.18, the Company does not maintain or contribute to, or have any obligation under, any Pension Plan. The Company is in compliance in all material respects with the presently applicable provisions of ERISA and the United States Internal Revenue Code of 1986, as amended, with respect to each Pension Plan except in any such case for any such matters that, individually or in the aggregate, have not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

3.19          Insurance. The Company maintains insurance in such amounts and covering such losses and risks as the Company believes to be reasonably prudent in relation to the businesses in which the Company is engaged. No notice of cancellation has been received for any of such policies and the Company reasonably believes that is in compliance with all of the terms and conditions thereof The Company has no reason to believe that it will not be able to renew any existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue doing business as currently conducted without a significant increase in cost, other than normal increases in the industry. Without limiting the generality of the foregoing, the Company maintains Director’s and Officer’s insurance in an amount deemed to be reasonable and appropriate by the Company’s Board of Directors.

 

3.20          Property. The Company does not own any real property. The Company has good and marketable title to all personal Property owned by it which, in each such case free and clear of all Liens except for Permitted Liens and except for such Liens which, individually and together with all other Liens (including without limitation Permitted Liens) do not have, and cannot reasonably be expected to have, a Material Adverse Effect. Any Property held under lease by the Company is held by it under valid, subsisting and enforceable leases with such exceptions as are not material and do not materially interfere with the use made or proposed to be made of such Property by the Company.

 

3.21          Regulatory Permits. The Company possesses all material certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct its businesses other than where the failure to possess such certificates, authorizations or permits, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect. The Company has not received any notice or otherwise become aware of any proceedings, inquiries or investigations relating to the revocation or modification of any such certificate, authorization or permit.

 

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3.22          Exchange Act Registration; Listing. Exchange Act Registration; Listing. The Company files supplementary and periodic information, documents, and reports pursuant to Section 15(d) of the Exchange Act. The Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange Act and is traded over-the-counter and quoted on the over-the-counter Bulletin Board QB or QX Markets (collectively, “OTCBB”). The Company has taken no action designed to, or which, to the knowledge of the Company, would reasonably be expected to have the effect of, terminating the registration of the Common Stock under the Exchange Act or ceasing the trading of the Common Stock or its quoting on the OTCBB

 

3.23          Investment Company Status. The Company is not, and immediately after receipt of payment for the Shares and the Warrants issued under this Agreement will not be, an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company Act”), and shall conduct its business in a manner so that it will not become subject to the Investment Company Act.

 

3.24          Transfer Taxes. No stock transfer or other taxes (other than income taxes) are required to be paid in connection with the issuance and sale of any of the Securities, other than such taxes for which the Company has established appropriate reserves and intends to pay in full on or before the Closing.

 

3.25          Sarbanes-Oxley Act; Internal Controls and Procedures. The Company is in material compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof. The Company maintains internal accounting controls, policies and procedures, and such books and records as are reasonably designed to provide reasonable assurance that (i) all transactions to which the Company is a party or by which its properties are bound are effected by a duly authorized employee or agent of the Company, supervised by and acting within the scope of the authority granted by the Company’s senior management; (ii) the recorded accounting of the Company’s consolidated assets is compared with existing assets at regular intervals; and (iii) all transactions to which the Company is a party, or by which its properties are bound, are recorded (and such records maintained) in accordance with all Governmental Requirements and as may be necessary or appropriate to ensure that the financial statements of the Company are prepared in accordance with GAAP.

 

3.26          Embargoed Person. None of the funds or other assets of the Company shall constitute property of, or shall be beneficially owned, directly or indirectly, by any person subject to trade restrictions under United States law, including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. § 1701 et seq., the Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated under any such United States laws (each, an “Embargoed Person”), with the result that the investments evidenced by the Securities are or would be in violation of law. No Embargoed Person shall have any interest of any nature whatsoever in the Company with the result that the investments evidenced by the Securities are or would be in violation of law. None of the funds or other assets of the Company shall be derived from any unlawful activity with the result that the investments evidenced by the Securities are or would be in violation of law.

 

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3.27          Solvency. As of the Execution Date and as of the Closing Date, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing Debt as such Debt matures or is otherwise payable; (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted taking into account the current and projected capital requirements of the business conducted by the Company and projected capital availability; and (iii) the current cash flow of the Company, together with the proceeds the Company would receive upon liquidation of its assets, after taking into account all anticipated uses of such amounts, would be sufficient to pay all Debt when such Debt is required to be paid. The Company has no knowledge of any facts or circumstances which lead it to believe that it will be required to file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction, and has no present intention to so file.

 

3.28          Transactions with Interested Persons. Except as set forth in the Disclosure Documents, no officer, director or employee of the Company is or has made any arrangements with the Company to become a party to any transaction with the Company (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

 

3.29         Customers and Suppliers. Except as set forth in the Disclosure Documents, the relationships of the Company with its customers and suppliers are maintained on commercially reasonable terms. To the Company’s knowledge, no customer or supplier of the Company has any plan or intention to terminate its agreement with the Company, which termination would reasonably be expected to have a Material Adverse Effect.

 

3.30          FDA Matters and Clinical Trials.

 

(a)          The Company has not received any notices or correspondence from any federal, state, local or foreign regulatory body that regulates the types of matters subject to the jurisdiction of the U.S. Food and Drug Administration (“Health Authorities”) which have not been resolved requiring or threatening the termination, suspension or modification of any animal studies, preclinical tests or clinical trials conducted by or on behalf of the Company or in which the Company has participated that are described in the Disclosure Documents or the results of which are referred to in the Disclosure Documents. To the knowledge of the Company, the currently pending clinical trials, studies and other preclinical tests conducted by or on behalf of the Company and that are described in the Disclosure Documents or the results of which are referred to in the Disclosure Documents, are being conducted in accordance with experimental protocols, procedures and controls generally used by qualified experts in the preclinical or clinical study of new drugs.

 

(b)          The Company has no knowledge of any adverse event that has resulted from any of such studies, tests or trials that was not disclosed as required to any Health Authority.

 

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3.31          Full Disclosure. The representations, warranties and written statements contained in this Agreement and the other Transaction Documents and in the certificates, exhibits and schedules delivered to such Investor by the Company pursuant to this Agreement and the other Transaction Documents and in connection with such Investor’s due diligence investigation of the Company, do not contain any untrue statement of a material fact, and do not omit to state a material fact required to be stated therein or necessary in order to make such representations, warranties or statements not misleading in light of the circumstances under which they were made. Neither the Company nor any Person acting on its behalf or at its direction has provided such Investor with material non-public information. Following the filing of the Current Report on Form 8-K in accordance with Section 4.1(c) hereof, to the Company’s knowledge, such Investor will not possess any material non-public information concerning the Company. The Company acknowledges that such Investor is relying on the representations, acknowledgments and agreements made by the Company in this Section 3.31 and elsewhere in this Agreement in making trading and other decisions concerning the Company’s securities.

 

3.32          No Other Agreements. The Company has not, directly or indirectly, entered into any agreement with or granted any right to any Investor relating to the terms or conditions of the transactions contemplated by the Transaction Documents, except as expressly set forth in the Transaction Documents.

 

4.           Covenants of the Company and Each Investor.

 

4.1           The Company agrees with each Investor that the Company will:

 

(a)          file a Form D with respect to the Securities issued at the Closing as and when required under Regulation D and provide a copy thereof to such Investor promptly after such filing;

 

(b)          take such action as the Company reasonably determines upon the advice of counsel is necessary to qualify the Shares and Warrants for sale under applicable state or “blue-sky” laws or obtain an exemption therefrom, and shall promptly provide evidence of any such action to such Investor at such Investor’s request; and

 

(c)          on or prior to 5:00 p.m. (eastern time) on the fourth Business Day following the Execution Date, file with the Commission a Current Report on Form 8-K disclosing the material terms of this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby, including as exhibits this Agreement and the other Transaction Documents; provided, however, that each Investor shall have a reasonable opportunity to review and comment on any such Form 8-K prior to the issuance or filing thereof. Thereafter, the Company shall timely file any filings and notices required by the Commission or applicable law with respect to the transactions contemplated hereby;

 

(d)           maintain its corporate existence in good standing;

 

(e)           maintain, keep and preserve all of its Properties necessary in the proper conduct of its businesses in good repair, working order and condition (ordinary wear and tear excepted) and make all necessary repairs, renewals and replacements and improvements thereto, except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

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(f)           pay or discharge before becoming delinquent (a) all taxes, levies, assessments and governmental charges imposed on it or its income or profits or any of its Property and (b) all lawful claims for labor, material and supplies, which, if unpaid, might become a Lien upon any of its Property, except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; provided, however, that the Company shall not be required to pay or discharge any tax, levy, assessment or governmental charge, or claim for labor, material or supplies, whose amount, applicability or validity is being contested in good faith by appropriate proceedings being diligently pursued and for which appropriate reserves have been established under GAAP;

 

(g)           comply with all Governmental Requirements applicable to the operation of its business, except for instances of noncompliance that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;,

 

(h)           comply with all agreements, documents and instruments binding on it or affecting its Properties or business, including, without limitation, all Material Contracts, except for instances of noncompliance that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(i)           provide each Investor with copies of all materials sent to its stockholders, in each such case at the same time as delivered to such stockholders;

 

(j)           timely file with the Commission all reports required to be filed pursuant to the Exchange Act and refrain from terminating its status as an issuer required by the Exchange Act to file reports thereunder even if the Exchange Act or the rules or regulations thereunder would permit such termination;

 

(k)           until the earlier of (A) Effective Date of the Registration Statement and (B) the date upon which all Investors are able to sell Shares without volume or manner of sale limitations under Rule 144, take commercially reasonable steps to restrict each of the Company’s Chief Executive Officer, President and Chief Financial Officer (each, a “Specified Employee”) from selling shares of Common Stock; and

 

(l)          use commercially reasonable efforts to maintain adequate insurance coverage (including D&O insurance) for the Company and each Subsidiary.

 

4.2           Voting Rights. The Company agrees that it shall not approve of or give effect to any of the following actions without the written consent of Battery, provided, however, that the Company shall not be required to seek the written consent of Battery in the event that Battery has sold greater than or equal to twenty-five percent (25%) of the Shares it purchases on the Closing Date (“Battery Threshold Amount”):

 

(a)          alter or change the rights, preferences or privileges of the Put Option;

 

(b)          other than the repurchase of up to 2,000,000 Shares from a Company director from time to time, , purchase, redeem or otherwise acquire any of (i) the Company’s equity securities (including warrants, options and other rights to acquire equity securities) or (ii) the Securities, other than (A) a repurchase by the Company at the lower of cost or the fair market value pursuant to existing agreements, (B) the purchase of capital stock from certain stockholders approved by the Investors, (C) pursuant to an exercise of the Put Right or the put rights granted under the Other Securities Purchase Agreements or (D) the contemplated option exchange disclosed in the disclosure schedules to the 2015 Purchase Agreement;

 

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(c)          liquidate, dissolve or wind-up the business and affairs of the Company or consent to any of the foregoing; and

 

(d)          merge or consolidate with another corporation or entity in which the holders of the Company’s voting equity securities immediately prior to the transaction own, directly or indirectly, fifty percent (50%) or less of the voting securities of the surviving corporation unless (i) the consideration for the merger or consolidation is in the form of a cash offer or marketable securities that are registered, saleable and listed on the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (ii) the average daily trading volume of the Common Stock during the Measurement Period immediately preceding the closing of such merger or consolidation is equal to or greater than $1,000,000 and (iii) the purchase price per share is equal to or greater than two hundred fifty percent (250%) of the Per Share Price.

 

4.3            Board Representation. The Company shall be obligated to present one nominee nominated by Battery to become a member of the Company’s Board (the “Battery Member”) either through an action by written consent or through the vote of the Company’s stockholders at the next meeting of the Company’s stockholders, which shall be held no later than three (3) months after the date of this Agreement; provided, however, that the Company shall no longer be obligated to nominate the Battery Member in the event that Battery has sold the Battery Threshold Amount.

 

4.4            No Participation Rights. Each Investor has declined to exercise such Investor’s participation right set forth in the Original 2011 Securities Purchase Agreement with respect to either the transaction effected pursuant to the 2013 Purchase Agreement or the Company’s issuance of convertible promissory notes on December 1, 2014, and thus no longer has any participation right with respect to either the transaction contemplated by the 2015 Purchase Agreement or future financings of the Company.

 

4.5            Reservation of Common Stock. The Company shall, on the Closing Date, have authorized and reserved for issuance to the Investors free from any preemptive rights, and shall keep available at all times during which any Warrants are outstanding, a number of shares of Common Stock (the “Reserved Amount”) that, on the Closing Date, is not less than one hundred percent (100%) of the number of Warrant Shares issuable upon exercise of all of the Warrants issued at the Closing, without regard to any limitation or restriction on such conversion or exercise that may be set forth in the Warrants. The Reserved Amount shall be allocated in accordance with each Investor’s Pro Rata Share. In the event that an Investor shall sell or otherwise transfer any of such Investor’s Warrants, each transferee shall be allocated a pro rata portion of such transferor’s Reserved Amount. Any portion of the Reserved Amount allocated to any Investor or other Person which no longer holds any Warrants shall be reallocated to the remaining Investors pro rata based on the number of Registrable Securities held by such Investors at such time. In the event that the Reserved Amount is insufficient at any time to cover one hundred percent 100% of the Registrable Securities issuable upon the exercise of the Warrants (without regard to any restriction on such conversion or exercise), the Company shall take such action (including without limitation holding a meeting of its stockholders) to increase the Reserved Amount to cover 100% of the Registrable Securities issuable upon such conversion and exercise, such increase to be effective not later than the thirtieth (30th) day (or sixtieth (60th) day, in the event stockholder approval is required for such increase) following the Company’s receipt of written notice of such deficiency. While any Warrants are outstanding, the Company shall not reduce the Reserved Amount without obtaining the prior written consent of each Investor then holding Warrants.

 

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4.6            Use of Proceeds. The Company shall use the proceeds from the sale of the Shares and Warrants for general business purposes; provided, that the Company shall not use any of such proceeds (i) to pay any dividend or make any distribution on any of its securities, or (ii) to repay any loan made to or incurred by any Key Employee or any other officer or director or Affiliate of the Company.

