|
Delaware
|
| |
3841
|
| |
47-1214177
|
|
|
(State or other jurisdiction of
incorporation or organization) |
| |
(Primary Standard Industrial Classification
Code Number) |
| |
(I.R.S. Employer Identification Number)
|
|
|
Large accelerated filer
☐
|
| |
Accelerated filer
☐
|
| |
Non-accelerated filer
☐
(Do not check if a smaller reporting company) |
| |
Smaller reporting company ☒
|
|
Title of Each Class of Securities to be Registered
|
| |
Proposed
Maximum Aggregate Offering Price (1) |
| |
Amount of
Registration Fee |
| ||||||
Units, each consisting of one share of common stock, par value $.001 per share, and one warrant
|
| | | $ | 10,000,000 | | | | | $ | 1,162.00 | | |
Common stock included in the units
|
| | | | — | | | | | | — | | |
Warrants included in the units
|
| | | | — | | | | | | — | | |
Common stock, issuable upon exercise of all warrants issued or issuable in public offering
(2)
|
| | | $ | 10,000,000 | | | | | $ | 1,162.00 | | |
Total
|
| | | $ | 20,000,000 | | | | | $ | 2,324.00 (3) | | |
| | |
Per Unit
|
| |
Total
(2)
|
| ||||||
Public offering price
|
| | | $ | 5.00 | | | | | $ | 6,000,000 | | |
Selling agents’ commissions
(1)
|
| | | $ | 0.35 | | | | | $ | 420,000 | | |
Proceeds, before expenses, to us
|
| | | $ | 4.65 | | | | | $ | 5,580,000 | | |
| | |
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Project
|
| |
Device
|
| |
Features
|
|
PortIO | | | Long-term implantable vascular access device | | |
•
No central venous access
•
No indwelling intravascular component
•
No radiographic confirmation required
|
|
Caldus | | | Disposable tissue ablation devices, including renal denervation for hypertension | | |
•
Completely disposable
•
No console or other capital equipment.
•
Direct thermal ablation using heated fluid
|
|
CarpX | | | Percutaneous device to treat carpal tunnel syndrome | | |
•
Completely percutaneous
•
Office-based procedure
|
|
NextCath | | | Self-anchoring short-term catheters | | |
•
Anchoring integral to catheter design
•
No suturing, elaborate dressings or costly catheter securement devices
|
|
NextFlo | | | Highly-accurate disposable infusion pumps | | |
•
Variable resistor design
•
Applicable to broader range of drugs
|
|
| | |
For the Period
June 26, 2014 (inception) through December 31, 2014 |
| |
For the Nine
Months Ended September 30, 2015 |
| ||||||
Operating Data: | | | | | | | | | |||||
Net sales
|
| | | | — | | | | | | — | | |
Net loss
|
| | | $ | (274,384 ) | | | | | $ | 1,045,848 | | |
Basic and diluted net loss per share
|
| | | | (0.03 ) | | | | | | (0.10 ) | | |
Weighted average number of shares outstanding
|
| | | | 8,618,278 | | | | | | 10,951,449 | | |
| | | | | | | | |
September 30, 2015
|
| |||||||||
| | |
December 31, 2014
|
| |
Actual
|
| |
Pro forma
As Adjusted (1) |
| |||||||||
Balance Sheet Data: | | | | | | | | | | ||||||||||
Cash
|
| | | $ | 839,077 | | | | | $ | 1,415,294 | | | | | $ | 6,875,294 | | |
Working capital
|
| | | | 794,828 | | | | | | 1,176,776 | | | | | | 6,636,776 | | |
Total assets
|
| | | | 842,077 | | | | | | 1,809,855 | | | | | | 7,269,855 | | |
Total liabilities
|
| | | | 47,249 | | | | | | 238,518 | | | | | | 238,518 | | |
Total stockholders’ equity
|
| | | | 794,828 | | | | | | 1,571,337 | | | | | | 7,031,337 | | |
Assumed Percentage of Units Sold
|
| |
100%
|
| |
80%
|
| |
60%
|
| |
40%
|
| |
20%
|
| |||||||||||||||
Price to Public
|
| | | $ | 10,000,000 | | | | | $ | 8,000,000 | | | | | $ | 6,000,000 | | | | | $ | 4,000,000 | | | | | $ | 2,000,000 | | |
Selling agents’ commissions
|
| | | | 700,000 | | | | | | 560,000 | | | | | | 420,000 | | | | | | 280,000 | | | | | | 140,000 | | |
Other offering expenses
|
| | | | 760,000 | | | | | | 720,000 | | | | | | 680,000 | | | | | | 640,000 | | | | | | 600,000 | | |
Net proceeds
|
| | | $ | 8,540,000 | | | | | $ | 6,720,000 | | | | | $ | 4,900,000 | | | | | $ | 3,080,000 | | | | | $ | 1,260,000 | | |
Research and development and regulatory clearance of products, commercialization of products, etc.
|
| | | $ | 5,693,190 | | | | | $ | 4,267,448 | | | | | $ | 3,057,185 | | | | | $ | 1,702,938 | | | | | $ | 552,316 | | |
Operating expenses (including legal and accounting expenses related to SEC reporting obligations and payment of contingent compensation to our Chief Executive Officer)
|
| | | | 2,525,915 | | | | | | 1,797,517 | | | | | | 1,469,131 | | | | | | 1,298,607 | | | | | | 514,095 | | |
Working capital
|
| | | | 320,894 | | | | | | 655,034 | | | | | | 373,683 | | | | | | 78,455 | | | | | | 193,589 | | |
Total use of proceeds
|
| | | $ | 8,540,000 | | | | | $ | 6,720,000 | | | | | $ | 4,900,000 | | | | | $ | 3,080,000 | | | | | $ | 1,260,000 | | |
|
Public offering price
|
| | | | | | | | | $ | 5.00 | | | ||
|
Net tangible book value before this offering
|
| | | $ | 0.13 | | | | | | | | | ||
|
Decrease attributable to new investors
|
| | | $ | 0.39 | | | | | | | | | ||
|
Pro forma net tangible book value after this offering
|
| | | | | | | | | $ | 0.52 | | | ||
|
Dilution to new investors
|
| | | | | | | | | $ | 4.48 | | | ||
|
| | |
Shares Purchased
|
| |
Total Consideration
|
| |
Average Price
Per Share |
| ||||||||||||||||||||||||||
| | |
Number
|
| |
Percentage
|
| |
Amount
|
| |
Percentage
|
| |||||||||||||||||||||||
Initial stockholders
|
| | | | 12,250,000 | | | | | | 91.1 % | | | | | $ | 2,173,212 | | | | | | 26.6 % | | | | | $ | 0.18 | | | |||||
New investors
|
| | | | 1,200,000 | | | | | | 8.9 % | | | | | $ | 6,000,000 | | | | | | 73.4 % | | | | | $ | 5.00 | | | |||||
| | | | | 13,450,000 | | | | | | 100.0 % | | | | | $ | 8,173,212 | | | | | | 100.0 % | | | | | | | | | |||||
|
| | |
December 31, 2014
|
| |
September 30, 2015
|
| |||||||||||||||
| | |
Actual
|
| |
Actual
|
| |
Pro forma
As Adjusted |
| ||||||||||||
Cash | | | | $ | 839,077 | | | | | $ | 1,415,294 | | | | | $ | 6,875,294 | | | |||
Stockholders’ equity: | | | | | ||||||||||||||||||
Preferred stock, $.001 par value, 20,000,000 shares authorized; none issued or outstanding
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | |||
Common stock, $.001 par value, 50,000,000 shares authorized; 12,250,000 and 10,856,371 shares issued and outstanding, respectively; and 13,450,000 shares issued and outstanding, as adjusted
|
| | | | 10,856 | | | | | | 12,250 | | | | | | 13,450 | | | |||
Additional paid-in capital
|
| | | | 1,058,356 | | | | | | 2,879,319 | | | | | | 8,338,119 | | | |||
Accumulated deficit
|
| | | | (274,384 ) | | | | | | (1,320,232 ) | | | | | | (1,320,232 ) | | | |||
Total stockholders’ equity
|
| | | | 794,828 | | | | | | 1,571,337 | | | | | | 7,031,337 | | | |||
Total capitalization
|
| | | $ | 794,828 | | | | | $ | 1,571,337 | | | | | $ | 7,031,337 | | | |||
|
Team Member
|
| |
Career Highlights
|
|
Lishan Aklog, M.D.
Chairman and Chief Executive Officer |
| |
•
Co-founding Partner, Pavilion Holdings Group and Pavilion Medical Innovations
•
Former Chairman and Chief Technology Officer, Vortex Medical
•
Former Associate Professor, Chief of Cardiovascular Surgery and Cardiovascular Center Chair, St. Joseph’s Hospital and Medical Center, Phoenix, Arizona
•
Former Assistant Professor of Cardiothoracic Surgery and Associate Chief of Cardiac Surgery, Mount Sinai Medical Center, New York
•
Former Assistant Professor of Surgery and Attending Cardiac Surgeon, Harvard Medical School and Brigham and Women’s Hospital
|
|
Michael J. Glennon
Vice Chairman |
| |
•
Co-founding Partner, Pavilion Holdings Group and Pavilion Medical Innovations
•
Chairman and Chief Executive Officer, Saphena Medical and Cruzar Medsystems
•
Former Chief Executive Officer, Vortex Medical
•
Former Senior Vice President, Accellent, Inc.
•
Former senior sales and marketing executive at multiple companies including Guidant and Medtronic
|
|
Brian J. deGuzman, M.D.
Chief Medical Officer |
| |
•
Co-founding Partner, Pavilion Holdings Group and Pavilion Medical Innovations
•
Chief Executive Officer, Kaleidoscope Medical
•
Former Chief Medical Officer, Vortex Medical
•
Former Assistant Professor and Associate Chief of Cardiovascular Surgery, St. Joseph’s Hospital and Medical Center, Phoenix, Arizona
•
Former Assistant Professor of Surgery and Attending Cardiac Surgeon, Tufts University School of Medicine and Lahey Clinic
|
|
James L. Cox, M.D.
Director |
| |
•
Professor of Surgery Emeritus, Washington University School of Medicine
•
Creator of the Cox-Maze procedure for atrial fibrillation
•
Chairman, The World Heart Foundation
•
Former President, American Association of Thoracic Surgery
•
Instrumental in founding six medical device companies
|
|
Ronald M. Sparks
Director |
| |
•
Former Healthcare Industry Executive, Avista Capital Partners
•
Former Chairman and CEO, Navilyst, Inc.
•
Former President and CEO, Accellent
•
Former Division President, Smith & Nephew
•
Led the commercialization of over 50 medical device products
|
|
Team Member
|
| |
Career Highlights
|
|
Albert Chin, M.D.
Medical Advisory Board |
| |
•
Co-founding Partner and Chief Innovation Officer, Pavilion Medical Innovations
•
Former Vice President of Research and Chief Innovation Officer, Maquet Cardiovascular/ Guidant Cardiac Surgery
•
Inventor on 184 issued patents and of 12 commercialized products
|
|
Marc Gerdisch, M.D.
Medical Advisory Board |
| |
•
Assistant Professor, Loyola University Medical Center
•
Chief of Cardiovascular and Thoracic Surgery, Franciscan St. Francis Health Heart Center, Indianapolis
|
|
Timothy Murphy, M.D.
Medical Advisory Board |
| |
•
Professor of Diagnostic Imaging and Director of the Vascular Diseases Research Center, Warren Alpert Medical School of Brown University
•
Former President, Society of Interventional Radiology
•
Co-founder of four medical device companies
|
|
Todd Rosengart, M.D.
Medical Advisory Board |
| |
•
Professor and Chairman, Debakey Department of Surgery, Baylor Medical College
•
Professor of Heart and Vascular Disease and DeBakey-Bard Chair of Surgery, Texas Heart Institute
•
Co-founder of five medical device and healthcare IT companies
|
|
Phillip Stieg, M.D.
Medical Advisory Board |
| |
•
Professor and Chairman of Neurological Surgery, Weil Cornell Medical College
•
Neurosurgeon-in-Chief and Chairman of Neurological Surgery, New York-Presbyterian Hospital
•
Former President of the Society of University Neurosurgeons
|
|
Project
|
| |
Inventors
|
| |
Title
|
| |
Number
|
| |
Date
|
|
PortIO | | |
Aklog and deGuzman
|
| | “Intraosseous Infusion Ports and Methods of Use” | | |
Application#
US62/0.79.266 US14940889 PCT/US15/60669 |
| |
Filed
13-Nov-2014 13-Nov-2015 13-Nov-2015 |
|
Caldus | | |
Aklog and deGuzman
|
| | “Continuous Flow Balloon Catheter Systems and Methods of Use” | | |
Application#
62/131.214 |
| |
Filed
10-Mar-2015 |
|
| | |
Aklog and deGuzman
|
| | “Continuous Flow Thermal Ablation Balloon Catheter Systems and Methods of Use” | | |
Application#
62/131.217 |
| |
Filed
10-Mar-2015 |
|
CarpX | | |
Aklog and deGuzman
|
| | “Systems and Methods for Percutaneous Division of Fibrous Structures” | | |
Application#
62/086.950 |
| |
Filed
03-Dec-2014 |
|
NextCath | | |
Aklog and deGuzman
|
| | “Self-Anchoring Catheters and Methods of Use” | | |
Application#
62/085.838 |
| |
Filed
01-Dec-2014 |
|
NextFlo | | |
Aklog, deGuzman,
Glennon, Cronin and Barker |
| | “Systems and Methods for Infusion of Fluids Using Stored Potential Energy and a Variable Flow Resistor” | | |
U.S. Patent
8,622,976 (1) |
| |
Issued
07-Jan-2014 |
|
| | |
Aklog, deGuzman,
Glennon, Cronin and Barker |
| | “Systems and Methods for Infusion of Fluids Using Stored Potential Energy and a Variable Flow Resistor” | | |
U.S. Patent
9,255,834 (2) |
| |
Issued
13-Oct-2015 |
|
Name
|
| |
Age
|
| |
Position
|
|
Lishan Aklog, M.D. | | |
50
|
| | Chairman and Chief Executive Officer | |
Michael J. Glennon | | |
49
|
| | Vice Chairman and Director | |
Richard Fitzgerald | | |
52
|
| | Chief Financial Officer and Secretary | |
Brian J. deGuzman, M.D. | | |
51
|
| | Chief Medical Officer | |
Ira Scott Greenspan | | |
57
|
| | Senior Advisor and Director | |
James L. Cox, M.D. | | |
72
|
| | Director | |
Joshua R. Lamstein | | |
46
|
| | Director | |
Ronald M. Sparks | | |
60
|
| | Director | |
David Weild IV | | |
58
|
| | Director | |
Name and Address of Beneficial Owner
(1)
|
| |
Amount and
Nature of Beneficial Ownership |
| |
Approximate
Percentage of Outstanding Shares of Common Stock Prior to Offering |
| |
Approximate
Percentage of Outstanding Shares of Common Stock After Offering |
| |||||||||
5% Stockholders | | | | | | | | | | | | | | | | | | | |
HCFP/Capital Partners III LLC
|
| | | | 5,713,879 | | | | | | 46.6 % | | | | | | 42.5 % | | |
Pavilion Venture Partners LLC
|
| | | | 2,508,532 | | | | | | 20.5 % | | | | | | 18.7 % | | |
Directors and Executive Officers | | | | | | | | | | | | | | | | | | | |
Lishan Aklog, M.D.