 

4.7            Use of Investor Name. Except as may be required by applicable law and/or this Agreement, the Company shall not use, directly or indirectly, any Investor’s name or the name of any of its Affiliates in any advertisement, announcement, press release or other similar communication unless it has received the prior written consent of any Investor for the specific use contemplated or as otherwise required by applicable law or regulation.

 

4.8            Company’s Instructions to Transfer Agent. . Certificates evidencing the Shares and Warrant Shares shall not contain any legend (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Shares or Warrant Shares pursuant to Rule 144, (iii) if such Shares or Warrant Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares and Warrant Shares and without volume or manner-of-sale restrictions, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Warrant Shares, or if such Shares or Warrant Shares may be sold under Rule 144 and the Company is then in compliance with the current public information required under Rule 144, or if the Shares or Warrant Shares may be sold under Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares or Warrant Shares or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Warrant Shares shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.8, it will, no later than three Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Shares or Warrant Shares, as the case may be, issued with a restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.8. Certificates for Securities subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser.

 

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4.9            Limitations on Disposition. No Investor shall sell, transfer, assign or dispose of any Securities, unless:

 

(a)          there is then in effect an effective registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

 

(b)          such Investor has notified the Company in writing of any such disposition, and furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such Securities under the Securities Act; provided, however, that no such opinion of counsel will be required (A) if the sale, transfer or assignment complies with federal and state securities laws and is made to a fund or other institutional investor that is an Affiliate of such Investor and which is also an “accredited investor” as that term is defined in Rule 501 of Regulation D; provided, that such Affiliate provides the Company with customary accredited investor and investment representations (comparable with those set forth in Section 2.2 hereof), and agrees to be bound by the terms and conditions of this Agreement, (B) if the sale, transfer or assignment is made pursuant to Rule 144 and such Investor provides the Company with evidence reasonably satisfactory to the Company that the proposed transaction satisfies the requirements of Rule 144 or (C) in connection with a bona fide pledge or hypothecation of any Securities under a margin arrangement with a broker-dealer or other financial institution or the sale of any such Securities by such broker-dealer or other financial institution following such Investor’s default under such margin arrangement.

 

4.10          Disclosure of Non-public Information. The Company agrees that it will not at any time following the Execution Date disclose material non-public information to any Investor without first obtaining such Investor’s written consent to such disclosure, except to the extent required by any Transaction Documents. For the avoidance of doubt, any information provided to the Battery Member in its capacity as a member of the Board of Directors shall not be deemed a disclosure of information pursuant to this Section.

 

4.11          Listing. Provided the Company is eligible for trading or listing, as the case may be, the Company (i) has, or promptly following the Closing shall, use its best efforts to include all of the Warrant Shares issuable upon exercise of the Warrants (without regard to any limitation on such exercise) for trading on the OTCBB, and (ii) shall use its best efforts to attain designation and quotation, or listing, of the Common Stock and Warrant Shares on the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange for a minimum of five (5) years following the Closing Date or, in the event the Company is unable to attain such designation and quotation or listing on the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange, to maintain the trading of the Common Stock on the OTCBB or any successor inter-dealer trading system for a minimum of five (5) years following the Closing Date.

 

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4.12          Indemnification of Investors. The Company will indemnify and hold each Investor and its directors, managers, officers, shareholders, members, partners, employees and agents (each, an “Investor Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Investor Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against an Investor, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Investor, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Investor’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Investor may have with any such stockholder or any violations by such Investor of state or federal securities laws or any conduct by such Investor which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Investor Party in respect of which indemnity may be sought pursuant to this Agreement, such Investor 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 Investor 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 Investor 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 following such Investor Party’s written request that it do so, 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 Investor Party. The Company will not be liable to any Investor Party under this Agreement (i) for any settlement by an Investor Party effected without the Company’s prior written consent, which 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 such Investor Party’s wrongful actions or omissions, or gross negligence or to such Investor Party’s breach of any of the representations, warranties, covenants or agreements made by such Investor in this Agreement or in the other Transaction Documents.

 

4.13 Indemnification of the Company. Each Investor, severally and not jointly and only to the extent of such Investor’s Purchase Price, will indemnify and hold the Company and its directors, manager, officers, shareholders, employees and agents (each, a “Company Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Company Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by or on behalf of such Investor in this Agreement or in the other Transaction Documents or (b) any violations by such Investor of state or federal securities laws or any conduct by such Investor which constitutes fraud, gross negligence, willful misconduct or malfeasance. If any action shall be brought against any Company Party in respect of which indemnity may be sought pursuant to this Agreement, such Company Party shall promptly notify the Investor in writing, and the Investor shall have the right to assume the defense thereof with counsel of its own choosing. Any Company 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 Company Party except to the extent that (i) the employment thereof has been specifically authorized by such Investor in writing, (ii) the Investor has failed after a reasonable period of time following such Company Party’s written request that it do so, 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 such Investor and the position of such Company Party. Such Investor will not be liable to any Company Party under this Agreement for any settlement by a Company Party effected without such Investor’s prior written consent, which shall not be unreasonably withheld or delayed.

 

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5.           Intentionally Omitted .

 

6.           Conditions to Closing.

 

6.1           Conditions to Investors’ Obligations at the Closing. Each Investor’s obligations to effect the Closing, including without limitation its obligation to purchase Shares and Warrants at the Closing, are conditioned upon the fulfillment (or waiver by such Investor in its sole and absolute discretion) of each of the following events as of the Closing Date, and the Company shall use commercially reasonable efforts to cause each of such conditions to be satisfied:

 

(a)          the representations and warranties of the Company set forth in this Agreement and in the other Transaction Documents shall be true and correct in all material respects as of such date as if made on such date (except that to the extent that any such representation or warranty relates to a particular date, such representation or warranty shall be true and correct in all material respects as of that particular date);

 

(b)          prior to the Closing Date the Company shall have filed the Amended Charter with the Secretary of State of Delaware authorizing a number shares of Common Stock sufficient to issue the Securities, which Amended Charter shall continue to be in full force and effect as of the Closing Date and shall be in a form acceptable to Battery;

 

(c)          the Company shall have complied with or performed in all material respects all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by the Company on or before the Closing;

 

(d)          the Company shall have delivered to such Investor a certificate, signed by the Chief Executive Officer and Chief Financial Officer of the Company, certifying that the conditions specified in Section 6.1(a), 6.1(c), 6.1(k), 6.1(1), 6.1(m) and 6.1(n) have been fulfilled as of the Closing, it being understood that such Investor may rely on such certificate as though it were a representation and warranty of the Company made herein;

 

(e)           the Company shall have delivered to such Investor an opinion of counsel for the Company, dated as of the Closing Date, in form and substance satisfactory to such Investor;

 

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(f)           the Company shall have delivered to such Investor duly executed certificates representing the Shares and the Warrants being purchased by such Investor, as applicable;

 

(g)           the Company shall have executed and delivered to the Investor the Registration Rights Agreement;

 

(h)           the Company shall deliver to each Investor who requests it, a management rights letter which shall be in a form acceptable to Battery.

 

(i)           the Company shall have delivered to such Investor a certificate, signed by the Secretary or an Assistant Secretary of the Company, attaching (i) the charter and By-Laws of the Company, and (ii) resolutions passed by its Board of Directors to authorize the transactions contemplated hereby and by the other Transaction Documents, and certifying that such documents are true and complete copies of the originals and that such resolutions have not been amended or superseded, it being understood that such Investor may rely on such certificate as a representation and warranty of the Company made herein;

 

(j)          the Company shall have obtained the written agreement of each Specified Employee and critical consultant of the Company to refrain from selling shares of Common Stock for the period specified in, and in accordance with, Section 4.1(k) hereof;

 

(k)          there shall have occurred no material adverse change in the Company’s consolidated business or financial condition since the date of the Company’s most recent financial statements contained in the Disclosure Documents;

 

(1)         the Common Stock shall be traded on the OTCBB or listed on the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange;

 

(m)           the Company shall have authorized and reserved for issuance the aggregate number of shares of Common Stock issuable upon exercise of all of the Warrants to be issued at the Closing (such number to be determined without regard to any restriction on such exercise);

 

(o)           there shall be no injunction, restraining order or decree of any nature of any court or Government Authority of competent jurisdiction that is in effect that restrains or prohibits the consummation of the transactions contemplated hereby and by the other Transaction Documents;

 

(p)           the Company shall have waived any applicable anti-takeover measures under Delaware law or the Company’s charter documents that may be triggered by the actions set forth in the Transaction Documents;

 

(q)           the Company and the Investors shall have made filings, if any, required by the Hart-Scott-Rodino Anti-Trust Improvements Act, as amended; and

 

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(r)           the Company shall have executed an indemnification agreement with the Battery Member, in a form satisfactory to Battery, and shall include the Battery Member on the Company’s D&O Insurance Policy.

 

6.2           Conditions to Company’s Obligations at the Closing. The Company’s obligations to effect the Closing with each Investor are conditioned upon the fulfillment (or waiver by the Company in its sole and absolute discretion) of each of the following events as of the Closing Date:

 

(a)           the representations and warranties of such Investor set forth in this Agreement and in the other Transaction Documents shall be true and correct in all material respects as of such date as if made on such date (except that to the extent that any such representation or warranty relates to a particular date, such representation or warranty shall be true and correct in all material respects as of that date);

 

(b)           such Investor shall have complied with or performed all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by such Investor on or before the Closing;

 

(c)           there shall be no injunction, restraining order or decree of any nature of any court or Government Authority of competent jurisdiction that is in effect that restrains or prohibits the consummation of the transactions contemplated hereby and by the other Transaction Documents;

 

(d)           such Investor shall have executed each Transaction Document to which it is a party and shall have delivered the same to the Company; and

 

(e)           such Investor shall have tendered to the Company the Purchase Price for the Shares and the Warrant being purchased by it at the Closing by wire transfer of immediately available funds.

 

7.            Miscellaneous.

 

7.1            Survival; Severability. The representations, warranties, covenants and indemnities made by the parties herein and in the other Transaction Documents shall survive the Closing notwithstanding any due diligence investigation made by or on behalf of the party seeking to rely thereon. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that in such case the parties shall negotiate in good faith to replace such provision with a new provision which is not illegal, unenforceable or void, as long as such new provision does not materially change the economic benefits of this Agreement to the parties.

 

7.2            Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. After the Closing, the Investors may assign their respective rights and obligations hereunder, in connection with any private sale or transfer of the Shares or Warrants in accordance with the terms hereof, as long as, as a condition precedent to such transfer, the transferee executes an acknowledgment agreeing to be bound by the applicable provisions of this Agreement, in which case the term “Investor” shall be deemed to refer to such transferee as though such transferee were an original signatory hereto. The Company may not assign its rights or obligations under this Agreement.

 

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7.3            No Reliance. Each party acknowledges that (i) it has such knowledge in business and financial matters as to be fully capable of evaluating this Agreement, the other Transaction Documents, and the transactions contemplated hereby and thereby, (ii) it is not relying on any advice or representation or warranty of any other party in connection with entering into this Agreement, the other Transaction Documents, or such transactions (other than the representations and warranties made in this Agreement or the other Transaction Documents), (iii) it has not received from any party any assurance or guarantee as to the merits (whether legal, regulatory, tax, financial or otherwise) of entering into this Agreement or the other Transaction Documents or the performance of its obligations hereunder and thereunder, and (iv) it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed necessary, and has entered into this Agreement and the other Transaction Documents based on its own independent judgment and on the advice of its advisors as it has deemed necessary, and not on any view (whether written or oral) expressed by any party.

 

7.4            Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor hereunder are several and not joint with the obligations of the other Investors hereunder, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor hereunder. The Company acknowledges and agrees that nothing contained herein or in any other agreement or document delivered at Closing, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or a “group” as described in Section 13(d) of the Exchange Act, or create a presumption that the Investors are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Investor has been represented by its own separate counsel in connection with the transactions contemplated hereby, shall be entitled to protect and enforce its rights, including without limitation rights arising out of this Agreement or the other Transaction Documents, individually, and shall not be required to be join any other Investor as an additional party in any proceeding for such purpose.

 

7.5            Injunctive Relief. The parties hereto acknowledge and agree that a breach by either of their obligations hereunder will cause irreparable harm the other party and that the remedy or remedies at law for any such breach will be inadequate and agrees, in the event of any such breach, in addition to all other available remedies, the non-breaching party shall be entitled to an injunction restraining any breach and requiring immediate and specific performance of such obligations.

 

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7.6            Investors’ Trading Activity. The Company acknowledges that, following the filing of the Current Report on Form 8-K described in paragraph 4.1 above, each Investor shall have the right to purchase or sell, long or short, Common Stock and instruments or contracts whose value is derived from the market value of the Common Stock, and that sales of or certain derivative transactions relating to the Common Stock may have a negative impact on the market price of the Common Stock.

 

7.7            Governing Law; Jurisdiction. This Agreement shall be governed by and construed under the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the City and County of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby and hereby irrevocably waives, and agrees not to assert in any such 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 brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. 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 to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. In any action, suit or proceeding in any jurisdiction brought by any party against any other party, the parties each knowingly and intentionally, to the greatest extent permitted by applicable law, hereby absolutely, unconditionally, irrevocably and expressly waives forever trial by jury.

 

7.8            Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. This Agreement may be executed and delivered by facsimile transmission.

 

7.9            Headings. The headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

7.10         Notices. Any notice, demand or request required or permitted to be given by the Company or the Investor pursuant to the terms of this Agreement shall be in writing and shall be deemed delivered (i) when delivered personally or by verifiable facsimile transmission, unless such delivery is made on a day that is not a Business Day, in which case such delivery will be deemed to be made on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to an overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed as follows:

 

If to the Company : Joel Ackerman, Chief Executive Officer

Champions Oncology, Inc.

855 North Wolfe Street, Suite 619

Baltimore, Maryland 21205

Tel (410) 369-0365

Fax (410) 369-0390

jackerman@championsoncology.com

 

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with a copy to : Hillel Tendler, Esquire

Neuberger, Quinn, Gielen, Rubin & Gibber, P.A.

One South Street, 27 th Floor

Baltimore, Maryland 21202

Tel (41) 332-8552

Fax (410) 332-8553

ht@nqgrg.com

 

and if to any Investor, to such address for such Investor as shall appear on the signature page hereof executed by such Investor, or as shall be designated by such Investor in writing to the Company in accordance with this Section 7.10.

 

7.11  Expenses. The Company and each Investor shall pay all costs and expenses that it incurs in connection with the negotiation, execution, delivery and performance of this Agreement or the other Transaction Documents, provided, however, that that the Company shall, at the Closing, pay up to $75,000 in immediately available funds for all reasonable, documented out-of-pocket expenses (including without limitation reasonable legal fees and expenses) incurred or to be incurred by Battery in connection its due diligence investigation of the Company and the negotiation, preparation, execution, delivery and performance of this Agreement and the other Transaction Documents.

 

7.12 Entire Agreement; Amendments. This Agreement and the other Transaction Documents constitute the entire agreement between the parties with regard to the subject matter hereof and thereof, superseding all prior agreements or understandings, whether written or oral, between or among the parties. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and the holders of at least a majority of the Shares and Warrant Shares into which all of the Warrants then outstanding are exercisable (without regard to any limitation on such exercise), and no provision hereof may be waived other than by a written instrument signed by the party against whom enforcement of any such waiver is sought. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

[Signature Pages to Follow]

 

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

 

  CHAMPIONS ONCOLOGY, INC.
     
  By: /s/ Joel Ackerman
    Name: Joel Ackerman
    Title: Chief Executive Officer

 

  BATTERY VENTURES IX, L.P.
  By: Battery Partners IX, LLC
    General Partner
         
    By: /s/ Scott Tobin
      Name: Scott Tobin
      Title: Member Manager

 

  BATTERY INVESTMENT PARTNERS, IX, LLC
  By: Battery Partners IX, LLC
    Managing Member
         
    By: /s/ Scott Tobin
      Name: Scott Tobin
      Title: Member Manager

 

  /s/ Joel Ackerman
  Joel Ackerman
   
  /s/ Ronnie Morris
  Ronnie Morris

 

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SCHEDULE OF INVESTORS

 

Name   Purchase
Price
    Number of
Shares
    Number of
Warrants
 
Battery Ventures IX, L.P.   $ 4,059,410       5,412,547       811,882  
Battery Investment Partners IX, LLC   $ 40,590       54,120       8,118  
Harris & Harris Group, Inc.   $ 2,000,000       2,666,667       0  
Perceptive Life Sciences Master Fund Ltd.   $ 1,250,000       1,666,667       0  
Porter Partners, L.P.   $ 340,000       453,333       0  
EDJ Limited   $ 60,000       80,000       0  
Northwood Capital Partners LP   $ 200,000       266,667       0  
The Oliver D. Curme Children’s Trust - 1997   $ 500,000       666,667       100,000  
Richard L. Sandor Revocable Trust   $ 250,000       333,333       50,000  
Ronnie Morris, M.D.   $ 250,000       333,333       0  
Joel Ackerman   $ 250,000       333,333       0  
Steve Geller   $ 100,000       133,333       20,000  
Bernard Kaminetsky   $ 100,000       133,333       20,000  
TOTAL   $ 9,400,000       12,533,333       1,010,000  

 

34

 

 

Exhibit 10.4

 

AMENDED AND RESTATED 2013 SECURITIES PURCHASE AGREEMENT

 

This AMENDED AND RESTATED 2013 SECURITIES PURCHASE AGREEMENT (this “Agreement” ), dated as of March 13, 2015, by and between Champions Oncology, Inc., a Delaware corporation (the “Company” ), Battery Ventures IX, L.P., a Delaware limited partnership (“Ventures” ), Battery Investment Partners IX, LLC, a Delaware limited liability company (together with Ventures, “Battery” ), PAR Investment Partners, L.P., a Delaware limited partnership (“ PAR ”), Joel Ackerman (“ Ackerman ”) and Ronnie Morris (“ Morris ”) amends and restates in its entirety the Securities Purchase Agreement dated as of January 28, 2013 (the “ Original 2013 Securities Purchase Agreement ”) between the Company, Battery, PAR, Ackerman, Morris and the other parties to the Original 2013 Securities Purchase Agreement (such parties, Battery, PAR, Ackerman and Morris being the “Investors” ), as amended by the Amendment No. 1 to 2013 Securities Purchase Agreement dated January 29, 2014.

 

A.           Pursuant to the Original 2013 Securities Purchase Agreement, the Company sold to each Investor, and each Investor purchased, on the terms and subject to the conditions set forth in the Original 2013 Securities Purchase Agreement, (i) shares (the “Shares” ) of the Company’s common stock, $0.001 par value per share (the “Common Stock” ), and (ii) a Warrant in the form attached thereto as Exhibit A (each, a “Warrant” and, collectively with the other Warrants issued thereunder, the “Warrants ”). The shares of Common Stock into which the Warrants are exercisable are referred to herein as the “Warrant Shares” , and the Shares, the Warrants, the Warrant Shares, and the Put Option Shares (as defined below) are collectively referred to herein as the “Securities” .

 

B.            Battery, PAR, Ackerman and Morris constitute the holders of at least a majority of the number of Shares and Warrant Shares into which all of the Warrants then outstanding are exercisable, and thus this Agreement is binding upon all of the parties, including all of the Investors, to the Original 2013 Securities Purchase Agreement pursuant to Section 6.12 of the Original 2013 Securities Purchase Agreement.

 

C.            The Company, Battery, PAR, Ackerman and Morris wish to amend and restate the Original 2013 Securities Purchase Agreement, including to add a limitation with respect to the Put Right (as defined herein).

 

In consideration of the mutual promises made herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Investor hereby agree as follows:

 

1.           Purchase and Sale of Shares and Warrants.

 

1.1.           Closing of Purchase and Sale; Purchase Price. Upon the terms and subject to the satisfaction or waiver of the conditions set forth in the Original 2013 Securities Purchase Agreement, the Company agreed to sell and each Investor agreed to purchase (i) the number of Shares set forth below such Investor’s name on the signature pages thereof, and (ii) a Warrant. The date on which the closing of the purchase and sale pursuant to the terms of the Original 2013 Securities Purchase Agreement occurred (the “Closing”) is hereinafter referred to as the “ Closing Date ”. The Closing was deemed to occur at the offices of Epstein Becker & Green, P.C., 250 Park Avenue, New York, NY 10177, within two (2) business days following the satisfaction or waiver of the conditions to the Closing set forth in Section 5 thereof. At the Closing, the Escrow Agent (i) released the aggregate Purchase Price to the Company, (ii) delivered the Warrants to the Investors and (iii) delivered the Transfer Agent Instruction Letter to the Company’s transfer agent.

 

 
 

 

1.2.           Exercise of Investor Put Option.

 

(a)          Subject to adjustments pursuant to Section 1.2(b), if any, upon the occurrence of a Put Option Trigger Event (as defined below), each Investor shall have the right to elect to require the Company to acquire, severally and not jointly, from such Investor the Shares held by such Investor (the “ Put Shares ”) for an amount equal to the number of Put Shares times the Per Share Price (the “ Put Right ”). An Investor may exercise their Put Right by delivering written notice to the Company (the “ Put Option Exercise Notice ”) within thirty (30) days of a Put Option Trigger Event (the “ Put Option Exercise Deadline ”), which shall indicate (x) the total number of Put Shares to be acquired from the exercising Investor and (y) the Business Day on which the closing of the purchase of the Put Shares subject to the Put Option Exercise Notice shall occur (the “Put Option Closing”); provided, however, that the Put Option Closing shall occur at least five (5) Business Days following the Put Option Exercise Deadline and no later than ninety (90) Business Days following the Put Option Exercise Deadline.

 

(b)           Adjusted Put Shares . In the event that the Company does not have sufficient Legally Available Cash (as defined below) to satisfy all of its put right obligations in this Agreement and the Other Securities Purchase Agreements, the Put Right for an Investor shall be limited to a number of Put Shares (“ Adjusted Put Shares ”) equal to the following (rounded to the nearest whole number):

 

APS = [(X * [(A*Y)/((A*Y)+(B*Z)+(C*W))]] / Y

 

APS = Adjusted Put Shares

 

X = Legally Available Cash

 

A = total number of Put Shares that an Investor elects to have repurchased pursuant to such Investor’s Put Right in connection with the relevant Put Option Triggering Event

 

B = total number of put shares that 2011 Investors elect to have repurchased pursuant to such investors’ put rights in the Amended and Restated 2011 Purchase Agreement in connection with the relevant Put Option Triggering Event

 

C = total number of put shares that 2015 Investors elect to have repurchased pursuant to such investors’ put rights in the 2015 Purchase Agreement in connection with the relevant Put Option Triggering Event

 

Y = Per Share Price

 

Z = Per Share Price (as defined in the Amended and Restated 2011 Purchase Agreement)

 

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W = Per Share Price (as defined in the 2015 Purchase Agreement)

 

Legally Available Cash ” means the maximum of amount of cash that the Company is legally permitted (as determined by an opinion of counsel) to spend on the repurchase of shares of Common Stock from the Investors, the 2011 Investors and/or the 2015 Investors, whether or not such maximum amount of cash is then actually available to the Company.  If there are no legal restrictions on the repurchase of Common Stock held by the Investors, the 2011 Investors and/or the 2015 Investors, then “Legally Available Cash” shall be deemed to be in excess of the amount necessary to satisfy all of the Company’s put right obligations under this Agreement and the Other Securities Purchase Agreements, and as such this clause (b) shall not apply.

 

(c)          The Put Right shall terminate for all Investors if one of the following events has occurred:

 

(i)          the daily VWAP of the Common Stock is greater than or equal to three hundred and seventy-five percent (375%) of the Per Share Price for any consecutive forty trading-day period (the “Measurement Period”) and (y) the daily volume traded in Common Stock has averaged at least 250,000 shares during such Measurement Period, provided that such daily volume shall be adjusted proportionately to account for any stock splits or reverse stock splits of the Common Stock;

 

(ii)         (x) the Company completes an offering of its Common Stock registered under the Securities Act with gross proceeds to the Company of at least fifteen million dollars ($15,000,000) at a price per share that equals or exceeds three hundred and seventy-five percent (375%) of the Per Share Price and (y) the resale of the Shares held by the Investors at such time is registered on an effective registration statement under the Securities Act;

 

(iii)        a sale by one of the Investors of twenty-five percent (25%) of the Shares held by such Investor, provided, however, that a sale by such Investor will only affect such Investor and will not affect the Put Right of any other Investor;

 

(iv)        each of Battery (unless Battery’s Put Right has terminated), PAR (unless PAR’s Put Right has terminated) and the Company consent in writing to terminate the Put Right; or

 

(v)         if Battery’s and PAR’s Put Right have terminated, the Investors, other than Battery and PAR, holding a majority of the Shares held by all such non-Battery and non-PAR Investors and the Company consent in writing to terminate the Put Right.

 

(d)          Battery’s Put Right shall terminate if both Battery and the Company consent in writing to terminate Battery’s Put Right.

 

(e)          PAR’s Put Right shall terminate if both PAR and the Company consent in writing to terminate PAR’s Put Right.

 

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(f)           Put Option Closing. Upon the terms and subject to the satisfaction or waiver of the conditions set forth herein, the Company shall purchase from each Investor subject to a Put Option Exercise Notice, severally, but not jointly, at the Put Option Closing, the number of Put Shares to be purchased from such Investor in accordance with Section 1.2(a). Each Put Option Closing shall occur at 10:00 a.m., New York City time, on the date specified in the Put Option Exercise Notice (or such later date as is mutually agreed to by the Company and each Investor) after notification of satisfaction (or waiver) of the conditions to such Closing set forth in Section 5 below at the offices of Epstein Becker & Green, P.C., 250 Park Avenue, New York, NY 10177, or such other place as the Company and the affected Investor may agree. The date on which any such Closing occurs is hereinafter referred to herein as a “Put Option Closing Date.”

 

1.3.           Certain Definitions. When used herein, the following terms shall have the respective meanings indicated:

 

“Affiliate” means, as to any Person (the “subject Person”), any other Person (a) that directly or indirectly through one or more intermediaries controls or is controlled by, or is under direct or indirect common control with, the subject Person, (b) that directly or indirectly beneficially owns or holds ten percent (10%) or more of any class of voting equity of the subject Person, or (c) ten percent (10%) or more of the voting equity of which is directly or indirectly beneficially owned or held by the subject Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, through representation on such Person’s board of directors or other management committee or group, by contract or otherwise.

 

“Agreement” has the meaning specified in the preamble to this Agreement.

 

“Amended and Restated Registration Rights Agreement” means the 2015 Amended and Restated Registration Rights Agreement between the Company, the Investors and the other parties thereto.

 

Amended and Restated 2011 Purchase Agreement ” means the Amended and Restated 2011 Securities Purchase Agreement between the Company and certain investors dated the date hereof.

 

“Battery” has the meaning specified in the preamble to this Agreement.

 

“Battery Member” has the meaning specified in Section 4.3 hereof.

 

“Board of Directors” means the Company’s board of directors.

 

“Business” means the consolidated business, properties, assets, operations, results of operations or financial condition of the Company and its Subsidiaries taken as a whole.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which the New York Stock Exchange is closed or on which banks in the City of New York are required or authorized by law to be closed.

 

“Change of Control” means the occurrence of any one or more of the following events: (i) the sale or other disposition to an unrelated party of all or substantially all of the assets of the Company in one transaction or a series of transactions (other than financing arrangements); or (ii) a merger, consolidation or share exchange involving the Company and any other person or entity (other than for the purposes of reincorporation), in which the Company or one of its subsidiaries is not the surviving entity, after approval of the Board of Directors.

 

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“Closing” has the meaning specified in Section 1.1 hereof.

 

“Closing Date” has the meaning specified in Section 1.1 hereof.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” has the meaning specified in the recitals to this Agreement.

 

“Company” has the meaning specified in the preamble to this Agreement.

 

“Company Party” has the meaning specified in Section 4.13 hereof.