|
| | | | 8,222,412 (2)(3) | | | | | | 67.1 % | | | | | | 61.1 % | | |
Ira Scott Greenspan
|
| | | | 5,762,656 (3)(9) | | | | | | 47.0 % | | | | | | 42.8 % | | |
Joshua R. Lamstein
|
| | | | 83,617 (4) | | | | | | * | | | | | | * | | |
Richard Fitzgerald
|
| | | | 0 | | | | | | 0 | | | | | | 0 | | |
Michael J. Glennon
|
| | | | 0 (5) | | | | | | 0 | | | | | | 0 | | |
Brian J. deGuzman, M.D.
|
| | | | 0 (5) | | | | | | 0 | | | | | | 0 | | |
Ronald M. Sparks
|
| | | | 0 (6) | | | | | | 0 | | | | | | 0 | | |
James L. Cox, M.D.
|
| | | | 0 (7) | | | | | | 0 | | | | | | 0 | | |
David Weild IV
|
| | | | 0 (8) | | | | | | 0 | | | | | | 0 | | |
All directors and executive officers as a group (nine individuals)
|
| | | | 8,354,807 (2)(3)(9) | | | | | | 68.2 % | | | | | | 62.1 % (10) | | |
Name
|
| |
Number of
Shares of Common Stock included in Units |
| |
Number of
Warrants included in Units |
| |
Relationship to Us
|
| ||||||
HCFP/Capital Partners III LLC
|
| | | | 20,000 | | | | | | 20,000 | | | | Affiliate of Drs. Aklog and deGuzman and Messrs. Glennon, Greenspan and Lamstein | |
Pavilion Venture Partners LLC
|
| | | | 30,000 | | | | | | 30,000 | | | | Affiliate of Drs. Aklog and deGuzman and Mr. Glennon | |
Ira Scott Greenspan
|
| | | | 10,000 | | | | | | 10,000 | | | | Senior Advisor and Director | |
Joshua R. Lamstein
|
| | | | 30,000 | | | | | | 30,000 | | | | Director | |
| | |
Page
|
| |||
Condensed Consolidated Financial Statements (Unaudited) | | | |||||
| | | | F-2 | | | |
| | | | F-3 | | | |
| | | | F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
Consolidated Financial Statements | | | |||||
| | | | F-13 | | | |
| | | | F-14 | | | |
| | | | F-15 | | | |
| | | | F-16 | | | |
| | | | F-17 | | | |
| | | | F-18 | | |
| | |
September 30,
2015 |
| |
December 31,
2014 |
| ||||||||
| | |
(Unaudited)
|
| | ||||||||||
ASSETS
|
| | | ||||||||||||
Current assets: | | | | ||||||||||||
Cash
|
| | | $ | 1,415,294 | | | | | $ | 839,077 | | | ||
Prepaid and other current assets
|
| | | | — | | | | | | 3,000 | | | ||
Total current assets
|
| | | | 1,415,294 | | | | | | 842,077 | | | ||
Deferred offering costs
|
| | | | 394,561 | | | | | | — | | | ||
Total assets
|
| | | $ | 1,809,855 | | | | | $ | 842,077 | | | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| | | ||||||||||||
Current liabilities: | | | | ||||||||||||
Accounts payable and accrued expenses
|
| | | $ | 238,518 | | | | | $ | 47,249 | | | ||
Total current liabilities
|
| | | | 238,518 | | | | | | 47,249 | | | ||
Commitments and contingencies | | | | ||||||||||||
Stockholders’ equity: | | | | ||||||||||||
Preferred stock, $.001 par value, authorized 20,000,000 shares; none issued and outstanding
|
| | | | — | | | | | | — | | | ||
Common stock, $.001 par value, authorized 50,000,000 shares, 12,250,000
shares and 10,856,371 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively |
| | | | 12,250 | | | | | | 10,856 | | | ||
Additional paid-in capital
|
| | | | 2,879,319 | | | | | | 1,058,356 | | | ||
Accumulated deficit
|
| | | | (1,320,232 ) | | | | | | (274,384 ) | | | ||
Total stockholders’ equity
|
| | | | 1,571,337 | | | | | | 794,828 | | | ||
Total liabilities and stockholders’ equity
|
| | | $ | 1,809,855 | | | | | $ | 842,077 | | | ||
|
| | |
Nine Months Ended
September 30, 2015 |
| ||||
Formation and operating costs
|
| | | $ | 697,866 | | | |
Research and development costs
|
| | | | 347,982 | | | |
Net loss
|
| | | $ | 1,045,848 | | | |
Net loss per share, basic and diluted
|
| | | $ | (.10 ) | | | |
Weighted average shares outstanding, basic and diluted
|
| | | | 10,951,449 | | | |
|
| | |
Common Stock
|
| |
Additional
Paid in Capital |
| |
Accumulated
Deficit |
| |
Total
Stockholders’ Equity |
| |||||||||||||||||||||||
|
| |
Shares
|
| |
Par
Value |
| |||||||||||||||||||||||||||||
Balance, January 1, 2015
|
| | | | 10,856,371 | | | | | $ | 10,856 | | | | | $ | 1,058,356 | | | | | $ | (274,384 ) | | | | | $ | 794,828 | | | |||||
Contributed services
|
| | | | | | | | | | | | | | | | 300,000 | | | | | | | | | | | | 300,000 | | | |||||
Warrants issued for legal services
|
| | | | | | | | | | | | | | | | 272,357 | | | | | | | | | | | | 272,357 | | | |||||
Exercise of warrants
|
| | | | 1,393,629 | | | | | | 1,394 | | | | | | 1,248,606 | | | | | | | | | | | | 1,250,000 | | | |||||
Net loss
|
| | | | | | | | | | | | | | | | | | | | | | (1,045,848 ) | | | | | | (1,045,848 ) | | | |||||
Balance, September 30, 2015
|
| | | | 12,250,000 | | | | | $ | 12,250 | | | | | $ | 2,879,319 | | | | | $ | (1,320,232 ) | | | | | $ | 1,571,337 | | | |||||
|
| Cash flows from operating activities | | | |||||
|
Net loss
|
| | | $ | (1,045,848 ) | | |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | |||||
|
Expense attributable to contributed services
|
| | | | 300,000 | | |
| Changes in operating assets and liabilities: | | | |||||
|
Prepaid and other current assets
|
| | | | 3,000 | | |
|
Accounts payable and accrued expenses
|
| | | | 141,269 | | |
|
Net cash used in operating activities
|
| | | | (601,579 ) | | |
| Cash flows from financing activities | | | |||||
|
Payment of deferred offering costs
|
| | | | (72,204 ) | | |
|
Proceeds from common stock issued upon exercise of warrants
|
| | | | 1,250,000 | | |
|
Net cash provided by financing activities
|
| | | | 1,177,796 | | |
|
Net increase in cash
|
| | |
|
576,217
|
| |
|
Cash, beginning of the period
|
| | | | 839,077 | | |
|
Cash, end of the period
|
| | | $ | 1,415,294 | | |
| Supplemental schedule of noncash financing activities: | | | |||||
|
Issuance of warrants in exchange for legal services
|
| | | $ | 272,356 | | |
|
Warrants outstanding at January 1, 2015
|
| | | | 10,856,371 | | | |
|
Issuance of warrant to advisor
|
| | | | 97,554 | | | |
|
Warrants exercised
|
| | | | (1,393,629 ) | | | |
|
Warrants outstanding at September 30, 2015
|
| | | | 9,560,296 | | | |
|
|
ASSETS
|
| |||||||
| CURRENT ASSETS: | | | ||||||
|
Cash
|
| | | $ | 839,077 | | | |
|
Prepaid expenses and other current assets
|
| | | | 3,000 | | | |
|
TOTAL ASSETS
|
| | | $ | 842,077 | | | |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| |||||||
| CURRENT LIABILITIES: | | | ||||||
|
Accounts payable and accrued expenses
|
| | | $ | 47,249 | | | |
| COMMITMENTS AND CONTINGENCIES (Note 4) | | | ||||||
| STOCKHOLDERS’ EQUITY: | | | ||||||
|
Preferred stock, $.001 par value, authorized 20,000,000 shares, none issued
|
| | | | — | | | |
|
Common stock, $.001 par value, authorized 50,000,000 shares, 10,856,371 issued and outstanding
|
| | | | 10,856 | | | |
|
Additional paid-in capital
|
| | | | 1,058,356 | | | |
|
Accumulated deficit
|
| | | | (274,384 ) | | | |
|
TOTAL STOCKHOLDERS’ EQUITY
|
| | | | 794,828 | | | |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| | | $ | 842,077 | | | |
|
|
Revenue
|
| | | $ | — | | | |
|
Formation and operational costs
|
| | | | 274,384 | | | |
|
Net loss
|
| | | $ | (274,384 ) | | | |
|
Weighted average number of shares used in computing net loss per share, basic and diluted
|
| | | | 8,618,278 | | | |
|
Basic and diluted net loss per share
|
| | | $ | (0.03 ) | | | |
|
| | |
Common Stock
|
| |
Additional
Paid-In Capital |
| |
Accumulated
deficit |
| |
Stockholders’
Equity |
| |||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |||||||||||||||||||||||||||||
Balance at June 26, 2014, date of inception
|
| | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | |||||
Common shares and 8,083,049 warrants issued to founders
|
| | | | 8,083,049 | | | | | | 8,083 | | | | | | (4,871 ) | | | | | | — | | | | | | 3,212 | | | |||||
Units consisting of one share of
common stock and one warrant issued to initial stockholders, net of offering costs of $7,500 |
| | | | 418,089 | | | | | | 418 | | | | | | 67,082 | | | | | | — | | | | | | 67,500 | | | |||||
Units consisting of one share of
common stock and one warrant issued to investors, net of offering costs of $46,500 |
| | | | 2,355,233 | | | | | | 2,355 | | | | | | 796,145 | | | | | | | | | | | | 798,500 | | | |||||
Value of contributed services of Chief Executive Officer and Chief Financial Officer
|
| | | | — | | | | | | — | | | | | | 200,000 | | | | | | — | | | | | | 200,000 | | | |||||
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | (274,384 ) | | | | | | (274,384 ) | | | |||||
Balance at December 31, 2014
|
| | | | 10,856,371 | | | | | $ | 10,856 | | | | | $ | 1,058,356 | | | | | $ | (274,384 ) | | | | | $ | 794,828 | | | |||||
|
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | ||||||
|
Net loss
|
| | | $ | (274,384 ) | | | |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | ||||||
|
Expense attributable to contributed services
|
| | | | 200,000 | | | |
| Change in operating assets and liabilities: | | | ||||||
|
Prepaid expenses and other current assets
|
| | | | (3,000 ) | | | |
|
Accounts payable and accrued expenses
|
| | | | 47,249 | | | |
|
NET CASH USED IN OPERATING ACTIVITIES
|
| | | | (30,135 ) | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | ||||||
|
Proceeds from sale of shares of common stock and warrants
|
| | | | 923,212 | | | |
|
Payment of offering costs
|
| | | | (54,000 ) | | | |
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
| | | | 869,212 | | | |
|
NET INCREASE IN CASH
|
| | | | 839,077 | | | |
|
Cash at June 26, 2014
|
| | | | — | | | |
|
Cash at December 31, 2014
|
| | | $ | 839,077 | | | |
|
|
U.S. statutory rate
|
| | | | (35.0 %) | | | |
|
State income taxes (net of federal benefit)
|
| | | | (5.4 %) | | | |
|
Permanent differences
|
| | | | 29.5 % | | | |
|
Valuation allowance
|
| | | | 10.9 % | | | |
| | | | | | 0.0 % | | | |
|
| Noncurrent deferred tax assets: | | | ||||||
|
Net operating loss
|
| | | $ | 30,051 | | | |
|
Valuation allowance
|
| | | | (30,051 ) | | | |
|
Total net deferred tax assets
|
| | | $ | — | | | |
|
|
SEC registration fee
|
| | | $ | 3,079.59 | | |
|
FINRA filing fee
|
| | | $ | 2,750.00 | | |
|
Accounting fees and expenses
|
| | | $ | 100,000 | | |
|
Printing and engraving expenses
|
| | | $ | 50,000 | | |
|
Legal fees and expenses
|
| | | $ | 400,000 | | |
|
Nasdaq listing fees
|
| | | $ | 50,000 | | |
|
Miscellaneous
|
| | | | 50,000 (1) | | |
|
Total
|
| | | $ | 655,829.59 | | |
|
Exhibit No.
|
| |
Description
|
| |||
| | | 1.1 | | | | Form of Selling Agent Agreement. | |
| | | 3.1 | | | | Certificate of Incorporation.** | |
| | | 3.2 | | | | Certificate of Amendment to Certificate of Incorporation** | |
| | | 3.3 | | | | By-laws.** | |
| | | 4.1 | | | | Specimen Unit Certificate.** | |
| | | 4.2 | | | | Specimen Common Stock Certificate.** | |
| | | 4.3 | | | | Specimen Warrant Certificate.** | |
| | | 4.4 | | | | Form of Warrant Agreement between Continental Stock Transfer & Trust Company and PAVmed.** | |
| | | 4.5 | | | | 2014 Long-Term Equity Incentive Plan** | |
| | | 4.6 | | | | Form of Unit Purchase Option | |
| | | 5.1 | | | | Opinion of Graubard Miller.** | |
| | | 10.1 | | | | Patent Option Agreement.** | |
| | | 10.2.1 | | | | Employment Agreement between PAVmed and Dr. Aklog.** | |
| | | 10.2.2 | | | | Amendment to Employment Agreement between PAVmed and Dr. Aklog.** | |
| | | 10.2.3 | | | | Second Amendment to Employment Agreement between PAVmed and Dr. Aklog. | |
| | | 10.3.1 | | | | Form of Subscription Agreement (July 2014)** | |
| | | 10.3.2 | | | | Form of Subscription Agreement (November 2014)** | |
| | | 10.4.1 | | | | Form of Letter Agreement with HCFP Capital Partners III LLC** | |
| | | 10.4.2 | | | | Form of Letter Agreement with Pavilion Venture Partners LLC** | |
| | | 10.5.1 | | | | Letter agreement regarding corporate opportunities executed by Dr. Lishan Aklog.** | |
| | | 10.5.2 | | | | Letter agreement regarding corporate opportunities executed by Michael Glennon.** | |
|
Exhibit No.
|
| |
Description
|
| |||
| | | 10.5.3 | | | | Letter agreement regarding corporate opportunities executed by Dr. Brian deGuzman.** | |
| | | 10.6 | | | | Management services agreement between PAVmed and HCP/Advisors LLC. | |
| | | 10.7 | | | | Form of Management services agreement between PAVmed and Pavilion Holdings Group.** | |
| | | 10.8 | | | | Employment Agreement between PAVmed and Richard Fitzgerald. | |
| | | 23.1 | | | | Consent of Citrin Cooperman & Company, LLP. | |
| | | 23.2 | | | | Consent of Graubard Miller (included in Exhibit 5.1).** | |
| | | 24 | | | | Power of Attorney (included on signature page of this Registration Statement). | |
| | | | PAVMED INC. | | |||
| | | | By: | | |
/s/ Lishan Aklog
|
|
| | | | | | |
Lishan Aklog
Chairman and Chief Executive Officer (Principal Executive Officer) |
|
|
Name
|
| |
Position
|
| |
Date
|
|
|
/s/ Lishan Aklog
Lishan Aklog
|
| |
Chairman and Chief Executive Officer
(Principal Executive Officer) |
| |
November 20, 2015
|
|
|
/s/ Richard Fitzgerald
Richard Fitzgerald
|
| |
Chief Financial Officer
(Principal Accounting and Financial Officer) and Secretary |
| |
November 20, 2015
|
|
|
/s/ Michael J. Glennon
Michael J. Glennon
|
| |
Vice Chairman and Director
|
| |
November 20, 2015
|
|
|
/s/ Ira Scott Greenspan
Ira Scott Greenspan
|
| |
Director
|
| |
November 20, 2015
|
|
|
/s/ James L. Cox, M.D.
James L. Cox, M.D.
|
| |
Director
|
| |
November 20, 2015
|
|
|
/s/ Joshua R. Lamstein
Joshua R. Lamstein
|
| |
Director
|
| |
November 20, 2015
|
|
|
/s/ Ronald M. Sparks
Ronald M. Sparks
|
| |
Director
|
| |
November 20, 2015
|
|
|
/s/ David Weild IV
David Weild IV
|
| |
Director
|
| |
November 20, 2015
|
|
Exhibit 1.1
SELLING AGENCY AGREEMENT
[ ], 2015
Tripoint Global Equities, LLC
1450 Broadway, Floor 26
New York, New York 10018
The Benchmark Company
40 Fulton Street, 19th Floor
New York, NY 10038
Ladies and Gentlemen:
Introduction . This agreement (this “Agreement”) constitutes the agreement between PAVmed, Inc., a Delaware corporation (the “Company”), on the one hand, and Tripoint Global Equities, LLC (“Tripoint”) and The Benchmark Company, LLC (“Benchmark”; and together with Tripoint, the “Selling Agents” and each a “Selling Agent”), on the other hand, pursuant to which the Selling Agents shall serve as agents for the Company in connection with the proposed Offering (as defined below) of up to an aggregate of $10,000,000.00 (the “Maximum”) of units of the Company (“Units”), each Unit consisting of one share of common stock, par value $0.001 per share (“Common Stock”), and one warrant (the “Warrant”) to purchase one share of Common Stock, to various investors (each an “Investor” and collectively, the “Investors”). The units, Common Stock and Warrants are collectively referred to herein as the “Securities.”
The Company hereby confirms its agreement with the Selling Agents as follows:
Section 1. Agreement to Act as Selling Agents .
(a) On the basis of the representations, warranties and agreements of the Company herein contained, and subject to all the terms and conditions of this Agreement, the Selling Agents shall be the exclusive Selling Agents in connection with the offering and sale by the Company of the Securities pursuant to the Company’s Registration Statement (as defined below), with the terms of such offering (the “Offering”) to be subject to market conditions and negotiations between the Company, the Selling Agents and the prospective Investors. The Selling Agents will act on a reasonable best efforts basis and the Company agrees and acknowledges that there is no guarantee of the successful sale of the Securities, or any portion thereof, in the prospective Offering. Under no circumstances will the Selling Agents or any of their respective “Affiliates” (as defined below) be obligated to underwrite or purchase any of the Securities for its own account or otherwise provide any financing. The Selling Agents shall act solely as the Company’s agent and not as principal. The Selling Agents shall have no authority to bind the Company with respect to any prospective offer to purchase Securities and the Company shall have the sole right to accept offers to purchase Securities and may reject any such offer, in whole or in part. Subject to the Company’s written consent, which such consent shall not be unreasonably withheld, conditioned, or delayed, the Selling Agents may (i) create a selling syndicate for the Offering comprised of broker-dealers who are members of the Financial Industry Regulatory Authority (“FINRA”) and/or (ii) rely on soliciting dealers who are FINRA members to participate in placing a portion of the Offering. The Selling Agents may also retain other brokers or dealers to act as sub-agents or selected dealers on their behalf in connection with the Offering. Subject to the terms and conditions hereof, payment of the purchase price for, and delivery of, the Securities shall be made at one closing (the “Closing” and the date on which the Closing occurs, the “Closing Date”). As compensation for services rendered, on the Closing Date, the Company shall pay to the Selling Agents the fees and expenses set forth below:
(i) Cash : A cash fee (the “Cash Fee”) equal to 7.0% of the gross proceeds received by the Company from the sale of the Securities at the Closing, including proceeds received from sales/orders placed through BANQ, an online brokerage division of TriPoint (“BANQ”), which
such Cash Fee will be allocated by the Selling Agents among the Selling Agents and/or the members of the selling syndicate and soliciting dealers in their sole discretion.
(ii) Purchase Option : Purchase options (the “Selling Agent Options”) for the purchase of an amount of Units equal to 5.0% of the Units sold in the Offering, or 100,000 Units if the maximum number of Units are sold in the offering which will be allocated by the Selling Agents among the Selling Agents in their sole discretion. The Selling Agent Options will be non-exercisable for 6 months after the effective date of the Offering (“Effective Date”). The Selling Agent Options will be exercisable for cash and have a term of five years from the Effective Date. The Selling Agent Options will have a strike price equal to 110% of the price of the Units sold in the Offering.
(iii) Expenses :
A. | Subject to compliance with FINRA Rule 5110(f)(2)(B), the Company agrees to pay the Selling Agents a non-accountable expense fee equal to 2.0% (“Expense Fee”) of the gross proceeds received by the Company from the sale of the Securities at the Closing (of which $25,000 has been paid to date and will be reimbursed to the Company to the extent expenses are not incurred (the “Advance”)), including proceeds received from sales/orders placed through BANQ, which such Expense Fee will be allocated by the Selling Agents among the Selling Agents and/or the members of the selling syndicate and soliciting dealers in their sole discretion (such Expense Fee shall be exclusive of the fees of Selling Agents’ respective counsels, as set forth in Section 1(a)(iii)(B) below; provided , however , that such expense fee in no way limits or impairs the indemnification and contribution provisions of this Agreement). |
B. The Company also agrees to pay the fees and expenses of Benchmark’s legal counsel related to the Offering, which fees shall not exceed .4% of the gross proceeds of the offering and the fees and expenses of TriPoint’s legal counsel related to the Offering, which fees shall not exceed .2% of the gross proceeds of the offering assuming in both cases the maximum amount of gross proceeds in the offering are raised, Any such fees and expenses will only be payable to the extent such fees and expenses are incurred.
(iv) Expenses if no Closing : In the event following the date of effectiveness of the Registration Statement (“Effective Date”) that there is no Closing, subject to compliance with FINRA Rules 5110(f)(2)(D) and 5110(f)(2)(E), the Company agrees to reimburse the Selling Agents’ accountable expenses equal to $5,000.00 over and above the Advance (inclusive of the fees of Selling Agents’ respective legal counsels, as set forth in Section 1(a)(iii)(B)); provided , however , that such expense cap in no way limits or impairs the indemnification and contribution provisions of this Agreement.
(v) Lock Up : The Selling Agents shall enter into a lock up agreement in a form reasonably acceptable to Selling Agents, providing, among other things, that they shall not sell, transfer, assign, pledge, hypothecate, or make subject to any hedging, short sale, derivative, put or call transaction that would result in effective economic disposition any of the Company’s securities received hereunder for a period of 180 days immediately following the Effective Date or commencement of sales thereunder, in accordance with FINRA Rule 5110(g).
(b) The term of the Selling Agents’ exclusive engagement will be until the earlier of (i) 12 months from the date hereof or (ii) completion of the Offering (the “Exclusive Term”); provided , however , that a party hereto may terminate the engagement with respect to itself at any time upon 10 days written notice to the other party. Notwithstanding anything to the contrary contained herein, the provisions concerning confidentiality, indemnification and contribution contained herein and the Company’s
2
obligations contained in the indemnification provisions will survive any expiration or termination of this Agreement, and the Company’s obligation to pay fees actually earned and payable and to reimburse expenses actually incurred and reimbursable pursuant to Section 1 hereof and which are permitted to be reimbursed under FINRA Rule 5110(f)(2)(D), will survive any expiration or termination of this Agreement. Nothing in this Agreement shall be construed to limit the ability of the Selling Agents or their respective Affiliates to pursue, investigate, analyze, invest in, or engage in investment banking, financial advisory or any other business relationship with Persons (as defined below) other than the Company. As used herein (i) “Persons” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind and (ii) “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”).
(c) If during the Exclusive Term, or within twelve months after the date of termination or expiration of this Agreement, securities are sold by the Company to investors directly identified to the Company by any of the Selling Agents on behalf of the Company, then the Company shall pay to the Selling Agents, at the time of each such sale, the cash fees set forth in this Section 1(a)(i) with respect to any such sale. Upon termination of this Agreement and at the request of the Company, Tripoint and Benchmark will provide the Company with a list of investors so identified by Tripoint and Benchmark, respectively, on behalf of the Company.
Section 2. Representations, Warranties and Covenants of the Company . The Company hereby represents, warrants and covenants to the Selling Agents, as of the date hereof, and as of the Closing Date, as follows:
(a) Securities Law Filings . On April 22, 2015, the Company filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-1 (Registration File No. 333-203569) under the Securities Act and the rules and regulations (the “Rules and Regulations”) of the Commission promulgated thereunder. At the time of such filing, the Company met the requirements of Form S-1 under the Securities Act. The Company will file with the Commission pursuant to Rules 430A and 424(b) under the Securities Act, a final prospectus included in such registration statement relating to the offering of the Securities and the plan of distribution thereof and has advised the Selling Agents of all further information (financial and other) with respect to the Company required to be set forth therein. Such registration statement, including the exhibits thereto, as amended at the date of this Agreement, is hereinafter called the “Registration Statement”; such prospectus in the form in which it appears in the Registration Statement as amended at the date of this Agreement is hereinafter called the “Base Prospectus”; and the amended or supplemented form of prospectus, in the form in which it will be filed with the Commission pursuant to Rules 430A and 424(b) (including the Base Prospectus as so amended or supplemented) is hereinafter called the “Prospectus Supplement.” All references in this Agreement to financial statements and schedules and other information that is “contained,” “included,” “described,” “referenced,” “set forth” or “stated” in the Registration Statement, the Base Prospectus or the Prospectus Supplement (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information that is or is deemed to be incorporated by reference in the Registration Statement, the Base Prospectus or the Prospectus Supplement, as the case may be.
(b) Assurances . The Registration Statement (and any further documents to be filed with the Commission) contains all exhibits and schedules as required by the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the Securities Act and the applicable Rules and Regulations and did not and, as amended or supplemented, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading ( provided , however , that the preceding representations and warranties contained in this sentence shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by the Selling Agents expressly for use therein (the “Selling Agent Information”)). The Base Prospectus, and the Prospectus Supplement, each as of its respective date,
3
comply in all material respects with the Securities Act and the applicable Rules and Regulations. Each of the Base Prospectus and the Prospectus Supplement, as amended or supplemented, did not and will not contain as of the date thereof any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading ( provided , however , that the preceding representations and warranties contained in this sentence shall not apply to any Selling Agent Information). All post-effective amendments to the Registration Statement reflecting facts or events arising after the date thereof which represent, individually or in the aggregate, a fundamental change in the information set forth therein have been so filed with the Commission. There are no documents required to be filed with the Commission in connection with the transaction contemplated hereby that (x) have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period. There are no contracts or other documents required to be described in the Base Prospectus, or Prospectus Supplement, or to be filed as exhibits or schedules to the Registration Statement, that have not been described or filed as required. The Company is eligible to use free writing prospectuses in connection with the Offering pursuant to Rules 164 and 433 under the Securities Act. Any free writing prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable Rules and Regulations. Each free writing prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or behalf of or used by the Company complies or will comply in all material respects with the requirements of the Securities Act and the applicable Rules and Regulations. The Company will not, without the prior consent of the Selling Agents, prepare, use or refer to, any free writing prospectus.
(c) Offering Materials . The Company has delivered, or will as promptly as practicable deliver, to the Selling Agents complete conformed copies of the Registration Statement and of each consent and certificate of experts, as applicable, filed as a part thereof, and conformed copies of the Registration Statement (without exhibits), the Base Prospectus, and the Prospectus Supplement, as amended or supplemented, in such quantities and at such places as the Selling Agents reasonably request. Neither the Company nor any of its directors and officers has distributed and none of them will distribute, prior to the Closing Date, any offering material in connection with the offering and sale of the Securities other than the Base Prospectus, the Prospectus Supplement, the Registration Statement, and any other materials permitted by the Securities Act.
(d) Subsidiaries . All of the direct and indirect subsidiaries of the Company (the “Subsidiaries”) are described in the Registration Statement to the extent necessary. Except as described in the Base Prospectus and Prospectus Supplement, the Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any liens, charges, security interests, encumbrances, rights of first refusal, preemptive rights or other restrictions (collectively, “Liens”), and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.
(e) Organization and Qualification . The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing (where applicable) under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of this Agreement or any other agreement entered into between the Company and the Investors, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement or the transactions contemplated under the Prospectus Supplement (any of (i), (ii) or
4
(iii), a “Material Adverse Effect”) and no action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened (“Proceeding”) has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(f) Authorization; Enforcement . The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and the Prospectus Supplement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Company’s Board of Directors (the “Board of Directors”) or the Company’s shareholders in connection therewith other than in connection with the Required Approvals (as defined below). This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(g) No Conflicts . The execution, delivery and performance by the Company of this Agreement and the transactions contemplated hereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not reasonably be expected to result in a Material Adverse Effect.
(h) Filings, Consents and Approvals . The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement and the transactions contemplated hereby, other than: (i) the filing with the Commission of the Prospectus Supplement, (ii) application(s) to the NASDAQ Capital Market (the “Trading Market”) for the listing of the Securities for trading thereon in the time and manner required thereby and (iii) such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).