 

Current Violation ” has the meaning specified in Section 3.7 hereof.

 

“Debt” means, as to any Person at any time: (a) all indebtedness, liabilities and obligations of such Person for borrowed money; (b) all indebtedness, liabilities and obligations of such Person to pay the deferred purchase price of Property or services (except trade accounts payable, accrued compensation, accrued expenses, and unearned revenue and customer deposits of such Person that, in any such case, arise in the ordinary course of business and are not more than sixty (60) days past due); (c) all capital lease obligations of such Person; (d) all indebtedness, liabilities and obligations of others guaranteed by such Person; (e) all indebtedness, liabilities and obligations secured by a Lien existing on Property owned by such Person, whether or not the indebtedness, liabilities or obligations secured thereby have been assumed by such Person or are non-recourse to such Person; (f) all reimbursement obligations of such Person (whether contingent or otherwise) in respect of letters of credit, bankers’ acceptances, surety or other bonds and similar instruments; and (g) all indebtedness, liabilities and obligations of such Person to redeem or retire shares of capital stock of such Person.

 

“Disclosure Documents” means all SEC Documents filed by the Company at least two (2) Business Days prior to the date of this Agreement via the Commission’s Electronic Data Gathering, Analysis and Retrieval system (EDGAR) in accordance with the requirements of Regulation S-T under the Exchange Act.

 

Disclosure Schedule ” has the meaning specified in the introduction to the Disclosure Schedule attached hereto.

 

“Effective Date” has the meaning specified in the Amended and Restated Registration Rights Agreement.

 

“Embargoed Person” has the meaning specified in Section 3.26 hereof.

 

“Environmental Law” means any federal, state, provincial, local or foreign law, statute, code or ordinance, principle of common law, rule or regulation, as well as any Permit, order, decree, judgment or injunction issued, promulgated, approved or entered thereunder, relating to pollution or the protection, cleanup or restoration of the environment or natural resources, or to the public health or safety, or otherwise governing the generation, use, handling, collection, treatment, storage, transportation, recovery, recycling, discharge or disposal of hazardous materials.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder.

 

Escrow Agreement ” means the Escrow Agreement dated as of the date hereof between the Company, each Investor and the Escrow Agent.

 

Escrow Agent ” means Epstein Becker & Green, P.C.

 

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

 

“Execution Date” means the date of the Original 2013 Securities Purchase Agreement.

 

“FINRA” means Financial Industry Regulatory Authority.

 

“GAAP” means generally accepted accounting principles, applied on a consistent basis, as set forth in (i) opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements of the Financial Accounting Standards Board and (iii) interpretations of the Commission and the staff of the Commission. Accounting principles are applied on a “consistent basis” when the accounting principles applied in a current period are comparable in all material respects to those accounting principles applied in a preceding period.

 

“Governmental Authority” means any nation or government, any state, provincial or political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including without limitation any stock exchange, securities market or self-regulatory organization.

 

“Governmental Requirement” means any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, license or other directive or requirement of any federal, state, county, municipal, parish, provincial or other Governmental Authority or any department, commission, board, court, agency or any other instrumentality of any of them.

 

“Harris & Harris” means Harris & Harris Group, Inc.

 

“Health Authorities” has the meaning specified in Section 3.30(a) hereof.

 

“Intellectual Property” means any U.S. or foreign patents, patent rights, patent applications, trademarks, trade names, service marks, brand names, logos and other trade designations (including unregistered names and marks), trademark and service mark registrations and applications, copyrights and copyright registrations and applications, inventions, invention disclosures, protected formulae, formulations, processes, methods, trade secrets, computer software, computer programs and source codes, manufacturing research and similar technical information, engineering know-how, customer and supplier information, assembly and test data drawings or royalty rights.

 

6
 

 

“Investment Company Act” means the Investment Company Act of 1940, as amended.

 

“Investor” and “Investors” have the meanings specified in the preamble to this Agreement.

 

“Investor Party” has the meaning specified in Section 4.12 hereof.

 

“Key Employee” has the meaning specified in Section 3.15 hereof.

 

Legally Available Cash ” shall have the meaning specified in Section 1.2(b) hereof.

 

Lien ” means, with respect to any Property, any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, tax lien, financing statement, pledge, charge, or other lien, charge, easement, encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such Property (including, without limitation, any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing).

 

“Material Adverse Effect” means an effect that is material and adverse to (i) the Business, (ii) the ability of the Company to perform its obligations under this Agreement or the other Transaction Documents (as defined below) or (iii) the rights and benefits to which an Investor is entitled under this Agreement and the other Transaction Documents.

 

“Material Contracts” means, as to the Company, any agreement required pursuant to Item 601 of Regulation S-B or Item 601 of Regulation S-K, as applicable, promulgated under the Securities Act to be filed as an exhibit to any report, schedule, registration statement or definitive proxy statement filed or required to be filed by the Company with the Commission under the Exchange Act or any rule or regulation promulgated thereunder, and any and all amendments, modifications, supplements, renewals or restatements thereof.

 

“Measurement Period” has the meaning specified in Section 1.2(b) hereof.

 

“New Securities” shall mean, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

 

Original 2013 Securities Purchase Agreement ” has the meaning specified in the preamble to this Agreement.

 

“OTCBB” has the meaning specified in Section 3.22 hereof.

 

Other Securities Purchase Agreement ” means, each and jointly, the Amended and Restated 2011 Purchase Agreement and the 2015 Purchase Agreement.

 

“PAR” has the meaning specified in the preamble to this Agreement.

 

7
 

 

“PAR Member” has the meaning specified in Section 4.3 hereof.

 

“Pension Plan” means an employee benefit plan (as defined in ERISA) maintained by the Company for employees of the Company or any of its Affiliates.

 

“Permitted Liens” means the following:

 

(h)          encumbrances consisting of easements, rights-of-way, zoning restrictions or other restrictions on the use of Real Property or imperfections to title that do not (individually or in the aggregate) materially impair the ability of the Company to use such Property in its businesses, and none of which is violated in any material respect by existing or proposed structures or land use;

 

(i)          Liens for taxes, assessments or other governmental charges (including without limitation in connection with workers’ compensation and unemployment insurance) that are not delinquent or which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the Property subject to such Liens, and for which adequate reserves (as determined in accordance with GAAP) have been established; and

 

(j)          Liens of mechanics, materialmen, warehousemen, carriers, landlords or other similar statutory Liens securing obligations that are not yet due and are incurred in the ordinary course of business or which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the Property subject to such Liens, for which adequate reserves (as determined in accordance with GAAP) have been established.

 

“Per Share Price” shall mean $0.50 per Share, as adjusted for any dividend, stock split, reverse stock split, split-up or other distribution on shares of Common Stock.

 

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

 

“Pre-Notice” has the meaning specified in Section 4.4(a) hereof.

 

“Principal Market” means the principal exchange or market on which the Common Stock is listed or traded.

 

“Property” means property and/or assets of all kinds, whether real, personal or mixed, tangible or intangible (including, without limitation, all rights relating thereto).

 

“Pro Rata Share” means, with respect to an Investor, the ratio determined by dividing (i) the number of Shares purchased hereunder by such Investor by (ii) the aggregate number of Shares purchased hereunder by all of the Investors.

 

“Purchase Price” means, with respect to an Investor, the number of Shares purchased by such Investor at the Closing times the Per Share Price.

 

8
 

 

“Put Option Closing” has the meaning specified in Section 1.2(a) hereof.

 

“Put Option Closing Date” has the meaning specified in Section 1.2(c) hereof.

 

Put Option Exercise Deadline ” has the meaning specified in Section 1.2(a) hereof.

 

“Put Option Exercise Notice” has the meaning specified in Section 1.2(a) hereof.

 

“Put Option Trigger Event” shall mean the occurrence of any of the following events: (i) any Change of Control of the Company, or (ii) the sale or exclusive license of substantially all of the Company’s assets, or similar transaction, involving all or substantially all of the Company’s assets.

 

“Put Right” has the meaning specified in Section 1.2(a) hereof.

 

“Put Shares” has the meaning specified in Section 1.2(a) hereof.

 

“Real Property” has the meaning specified in Section 3.22 hereof.

 

“Regulation D” has the meaning specified in the recitals to this Agreement.

 

“Reserved Amount” has the meaning specified in Section 4.5 hereof.

 

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

 

“SEC Documents” has the meaning specified in Section 3.4 hereof.

 

“Securities” has the meaning specified in the recitals to this Agreement.

 

“Securities Act” has the meaning specified in the recitals to this Agreement.

 

“Shares” has the meaning specified in the recitals to this Agreement.

 

“Specified Employee” has the meaning specified in Section 4.1(k) hereof.

 

“Subsequent Financing” means any planned issuance by the Company or any of its Subsidiaries of Common Stock, common stock equivalents, indebtedness or a combination of units thereof for cash consideration, except for offerings of Common Stock or other securities of the Company that are registered under the Securities Act.

 

“Subsequent Financing Notice” has the meaning specified in Section 4.4(a) hereof.

 

“Subsequent Financing Share” means a fraction, the numerator of which is the number of Shares purchased by such Investor pursuant to this Agreement held by such Investor on the date of a Pre-Notice, and the denominator of which is the total number of Shares issued to all Investors pursuant to the terms of this Agreement outstanding on the date of such Pre-Notice.

 

9
 

 

“Subsidiary” means, with respect to the Company, any corporation or other entity (other than an entity having no material operations or business during the twelve month period immediately preceding the Execution Date) of which at least a majority of the outstanding shares of stock or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors (or Persons performing similar functions) of such corporation or entity (regardless of whether or not at the time, in the case of a corporation, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the Company or one or more of its Affiliates.

 

“Termination Date” means the first date on which there are no Warrants outstanding.

 

“Threshold Amount” means, with respect to each Investor, such Investor has (i) sold greater than or equal to twenty-five percent (25%) of the Shares it purchases on the Closing Date or (ii) owns less than 10% of the Company’s outstanding Common Stock.

 

“Trading Day” means any day on which the Common Stock may be purchased and sold on the Principal Market.

 

“Transaction Documents” means, collectively, this Agreement, the Amended and Restated Registration Rights Agreement, the Warrants, the Escrow Agreement and all other agreements, documents and other instruments executed and delivered by or on behalf of the Company or any of its officers at the Closing.

 

Transfer Agent Instruction Letter ” means an irrevocable instruction letter by the Company to the Company’s transfer agent instructing it to issue certificates representing the Shares to the Investors.

 

2011 Investors ” means collectively, the several investors party to the 2011 Purchase Agreement.

 

2011 Purchase Agreement ” means the Securities Purchase Agreement between the Company and certain investors dated March 24, 2011.

 

“2013 Registrable Securities” has the meaning specified in the Amended and Restated Registration Rights Agreement.

 

2015 Investors ” means collectively, the several investors party to the 2015 Purchase Agreement.

 

2015 Purchase Agreement ” means the Securities Purchase Agreement between the Company and certain investors dated the date of this Agreement.

 

“Ventures” has the meaning specified in the preamble to this Agreement.

 

10
 

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a stock exchange, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the stock exchange on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Investors of a majority in interest of the Shares then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

“Warrant” and “Warrants” have the meanings specified in the recitals to this Agreement.

 

1.4.           Other Definitional Provisions. All definitions contained in this Agreement are equally applicable to the singular and plural forms of the terms defined. The words “hereof’, “herein” and “hereunder” and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.

 

2.           Representations and Warranties of Each Investor. Each Investor (with respect to itself only) hereby represents and warrants to the Company and agrees with the Company that, as of the Execution Date and as of the Closing Date:

 

2.1.           Authorization; Enforceability. Such Investor (if an entity) is duly and validly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization as set forth below such Investor’s name on the signature page hereof with the requisite power and authority to purchase the Shares and Warrant to be purchased by it hereunder and to execute and deliver this Agreement and the other Transaction Documents to which it is a party. This Agreement constitutes, and upon execution and delivery thereof, each other Transaction Document to which such Investor is a party will constitute, such Investor’s valid and legally binding obligation, enforceable in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) general principles of equity.

 

2.2.           Accredited Investor. Such Investor (i) is an “accredited investor” as that term is defined in Rule 501 of Regulation D and (ii) is acquiring the Securities in the ordinary course of its business, solely for its own account, and not with a view to the public resale or distribution of all or any part thereof, except pursuant to sales that are registered under the Securities Act or are exempt from the registration requirements of, the Securities Act and does not have any agreement or understanding with any person to distribute any of the Securities; provided, however, that, in making such representation, such Investor does not agree to hold the Securities for any minimum or specific term and reserves the right to sell, transfer or otherwise dispose of the Securities at any time in accordance with the provisions of this Agreement and with Federal and state securities laws applicable to such sale, transfer or disposition.

 

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2.3.           Information. The Company has, prior to the Execution Date, provided such Investor with information regarding the business, operations and financial condition of the Company and has, prior to the Execution Date, granted to such Investor the opportunity to ask questions of and receive satisfactory answers from representatives of the Company, its officers, directors, employees and agents concerning the Company and materials relating to the terms and conditions of the purchase and sale of the Securities hereunder, as such Investor deems relevant in making an informed decision with respect to its investment in the Securities. Such Investor, 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 risks of the proposed investment in the Securities, and has so evaluated the merits and risks of such investment. Such Investor 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. Neither such information nor any other investigation conducted by such Investor or any of its representatives shall modify, amend or otherwise affect such Investor’s right to rely on the Company’s representations and warranties contained in this Agreement.

 

2.4.           Limitations on Disposition. Such Investor acknowledges that, except as provided in the Amended and Restated Registration Rights Agreement, the Securities have not been and are not being registered under the Securities Act and may not be transferred or resold without registration under the Securities Act or unless pursuant to an exemption therefrom.

 

2.5.           Legend. Such Investor understands that the certificates representing the Securities may bear at issuance a restrictive legend in substantially the following form:

 

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and may not be offered, transferred, pledged, hypothecated, sold or otherwise disposed of unless a registration statement under the Securities Act and applicable state securities laws shall have become effective with regard thereto, or an exemption from registration under the Securities Act and applicable state securities laws is available in connection with such offer or sale.”