(i) Issuance of the Securities; Registration . The Securities are duly authorized and, when issued and paid for in accordance with this Agreement and the Prospectus Supplement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The shares underlying the Warrants (the “Warrant Shares”), when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to the Prospectus Supplement.
(j) Capitalization . The capitalization of the Company is as set forth in the Prospectus Supplement. The Company has not issued any capital stock since the date of filing of its latest periodic report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
5
“Exchange Act”) or, in the event that the Company is not required to file periodic reports pursuant to Section 13(a) or 15(d) of the Exchange Act, the Company has not issued any capital stock since the date of filing of the Prospectus Supplement, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time any Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock (“Common Stock Equivalents”) outstanding as of the date of the filing of the Prospectus Supplement. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement and the transactions contemplated pursuant to the Prospectus Supplement. Except as a result of the purchase and sale of the Securities and except for stock options issued pursuant to the Company’s stock option plans, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investors and the Selling Agents) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any shareholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no shareholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s shareholders.
(k) Material Changes; Undisclosed Events, Liabilities or Developments . Since the date of the latest audited financial statements included within the Registration Statement, except as specifically disclosed in the Prospectus Supplement, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by the Prospectus Supplement or disclosed in the Prospectus Supplement, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective business, prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.
(l) Litigation . There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of this Agreement and the transactions contemplated pursuant to the Prospectus Supplement or the Securities or (ii) could, if there were an unfavorable decision, reasonably be expected to result in a Material Adverse
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Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has within the last 10 years been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. To the Company’s knowledge, the Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.
(m) Labor Relations . No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(n) Compliance . Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not reasonably be expected to result in a Material Adverse Effect.
(o) Regulatory Permits . The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the Prospectus Supplement, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.
(p) Title to Assets . The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens disclosed in the Prospectus Supplement, Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.
(q) Patents and Trademarks . The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or
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material for use in connection with their respective businesses as described in the Prospectus Supplement and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the Registration Statement, a notice (written or otherwise) of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as would not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(r) Insurance . The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.
(s) Transactions With Affiliates and Employees . Except as set forth in the Prospectus Supplement, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.
(t) Sarbanes-Oxley; Internal Accounting Controls . Except as set forth in the Prospectus Supplement: (I) the Company is in compliance in all material respects with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date; (II) the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (III) the Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.
(u) Certain Fees . Except as set forth herein and in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement and the transactions contemplated pursuant to the Prospectus Supplement. The Investors shall have no obligation with respect to any fees or with respect to any claims
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made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement and the transactions contemplated pursuant to the Prospectus Supplement.
(v) Investment Company . The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.
(w) Registration Rights . Except as set forth in the Prospectus Supplement, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.
(x) Listing and Maintenance Requirements . The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market.
(y) [Intentionally Omitted] .
(z) Disclosure . Except with respect to the material terms and conditions of the transactions contemplated by this Agreement and the transactions contemplated pursuant to the Prospectus Supplement, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Investors or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in the Prospectus Supplement or any free writing prospectus. The Company understands and confirms that the Investors will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Investors regarding the Company, its business and the transactions contemplated hereby is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading.
(aa) No Integrated Offering . Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would, to its knowledge, cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.
(bb) Solvency . The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The Base Prospectus sets forth as of December 31, 2014 and June 30, 2015 all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade
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accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
(cc) Tax Status . Except for matters that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary (i) has made or filed all United States federal and state income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.
(dd) Foreign Corrupt Practices . Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.
(ee) Accountants . The Company’s accounting firm is set forth in the Base Prospectus. To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) has expressed its opinion with respect to the financial statements of the Company for the year ended December 31, 2014.
(ff) Regulation M Compliance . The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s Selling Agents in connection with the placement of the Securities.
(gg) Office of Foreign Assets Control . Neither the Company nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(hh) U.S. Real Property Holding Corporation . The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended.
(ii) Bank Holding Company Act . Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any
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of its Subsidiaries exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(jj) Certificates . Any certificate signed by an officer of the Company and delivered to any of the Selling Agents or to counsel for any of the Selling Agents shall be deemed to be a representation and warranty by the Company to the Selling Agents as to the matters set forth therein.
(kk) Reliance . The Company acknowledges that the Selling Agents will rely upon the accuracy and truthfulness of the foregoing representations and warranties and hereby consents to such reliance.
(ll) Forward-Looking Statements . No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in either the Registration Statement, the Base Prospectus or the Prospectus Supplement has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
(mm) Statistical or Market-Related Data . Any statistical, industry-related and market-related data included or incorporated by reference in the Registration Statement, the Base Prospectus or the Prospectus Supplement, are based on or derived from sources that the Company reasonably and in good faith believes to be reliable and accurate, and such data agree with the sources from which they are derived.
(nn) FINRA Affiliations . Except as set forth on Schedule 2(nn), there are no affiliations with any FINRA member firm among the Company’s officers, directors or, to the knowledge of the Company, except as set forth on Schedule 2(nn), any five percent (5%) or greater shareholder of the Company.
(oo) No Incorporation by Reference . No documents are incorporated by reference in the Base Prospectus or the Prospectus Supplement pursuant to Item 12 of Form S-1 which were filed under the Exchange Act.
Section 3. Delivery and Payment . The Closing shall occur at the offices of Benchmark (or at such other place as shall be agreed upon by the Selling Agents and the Company). Subject to the terms and conditions hereof, and except as may otherwise be agreed or arranged between the parties, at the Closing payment of the purchase price for the Securities sold on the Closing Date shall be made by Federal Funds wire transfer, against delivery of such Securities, and such Securities shall be registered in such name or names and shall be in such denominations, as the Selling Agents may request at least one business day before the time of purchase (as defined below).
Except as may otherwise be agreed or arranged between the parties, deliveries of the documents with respect to the purchase of the Securities, if any, shall be made at the offices of Benchmark. All actions taken at the Closing shall be deemed to have occurred simultaneously.
Section 4. Covenants and Agreements of the Company . The Company further covenants and agrees with the Selling Agents as follows:
(a) Registration Statement Matters . The Company will advise the Selling Agents promptly after they receive notice thereof of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to any Prospectus Supplement or any amended Prospectus Supplement has been filed and will furnish the Selling Agents with copies thereof. The Company will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 14 or 15(d) of the Exchange Act subsequent to the date of any Prospectus Supplement and for so long as the delivery of a prospectus is required in connection with the Offering. The Company will advise the Selling Agents, promptly after it receives notice thereof (i) of any request by the Commission to amend the Registration Statement or to amend or supplement any Prospectus Supplement or for additional information, and (ii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-
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effective amendment thereto or any order preventing or suspending the use of the Base Prospectus or any Prospectus Supplement or any amendment or supplement thereto or any post-effective amendment to the Registration Statement, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the institution or threatened institution of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or a Prospectus Supplement or for additional information. The Company shall use its best efforts to prevent the issuance of any such stop order or prevention or suspension of such use. If the Commission shall enter any such stop order or order or notice of prevention or suspension at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible moment, or will file a new registration statement and use its best efforts to have such new registration statement declared effective as soon as practicable. Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b), 430A, 430B and 430C, as applicable, under the Securities Act, including with respect to the timely filing of documents thereunder, and will use its reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) are received in a timely manner by the Commission.
(b) Blue Sky Compliance . The Company will cooperate with the Selling Agents in endeavoring to qualify the Securities for sale under the securities laws of such jurisdictions (United States and foreign) as the Selling Agents may reasonably request and will make such applications, file such documents, and furnish such information as may be reasonably required for that purpose, provided the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction where it is not now so qualified or required to file such a consent, and provided further that the Company shall not be required to produce any new disclosure document other than a Prospectus Supplement. The Company will, from time to time, prepare and file such statements, reports and other documents as are or may be required to continue such qualifications in effect for so long a period as the Selling Agents may reasonably request for distribution of the Securities. The Company will advise the Selling Agents promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Securities for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use its best efforts to obtain the withdrawal thereof at the earliest possible moment.
(c) Amendments and Supplements to a Prospectus Supplement and Other Matters . The Company will comply with the Securities Act and the Exchange Act, and the rules and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and any Prospectus Supplement. If during the period in which a prospectus is required by law to be delivered in connection with the distribution of Securities contemplated by any Prospectus Supplement (the “Prospectus Delivery Period”), any event shall occur as a result of which, in the judgment of the Company or in the opinion of any of the Selling Agents or counsel for any of the Selling Agents, it becomes necessary to amend or supplement any Prospectus Supplement in order to make the statements therein, in the light of the circumstances under which they were made, as the case may be, not misleading, or if it is necessary at any time to amend or supplement any Prospectus Supplement to comply with any law, the Company will promptly prepare and file with the Commission, and furnish at its own expense to the Selling Agents and to dealers, an appropriate amendment to the Registration Statement or supplement to the Registration Statement or any Prospectus Supplement that is necessary in order to make the statements in any Prospectus Supplement as so amended or supplemented, in the light of the circumstances under which they were made, as the case may be, not misleading, or so that the Registration Statement or any Prospectus Supplement, as so amended or supplemented, will comply with law. Before amending the Registration Statement or supplementing any Prospectus Supplement in connection with the Offering, the Company will furnish the Selling Agents with a copy of such proposed amendment or supplement and will not file any such amendment or supplement to which the Selling Agents reasonably object.
(d) Copies of any Amendments and Supplements to a Prospectus Supplement . The Company will furnish the Selling Agents, without charge, during the period beginning on the date hereof and ending on the Closing Date of the Offering, as many copies of any Prospectus Supplement and any amendments and supplements thereto as the Selling Agents may reasonably request.
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(e) Free Writing Prospectus . The Company covenants that it will not, unless it obtains the prior consent of the Selling Agents, make any offer relating to the Securities that would constitute a Company Free Writing Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 of the Securities Act) required to be filed by the Company with the Commission or retained by the Company under Rule 433 of the Securities Act. In the event that the Selling Agents expressly consent in writing to any such free writing prospectus (a “Permitted Free Writing Prospectus”), the Company covenants that it shall (i) treat each Permitted Free Writing Prospectus as a Company Free Writing Prospectus, and (ii) comply with the requirements of Rule 164 and 433 of the Securities Act applicable to such Permitted Free Writing Prospectus, including in respect of timely filing with the Commission, legending and record keeping.
(f) Transfer Agent . The Company will maintain, at its expense, a registrar and transfer agent for the Common Stock.
(g) Earnings Statement . As soon as practicable and in accordance with applicable requirements under the Securities Act, but in any event not later than 18 months after the last Closing Date, the Company will make generally available to its security holders and to the Selling Agents an earnings statement, covering a period of at least 12 consecutive months beginning after the last Closing Date, that satisfies the provisions of Section 11(a) and Rule 158 under the Securities Act.
(h) Periodic Reporting Obligations . During the Prospectus Delivery Period, the Company will duly file, on a timely basis, with the Commission all reports and documents required to be filed under the Exchange Act within the time periods and in the manner required by the Exchange Act.
(i) Additional Documents . The Company will enter into any subscription, purchase or other customary agreements as the Selling Agents deem necessary or appropriate to consummate the Offering, all of which will be in form and substance reasonably acceptable to the Company and the Selling Agents. The Company agrees that the Selling Agents may rely upon, and each is a third party beneficiary of, the representations and warranties set forth in any such purchase, subscription or other agreement with Investors in the Offering.
(j) No Manipulation of Price . The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.
(k) Acknowledgment . The Company acknowledges that any advice given by any of the Selling Agents to the Company is solely for the benefit and use of the Board of Directors of the Company and may not be used, reproduced, disseminated, quoted or referred to, without such Selling Agent’s prior written consent.
Section 5. Conditions of the Obligations of the Selling Agent . The obligations of the Selling Agents hereunder shall be subject to the accuracy of the representations and warranties on the part of the Company set forth in Section 2 hereof, in each case as of the date hereof and as of the Closing Date as though then made, to the timely performance by each of the Company of its covenants and other obligations hereunder on and as of such dates, and to each of the following additional conditions:
(a) Accountants’ Comfort Letter . On the date hereof, the Selling Agents shall have received, and the Company shall have caused to be delivered to the Selling Agents, a letter from Citrin Cooperman Company, LLP, the independent registered public accounting firm of the Company (“Citrin”), addressed to the Selling Agents, dated as of the date hereof, in form and substance satisfactory to the Selling Agents. The letter shall not disclose any change in the condition (financial or other), earnings, operations, business or prospects of the Company from that set forth in the Base Prospectus or the applicable Prospectus Supplement, which, in the Selling Agents’ sole judgment, is material and adverse and that makes it, in the Selling Agents’ sole judgment, impracticable or inadvisable to proceed with the Offering of the Securities as contemplated by such Prospectus Supplement.
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(b) Compliance with Registration Requirements; No Stop Order; No Objection from the FINRA . Each Prospectus Supplement (in accordance with Rule 424(b)) and “free writing prospectus” (as defined in Rule 405 of the Securities Act), if any, shall have been duly filed with the Commission, as appropriate; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; no order preventing or suspending the use of any Prospectus Supplement shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; no order having the effect of ceasing or suspending the distribution of the Securities or any other securities of the Company shall have been issued by any securities commission, securities regulatory authority or stock exchange and no proceedings for that purpose shall have been instituted or shall be pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange; all requests for additional information on the part of the Commission shall have been complied with; and the FINRA shall have raised no objection to the fairness and reasonableness of the placement terms and arrangements.
(c) Corporate Proceedings . All corporate proceedings and other legal matters in connection with this Agreement, the Registration Statement and each Prospectus Supplement, and the registration, sale and delivery of the Securities, shall have been completed or resolved in a manner reasonably satisfactory to the Selling Agents’ respective counsels, and such counsel shall have been furnished with such papers and information as it may reasonably have requested to enable such counsels to pass upon the matters referred to in this Section 5.
(d) No Material Adverse Change . Subsequent to the execution and delivery of this Agreement and prior to the Closing Date, there shall not have occurred any Material Adverse Effect.
(e) Opinion of Counsel for the Company . The Selling Agents shall have received on the Closing Date the favorable opinion of legal counsel to the Company, dated as of such Closing Date, including, without limitation, a negative assurance letter, addressed to the Selling Agents in form and substance reasonably satisfactory to the Selling Agents.
(f) Officers’ Certificate . The Selling Agents shall have received on the Closing Date a certificate of the Company, dated as of such Closing Date, signed by the Chief Executive Officer and Chief Financial Officer of the Company, to the effect that the signers of such certificate have reviewed the Registration Statement, the Base Prospectus, any Prospectus Supplement, and this Agreement and to the further effect that:
(i) The representations and warranties of the Company in this Agreement are true and correct, as if made on and as of such Closing Date, and the Company has in all material respects complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to such Closing Date;
(ii) No stop order suspending the effectiveness of the Registration Statement or the use of the Base Prospectus or any Prospectus Supplement has been issued and no proceedings for that purpose have been instituted or are pending or, to the Company’s knowledge, threatened under the Securities Act; no order having the effect of ceasing or suspending the distribution of the Securities or any other securities of the Company has been issued by any securities commission, securities regulatory authority or stock exchange in the United States and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange in the United States;
(iii) When the Registration Statement became effective, at the time of sale, and at all times subsequent thereto up to the delivery of such certificate, the Registration Statement, when it became effective, contained all material information required to be included therein by the Securities Act and the
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applicable rules and regulations of the Commission thereunder, as the case may be, and in all material respects conformed to the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder, as the case may be, and the Registration Statement, did not and does not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading ( provided , however , that the preceding representations and warranties contained in this paragraph (iii) shall not apply to any statements or omissions made in reliance upon and in conformity with the Selling Agent Information) and, since the Effective Date, there has occurred no event required by the Securities Act and the rules and regulations of the Commission thereunder to be set forth in the Registration Statement which has not been so set forth; and
(iv) Subsequent to the respective dates as of which information is given in the Registration Statement and any Prospectus Supplement, there has not been: (a) any Material Adverse Effect; (b) any transaction that is material to the Company and the Subsidiaries taken as a whole, except transactions entered into in the ordinary course of business; (c) any obligation, direct or contingent, that is material to the Company and the Subsidiaries taken as a whole, incurred by the Company or any Subsidiary, except obligations incurred in the ordinary course of business; (d) any material change in the capital stock (except changes thereto resulting from the exercise of outstanding stock options or warrants) or outstanding indebtedness of the Company or any Subsidiary; (e) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company; or (f) any loss or damage (whether or not insured) to the property of the Company or any Subsidiary which has been sustained or will have been sustained which has a Material Adverse Effect.
(g) Bring-down Comfort Letter . On the Closing Date, the Selling Agents shall have received from Citrin, or such other independent registered public accounting firm engaged by the Company at such time, a letter dated as of such Closing Date, in form and substance satisfactory to the Selling Agents, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (a) of this Section 5, except that the specified date referred to therein for the carrying out of procedures shall be no more than three business days prior to such Closing Date.
(h) Stock Exchange Listing . The Common Stock, the Units and the Warrants shall be registered under the Exchange Act and shall be listed on the principal Trading Market, and the Company shall not have taken any action designed to terminate, or likely to have the effect of terminating, the registration of the Common Stock under the Exchange Act or delisting or suspending from trading the Common Stock from the principal Trading Market, nor shall the Company have received any information suggesting that the Commission or the principal Trading Market is contemplating terminating such registration or listing.
(i) Additional Documents . On or before the Closing Date, the Selling Agent and counsel for the Selling Agent shall have received such information and documents as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained. If any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Selling Agents by notice to the Company at any time on or prior to the Closing Date, which termination shall be without liability on the part of any party to any other party, except that Section 6 (Payment of Expenses), Section 7 (Indemnification and Contribution) and Section 8 (Representations and Indemnities to Survive Delivery) shall at all times be effective and shall survive such termination.
Section 6. Payment of Company Expenses . The Company agrees to pay all costs, fees and expenses incurred by the Company in connection with the performance of its obligations hereunder and in connection with the transactions contemplated hereby, including, without limitation: (i) all expenses incident to the issuance, delivery and qualification of the Securities (including all printing and engraving costs); (ii) all fees and expenses of the registrar and transfer agent of the Common Stock; (iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Securities; (iv) all fees and expenses of the Company’s counsel, independent public or certified public accountants and other advisors; (v) all costs and expenses incurred in
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connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates of experts), the Base Prospectus and each Prospectus Supplement, and all amendments and supplements thereto, and this Agreement; (vi) all filing fees, reasonable attorneys’ fees and expenses incurred by the Company in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Securities for offer and sale under the state securities or blue sky laws or the securities laws of any other country, and, if reasonably requested by any of the Selling Agents, preparing and printing a “Blue Sky Survey,” an “International Blue Sky Survey” or other memorandum, and any supplements thereto, advising any of the Selling Agents of such qualifications, registrations and exemptions; (vii) if applicable, the filing fees incident to the review and approval by the FINRA of any of the Selling Agents’ participation in the offering and distribution of the Securities; (viii) the fees and expenses associated with including the Securities on the Trading Market; (ix) all costs and expenses incident to the travel and accommodation of the Company’s employees on the “roadshow,” if any; (x) the costs of background checks on Company officers, and (xi) all other fees, costs and expenses referred to in Part II of the Registration Statement.
Section 7. Indemnification and Contribution . The Company agrees to indemnify the Selling Agents in accordance with the provisions of Schedule A hereto, which is incorporated by reference herein and made a part hereof.
Each Selling Agent, severally and not jointly, agrees to indemnify and hold harmless the Company, its directors, officers, employees, agents, and counsel, and each person, if any, who control the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act against any and all loss, liability, claim, damage and expense described in the foregoing indemnity from the Company to the several Selling Agents, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement, the Base Prospectus or any Prospectus Supplement or any amendment or supplement thereto or in any application, in reliance upon, and in strict conformity with, the Selling Agent Information. In case any action shall be brought against the Company or any other person so indemnified based on the Registration Statement, Base Prospectus or Prospectus Supplement or any amendment or supplement thereto or any application, and in respect of which indemnity may be sought against any Selling Agent, such Selling Agent shall have the rights and duties given to the Company, and the Company and each other person so indemnified shall have the rights and duties given to the several Selling Agents by the provisions provided in Schedule A.
Section 8. Representations and Indemnities to Survive Delivery . The respective indemnities, agreements, representations, warranties and other statements of the Company or any person controlling the Company, of its officers, and of the Selling Agents set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Selling Agents, the Company, or any of its or their partners, officers or directors or any controlling person, as the case may be, and will survive delivery of and payment for the Securities sold hereunder and any termination of this Agreement until the earlier of the expiration of any applicable statute of limitations and the seventh anniversary of the Closing Date, at which time the representations, warranties and agreements shall terminate and be of no further force and effect. A successor to a Selling Agent, or to the Company, its directors or officers or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Agreement.
Section 9. Notices . All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Selling Agents, to the addresses set forth above, attn: Mark Elenowitz, CEO of TriPoint, Facsimile: 212-202-6380; attn. John J Borer III, Senior Managing Director of Benchmark, Facsimile: 646-661-7050.
With a copy to :
Hunter Taubman Fischer, LLP
1450 Broadway, Floor 26
New York, New York 10018
Facsimile: (212) 202-6380
Attention: Louis Taubman, Esq.
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Greenberg Traurig, LLP
1750 Tysons Boulevard
McLean, VA 22102
Attention: Mark J. Wishner, Esq. and Jason T. Simon, Esq.
If to the Company:
PAVmed, Inc.
420 Lexington Ave, Suite 300
New York, NY 10170
Attention: Lishan Aklog
With a copy to :
Graubard Miller
405 Lexington Avenue
New York, New York 10174
Attention: David Alan Miller, Esq. and Jeffrey M. Gallant, Esq.
Any party hereto may change the address for receipt of communications by giving written notice to the others.
Section 10. Successors . This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers and directors and controlling persons referred to in Section 7 hereof, and to their respective successors, and personal representative, and no other person will have any right or obligation hereunder.
Section 11. Partial Unenforceability . The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.
Section 12. Governing Law Provisions . This Agreement shall be deemed to have been made and delivered in New York City and both this Agreement and the transactions contemplated hereby shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York, without regard to the conflict of laws principles thereof. Each of the Selling Agent and the Company: (i) agrees that any legal suit, action or proceeding arising out of or relating to this Agreement and/or the transactions contemplated hereby shall be instituted exclusively in New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, (ii) waives any objection which it may now or hereafter have to the venue of any such suit, action or proceeding, and (iii) irrevocably consents to the jurisdiction of the New York Supreme Court, County of New York, and the United States District Court for the Southern District of New York in any such suit, action or proceeding. Each of the Selling Agents and the Company further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York and agrees that service of process upon the Company mailed by certified mail to the Company’s address shall be deemed in every respect effective service of process upon the Company, in any such suit, action or proceeding, and service of process upon the Selling Agents mailed by certified mail to the Selling Agents’ respective address shall be deemed in every respect effective service process upon such Selling Agent, in any such suit, action or proceeding. Notwithstanding any provision of this Agreement to the contrary, the Company agrees that none of the Selling Agents, any of their respective affiliates, any of the respective officers, directors, employees, agents and representatives of the Selling Agents or any of their respective affiliates and each other person, if any, controlling any of the Selling Agents or any of their respective affiliates (each a “Relevant Person”), shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company arising out of the processing through BANQ, an online brokerage division of Tripoint, of orders for securities in respect of which Tripoint has not engaged in selling efforts, except for any loss, claim, damage, liability, deficiencies, actions, suits, proceedings,
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costs or legal or other expenses that are finally judicially determined to have resulted from the bad faith or gross negligence of such Relevant Person.
Section 13. General Provisions .
(a) This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. Section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.
(b) The Company acknowledges that in connection with the Offering of the Securities: (i) the Selling Agents have acted at arm’s length, are not agents of, and owe no fiduciary duties to the Company or any other person, (ii) the Selling Agents owe the Company only those duties and obligations set forth in this Agreement and (iii) the Selling Agents may have interests that differ from those of the Company. The Company waives to the full extent permitted by applicable law any claims it may have against any of the Selling Agents arising from an alleged breach of fiduciary duty in connection with the offering of the Securities.
[ The remainder of this page has been intentionally left blank .]
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If the foregoing is in accordance with your understanding of our agreement, please sign below whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.
Very truly yours, | ||
PAVmed, Inc., | ||
a Delaware corporation | ||
By: |
||
Name: | ||
Title: |
The foregoing Selling Agency Agreement is hereby confirmed and accepted as of the date first above written.
TRIPOINT GLOBAL EQUITIES, LLC | ||
By: |
||
Name: | ||
Title: | ||
THE BENCHMARK COMPANY, LLC | ||
By: |
||
Name: | ||
Title: |
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SCHEDULE A – INDEMNIFICATION
The Company hereby agrees to indemnify and hold Tripoint, Benchmark, their respective officers, directors, principals, employees, affiliates, and shareholders, and their respective successors and assigns, harmless from and against any and all loss, claim, damage, liability, deficiencies, actions, suits, proceedings, costs and legal expenses or expense whatsoever (including, but not limited to, reasonable legal fees and other expenses and reasonable disbursements incurred in connection with investigating, preparing to defend or defending any action, suit or proceeding, including any inquiry or investigation, commenced or threatened, or any claim whatsoever, or in appearing or preparing for appearance as witness in any proceeding, including any pretrial proceeding such as a deposition) (collectively, “Losses”) arising out of, based upon, or in any way related or attributed to, any breach of a representation, warranty or covenant by the Company contained in this Agreement.
If either Tripoint or Benchmark receives written notice of the commencement of any legal action, suit or proceeding with respect to which the Company is or may be obligated to provide indemnification pursuant to this Schedule A , Tripoint and/or Benchmark, as applicable, shall, within thirty (30) days of the receipt of such written notice, give the Company written notice thereof (a “Claim Notice”). Failure to give such Claim Notice within such thirty (30) day period shall not constitute a waiver by Tripoint or Benchmark, as applicable, of its respective right to indemnity hereunder with respect to such action, suit or proceeding. Upon receipt by the Company of a Claim Notice from Tripoint and/or Benchmark with respect to any claim for indemnification which is based upon a claim made by a third party (“Third Party Claim”), the Company may assume the defense of the Third Party Claim with counsel of its own choosing, as described below. Tripoint and/or Benchmark, as applicable, shall cooperate in the defense of the Third Party Claim and shall furnish such records, information and testimony and attend all such conferences, discovery proceedings, hearings, trial and appeals as may be reasonably required in connection therewith. Tripoint and/or Benchmark, as applicable, shall have the right to employ its own counsel in any such action, which shall be at the Company’s expense if (i) the Company and Tripoint and/or Benchmark, as applicable, shall have mutually agreed in writing to the retention of such counsel, (ii) the Company shall have failed in a timely manner to assume the defense and employ counsel or experts reasonably satisfactory to Tripoint and/or Benchmark, as applicable, in such litigation or proceeding or (iii) the named parties to any such litigation or proceeding (including any impleaded parties) include the Company and Tripoint and/or Benchmark, as applicable, and representation of the Company and Tripoint and/or Benchmark, as applicable, by the same counsel or experts would, in the reasonable opinion of Tripoint and/or Benchmark, as applicable, be inappropriate due to actual or potential differing interests between the Company and Tripoint and/or Benchmark, as applicable. The Company shall not satisfy or settle any Third Party Claim for which indemnification has been sought and is available hereunder, without the prior written consent of Tripoint and Benchmark, which consent shall not be delayed and which shall not be required if Tripoint and Benchmark, is granted a general release in connection therewith. The indemnification provisions hereunder shall survive the termination or expiration of this Agreement.
The Company further agrees, upon demand by Tripoint and/or Benchmark, to promptly reimburse Tripoint and/or Benchmark for, or pay, any reasonable fees, expenses or disbursements as to which Tripoint and/or Benchmark has been indemnified herein with such reimbursement to be made currently as such fees, expenses or disbursements are incurred by Tripoint and/or Benchmark, as applicable. Notwithstanding the provisions of the aforementioned indemnification, any such reimbursement or payment by the Company of fees, expenses, or disbursements incurred by Tripoint and/or Benchmark shall be repaid by Tripoint and/or Benchmark, as applicable, in the event of any proceeding in which a final judgment (after all appeals or the expiration of time to appeal) is entered in a court of competent jurisdiction against Tripoint or Benchmark based solely upon their respective gross negligence or intentional misconduct in the performance of their respective duties hereunder, and provided further , that the Company shall not be required to make reimbursement or payment for any settlement effected without the Company’s prior written consent (which consent shall not be unreasonably withheld or delayed).
If for any reason the foregoing indemnification is unavailable or is insufficient to hold any of the Selling Agents harmless, the Company agrees to contribute the amount paid or payable by any Selling Agent in such proportion as to reflect not only the relative benefits received by the Company, on the one hand, and the applicable Selling Agent, on the other hand, but also the relative fault of the Company and any of the Selling Agents as well as any relevant equitable considerations. In no event shall any Selling Agent contribute in excess of the fees actually received by it pursuant to the terms of this Agreement.
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For purposes of this Agreement, each officer, director, shareholder, and employee or affiliate of any Selling Agent and each person, if any, who controls a Selling Agent (or any affiliate) within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, shall have the same rights as a Selling Agent with respect to matters of indemnification by the Company hereunder.