 

2.6.           Reliance on Exemptions. Such Investor understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of U.S. federal and state securities laws and that the Company is relying upon the truth and accuracy of the representations and warranties of such Investor set forth in this Section 2 in order to determine the availability of such exemptions and the eligibility of such Investor to acquire the Securities.

 

2.7.           Non-Affiliate Status; Common Stock Ownership. Other than Battery, PAR, Joel Ackerman and Ronnie Morris, such Investor is not an Affiliate of the Company or of any other Investor and is not acting in association or concert with any other Person in regard to its purchase of the Securities or otherwise in respect of the Company. Except for the Investors identified in the sentence above, such Investor’s investment in the Securities is not for the purpose of acquiring, directly or indirectly, control of, and it has no intent to acquire or exercise control of, the Company or to influence the decisions or policies of the Board of Directors.

 

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3.           Representations and Warranties of the Company. The Company hereby represents and warrants to each Investor that, except as expressly set forth on the Disclosure Schedule to this Agreement, as of the Execution Date and as of the Closing Date:

 

3.1.           Organization, Good Standing and Qualification. The Company and each of its Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction under which it is incorporated, and has all requisite corporate power and authority to conduct its business as currently conducted and to execute, deliver and perform all of its obligations under this Agreement and to consummate the transactions contemplated hereby. The Company and each of its subsidiaries is qualified to do business as a foreign corporation in each jurisdiction where failure to be so qualified could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

3.2.           Authorization; Consents. The Company has the requisite corporate power and authority to enter into and perform its obligations under the Transaction Documents, including, without limitation, its obligations to issue and sell the Securities to the Investors in accordance with the terms hereof and thereof, and to issue the Warrant Shares upon exercise of the Warrants. All corporate action on the part of the Company by its officers, directors and stockholders necessary for the authorization, execution and delivery of, and the performance by the Company of its obligations under, the Transaction Documents has been taken, and no further consent or authorization of the Company, its Board of Directors, stockholders, any Governmental Authority or organization (other than such approval as may be required under the Securities Act and applicable state securities laws in respect of the Amended and Restated Registration Rights Agreement), or any other person or entity is required (pursuant to any rule of FINRA or otherwise).

 

3.3.           Due Execution; Enforceability. This Agreement has been and, at or prior to the Closing, each other Transaction Document to be delivered at the Closing will be, duly executed and delivered by the Company. This Agreement constitutes and, upon the execution and delivery thereof by the Company, each other Transaction Document will constitute the valid and legally binding obligation of the Company, enforceable against it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or other similar laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) general principles of equity.

 

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3.4.           Disclosure Documents; Agreements; Financial Statements; Other Information. The Company is subject to the reporting requirements of the Exchange Act and has filed with the Commission all reports, schedules, registration statements and definitive proxy statements that the Company was required to file with the Commission during the preceding twelve calendar months (collectively, the “SEC Documents”). The Company is not aware of any event occurring or expected to occur on or prior to the Closing Date (other than the transactions effected hereby and quarterly releases of financial results) that would require the filing of, or with respect to which the Company intends to file, a Form 8-K after the Closing. Each SEC Document, as of the date of the filing thereof with the Commission (or if amended or superseded by a filing prior to the Execution Date, then on the date of such amending or superseding filing), complied in all material respects with the requirements of the Securities Act or Exchange Act, as applicable, and the rules and regulations promulgated thereunder and, as of the date of such filing (or if amended or superseded by a filing prior to the Execution Date, then on the date of such filing), such SEC Document (including all exhibits and schedules thereto and documents incorporated by reference therein) did not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. All documents required to be filed as exhibits to the SEC Documents have been filed as required. Except as set forth in the Disclosure Documents, the Company has no liabilities, contingent or otherwise, other than liabilities incurred in the ordinary course of business which, under GAAP, are not required to be reflected in the financial statements included in the Disclosure Documents and which, individually or in the aggregate, are not material to the business or financial condition of the Company. As of their respective dates, the financial statements of the Company included in the SEC Documents have been prepared in accordance with GAAP (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end adjustments).

 

3.5.           Capitalization; Debt Schedule. The capitalization of the Company as of the date hereof, including its authorized capital stock, the number of shares issued and outstanding, the number of shares issuable and reserved for issuance pursuant to the Company’s stock option plans and agreements, the number of shares issuable and reserved for issuance pursuant to securities (other than the Warrants) exercisable for, or convertible into or exchangeable for any shares of Common Stock and the number of shares initially to be reserved for issuance upon exercise of the Warrants, is set forth on Schedule 3.5 hereto. All issued and outstanding shares of capital stock of the Company have been, or upon issuance will be, validly issued, fully paid and non-assessable. No shares of the capital stock of the Company were issued in violation of preemptive rights or any other similar rights of security holders of the Company or any Liens created by or through the Company. Except as disclosed on Schedule 3.5 or as contemplated herein, there are no outstanding preemptive rights, rights of first refusal, shareholder rights, options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exercisable or exchangeable for, any shares of capital stock of the Company, or arrangements by which the Company is or may become (as a result of the transactions contemplated hereby or the other Transaction Documents or otherwise) bound to issue additional shares of capital stock of the Company (whether pursuant to anti-dilution, “reset” or other similar provisions). Except as described on Schedule 3.5 hereto, the Company has no material Debt outstanding as of the date hereof.

 

3.6.           Due Authorization; Valid Issuance. The Shares and Warrants are duly authorized and, when issued, sold and delivered in accordance with the terms hereof, (i) the Shares and Warrants will be duly and validly issued, and the Shares will be fully paid and nonassessable; in each case, free and clear of any Liens imposed by or through the Company, and (ii) assuming the accuracy of each Investor’s representations in this Agreement, the Shares and Warrants will be issued, sold and delivered in compliance with all applicable Federal and state securities laws. The Warrant Shares are duly authorized and reserved for issuance and, when issued in accordance with the terms of the Warrants, will be duly and validly issued, fully paid and nonassessable, free and clear of any Liens imposed by or through the Company and, assuming the accuracy of each Investor’s representations in this Agreement at the time of exercise, will be issued, sold and delivered in compliance with all applicable Federal and state securities laws.

 

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3.7.           No Conflict with Other Instruments. The Company is not in violation of any provisions of its charter, bylaws or any other governing document or in default (and no event has occurred which, with notice or lapse of time or both, would constitute a default) under any provision of any instrument or contract to which it is a party or by which it or any of its Property is bound, or in violation of any provision of any Governmental Requirement applicable to it, except for any violation or default under any such instrument or contract or any violation of any provision of a Governmental Requirement that, in either such case, has not had or would not reasonably be expected to have a Material Adverse Effect (any such violation or default being referred to herein as a “Current Violation”). The (i) execution, delivery and performance of this Agreement and the other Transaction Documents, and (ii) consummation of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Shares and the Warrants and the reservation for issuance and issuance of the Warrant Shares) will not result in any violation of any provisions of the Company’s charter, Bylaws or any other governing document or in a default under any provision of any instrument or contract to which it is a party or by which it or any of its Property is bound, or in violation of any provision of any Governmental Requirement applicable to the Company or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument or contract or an event which results in the creation of any Lien upon any assets of the Company.

 

3.8.           Financial Condition; Taxes; Litigation.

 

(a)          The Company’s financial condition is, in all material respects, as described in the Disclosure Documents, except for changes in the ordinary course of business and normal year-end adjustments that are not, in the aggregate, materially adverse to the business or financial condition of the Company. Except as disclosed in the Disclosure Documents, there has been no (i) material adverse change to the Company’s business, operations, properties, financial condition, or results of operations since the date of the Company’s most recent audited financial statements contained in the Disclosure Documents or (ii) change by the Company in its accounting principles, policies and methods except as required by changes in GAAP or applicable law.

 

(b)          The Company (i) has prepared in good faith and duly and timely filed all tax returns required to be filed by it and such returns are complete and accurate in all material respects and (ii) has paid all taxes required to have been paid by it, except for taxes which it reasonably disputes in good faith or the failure of which to pay has not had or would not reasonably be expected to have a Material Adverse Effect, and has no liability with respect to accrued taxes in excess of the amounts that are described as accrued in the most recent financial statements included in the Disclosure Documents.

 

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(c)          Except as described in Schedule 3.8(c), the Company is not the subject of any pending or, to the Company’s knowledge, threatened inquiry, investigation or administrative or legal proceeding by the Internal Revenue Service, the taxing authorities of any state or local jurisdiction (other than with respect to taxes which it reasonably disputes in good faith or the failure of which to pay has not had or would not reasonably be expected to have a Material Adverse Effect), the Commission, FINRA, any state securities commission or other Governmental Authority.

 

(d)          Except as described in Schedule 3.8(d), there is no material claim, litigation or administrative proceeding pending or, to the Company’s knowledge, threatened or contemplated, against the Company or, to the Company’s knowledge, against any officer, director or employee of the Company in connection with such person’s employment therewith. The Company is not a party to or subject to the provisions of, any order, writ, injunction, judgment or decree of any court or Governmental Authority which has had or would reasonably be expected to have a Material Adverse Effect.

 

3.9.           Acknowledgement of Dilution. The Company acknowledges that the issuance of Warrant Shares upon exercise of the Warrants may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligation to issue Warrant Shares upon exercise of the Warrants in accordance with the terms of the Warrants, is unconditional (other than with respect to the conditions set forth in the Warrants) regardless of the effect of any such dilution.

 

3.10.          Intellectual Property. Except as set forth in Schedule 3.10:

 

(a)          The Company owns, free and clear of claims or rights or any other Person, with full right to use, sell, license, sublicense, dispose of, and bring actions for infringement of, or, to the knowledge of the Company, has acquired licenses or other rights to use, all Intellectual Property necessary for the conduct of its business as presently conducted (other than with respect to software which is generally commercially available and not used or incorporated into the Company’s products and open source software which may be subject to one or more “general public” licenses). All works that are used or incorporated into the Company’s services, products or services or products actively under development and which is proprietary to the Company was developed by or for the Company by the current or former employees, consultants or independent contractors of the Company or its predecessors in interest or purchased or licensed by the Company or its predecessors in interest.

 

(b)          The business of the Company as presently conducted and the production, marketing, licensing, use and servicing of any products or services of the Company do not, to the knowledge of the Company, infringe or conflict with any patent, trademark, copyright, or trade secret rights of any third parties or any other Intellectual Property of any third parties in any material respect. The Company has not received written notice from any third party asserting that any Intellectual Property owned or licensed by the Company, or which the Company otherwise has the right to use, is invalid or unenforceable by the Company and, to the Company’s knowledge, there is no valid basis for any such claim (whether or not pending or threatened).

 

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(c)          No claim is pending or, to the Company’s knowledge, threatened against the Company nor has the Company received any written notice or other written claim from any Person asserting that any of the Company’s present or contemplated activities infringe or may infringe in any material respect any Intellectual Property of such Person and the Company is not aware of any infringement by any other Person of any material rights of the Company under any Intellectual Property Rights.

 

(d)          All licenses or other agreements under which the Company is granted Intellectual Property (excluding licenses to use software utilized in the Company’s internal operations and which is generally commercially available) are in full force and effect and, to the Company’s knowledge, there is no material default by any party thereto. The Company has no reason to believe that the licensors under such licenses and other agreements do not have and did not have all requisite power and authority to grant the rights to the Intellectual Property purported to be granted thereby.

 

(e)          All licenses or other agreements under which the Company has granted rights to Intellectual Property to others (including all end-user agreements) since January 1, 2009, are in full force and effect, unless otherwise terminated in accordance with the terms of such licenses or arrangements, there has been no material default by the Company thereunder and, to the Company’s knowledge, there is no material default by any other party thereto.

 

(f)          The Company has taken all steps required in accordance with commercially reasonable business practice to establish and preserve its ownership in its owned Intellectual Property and to keep confidential all material technical information developed by or belonging to the Company which has not been patented or copyrighted. The Company is not making any material unlawful use of any Intellectual Property of any other Person, including, without limitation, any former employer of any past or present employees of the Company. To the Company’s knowledge, neither the Company nor any of its employees has any agreements or arrangements with former employers of such employees relating to any Intellectual Property of such employers, which materially interfere or conflict with the performance of such employee’s duties for the Company or result in any former employers of such employees having any rights in, or claims on, the Company’s Intellectual Property. Each current employee of the Company and each former employee of the Company who was hired after January 1, 2011 has executed agreements regarding confidentiality, proprietary information and assignment of inventions and copyrights to the Company, each independent contractor or consultant of the Company has executed agreements regarding confidentiality and proprietary information, and the Company has not received written notice that any employee, consultant or independent contractor is in violation of any agreement or in breach of any agreement or arrangement with former or present employers relating to proprietary information or assignment of inventions. Without limiting the foregoing: (i) the Company has taken reasonable security measures to guard against unauthorized disclosure or use of any of its Intellectual Property; and (ii) the Company has no reason to believe that any Person (including, without limitation, any former employee or consultant of the Company) has unauthorized possession of any of its Intellectual Property, or any part thereof, or that any Person has obtained unauthorized access to any of its Intellectual Property. The Company is in compliance in all material respects with its obligations pursuant to all agreements relating to Intellectual Property rights that are the subject of licenses granted by third parties, except for any non-compliance that has not had or would not reasonably be expected to have a Material Adverse Effect.

 

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3.11.          Registration Rights. Except as described on Schedule 3.11 hereto, the Company has not granted or agreed to grant to any person or entity any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the Commission or any other governmental authority which has not been satisfied in full prior or waived to the date hereof.

 

3.12.          Fees . Except as contemplated by Section 7.11 hereof and as set forth on Schedule 3.12 or disclosed in writing to the Investor by the Company, the Company is not obligated to pay any compensation or other fee, cost or related expenditure to any underwriter, broker, agent or other representative in connection with the transactions contemplated hereby. The Company will indemnify and hold harmless each Investor from and against any claim by any person or entity alleging that, as a result of any agreement or arrangement between such Person and the Company, such Investor is obligated to pay any such compensation, fee, cost or related expenditure in connection with the transactions contemplated hereby or the other Transaction Documents.