Notwithstanding any provision of this Agreement to the contrary, the Company agrees that none of the Selling Agents, any of their respective affiliates, any of their respective officers, directors, employees, agents and representatives of any of the Selling Agents or any of their respective affiliates and each other person, if any, controlling a Selling Agent or any of their respective affiliates (each a “Relevant Person”), shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company arising out of the processing through BANQ, an online brokerage division of Tripoint, of orders for securities in respect of which a Selling Agent has not engaged in selling efforts, except for any loss, claim, damage, liability, deficiencies, actions, suits, proceedings, costs or legal or other expenses that are finally judicially determined to have resulted from the bad faith or gross negligence of such Relevant Person.
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Exhibit 4.6
THE REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES THAT THIS PURCHASE OPTION SHALL NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED, OR BE THE SUBJECT OF ANY HEDGING, SHORT SALE, DERIVATIVE, PUT, OR CALL TRANSACTION THAT WOULD RESULT IN THE EFFECTIVE ECONOMIC DISPOSITION OF THE SECURITIES FOR A PERIOD OF ONE HUNDRED EIGHTY (180) DAYS) IMMEDIATELY FOLLOWING THE CLOSING DATE OF THE SALE OF UNITS OF THE INITIAL PUBLIC OFFERING OF PAVMED, INC. (“ CLOSING DATE ”). THIS PURCHASE OPTION IS NOT EXERCISABLE AFTER FIVE YEARS FROM THE CLOSING DATE.
UNIT PURCHASE OPTION
FOR THE PURCHASE OF
_____UNITS 1
OF
PAVmed, INC.
1. Purchase Option .
THIS CERTIFIES THAT, in consideration of $100 duly paid by or on behalf of ________________ (“ Holder ”), as registered owner of this Purchase Option, to PAVmed, Inc. (“ Company ”), Holder is entitled, at any time or from time to time from the Closing Date (“ Commencement Date ”), and at or before 5:00 p.m., New York City local time, _________, 2020 (“ Expiration Date ”) 2 , but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to ______________________(_____) units (“ Units ”) of the Company, each Unit consisting of one share of the Company’s common stock, par value $0.001 per share (“ Common Stock ”), and one warrant (“ Warrant(s) ”) expiring five years from the Closing Date. Each Warrant is the same as the warrants included in the Units being registered for sale to the public by way of the Company’s Registration Statement (“ Public Warrants ”). If the Expiration Date is a day on which banking institutions are authorized by law to close, then this Purchase Option may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending on the Expiration Date, the Company agrees not to take any action that would terminate this Purchase Option. This Purchase Option is initially exercisable at $_____ per Unit 3 so purchased; provided , however , that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Purchase Option, including the exercise price per Unit and the number of Units (and Common Stock and Warrants) to be received upon such exercise, shall be adjusted as therein specified. The term “Exercise Price” shall mean the initial exercise price or the adjusted exercise price, depending on the context.
2. Exercise .
2.1 Exercise Form . In order to exercise this Purchase Option, the exercise form attached hereto must be duly executed and completed and delivered to the Company, together with this Purchase Option and payment of the Exercise Price for the Units being purchased payable in cash or by certified check or official bank check. If the subscription rights represented hereby shall not be exercised at or
1 Total Units will equal 5% of the Units sold in the PAVmed, Inc. IPO.
2 Five years from the Closing Date
3 110% of the price that Units are sold in the Company’s IPO.
before 5:00 p.m., New York City local time, on the Expiration Date this Purchase Option shall become and be void without further force or effect, and all rights represented hereby shall cease and expire.
2.2 Legend . Each certificate for the securities purchased under this Purchase Option shall bear a legend as follows unless such securities have been registered under the Securities Act of 1933, as amended (“ Act ”):
“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (“Act”) or applicable state law. The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act and applicable state law.”
2.3 Cashless Exercise .
2.3.1 Determination of Amount . In lieu of the payment of the Exercise Price multiplied by the number of Units for which this Purchase Option is exercisable (and in lieu of being entitled to receive Common Stock and Warrants) in the manner required by Section 2.1, the Holder shall have the right (but not the obligation) to convert any exercisable but unexercised portion of this Purchase Option into Units (“ Cashless Exercise Right ”) as follows: upon exercise of the Cashless Exercise Right, the Company shall deliver to the Holder (without payment by the Holder of any of the Exercise Price in cash) that number of Units (or that number of shares of Common Stock and Warrants comprising that number of Units) equal to the quotient obtained by dividing (x) the “Value” (as defined below) of the portion of the Purchase Option being converted by (y) the Current Market Value (as defined below). The “Value” of the portion of the Purchase Option being converted shall equal the remainder derived from subtracting (a) (i) the Exercise Price multiplied by (ii) the number of Units underlying the portion of this Purchase Option being converted from (b) the Current Market Value of a Unit multiplied by the number of Units underlying the portion of the Purchase Option being converted. As used herein, the term “Current Market Value” per Unit at any date means: (A) in the event that neither the Units nor Public Warrants are still trading, the remainder derived from subtracting (x) the exercise price of the Warrants multiplied by the number of shares of Common Stock issuable upon exercise of the Warrants underlying one Unit from (y) (i) the Current Market Price of the Common Stock multiplied by (ii) the number of shares of Common Stock underlying one Unit, which shall include the shares of Common Stock underlying the Warrants included in such Unit; (B) in the event that the Units, Common Stock and Public Warrants are still trading, (i) if the Units are listed on a national securities exchange or quoted on the OTC Bulletin Board, the last sale price of the Units in the principal trading market for the Units as reported by the exchange or upon the OTC Bulletin Board, as the case may be, on the last trading day preceding the date in question; or (ii) if the Units are not listed on a national securities exchange or quoted on the OTC Bulletin Board (or successor exchange), but are traded in the residual over-the-counter market, the closing bid price for Units on the last trading day preceding the date in question for which such quotations are reported by the publisher of such quotations; and (C) in the event that the Units are not still trading but the Common Stock and Public Warrants underlying the Units are still trading, the Current Market Price of the Common Stock plus the product of (x) the Current Market Price of the Public Warrants and (y) the number of Shares underlying the Warrants included in one Unit. The “Current Market Price” shall mean (i) if the Common Stock (or Public Warrants, as the case may be) is listed on a national securities exchange or quoted on the OTC Bulletin Board, the last sale price of the Common Stock (or Public Warrants) in the principal trading market for the Common Stock as reported by the exchange or the OTC Bulletin Board, as the case may be, on the last trading day preceding the date in question; (ii) if the Common Stock (or Public Warrants, as the case may be) is not listed on a national securities exchange or quoted on the OTC Bulletin Board but are traded in the residual over-the-counter market, the closing bid price for the Common Stock (or Public Warrants) on the last trading day preceding the date in question for which such
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quotations are reported by the OTC Market or similar publisher of such quotations; and (iii) if the fair market value of the Common Stock cannot be determined pursuant to clause (i) or (ii) above, such price as the Board of Directors of the Company shall determine, in good faith. In the event the Public Warrants have expired and are no longer exercisable, no “Value” shall be attributed to the Warrants underlying this Purchase Option. Additionally, in the event that this Purchase Option is exercised pursuant to this Section 2.3 and the Public Warrants are still trading, the “Value” shall be reduced by the difference between the Warrant Exercise Price and the exercise price of the Public Warrants multiplied by the number of Warrants underlying the Units included in the portion of this Purchase Option being converted.
2.3.2 Mechanics of Cashless Exercise . The Cashless Exercise Right may be exercised by the Holder on any business day on or after the Commencement Date and not later than the Expiration Date by delivering the Purchase Option with the duly executed exercise form attached hereto with the cashless exercise section completed to the Company, exercising the Cashless Exercise Right and specifying the total number of Units the Holder will purchase pursuant to such Cashless Exercise Right.
2.4 No Obligation to Net Cash Settle . Notwithstanding anything to the contrary contained in this Purchase Option, in no event will the Company be required to net cash settle the exercise of the Purchase Option or the Warrants underlying the Purchase Option. The holder of the Purchase Option and the Warrants underlying the Purchase Option will not be entitled to exercise the Purchase Option or the Warrants underlying such Purchase Option unless a registration statement is effective, or an exemption from the registration requirements is available at such time and, if the holder is not able to exercise the Purchase Option or underlying Warrants, the Purchase Option and/or the underlying Warrants, as applicable, will expire worthless.
3. Transfer .
3.1 General Restrictions . The registered Holder of this Purchase Option, by its acceptance hereof, agrees that it will not sell, transfer, assign, pledge or hypothecate this Purchase Option for a period of one hundred eighty (180) days from issuance pursuant to Rule 5110(g) of the Rules of Financial Industry Regulatory Authority following the Closing Date to anyone other than (i) a sales agent or selected dealer in connection with the public offering (“ Offering ”), or (ii) a bona fide officer or partner of such sales agent or selected dealer. On and after the sixth month anniversary of the Closing Date, transfers to others may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with the Purchase Option and payment of all transfer taxes, if any, payable in connection therewith. The Company shall within five business days transfer this Purchase Option on the books of the Company and shall execute and deliver a new Purchase Option or Purchase Options of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Units purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.
3.2 Restrictions Imposed by the Act . The securities evidenced by this Purchase Option shall not be transferred unless and until (i) the Company has received the opinion of counsel for the Holder that the securities may be transferred pursuant to an exemption from registration under the Act and applicable state securities laws, the availability of which is established to the reasonable satisfaction of the Company (the Company hereby agreeing that the opinion of Greenberg Traurig, LLP shall be deemed satisfactory evidence of the availability of an exemption), or (ii) a registration statement or a post-effective amendment to the Registration Statement relating to such securities has been filed by the Company and declared effective by the Securities and Exchange Commission (the “ Commission ”) and compliance with applicable state securities law has been established.
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4. New Purchase Options to be Issued .
4.1 Partial Exercise or Transfer . Subject to the restrictions in Section 3 hereof, this Purchase Option may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Option for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax, the Company shall cause to be delivered to the Holder without charge a new Purchase Option of like tenor to this Purchase Option in the name of the Holder evidencing the right of the Holder to purchase the number of Units purchasable hereunder as to which this Purchase Option has not been exercised or assigned.
4.2 Lost Certificate . Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase Option and of reasonably satisfactory indemnification or the posting of a bond, the Company shall execute and deliver a new Purchase Option of like tenor and date. Any such new Purchase Option executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.
5. Registration Rights .
5.1 Demand Registration .
5.1.1 Grant of Right . The Company, upon written demand (“ Initial Demand Notice ”) of the Holder(s) of at least 51% of the Units subject to Purchase Options and/or the underlying Units and/or the underlying securities (“ Majority Holders ”), agrees to use its best efforts to register (the “ Demand Registration ”) under the Act on one occasion, all or any portion of the Purchase Option requested by the Majority Holders in the Initial Demand Notice and all of the securities underlying such Purchase Option, including the Units, the Common Stock, the Warrants and the Common Stock underlying the Warrants (collectively, the “ Registrable Securities ”). On such occasion, the Company will use its best efforts to file a registration statement or a post-effective amendment to the Registration Statement covering the Registrable Securities within sixty (60) days after receipt of the Initial Demand Notice and use its best efforts to have such registration statement or post-effective amendment declared effective as soon as possible thereafter. The demand for registration may be made at any time during a period of five years beginning on the Closing Date. The Initial Demand Notice shall specify the number of shares of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. The Company will notify all holders of the Purchase Option and/or Registrable Securities of the demand within ten (10) days from the date of the receipt of any such Initial Demand Notice. Each holder of Registrable Securities who wishes to include all or a portion of such holder’s Registrable Securities in the Demand Registration (each such holder including shares of Registrable Securities in such registration, a “ Demanding Holder ”) shall so notify the Company within fifteen (15) days after the receipt by the holder of the notice from the Company. Upon any such request, the Demanding Holders shall be entitled to have their Registrable Securities included in the Demand Registration, subject to Section 5.1.4.
5.1.2 Effective Registration . A registration will not count as a Demand Registration until the registration statement filed with the Commission with respect to such Demand Registration has been declared effective and the Company has complied with all of its obligations under this Agreement with respect thereto; provided , however , that if, after such registration statement has been declared effective, the offering of Registrable Securities pursuant to a Demand Registration is interfered with by any stop order or injunction of the Commission or any other governmental agency or court, the registration statement with respect to such Demand Registration will be deemed not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated, and (ii) a majority-in-interest of the Demanding Holders thereafter elect to continue the offering.
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5.1.3 Underwritten Offering . If the Majority Holders so elect and such holders so advise the Company as part of the Initial Demand Notice, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering. In such event, the right of any holder to include its Registrable Securities in such registration shall be conditioned upon such holder’s participation in such underwriting and the inclusion of such holder’s Registrable Securities in the underwriting to the extent provided herein. All Demanding Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Majority Holders.
5.1.4 Reduction of Offering . If the managing underwriter or underwriters for a Demand Registration that is to be an underwritten offering advises the Company and the Demanding Holders in writing that the dollar amount or number of shares of Registrable Securities which the Demanding Holders desire to sell, taken together with all other shares of Common Stock or other securities which the Company desires to sell and the shares of Common Stock, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other stockholders of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of shares, as applicable, the “ Maximum Number of Shares ”), then the Company shall include in such registration: (i) first, the Registrable Securities as to which Demand Registration has been requested by the Demanding Holders (pro rata in accordance with the number of shares that each such Person has requested be included in such registration, regardless of the number of shares held by each such Person (such proportion is referred to herein as “ Pro Rata ”)) that can be sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (iii) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (i) and (ii), the shares of Common Stock or other securities registrable pursuant to the terms of the Registration Rights Agreement between the Company and the initial investors in the Company, dated as of _________, 2008 (the “ Registration Rights Agreement ” and such registrable securities, the “ Investor Securities ”) as to which “piggy-back” registration has been requested by the holders thereof, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; and (iv) fourth, to the extent that the Maximum Number of Shares have not been reached under the foregoing clauses (i), (ii), and (iii), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Shares.
5.1.5 Withdrawal . If a majority-in-interest of the Demanding Holders disapprove of the terms of any underwriting or are not entitled to include all of their Registrable Securities in any offering, such majority-in-interest of the Demanding Holders may elect to withdraw from such offering by giving written notice to the Company and the underwriter or underwriters of their request to withdraw prior to the effectiveness of the registration statement filed with the Commission with respect to such Demand Registration. If the majority-in-interest of the Demanding Holders withdraws from a proposed offering relating to a Demand Registration, then the Company does not have to continue its obligations under Section 5.1 with respect to such proposed offering.
5.1.6 Terms . The Company shall bear all fees and expenses attendant to registering the Registrable Securities, including the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities, but the Holders shall pay any and all underwriting commissions. The Company agrees to use its reasonable best efforts to qualify or register the Registrable Securities in such states as are reasonably requested by the Majority Holder(s); provided ,
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however , that in no event shall the Company be required to register the Registrable Securities in a state in which such registration would cause (i) the Company to be obligated to qualify to do business in such state, or would subject the Company to taxation as a foreign corporation doing business in such jurisdiction or (ii) the principal stockholders of the Company to be obligated to escrow their shares of capital stock of the Company. The Company shall use its best efforts to cause any registration statement or post-effective amendment filed pursuant to the demand rights granted under Section 5.1.1 to remain effective for a period of nine consecutive months from the Closing Date of such registration statement or post-effective amendment.
5.2 Piggy-Back Registration .
5.2.1 Piggy-Back Rights . If at any time during the seven year period commencing on the Closing Date the Company proposes to file a registration statement under the Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for stockholders of the Company for their account (or by the Company and by stockholders of the Company including, without limitation, pursuant to Section 5.1), other than a registration statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (iii) for an offering of debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall (x) give written notice of such proposed filing to the holders of Registrable Securities as soon as practicable but in no event less than ten (10) days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any, of the offering, and (y) offer to the holders of Registrable Securities in such notice the opportunity to register the sale of such number of shares of Registrable Securities as such holders may request in writing within five (5) days following receipt of such notice (a “ Piggy-Back Registration ”). The Company shall cause such Registrable Securities to be included in such registration and shall use its best efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an underwriter or underwriters shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such Piggy-Back Registration.
5.2.2 Reduction of Offering . If the managing underwriter or underwriters for a Piggy-Back Registration that is to be an underwritten offering advises the Company and the holders of Registrable Securities in writing that the dollar amount or number of shares of Common Stock which the Company desires to sell, taken together with shares of Common Stock, if any, as to which registration has been demanded pursuant to written contractual arrangements with persons other than the holders of Registrable Securities hereunder, the Registrable Securities as to which registration has been requested under this Section 5.2, and the shares of Common Stock, if any, as to which registration has been requested pursuant to the written contractual piggy-back registration rights of other stockholders of the Company, exceeds the Maximum Number of Shares, then the Company shall include in any such registration:
(a) If the registration is undertaken for the Company’s account: (A) first, the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the shares of Common Stock or other
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securities, if any, comprised of Registrable Securities and Investor Securities, as to which registration has been requested pursuant to the applicable written contractual piggy-back registration rights of such security holders, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; and (C) third, to the extent that the Maximum Number of shares has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual piggy-back registration rights with such persons and that can be sold without exceeding the Maximum Number of Shares;
(b) If the registration is a “demand” registration undertaken at the demand of holders of Investor Securities, (A) first, the shares of Common Stock or other securities for the account of the demanding persons, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the shares of Registrable Securities, Pro Rata, as to which registration has been requested pursuant to the terms hereof, that can be sold without exceeding the Maximum Number of Shares; and (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons, that can be sold without exceeding the Maximum Number of Shares; and
(c) If the registration is a “demand” registration undertaken at the demand of persons other than either the holders of Registrable Securities or of Investor Securities, (A) first, the shares of Common Stock or other securities for the account of the demanding persons that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), collectively the shares of Common Stock or other securities comprised of Registrable Securities and Investor Securities, Pro Rata, as to which registration has been requested pursuant to the terms hereof and of the Registration Rights Agreement, as applicable, that can be sold without exceeding the Maximum Number of Shares; and (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons, that can be sold without exceeding the Maximum Number of Shares.
5.2.3 Withdrawal . Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the registration statement. The Company (whether on its own determination or as the result of a withdrawal by persons making a demand pursuant to written contractual obligations) may withdraw a registration statement at any time prior to the effectiveness of the registration statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 5.2.4.
5.2.4 Terms . The Company shall bear all fees and expenses attendant to registering the Registrable Securities, including the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities but the Holders shall pay any and all underwriting commissions related to the Registrable Securities. In the event of such a proposed
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registration, the Company shall furnish the then Holders of outstanding Registrable Securities with not less than fifteen days written notice prior to the proposed date of filing of such registration statement. Such notice to the Holders shall continue to be given for each applicable registration statement filed (during the period in which the Purchase Option is exercisable) by the Company until such time as all of the Registrable Securities have been registered and sold. The Holders of the Registrable Securities shall exercise the “piggy-back” rights provided for herein by giving written notice, within ten days of the receipt of the Company’s notice of its intention to file a registration statement. The Company shall use its best efforts to cause any registration statement filed pursuant to the above “piggyback” rights to remain effective for at least nine months from the date that the Holders of the Registrable Securities are first given the opportunity to sell all of such securities.
5.3 General Terms .
5.3.1 Indemnification . The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration statement hereunder and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (“ Exchange Act ”), against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against litigation, commenced or threatened, or any claim whatsoever whether arising out of any action between the underwriter and the Company or between the underwriter and any third party or otherwise) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify the underwriters contained in Section 5 of the Underwriting Agreement between the Company and the other underwriters named therein dated the Closing Date. The Holder(s) of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, its officers and directors and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors or assigns, in writing, for specific inclusion in such registration statement to the same extent and with the same effect as the provisions contained in Section 5 of the Underwriting Agreement pursuant to which the underwriters have agreed to indemnify the Company.
5.3.2 Exercise of Purchase Options . Nothing contained in this Purchase Option shall be construed as requiring the Holder(s) to exercise their Purchase Options or Warrants underlying such Purchase Options prior to or after the initial filing of any registration statement or the effectiveness thereof.
5.3.3 Documents Delivered to Holders . The Company shall furnish a signed counterpart, addressed to the participating Holders, of (i) an opinion of counsel to the Company, dated the Closing Date of such registration statement (and, if such registration includes an underwritten public offering, an opinion dated the date of the closing under any underwriting agreement related thereto), and (ii) a “cold comfort” letter dated the Closing Date of such registration statement (and, if such registration includes an underwritten public offering, a letter dated the date of the closing under the underwriting agreement) signed by the independent public accountants who have issued a report on the Company’s financial statements included in such registration statement, in each case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants’ letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to
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underwriters in underwritten public offerings of securities. The Company shall also deliver promptly to the Holders participating in the offering, the correspondence and memoranda described below and copies of all correspondence between the Commission and the Company, its counsel or auditors and all memoranda relating to discussions with the Commission or its staff with respect to the registration statement and permit the Holders, to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws or rules of FINRA . Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times and as often as the Holders, shall reasonably request. The Company shall not be required to disclose any confidential information or other records to the Holders, or to any other person, until and unless such persons shall have entered into reasonable confidentiality agreements (in form and substance reasonably satisfactory to the Company), with the Company with respect thereto.
5.3.4 Underwriting Agreement . The Company shall enter into an underwriting agreement with the managing underwriter(s), if any, selected by any Holders whose Registrable Securities are being registered pursuant to this Section 5, which managing underwriter shall be reasonably acceptable to the Company. Such agreement shall be reasonably satisfactory in form and substance to the Company, each Holder and such managing underwriters, and shall contain such representations, warranties and covenants by the Company and such other terms as are customarily contained in agreements of that type used by the managing underwriter. The Holders shall be parties to any underwriting agreement relating to an underwritten sale of their Registrable Securities and may, at their option, require that any or all the representations, warranties and covenants of the Company to or for the benefit of such underwriters shall also be made to and for the benefit of such Holders. Such Holders shall not be required to make any representations or warranties to or agreements with the Company or the underwriters except as they may relate to such Holders and their intended methods of distribution. Such Holders, however, shall agree to such covenants and indemnification and contribution obligations for selling stockholders as are customarily contained in agreements of that type used by the managing underwriter. Further, such Holders shall execute appropriate custody agreements and otherwise cooperate fully in the preparation of the registration statement and other documents relating to any offering in which they include securities pursuant to this Section 5. Each Holder shall also furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be reasonably required to effect the registration of the Registrable Securities.
5.3.5 Rule 144 Sale . Notwithstanding anything contained in this Section 5 to the contrary, the Company shall have no obligation pursuant to Sections 5.1 or 5.2 to use its best efforts to obtain the registration of Registrable Securities held by any Holder (i) where such Holder would then be entitled to sell under Rule 144 within any three-month period (or such other period prescribed under Rule 144 as may be provided by amendment thereof) all of the Registrable Securities then held by such Holder, and (ii) where the number of Registrable Securities held by such Holder is within the volume limitations under paragraph (e) of Rule 144 (calculated as if such Holder were an affiliate within the meaning of Rule 144).
5.3.6 Supplemental Prospectus . Each Holder agrees, that upon receipt of any notice from the Company of the happening of any event as a result of which the prospectus included in the registration statement, as then in effect, includes an untrue statement of a 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, such Holder will immediately discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder’s receipt of the copies of a supplemental or amended prospectus, and, if so desired by the Company, such Holder shall deliver to the Company (at the expense of the Company) or destroy (and
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deliver to the Company a certificate of such destruction) all copies, other than permanent file copies then in such Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.
5.3.7 Rule 144 . The Company covenants that it shall file any reports required to be filed by it under the Act and the Exchange Act and shall take such further action as the holders of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holders to sell Registrable Securities without registration under the Act within the limitations of the exemptions provided by Rule 144, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Securities and Exchange Commission.
6. Adjustments .
6.1 Adjustments to Exercise Price and Number of Securities . The Exercise Price and the number of Units underlying the Purchase Option shall be subject to adjustment from time to time as hereinafter set forth:
6.1.1 Stock Dividends — Split-Ups . If after the date hereof, and subject to the provisions of Section 6.2 below, the number of outstanding shares of Common Stock is increased by a stock dividend payable in shares of Common Stock or by a split-up of shares of Common Stock or other similar event, then, on the Closing Date thereof, the number of shares of Common Stock underlying each of the Units purchasable hereunder shall be increased in proportion to such increase in outstanding shares. In such case, the number of shares of Common Stock, and the exercise price applicable thereto, underlying the Warrants underlying each of the Units purchasable hereunder shall be adjusted in accordance with the terms of the Warrants.
6.1.2 Aggregation of Shares . If after the date hereof, and subject to the provisions of Section 6.2, the number of outstanding shares of Common Stock is decreased by a consolidation, combination or reclassification of shares of Common Stock or other similar event, then, on the Closing Date thereof, the number of shares of Common Stock underlying each of the Units purchasable hereunder shall be decreased in proportion to such decrease in outstanding shares. In such case, the number of shares of Common Stock, and the exercise price applicable thereto, underlying the Warrants underlying each of the Units purchasable hereunder shall be adjusted in accordance with the terms of the Warrants.
6.1.3 Replacement of Securities upon Reorganization, etc . In case of any reclassification or reorganization of the outstanding shares of Common Stock other than a change covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of such shares of Common Stock, or in the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding shares of Common Stock), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Purchase Option shall have the right thereafter (until the expiration of the right of exercise of this Purchase Option) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of shares of Common Stock of the Company obtainable upon exercise of this Purchase Option and the underlying Warrants immediately prior to such event; and if any reclassification also results in a change in shares of Common Stock covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections 6.1.1,
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6.1.2 and this Section 6.1.3. The provisions of this Section 6.1.3 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers.
6.1.4 Changes in Form of Purchase Option . This form of Purchase Option need not be changed because of any change pursuant to this Section, and Purchase Options issued after such change may state the same Exercise Price and the same number of Units as are stated in the Purchase Options initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase Options reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the Commencement Date or the computation thereof.
6.2 Substitute Purchase Option . In case of any consolidation of the Company with, or merger of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger which does not result in any reclassification or change of the outstanding shares of Common Stock), the corporation formed by such consolidation or merger shall execute and deliver to the Holder a supplemental Purchase Option providing that the holder of each Purchase Option then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Purchase Option) to receive, upon exercise of such Purchase Option, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or merger, by a holder of the number of shares of Common Stock of the Company for which such Purchase Option might have been exercised immediately prior to such consolidation, merger, sale or transfer. Such supplemental Purchase Option shall provide for adjustments which shall be identical to the adjustments provided in Section 6. The above provision of this Section shall similarly apply to successive consolidations or mergers.
6.3 Elimination of Fractional Interests . The Company shall not be required to issue certificates representing fractions of shares of Common Stock or Warrants upon the exercise of the Purchase Option, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of Warrants, shares of Common Stock or other securities, properties or rights.
7. Reservation and Listing . The Company shall at all times reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issuance upon exercise of this Purchase Option or the Warrants underlying this Purchase Option, such number of shares of Common Stock or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of this Purchase Options and payment of the Exercise Price therefor, all shares of Common Stock and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any stockholder. The Company further covenants and agrees that upon exercise of the Warrants underlying this Purchase Option and payment of the respective Warrant exercise price therefor, all shares of Common Stock and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any stockholder. As long as this Purchase Option shall be outstanding, the Company shall use its best efforts to cause all (i) Units issuable upon exercise of this Purchase Option, (ii) shares of Common Stock included in the Units issuable upon exercise of this Purchase Option, (iii) Warrants included in the Units issuable upon exercise of this Purchase Option and (iv) shares of Common Stock issuable upon exercise of the Warrants included in the Units issuable upon exercise of this Purchase Option to be listed (subject to official notice of issuance) on all securities exchanges (or, if applicable on the OTC Bulletin Board or any successor trading market) on which the Units, the Common Stock or the Public Warrants issued to the public in connection herewith may then be listed and/or quoted.
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8. Certain Notice Requirements .
8.1 Holder’s Right to Receive Notice . Nothing herein shall be construed as conferring upon the Holders the right to vote or consent as a stockholder for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company. If, however, at any time prior to the expiration of this Purchase Option and its exercise, any of the events described in Section 8.2 shall occur, then, in one or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividend, distribution, conversion or exchange of securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of the closing of the transfer books, as the case may be. Notwithstanding the foregoing, the Company shall deliver to each Holder a copy of each notice given to the other stockholders of the Company at the same time and in the same manner that such notice is given to the stockholders.
8.2 Events Requiring Notice . The Company shall be required to give the notice described in this Section 8 upon one or more of the following events: (i) if the Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company, or (ii) the Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor, (iii) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business shall be proposed, (iv) if the Company shall deliver a notice to holders of the warrants of a redemption pursuant to Section 6.2 of the Warrant Agreement or (v) if the Company shall deliver a notice to the Holder pursuant to Section 5 of this Purchase Option.
8.3 Notice of Change in Exercise Price . The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 6 hereof, send notice to the Holders of such event and change (“ Price Notice ”). The Price Notice shall describe the event causing the change and the method of calculating same and shall be certified as being true and accurate by the Company’s President and Chief Financial Officer.
8.4 Transmittal of Notices . All notices, requests, consents and other communications under this Purchase Option shall be in writing and shall be deemed to have been duly made when hand delivered, or mailed by express mail or private courier service:
(i) if to the registered Holder of this Purchase Option, to the address of such Holder as shown on the books of the Company, with a copy to:
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Greenberg Traurig, LLP
1750 Tysons Boulevard
Suite 1000
McLean, Virginia 22102
Attn: Mark J. Wishner
or (ii) if to the Company, to the following address or to such other address as the Company may designate by notice to the Holders:
PAVmed, Inc.