 

3.13.          Solicitation; Other Issuances of Securities. Neither the Company nor any of its Subsidiaries or Affiliates, nor any person acting on its or their behalf, (i) has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities, or (ii) has, directly or indirectly, made any offers or sales of any security or the right to purchase any security, or solicited any offers to buy any security or any such right, under circumstances that would require registration of the Securities under the Securities Act.

 

3.14.          Foreign Corrupt Practices. Neither the Company, nor to the Company’s knowledge any director, officer, agent, employee or other person acting on behalf of the Company, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee (including without limitation any bribe, rebate, payoff, influence payment, kickback or other unlawful payment), or (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

3.15.          Key Employees. Each of the Company’s executive officers (as defined in Rule 501(f) of the Securities Act) (each, a “Key Employee”) is currently serving in the capacity described in the Disclosure Documents. The Company has no knowledge of any fact or circumstance (including without limitation (i) the terms of any agreement to which such person is a party or any litigation in which such person is or may become involved and (ii) any illness or medical condition that could reasonably be expected to result in the disability or incapacity of such person) that would limit or prevent any such person from serving in such capacity on a full-time basis in the foreseeable future, or of any intention on the part of any such person to limit or terminate his or her employment with the Company.

 

3.16.          Employee Matters. There is no strike, labor dispute or union organization activities pending or, to the knowledge of the Company, threatened between it and its employees. No employees of the Company belong to any union or collective bargaining unit. The Company has complied in all material respects with all applicable federal and state equal opportunity and other laws related to employment.

 

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3.17.          Environment. To the Company’s knowledge, the Company does not have any current liability under any Environmental Law, nor, to the knowledge of the Company, do any factors exist that are reasonably likely to give rise to any such liability that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect. To the Company’s knowledge, the Company has not violated any Environmental Law applicable to it now or previously in effect, other than such violations or infringements that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect.

 

3.18.          ERISA. Except as described on Schedule 3.18, the Company does not maintain or contribute to, or have any obligation under, any Pension Plan. The Company is in compliance in all material respects with the presently applicable provisions of ERISA and the United States Internal Revenue Code of 1986, as amended, with respect to each Pension Plan except in any such case for any such matters that, individually or in the aggregate, have not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

3.19.          Insurance. The Company maintains insurance in such amounts and covering such losses and risks as the Company believes to be reasonably prudent in relation to the businesses in which the Company is engaged. No notice of cancellation has been received for any of such policies and the Company reasonably believes that is in compliance with all of the terms and conditions thereof The Company has no reason to believe that it will not be able to renew any existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue doing business as currently conducted without a significant increase in cost, other than normal increases in the industry. Without limiting the generality of the foregoing, the Company maintains Director’s and Officer’s insurance in an amount deemed to be reasonable and appropriate by the Company’s Board of Directors.

 

3.20.          Property. The Company does not own any real property. The Company has good and marketable title to all personal Property owned by it which, in each such case free and clear of all Liens except for Permitted Liens and except for such Liens which, individually and together with all other Liens (including without limitation Permitted Liens) do not have, and cannot reasonably be expected to have, a Material Adverse Effect. Any Property held under lease by the Company is held by it under valid, subsisting and enforceable leases with such exceptions as are not material and do not materially interfere with the use made or proposed to be made of such Property by the Company.

 

3.21.          Regulatory Permits. The Company possesses all material certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct its businesses other than where the failure to possess such certificates, authorizations or permits, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect. The Company has not received any notice or otherwise become aware of any proceedings, inquiries or investigations relating to the revocation or modification of any such certificate, authorization or permit.

 

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3.22.          Exchange Act Registration; Listing. Exchange Act Registration; Listing. The Company files supplementary and periodic information, documents, and reports pursuant to Section 15(d) of the Exchange Act. The Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange Act and is traded over-the-counter and quoted on the over-the-counter Bulletin Board QB or QX Markets (collectively, “ OTCBB ”). The Company has taken no action designed to, or which, to the knowledge of the Company, would reasonably be expected to have the effect of, terminating the registration of the Common Stock under the Exchange Act or ceasing the trading of the Common Stock or its quoting on the OTCBB

 

3.23.          Investment Company Status. The Company is not, and immediately after receipt of payment for the Shares and the Warrants issued under this Agreement will not be, an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act, and shall conduct its business in a manner so that it will not become subject to the Investment Company Act.

 

3.24.          Transfer Taxes. No stock transfer or other taxes (other than income taxes) are required to be paid in connection with the issuance and sale of any of the Securities, other than such taxes for which the Company has established appropriate reserves and intends to pay in full on or before the Closing.

 

3.25.          Sarbanes-Oxley Act; Internal Controls and Procedures. The Company is in material compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof. The Company maintains internal accounting controls, policies and procedures, and such books and records as are reasonably designed to provide reasonable assurance that (i) all transactions to which the Company is a party or by which its properties are bound are effected by a duly authorized employee or agent of the Company, supervised by and acting within the scope of the authority granted by the Company’s senior management; (ii) the recorded accounting of the Company’s consolidated assets is compared with existing assets at regular intervals; and (iii) all transactions to which the Company is a party, or by which its properties are bound, are recorded (and such records maintained) in accordance with all Governmental Requirements and as may be necessary or appropriate to ensure that the financial statements of the Company are prepared in accordance with GAAP.

 

3.26.          Embargoed Person. None of the funds or other assets of the Company shall constitute property of, or shall be beneficially owned, directly or indirectly, by any person subject to trade restrictions under United States law, including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. § 1701 et seq., the Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated under any such United States laws (each, an “Embargoed Person”), with the result that the investments evidenced by the Securities are or would be in violation of law. No Embargoed Person shall have any interest of any nature whatsoever in the Company with the result that the investments evidenced by the Securities are or would be in violation of law. None of the funds or other assets of the Company shall be derived from any unlawful activity with the result that the investments evidenced by the Securities are or would be in violation of law.

 

3.27.          Solvency. As of the Execution Date and as of the Closing Date, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing Debt as such Debt matures or is otherwise payable; (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted taking into account the current and projected capital requirements of the business conducted by the Company and projected capital availability; and (iii) the current cash flow of the Company, together with the proceeds the Company would receive upon liquidation of its assets, after taking into account all anticipated uses of such amounts, would be sufficient to pay all Debt when such Debt is required to be paid. The Company has no knowledge of any facts or circumstances which lead it to believe that it will be required to file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction, and has no present intention to so file.

 

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3.28.          Transactions with Interested Persons. Except as set forth in the Disclosure Documents, no officer, director or employee of the Company is or has made any arrangements with the Company to become a party to any transaction with the Company (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

 

3.29.          Customers and Suppliers. Except as set forth in the Disclosure Documents, the relationships of the Company with its customers and suppliers are maintained on commercially reasonable terms. To the Company’s knowledge, no customer or supplier of the Company has any plan or intention to terminate its agreement with the Company, which termination would reasonably be expected to have a Material Adverse Effect.

 

3.30.          FDA Matters and Clinical Trials.

 

(a)          The Company has not received any notices or correspondence from any federal, state, local or foreign regulatory body that regulates the types of matters subject to the jurisdiction of the U.S. Food and Drug Administration (“Health Authorities”) which have not been resolved requiring or threatening the termination, suspension or modification of any animal studies, preclinical tests or clinical trials conducted by or on behalf of the Company or in which the Company has participated that are described in the Disclosure Documents or the results of which are referred to in the Disclosure Documents. To the knowledge of the Company, the currently pending clinical trials, studies and other preclinical tests conducted by or on behalf of the Company and that are described in the Disclosure Documents or the results of which are referred to in the Disclosure Documents, are being conducted in accordance with experimental protocols, procedures and controls generally used by qualified experts in the preclinical or clinical study of new drugs.

 

(b)          The Company has no knowledge of any adverse event that has resulted from any of such studies, tests or trials that was not disclosed as required to any Health Authority.

 

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3.31.          Full Disclosure. The representations, warranties and written statements contained in this Agreement and the other Transaction Documents and in the certificates, exhibits and schedules delivered to such Investor by the Company pursuant to this Agreement and the other Transaction Documents and in connection with such Investor’s due diligence investigation of the Company, do not contain any untrue statement of a material fact, and do not omit to state a material fact required to be stated therein or necessary in order to make such representations, warranties or statements not misleading in light of the circumstances under which they were made. Neither the Company nor any Person acting on its behalf or at its direction has provided such Investor with material non-public information. Following the filing of the Current Report on Form 8-K in accordance with Section 4.1(c) hereof, to the Company’s knowledge, such Investor will not possess any material non-public information concerning the Company. The Company acknowledges that such Investor is relying on the representations, acknowledgments and agreements made by the Company in this Section 3.31 and elsewhere in this Agreement in making trading and other decisions concerning the Company’s securities.

 

3.32.          No Other Agreements. The Company has not, directly or indirectly, entered into any agreement with or granted any right to any Investor relating to the terms or conditions of the transactions contemplated by the Transaction Documents, except as expressly set forth in the Transaction Documents.

 

4.           Covenants of the Company and Each Investor.

 

4.1.          The Company agrees with each Investor that the Company will:

 

(a)          file a Form D with respect to the Securities issued at the Closing as and when required under Regulation D and provide a copy thereof to such Investor promptly after such filing;

 

(b)          take such action as the Company reasonably determines upon the advice of counsel is necessary to qualify the Shares and Warrants for sale under applicable state or “blue-sky” laws or obtain an exemption therefrom, and shall promptly provide evidence of any such action to such Investor at such Investor’s request; and

 

(c)          on or prior to 5:00 p.m. (eastern time) on the fourth Business Day following the Execution Date, file with the Commission a Current Report on Form 8-K disclosing the material terms of this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby, including as exhibits this Agreement and the other Transaction Documents; provided, however, that each Investor shall have a reasonable opportunity to review and comment on any such Form 8-K prior to the issuance or filing thereof. Thereafter, the Company shall timely file any filings and notices required by the Commission or applicable law with respect to the transactions contemplated hereby;

 

(d)           maintain its corporate existence in good standing;

 

(e)           maintain, keep and preserve all of its Properties necessary in the proper conduct of its businesses in good repair, working order and condition (ordinary wear and tear excepted) and make all necessary repairs, renewals and replacements and improvements thereto, except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

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(f)           pay or discharge before becoming delinquent (i) all taxes, levies, assessments and governmental charges imposed on it or its income or profits or any of its Property and (ii) all lawful claims for labor, material and supplies, which, if unpaid, might become a Lien upon any of its Property, except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; provided, however, that the Company shall not be required to pay or discharge any tax, levy, assessment or governmental charge, or claim for labor, material or supplies, whose amount, applicability or validity is being contested in good faith by appropriate proceedings being diligently pursued and for which appropriate reserves have been established under GAAP;

 

(g)           comply with all Governmental Requirements applicable to the operation of its business, except for instances of noncompliance that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;,

 

(h)           comply with all agreements, documents and instruments binding on it or affecting its Properties or business, including, without limitation, all Material Contracts, except for instances of noncompliance that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(i)           provide each Investor with copies of all materials sent to its stockholders, in each such case at the same time as delivered to such stockholders;

 

(j)           timely file with the Commission all reports required to be filed pursuant to the Exchange Act and refrain from terminating its status as an issuer required by the Exchange Act to file reports thereunder even if the Exchange Act or the rules or regulations thereunder would permit such termination;

 

(k)           until the earlier of (i) Effective Date of the Registration Statement and (ii) the date upon which all Investors are able to sell all Shares in a 90 day period without volume or manner of sale limitations under Rule 144, take commercially reasonable steps to restrict each of the Company’s Chief Executive Officer and President (each, a “Specified Employee”) from selling shares of Common Stock; and

 

(l)          use commercially reasonable efforts to maintain adequate insurance coverage (including D&O insurance) for the Company and each Subsidiary.

 

4.2.           Voting Rights.

 

(a)           The Company agrees that it shall not approve of or give effect to any of the actions listed below (by amendment, merger, consolidation or otherwise) without the written consent of Battery and PAR. Notwithstanding the foregoing: (1) in the event that Battery meets the Threshold Amount, Battery’s consent is not required pursuant to this Section 4.2(a), however, PAR’s consent is still required; and (2) in the event that PAR meets the Threshold Amount, PAR’s consent is not required pursuant to this Section 4.2(a), however Battery’s consent is still required.

 

(i)          alter or change the rights, preferences or privileges of the Put Option; or

 

(ii)         liquidate, dissolve or wind-up the business and affairs of the Company or consent to any of the foregoing; and

 

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(b)          The Company agrees that it shall not approve of or give effect to any of the actions listed below (by amendment, merger, consolidation or otherwise) without the written consent of Battery and either PAR or Harris & Harris. Notwithstanding the foregoing: (1) in the event that Battery meets the Threshold Amount, Battery’s consent is not required pursuant to this Section 4.2(b), however the consent of either PAR or Harris & Harris is still required; (2) in the event that PAR meets the Threshold Amount, PAR’s consent is not required pursuant to this Section 4.2(b), however the consent of Battery and Harris & Harris is still required; and (3) in the event that Harris & Harris has sold equal to or greater than twenty-five percent (25%) of the Shares it purchases on the Closing Date, the consent of Harris & Harris is not required pursuant to this Section 4.2(b), however the consent of Battery and PAR is still required.

 

(i)          purchase, redeem or otherwise acquire any of (A) the Company’s equity securities (including warrants, options and other rights to acquire equity securities) or (B) the Securities, other than (1) a repurchase by the Company at the lower of cost or the fair market value pursuant to existing agreements, (2) the purchase of capital stock from certain stockholders approved by each of the Investors, (3) pursuant to an exercise of the Put Right or the put rights granted under the Other Securities Purchase Agreements or (4) the contemplated option exchange disclosed in the disclosure schedules to the 2015 Purchase Agreement;

 

(ii)         merge or consolidate with another corporation or entity in which the holders of the Company’s voting equity securities immediately prior to the transaction own, directly or indirectly, fifty percent (50%) or less of the voting securities of the surviving corporation unless (A) the consideration for the merger or consolidation is in the form of a cash offer or marketable securities that are registered, saleable and listed on the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange and (B) the purchase price per share is equal to or greater than three hundred and seventy-five percent (375%) of the Per Share Price.

 

4.3.           Board Representation. The Company shall be obligated to present one nominee nominated by each of Battery (the “ Battery Member ”) and PAR (the “ PAR Member ”) to become a member of the Company’s Board for election by the Company’s stockholders; provided, however, that the Company shall no longer be obligated to nominate the Battery Member in the event that Battery has sold or no longer holds the Threshold Amount with respect to Battery and the Company shall no longer be obligated to nominate the PAR Member in the event that PAR has sold or no longer holds the Threshold Amount with respect to PAR. Battery’s right to nominate the Battery Member for election to the Company’s Board above is cumulative with its existing right to nominate a person for election to the Company’s Board pursuant to the Amended and Restated 2011 Purchase Agreement; e.g., Battery shall have a right to nominate only one person for election to the Company’s Board. Upon the election of each of the Battery Member and the PAR Member to the Company’s Board, the Company shall execute an indemnification agreement with the Battery Member and the PAR Member, in a form satisfactory to Battery and PAR, as applicable and shall include the Battery Member and the PAR Member on the Company’s director and officer insurance policy.

 

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4.4.           No Participation Rights. Each Investor who had participation rights pursuant to the Original 2013 Securities Purchase Agreement has declined to exercise such Investor’s participation right set forth in such Original 2013 Securities Purchase Agreement with respect to either the Company’s issuance of convertible promissory notes on December 1, 2014 or the transaction contemplated by the 2015 Purchase Agreement and thus no longer has any participation right with respect to either the transaction contemplated by the 2015 Purchase Agreement or future financings of the Company.

 

4.5.           Reservation of Common Stock. The Company shall, on the Closing Date, have authorized and reserved for issuance to the Investors free from any preemptive rights, and shall keep available at all times during which any Warrants are outstanding, a number of shares of Common Stock (the “Reserved Amount”) that, on the Closing Date, is not less than one hundred percent (100%) of the number of Warrant Shares issuable upon exercise of all of the Warrants issued at the Closing, without regard to any limitation or restriction on such conversion or exercise that may be set forth in the Warrants. The Reserved Amount shall be allocated in accordance with each Investor’s Pro Rata Share. In the event that an Investor shall sell or otherwise transfer any of such Investor’s Warrants, each transferee shall be allocated a pro rata portion of such transferor’s Reserved Amount. Any portion of the Reserved Amount allocated to any Investor or other Person which no longer holds any Warrants shall be reallocated to the remaining Investors pro rata based on the number of 2013 Registrable Securities held by such Investors at such time. In the event that the Reserved Amount is insufficient at any time to cover one hundred percent 100% of the 2013 Registrable Securities issuable upon the exercise of the Warrants (without regard to any restriction on such conversion or exercise), the Company shall take such action (including without limitation holding a meeting of its stockholders) to increase the Reserved Amount to cover 100% of the 2013 Registrable Securities issuable upon such conversion and exercise, such increase to be effective not later than the thirtieth (30th) day (or sixtieth (60th) day, in the event stockholder approval is required for such increase) following the Company’s receipt of written notice of such deficiency. While any Warrants are outstanding, the Company shall not reduce the Reserved Amount without obtaining the prior written consent of each Investor then holding Warrants.

 

4.6.           Use of Proceeds. The Company shall use the proceeds from the sale of the Shares and Warrants for general business purposes; provided, that the Company shall not use any of such proceeds (i) to pay any dividend or make any distribution on any of its securities, or (ii) to repay any loan made to or incurred by any Key Employee or any other officer or director or Affiliate of the Company.

 

4.7.           Use of Investor Name. Except as may be required by applicable law and/or this Agreement, the Company shall not use, directly or indirectly, any Investor’s name or the name of any of its Affiliates in any advertisement, announcement, press release or other similar communication unless it has received the prior written consent of any Investor for the specific use contemplated or as otherwise required by applicable law or regulation.

 

4.8.           Company’s Instructions to Transfer Agent. The Company shall cause its transfer agent to remove the restrictive legend set forth in Section 2.5 from certificates evidencing the Shares and Warrant Shares (i) in connection with any sale of such Shares or Warrant Shares pursuant to a registration statement (including a Registration Statement) covering the resale of such security that is effective under the Securities Act, (ii) in connection with any sale of such Shares or Warrant Shares pursuant to Rule 144, or (iii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission), as set forth below. If all or any part of a Warrant is exercised in connection with an immediate resale of the exercised Warrant Shares pursuant to an effective registration statement, or in connection with an immediate resale of the exercised Warrant Shares pursuant to Rule 144, the Company shall cause its transfer agent to remove the restrictive legend from certificates issued representing the exercised Warrant Shares, as set forth below.

 

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(a)          The Company shall issue an instruction letter to its transfer agent to remove the restrictive legend in connection with any sale of the Shares or Warrant Shares pursuant to a registration statement, and shall cause its counsel, if required by the transfer agent, to issue a legal opinion authorizing the removal of restrictive legend in connection with a sale of the Shares or Warrant Shares pursuant Rule 144, provided that the relevant Investor shall have delivered to the Company, its counsel and its transfer agent a certification of such facts as the Company and its counsel may reasonably require in connection with providing such instruction letter or legal opinion.

 

(b)          The Company shall instruct its transfer agent to remove the restrictive legend as permitted by this Section 4.8 promptly after delivery by the Investor to the Company or its transfer agent of the certificate representing the Shares or Warrant Shares being sold by the Investor.

 

(c)          The Company may not make any notation on its records or give instructions to its transfer agent that enlarge the restrictions on transfer set forth in this Section 4.8.

 

(d)          Certificates for Shares or Warrant Shares subject to legend removal hereunder shall be transmitted by the Company’s transfer agent to the purchaser of such Shares or Warrant Shares by crediting the account of such purchaser’s prime broker with the Depository Trust Company System, if so directed by the selling Investor.

 

4.9.           Limitations on Disposition. No Investor shall sell, transfer, assign or dispose of any Securities, unless:

 

(a)          there is then in effect an effective registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

 

(b)          such Investor has notified the Company in writing of any such disposition, and furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such Securities under the Securities Act; provided, however, that no such opinion of counsel will be required (A) if the sale, transfer or assignment complies with federal and state securities laws and is made to a fund or other institutional investor that is an Affiliate of such Investor and which is also an “accredited investor” as that term is defined in Rule 501 of Regulation D; provided, that such Affiliate provides the Company with customary accredited investor and investment representations (comparable with those set forth in Section 2.2 hereof), and agrees to be bound by the terms and conditions of this Agreement, (B) if the sale, transfer or assignment is made pursuant to Rule 144 and such Investor has complied with the obligations set forth in Section 4.8(a) above or (C) in connection with a bona fide pledge or hypothecation of any Securities under a margin arrangement with a broker-dealer or other financial institution or the sale of any such Securities by such broker-dealer or other financial institution following such Investor’s default under such margin arrangement.

 

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4.10.          Disclosure of Non-public Information. The Company agrees that it will not at any time following the Execution Date disclose material non-public information to any Investor without first obtaining such Investor’s written consent to such disclosure, except to the extent required by any Transaction Documents. For the avoidance of doubt, any information provided to the Battery Member or PAR Member in its capacity as a member of the Board of Directors shall not be deemed a disclosure of information pursuant to this Section.

 

4.11.          Listing. Provided the Company is eligible for trading or listing, as the case may be, the Company (i) has, or promptly following the Closing shall, use its best efforts to include all of the Warrant Shares issuable upon exercise of the Warrants (without regard to any limitation on such exercise) for trading on the OTCBB, and (ii) shall use its best efforts to attain designation and quotation, or listing, of the Common Stock and Warrant Shares on the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange for a minimum of five (5) years following the Closing Date or, in the event the Company is unable to attain such designation and quotation or listing on the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange, to maintain the trading of the Common Stock on the OTCBB or any successor interdealer trading system for a minimum of five (5) years following the Closing Date.

 

4.12.          Indemnification of Investors. The Company will indemnify and hold each Investor and its directors, managers, officers, shareholders, members, partners, employees and agents (each, an “Investor Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Investor Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against an Investor, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Investor, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Investor’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Investor may have with any such stockholder or any violations by such Investor of state or federal securities laws or any conduct by such Investor which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Investor Party in respect of which indemnity may be sought pursuant to this Agreement, such Investor 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 Investor 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 Investor 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 following such Investor Party’s written request that it do so, 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 Investor Party. The Company will not be liable to any Investor Party under this Agreement (i) for any settlement by an Investor Party effected without the Company’s prior written consent, which 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 such Investor Party’s wrongful actions or omissions, or gross negligence or to such Investor Party’s breach of any of the representations, warranties, covenants or agreements made by such Investor in this Agreement or in the other Transaction Documents.

 

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4.13.          Indemnification of the Company. Each Investor, severally and not jointly and only to the extent of such Investor’s Purchase Price, will indemnify and hold the Company and its directors, manager, officers, shareholders, employees and agents (each, a “Company Party” ) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Company Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by or on behalf of such Investor in this Agreement or in the other Transaction Documents or (b) any violations by such Investor of state or federal securities laws or any conduct by such Investor which constitutes fraud, gross negligence, willful misconduct or malfeasance. If any action shall be brought against any Company Party in respect of which indemnity may be sought pursuant to this Agreement, such Company Party shall promptly notify the Investor in writing, and the Investor shall have the right to assume the defense thereof with counsel of its own choosing. Any Company 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 Company Party except to the extent that (i) the employment thereof has been specifically authorized by such Investor in writing, (ii) the Investor has failed after a reasonable period of time following such Company Party’s written request that it do so, 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 such Investor and the position of such Company Party. Such Investor will not be liable to any Company Party under this Agreement for any settlement by a Company Party effected without such Investor’s prior written consent, which shall not be unreasonably withheld or delayed.

 

5.           Conditions to Closing.

 

5.1.           Conditions to Investors’ Obligations at the Closing. Each Investor’s obligations to effect the Closing, including without limitation its obligation to purchase Shares and Warrants at the Closing, are conditioned upon the fulfillment (or waiver by such Investor in its sole and absolute discretion) of each of the following events as of the Closing Date, and the Company shall use commercially reasonable efforts to cause each of such conditions to be satisfied:

 

(a)          the representations and warranties of the Company set forth in this Agreement and in the other Transaction Documents shall be true and correct in all material respects as of such date as if made on such date (except that to the extent that any such representation or warranty relates to a particular date, such representation or warranty shall be true and correct in all material respects as of that particular date);

 

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(b)          the Company shall have complied with or performed in all material respects all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by the Company on or before the Closing;

 

(c)          the Company shall have delivered to such Investor a certificate, signed by the Chief Executive Officer and Chief Financial Officer of the Company, certifying that the conditions specified in Section 5.1(a), 5.1(b), 5.1(i), 5.1(j), 5.1(k) and 5.1(l) have been fulfilled as of the Closing, it being understood that such Investor may rely on such certificate as though it were a representation and warranty of the Company made herein;

 

(d)           the Company shall have delivered to such Investor an opinion of counsel for the Company, dated as of the Closing Date, in form and substance reasonably satisfactory to such Investor;

 

(e)           the Company shall have delivered to the Escrow Agent the duly executed Warrant being purchased by such Investor and the duly executed Transfer Agent Instruction Letter;

 

(f)           the Company shall have executed and delivered to the Investor the Amended and Restated Registration Rights Agreement;

 

(g)           the Company shall have delivered to such Investor a certificate, signed by the Secretary or an Assistant Secretary of the Company, attaching (i) the charter and By-Laws of the Company, and (ii) resolutions passed by its Board of Directors to authorize the transactions contemplated hereby and by the other Transaction Documents, and certifying that such documents are true and complete copies of the originals and that such resolutions have not been amended or superseded, it being understood that such Investor may rely on such certificate as a representation and warranty of the Company made herein;

 

(h)           the Company shall have obtained the written agreement of each Specified Employee of the Company to refrain from selling shares of Common Stock for the period specified in, and in accordance with, Section 4.1(k) hereof;

 

(i)           there shall have occurred no material adverse change in the Company’s consolidated business or financial condition since the date of the Company’s most recent financial statements contained in the Disclosure Documents;

 

(j)           the Common Stock shall be traded on the OTCBB or listed on the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange;

 

(k)           the Company shall have authorized and reserved for issuance the aggregate number of shares of Common Stock issuable upon exercise of all of the Warrants to be issued at the Closing (such number to be determined without regard to any restriction on such exercise);

 

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(l)           there shall be no injunction, restraining order or decree of any nature of any court or Government Authority of competent jurisdiction that is in effect that restrains or prohibits the consummation of the transactions contemplated hereby and by the other Transaction Documents;

 

(m)           the Company shall have waived any applicable anti-takeover measures under Delaware law or the Company’s charter documents that may be triggered by the actions set forth in the Transaction Documents;

 

(n)           the Company and the Investors shall have made filings, if any, required by the Hart-Scott-Rodino Anti-Trust Improvements Act, as amended; and

 

(o)           the Company shall have executed the Escrow Agreement.

 

5.2.           Conditions to Company’s Obligations at the Closing. The Company’s obligations to effect the Closing with each Investor are conditioned upon the fulfillment (or waiver by the Company in its sole and absolute discretion) of each of the following events as of the Closing Date:

 

(a)           the representations and warranties of such Investor set forth in this Agreement and in the other Transaction Documents shall be true and correct in all material respects as of such date as if made on such date (except that to the extent that any such representation or warranty relates to a particular date, such representation or warranty shall be true and correct in all material respects as of that date);

 

(b)           such Investor shall have complied with or performed all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by such Investor on or before the Closing;

 

(c)           there shall be no injunction, restraining order or decree of any nature of any court or Government Authority of competent jurisdiction that is in effect that restrains or prohibits the consummation of the transactions contemplated hereby and by the other Transaction Documents;

 

(d)           such Investor shall have executed each Transaction Document to which it is a party and shall have delivered the same to the Company; and

 

(e)           such Investor shall have tendered to the Escrow Agent the Purchase Price for the Shares and the Warrant being purchased by it at the Closing by wire transfer of immediately available funds.

 

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6.           Miscellaneous.

 

6.1.           Survival; Severability. The representations, warranties, covenants and indemnities made by the parties herein and in the other Transaction Documents shall survive the Closing notwithstanding any due diligence investigation made by or on behalf of the party seeking to rely thereon. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that in such case the parties shall negotiate in good faith to replace such provision with a new provision which is not illegal, unenforceable or void, as long as such new provision does not materially change the economic benefits of this Agreement to the parties.

 

6.2.           Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. After the Closing, the Investors may assign their respective rights and obligations hereunder, in connection with any private sale or transfer of the Shares or Warrants in accordance with the terms hereof, as long as, as a condition precedent to such transfer, the transferee executes an acknowledgment agreeing to be bound by the applicable provisions of this Agreement, in which case the term “Investor” shall be deemed to refer to such transferee as though such transferee were an original signatory hereto. The Company may not assign its rights or obligations under this Agreement.

 

6.3.           No Reliance. Each party acknowledges that (i) it has such knowledge in business and financial matters as to be fully capable of evaluating this Agreement, the other Transaction Documents, and the transactions contemplated hereby and thereby, (ii) it is not relying on any advice or representation or warranty of any other party in connection with entering into this Agreement, the other Transaction Documents, or such transactions (other than the representations and warranties made in this Agreement or the other Transaction Documents), (iii) it has not received from any party any assurance or guarantee as to the merits (whether legal, regulatory, tax, financial or otherwise) of entering into this Agreement or the other Transaction Documents or the performance of its obligations hereunder and thereunder, and (iv) it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed necessary, and has entered into this Agreement and the other Transaction Documents based on its own independent judgment and on the advice of its advisors as it has deemed necessary, and not on any view (whether written or oral) expressed by any party.

 

6.4.           Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor hereunder are several and not joint with the obligations of the other Investors hereunder, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor hereunder. The Company acknowledges and agrees that nothing contained herein or in any other agreement or document delivered at Closing, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or a “group” as described in Section 13(d) of the Exchange Act, or create a presumption that the Investors are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Investor has been represented by its own separate counsel in connection with the transactions contemplated hereby, shall be entitled to protect and enforce its rights, including without limitation rights arising out of this Agreement or the other Transaction Documents, individually, and shall not be required to be join any other Investor as an additional party in any proceeding for such purpose.

 

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6.5.           Injunctive Relief. The parties hereto acknowledge and agree that a breach by either of their obligations hereunder will cause irreparable harm the other party and that the remedy or remedies at law for any such breach will be inadequate and agrees, in the event of any such breach, in addition to all other available remedies, the non-breaching party shall be entitled to an injunction restraining any breach and requiring immediate and specific performance of such obligations.

 

6.6.           Investors’ Trading Activity. The Company acknowledges that, following the filing of the Current Report on Form 8-K described in paragraph 4.1 above, each Investor shall have the right to purchase or sell, long or short, Common Stock and instruments or contracts whose value is derived from the market value of the Common Stock, and that sales of or certain derivative transactions relating to the Common Stock may have a negative impact on the market price of the Common Stock.

 

6.7.           Governing Law; Jurisdiction. This Agreement shall be governed by and construed under the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the City and County of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby and hereby irrevocably waives, and agrees not to assert in any such 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 brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. 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 to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. In any action, suit or proceeding in any jurisdiction brought by any party against any other party, the parties each knowingly and intentionally, to the greatest extent permitted by applicable law, hereby absolutely, unconditionally, irrevocably and expressly waives forever trial by jury.

 

6.8.           Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. This Agreement may be executed and delivered by facsimile transmission.

 

6.9.           Headings. The headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

6.10.          Notices. Any notice, demand or request required or permitted to be given by the Company or the Investor pursuant to the terms of this Agreement shall be in writing and shall be deemed delivered (i) when delivered personally or by verifiable facsimile transmission, unless such delivery is made on a day that is not a Business Day, in which case such delivery will be deemed to be made on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to an overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed as follows:

 

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If to the Company : Joel Ackerman, Chief Executive Officer
  Champions Oncology, Inc.
  One University Plaza
  Suite 307
  Hackensack, NJ 07601
  Tel (201) 808-8400
  Fax (201) 357-5216
  jackerman@championsoncology.com
   
with a copy  
(which shall not constitute notice)to: Adam D. So, Esq.
  Epstein Becker & Green, P.C.
  250 Park Avenue
  New York, NY 10177
  Tel (212) 351-3788
  Fax (212) 878-8693
  ASo@ebglaw.com

 

and if to any Investor, to such address for such Investor as shall appear on the signature page hereof executed by such Investor, or as shall be designated by such Investor in writing to the Company in accordance with this Section 6.10.

 

6.11.          Expenses. The Company and each Investor shall pay all costs and expenses that it incurs in connection with the negotiation, execution, delivery and performance of this Agreement or the other Transaction Documents, provided, however, that that the Company shall, at the Closing, pay up to $50,000 to Battery and $25,000 to PAR in immediately available funds for all reasonable, documented out-of-pocket expenses (including without limitation reasonable legal fees and expenses) incurred or to be incurred by Battery and PAR, as applicable in connection with their due diligence investigation of the Company and the negotiation, preparation, execution, delivery and performance of this Agreement and the other Transaction Documents.

 

6.12.          Entire Agreement; Amendments. This Agreement and the other Transaction Documents constitute the entire agreement between the parties with regard to the subject matter hereof and thereof, superseding all prior agreements or understandings, whether written or oral, between or among the parties. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and the holders of at least a majority of the Shares and Warrant Shares into which all of the Warrants then outstanding are exercisable (without regard to any limitation on such exercise), and no provision hereof may be waived other than by a written instrument signed by the party against whom enforcement of any such waiver is sought. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

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[Signature Pages to Follow]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first-above written.

 

  CHAMPIONS ONCOLOGY, INC
     
  By: /s/ Joel Ackerman
    Name: Joel Ackerman
    Title: Chief Executive Officer

 

  BATTERY VENTURES IX, L.P.
  By: Battery Partners IX, LLC
    General Partner
       
    By: /s/ Scott Tobin
      Name: Scott Tobin
      Title: Member Manager

 

  BATTERY INVESTMENT PARTNERS, IX, LLC
  By: Battery Partners IX, LLC
    Managing Member
       
    By: /s/ Scott Tobin
      Name: Scott Tobin
      Title: Member Manager

 

  PAR INVESTMENT PARTNERS, L.P.
  By: PAR Group, L.P.
    General Partner
    By: PAR Capital Management, Inc.
      General Partner
       
      By: /s/ Arthur Epker, III
        Name: Arthur Epker, III
        Title: Vice President

 

  /s/ Joel Ackerman
  Joel Ackerman
   
  /s/ Joel Ackerman
  Ronnie Morris

  

 
 

 

SCHEDULE OF INVESTORS

 

Name   Purchase
Price
    Number of
Shares
    Number of
Warrants
 
Battery Ventures IX, L.P.   $ 3,465,350       6,930,700       693,070  
Battery Investment Partners IX, LLC   $ 34,650       69,300       6,930  
PAR Investment Partners, L.P.   $ 5,000,000.00       10,000,000       1,000,000  
Harris & Harris Group, Inc.   $ 200,000.00       400,000       40,000  
Ronnie Morris, M.D.   $ 250,000.00       500,000       50,000  
Joel Ackerman   $ 250,000.00       500,000       50,000  
Bernard Kaminetsky
  $ 100,000.00       200,000       20,000  
TOTAL   $ 9,300,000       18,600,000       1,860,000  

 

 

 

 

Exhibit 10.5

 

AMENDMENT NO. 1 TO

2011 WARRANTS

TO PURCHASE COMMON STOCK OF

CHAMPIONS ONCOLOGY, INC.

 

This Amendment No. 1 (this “ Amendment ”) to the Warrants with the issue date of April 4, 2011 (the “ Original Warrants ”), effective as of March 13, 2015, is between Champions Oncology, Inc. (the “ Company ”) and the other parties hereto, who constitute the holders of Original Warrants exercisable for a majority of the number of shares of Common Stock of the Company into which all of the Original Warrants outstanding as of the date hereof are exercisable, and is thus binding upon all of the holders of Original Warrants pursuant to Section 12 of the Original Warrants.

 

WHEREAS, the parties hereto wish to amend the terms of the Original Warrants;

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledge, the parties agree as follows.

 

1.          Section 5(c) of each of the Original Warrants is deleted in its entirety and replaced with “[ Reserved ]”.

 

2.          The last sentence of Section 1(a) is amended and restated in its entirety as follows:

 

“The “ Exercise Price ” for each Warrant Share purchased by the Holder upon the exercise of this Warrant shall be equal to $0.40, subject to adjustment for the events specified in Section 5 below.”

 

For purposes of this Amendment, the definition of “Exercise Price” in the Original Warrants (before giving effect to the amendment in this Section 2) is referred to as the “ Original Exercise Price ”, and the definition of “Exercise Price” in the Original Warrants (after giving effect to the amendment in this Section 2) is referred to as the “ New Exercise Price ”.

 

3.          The number of shares issuable upon exercise of each of the Original Warrants (as set forth in the Preamble to the Original Warrants) (the “ Original Shares Issuable ”) shall be amended to an amount (the “ New Shares Issuable ”) equal to (x) the Original Exercise Price divided by the New Exercise Price, multiplied by (y) the Original Shares Issuable. For avoidance of doubt, the New Shares Issuable shall be subject to all limitations, conditions, and adjustments as set forth in the Original Warrants.

 

4.          The definition of “Expiration Date” (as set forth in the Preamble to the Original Warrants) of each of the Original Warrants is amended and restated in its entirety as follows:

 

“…6:00 p.m., eastern time, on April 4, 2017 (or, if such date is not a Business Day, on the Business Day immediately following such date) (the “ Expiration Date ”).”

 

5.          All other provisions of the Original Warrants shall remain effective.

 

 
 

 

6.          This Amendment shall for all purposes be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York.

 

7.          This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. This Amendment may be executed and delivered by facsimile transmission and/or pdf email transmission.

 

[Remainder of page intentionally left blank]

 

 
 

 

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first written above.

 

  CHAMPIONS ONCOLOGY, INC.
     
  By: /s/ Joel Ackerman
    Name: Joel Ackerman
    Title: President

 

  BATTERY VENTURES IX, L.P.
  By: Battery Partners IX, LLC, its general partner
         
    By: /s/ Scott Tobin
      Name: Scott Tobin
      Title: Member Manager

 

  BATTERY INVESTMENT PARTNERS IX, LLC
     
  By: Battery Partners IX, LLC, its general partner
       
    By: /s/ Scott Tobin
      Name: Scott Tobin
      Title: Member Manager

 

 

 

 

Exhibit 10.6

 

AMENDMENT NO. 1 TO

2013 WARRANTS

TO PURCHASE COMMON STOCK OF

CHAMPIONS ONCOLOGY, INC.

 

This Amendment No. 1 (this “ Amendment ”) to the Warrants with the issue date of January 28, 2013 (the “ Original Warrants ”), effective as of March 13, 2015, is between Champions Oncology, Inc. (the “ Company ”) and the other parties hereto, who constitute the holders of Original Warrants exercisable for a majority of the number of shares of Common Stock of the Company into which all of the Original Warrants outstanding as of the date hereof are exercisable, and is thus binding upon all of the holders of Original Warrants pursuant to Section 12 of the Original Warrants.

 

WHEREAS, the parties hereto wish to amend the terms of the Original Warrants;

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledge, the parties agree as follows.

 

1.          Section 5(c) of each of the Original Warrants is deleted in its entirety and replaced with “[ Reserved ]”.

 

2.          The last sentence of Section 1(a) is amended and restated in its entirety as follows:

 

“The “ Exercise Price ” for each Warrant Share purchased by the Holder upon the exercise of this Warrant shall be equal to $0.40, subject to adjustment for the events specified in Section 5 below.”

 

For purposes of this Amendment, the definition of “Exercise Price” in the Original Warrants (before giving effect to the amendment in this Section 2) is referred to as the “ Original Exercise Price ”, and the definition of “Exercise Price” in the Original Warrants (after giving effect to the amendment in this Section 2) is referred to as the “ New Exercise Price ”.

 

3.          The number of shares issuable upon exercise of each of the Original Warrants (as set forth in the Preamble to the Original Warrants) (the “ Original Shares Issuable ”) shall be amended to an amount (the “ New Shares Issuable ”) equal to (x) the Original Exercise Price divided by the New Exercise Price, multiplied by (y) the Original Shares Issuable. For avoidance of doubt, the New Shares Issuable shall be subject to all limitations, conditions, and adjustments as set forth in the Original Warrants.

 

4.          The definition of “Expiration Date” (as set forth in the Preamble to the Original Warrants) of each of the Original Warrants is amended and restated in its entirety as follows:

 

“…6:00 p.m., eastern time, on January 28, 2019 (or, if such date is not a Business Day, on the Business Day immediately following such date) (the “ Expiration Date ”).”

 

5.          All other provisions of the Original Warrants shall remain effective.

 

 
 

 

6.          This Amendment shall for all purposes be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York.

 

7.          This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. This Amendment may be executed and delivered by facsimile transmission and/or pdf email transmission.

 

[Remainder of page intentionally left blank]

 

 
 

 

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first written above.

 

  CHAMPIONS ONCOLOGY, INC.
     
  By: /s/ Joel Ackerman
    Name: Joel Ackerman
    Title: President

 

  BATTERY VENTURES IX, L.P.
  By: Battery Partners IX, LLC, its general partner
       
    By: /s/ Scott Tobin
      Name: Scott Tobin
      Title: Member Manager

 

  BATTERY INVESTMENT PARTNERS IX, LLC
     
  By: Battery Partners IX, LLC, its general partner
       
    By: /s/ Scott Tobin
      Name: Scott Tobin
      Title: Member Manager

 

  PAR INVESTMENT PARTNERS, L.P.
  By: PAR Group, L.P., its general partner
    By: PAR Capital Management, Inc., its general partner
         
      By: /s/ Arthur Epker III
        Name: Arthur Epker III
        Title: Vice President

 

  /s/ Joel Ackerman
  Joel Ackerman
   
  /s/ Ronnie Morris
  Ronnie Morris