420 Lexington Avenue
Suite 300
New York, New York 10170
Attn: Lishan Aklog
With a copy to:
Graubard Miller
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attention David Alan Miller, Esq.
9. Miscellaneous .
9.1 Amendments . The Company and the Holder may from time to time supplement or amend this Purchase Option without the approval of any of the Holders in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and the Holder may deem necessary or desirable and that the Company and the Holder deem shall not adversely affect the interest of the Holders. All other modifications or amendments shall require the written consent of and be signed by the party against whom enforcement of the modification or amendment is sought.
9.2 Headings . The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Purchase Option.
9.3 Entire Agreement . This Purchase Option (together with the other agreements and documents being delivered pursuant to or in connection with this Purchase Option) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.
9.4 Binding Effect . This Purchase Option shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Option or any provisions herein contained.
9.5 Governing Law; Submission to Jurisdiction . This Purchase Option shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect
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to conflict of laws. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Option shall be brought and enforced in the courts of the State of New York or of the United States of America for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company and the Holder agree that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor.
9.6 Waiver, Etc . The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Option shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Option or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase Option. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Purchase Option shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non- fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach or non-compliance.
9.7 Execution in Counterparts . This Purchase Option may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto.
9.8 Exchange Agreement . As a condition of the Holder’s receipt and acceptance of this Purchase Option, Holder agrees that, at any time prior to the complete exercise of this Purchase Option by Holder, if the Company and the Holder mayr into an agreement (“ Exchange Agreement ”) pursuant to which they agree that all outstanding Purchase Options will be exchanged for securities or cash or a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.
14 |
IN WITNESS WHEREOF, the Company has caused this Purchase Option to be signed by its duly authorized officer as of the ___ day of _________, 2015.
PAVmed, Inc.. | ||
By: | ||
Name: | ||
Title: |
15 |
Form to be used to exercise Purchase Option:
PAVmed, Inc.
420 Lexington Avenue
Suite 300
New York, New York 10170
Attn: Lishan Aklog
Date: _________, 201__
The undersigned hereby elects irrevocably to exercise all or a portion of the within Purchase Option and to purchase _________ Units of PAVmed, Inc. and hereby makes payment of $ _________ (at the rate of $ _________ per Unit) in payment of the Exercise Price pursuant thereto. Please issue the Common Stock and Warrants as to which this Purchase Option is exercised in accordance with the instructions given below.
or
The undersigned hereby elects irrevocably to convert its right to purchase _________ Units purchasable under the within Purchase Option by surrender of the unexercised portion of the attached Purchase Option (with a “ Value ” based of $_________ based on a “ Market Price ” of $_________). Please issue the securities comprising the Units as to which this Purchase Option is exercised in accordance with the instructions given below.
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the purchase option in every particular, without alteration or enlargement or any change whatever.
Signature(s) Guaranteed:
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15).
16 |
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name
(Print in Block Letters)
Address
Form to be used to assign Purchase Option:
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer of the within Purchase Option):
FOR VALUE RECEIVED, ________________________________ does hereby sell, assign and transfer unto ________________________________ the right to purchase ________ Units of PAVmed, Inc. (“ Company ”) evidenced by the within Purchase Option and does hereby authorize the Company to transfer such right on the books of the Company.
Dated: _________, 201__
Signature
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the purchase option in every particular, without alteration or enlargement or any change whatever.
Signature(s) Guaranteed:
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15).
17 |
Exhibit 10.2.3
PAVMED INC.
420 Lexington Avenue, Suite 300
New York, New York 10170
November 17, 2015
Mr. Lishan Aklog
10 Hickory Pine Court
Purchase, NY 10577
Dear Mr. Aklog:
This letter will serve to amend the Employment Agreement (“Employment Agreement”), dated as of October 24, 2014 and amended on April 8, 2015, between you and PAVmed Inc.
Section 3.1 of the Employment Agreement is hereby amended and restated to read as follows:
“3.1 Salary . The Company shall pay to Executive a salary (“Base Salary”) at the annual rate of $295,000. Executive’s compensation shall be paid in equal, periodic installments in accordance with the Company’s normal payroll procedures commencing as of November 1, 2015. Executive’s Base Salary from November 1, 2104 to October 31, 2015, which will be paid at the rate of $240,000 per year, shall be paid only upon, and be subject to, the consummation of the Company’s initial public offering of its securities.”
Except as amended herein, all other provisions of the Employment Agreement shall remain in full force and effect.
Please sign this letter in the place below to confirm your agreement.
Sincerely, | ||
PAVMED INC. | ||
By: | /s/ Richard Fitzgerald | |
Name: Richard Fitzgerald | ||
Title: Chief Financial officer |
AGREED TO:
/s/ Lishan Aklog | |
Lishan Aklog, M.D. |
Exhibit 10.6
MANAGEMENT SERVICES AGREEMENT
This MANAGEMENT SERVICES AGREEMENT dated as of November 17, 2015 and effective as of October 27, 2015 is between PAVmed Inc. (“Company”), a Delaware corporation with offices at 420 Lexington Avenue, Suite 300, New York, New York 10170, and HCP/Advisors LLC, a limited liability company with offices at 747 Third Avenue, New York, New York (“HCP”);
WHEREAS, the Company previously entered into a management services agreement (“Former Agreement”) dated April 8, 2015 with HCFP LLC (“HCFP”), an affiliate of HCP, pursuant to which such entity was to provide certain services to the Company, including making Richard J. Salute, the Company’s former Chief Financial Officer, available to serve in such capacity for the Company;
WHEREAS, the terms of the Former Agreement provided that it was to expire automatically upon the resignation of Mr. Salute;
WHEREAS, Mr. Salute resigned from his position as Chief Financial Officer as of October 26, 2015;
WHEREAS, the Company desires to enter into this agreement with HCP to replace the Former Agreement and provide the services set forth below to the Company and HCP desires to provide such services to the Company on the terms and conditions herein set forth;
NOW THEREFORE IT IS HEREBY AGREED:
1. Services . HCP will provide certain management services to the Company, including without limitation:
a. | services to support the Company’s executive officers in identifying potential corporate opportunities; |
b. | providing financial and accounting resources for assistance in complying with Section 404 of the Sarbanes-Oxley Act of 2002; |
c. | general business development; |
d. | corporate development; |
e. | corporate governance; |
f. | marketing strategy including preparing and/or reviewing company presentations; |
g. | strategic development and planning; |
h. | coordination with service providers; and | |
i. | other advisory services as may be mutually agreed upon between the Company and HCP (collectively, the “Services”). |
HCP shall devote the appropriate amount of time, energy, and skill to the Services based upon its professional judgment and in its sole and absolute discretion.
2. Compensation . In consideration of the provision of the Services hereunder, the Company shall pay HCP an initial monthly fee of $35,000 commencing as of November 1, 2015 and thereafter a monthly fee of $25,000 payable in advance on the first day of each month. Additionally, HCP shall be entitled to recover all direct, out of pocket costs and other expenses incurred by HCP in connection with providing the Services; provided, however, that any single expense in excess of $500 and aggregate expenses in excess of $2,500 shall require prior approval from the Company acting through the Chief Executive Officer or the Board.
3. Term and Termination .
3.1 This Agreement will be in effect for a term of three years (the “Term”), unless earlier terminated by either party in accordance with Sections 3.2 or 3.3 below. The Term may be extended by mutual written agreement signed by both parties.
3.2 Either party may terminate this Agreement prior to the expiration of the Term in the event of a material breach of the terms of this Agreement by the other party upon notice of no less than 10 days of the same without the breaching party having cured the claimed default within 30 days. The Company shall also have the right to terminate this Agreement if HCP commits any fraud or dishonest action in its relations with the Company or any of its subsidiaries or affiliates (“dishonest” for these purposes shall mean HCP’s knowingly or recklessly making of a material misstatement or omission for its personal benefit) or the conviction of HCP of a felony under federal or state law.
3.3 The Company may terminate this Agreement for any reason prior to the expiration of the Term upon not less than ninety (90) days advance written notice.
3.4 If this Agreement is terminated by the Company prior to the expiration of the Term pursuant to Section 3.2, the Company shall pay HCP for all amounts owed through the date of termination. If this Agreement is terminated by HCP prior to the expiration of the Term pursuant to Section 3.2 or by the Company pursuant to Section 3.3, the Company shall pay HCP for all amounts owed through the end of the Term in one lump sum payment within 30 days of termination.
4. Indemnification . The Company agrees to indemnify and hold harmless HCP from and against any and all losses, claims, damages or liabilities, including reasonable legal fees (collectively, “Losses”), suffered or incurred by HCP in connection with or as a result of the provision of the Services hereunder (except to the extent that any such Losses result from the gross negligence or bad faith of HCP performing the Services). HCP agrees to indemnify the Company for Losses incurred by it as a result of the gross negligence or bad faith of HCP in performing the Services.
5. Confidentiality . Each party agrees that it will not at any time, during the Term or thereafter, divulge to any person or entity any financial information, proprietary rights, trade secrets and “know-how,” customers and sources (“Confidential Information”) of the other party obtained or learned as a result of the performance of this Agreement, except (i) in the course of performing the Services hereunder, (ii) with the other party’s prior written consent; (iii) to the extent that any such information is in the public domain other than as a result of a party’s breach of any of its obligations hereunder; or (iv) where required to be disclosed by law, regulation, stock exchange rule, court order, subpoena or other government process. If a party shall be required to make disclosure pursuant to the provisions of clause (iv) of the preceding sentence, the disclosing party shall promptly, but in no event more than 48 hours after learning of such subpoena, court order, or other government process, notify, confirmed by mail, the other party and, at the other party’s expense, the disclosing party shall: (a) take all reasonably necessary and lawful steps required by the non-disclosing party to defend against the enforcement of such subpoena, court order or other government process, and (b) permit the non-disclosing party to intervene and participate with counsel of its choice in any proceeding relating to the enforcement thereof.
6. Independent Contractor . HCP hereby acknowledges that it will be performing the Services hereunder as an independent contractor and not as an employee or agent of the Company or any affiliate thereof. Further, HCP shall have no authority to act for, represent or bind the Company or any affiliate thereof in any manner, except as may be expressly agreed to by the Company in writing from time to time.
7. Notices . All notices provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered if delivered personally or by nationally recognized overnight courier (for example and not by way of limitation: Federal Express, United Parcel Service, Airborne Express), with acknowledgement of receipt required, addressed to the party to receive the same at the following address, or such other address as the party to receive the same shall have specified by written notice given in the manner provided for herein:
If to the Company:
PAVmed Inc.
420 Lexington Avenue, Suite 300
New York, New York 10170
Attn: Lishan Aklog, M.D.
If to HCP:
HCP/Advisors, LLC
747 Third Avenue
New York, New York
Attn: Ira S. Greenspan
With a copy in either case to:
Graubard Miller
The Chrysler Building
405 Lexington Ave, 11th Floor
New York, NY 10170
Attn: David Alan Miller, Esq.
8. Governing Law; Jurisdiction . This Agreement shall be governed by internal laws of the State of New York. Each party agrees to submit to personal jurisdiction and to waive any objection as to venue in the courts of the State of New York or the United States District Court for the Southern District of New York. The prevailing party in any such action shall be entitled to recover its reasonable attorney’s fees and costs incurred in any such action or on appeal.
9. Severability . If a provision of this Agreement is held invalid under any applicable law, such invalidity shall not affect any other provision of this Agreement that can be given effect without the invalid provision. Further, all terms and conditions of this Agreement shall be deemed enforceable to the fullest extent permissible under applicable law, and when necessary, the court is requested to reform any and all terms or conditions to give them such effect.
10. Entire Agreement; Waiver . This Agreement sets forth the entire agreement of the parties relating to the employment of Executive and is intended to supersede all prior negotiations, understandings and agreements, including the Former Agreement. No provisions of this Agreement may be waived or changed except by a writing by the party against whom such waiver or change is sought to be enforced. The failure of any party to require performance of any provision hereof or thereof shall in no manner affect the right at a later time to enforce such provision.
11. Preparation of Agreement . This Agreement has been prepared by Graubard Miller (“GM”) solely as counsel to the Company. GM is not acting as legal counsel nor providing any legal representation or consultative services to HCP in connection with the Agreement and the Company has advised HCP to seek the advice of other counsel in connection with the negotiation and preparation of this Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.
PAVMED INC. | ||
By: | /s/ Lishan Aklog | |
Name: Lishan Aklog, M.D. | ||
Title: Chief Executive Officer | ||
HCP/ADVISORS LLC | ||
By: | /s/ Ira S. Greenspan | |
Name: Ira S. Greenspan | ||
Title: Managing Member |
Exhibit 10.8
EMPLOYMENT AGREEMENT
AGREEMENT dated as of October 8, 2015 between Richard Fitzgerald, residing at 330 Bair Road, Berwyn, Pennsylvania 19312 (“Executive”), and PAVmed Inc., a Delaware corporation having its principal office at 420 Lexington Avenue, Suite 300, New York, New York 10170 (“Company”);
WHEREAS, the Company desires to employ Executive, and Executive desires to be employed by the Company, on the terms and conditions herein set forth;
IT IS AGREED:
1. Employment, Duties and Acceptance .
1.1 General . The Company hereby agrees to employ the Executive as its Chief Financial Officer. All of Executive’s powers and authority in any capacity shall at all times be subject to the direction and control of the Company’s Chief Executive Officer and Board of Directors (“Board”). The Board may assign to Executive such management and supervisory responsibilities and executive duties for the Company or any subsidiary of the Company, including serving as an executive officer and/or director of any subsidiary, as are consistent with Executive’s status as chief financial officer.
1.2 Full-Time Position . Executive accepts such employment and agrees to devote substantially all of his business time, energies and attention to the performance of his duties hereunder; provided that nothing herein shall be construed as preventing Executive from making and supervising personal investments. Executive shall not serve as a consultant to, or on boards of directors of, or in any other capacity to other companies, for profit and not for profit, without the prior consent of the Board.
1.3 Location . Executive will perform his duties in New York, New York. Executive shall undertake such occasional travel, within or outside the United States, as is reasonably necessary in the interests of the Company.
2. Term . The term of Executive’s employment hereunder shall commence on October 26, 2015 (“Commencement Date”) and terminate on the two year anniversary of such Commencement Date (“Term”) unless terminated earlier as hereinafter provided in this Agreement, or unless extended by mutual written agreement of the Company and Executive. Unless the Company and Executive have otherwise agreed in writing, if Executive continues to work for the Company after the expiration of the Term, his employment thereafter shall be under the same terms and conditions provided for in this Agreement, except that his employment will be on an “at will” basis and the provisions of Sections 4.4 and 4.6(c) shall no longer be in effect.
3. Compensation and Benefits .
3.1 Salary . The Company shall pay to Executive a salary (“Base Salary”) at the annual rate of $275,000. Executive’s compensation shall be paid in equal, periodic installments in accordance with the Company’s normal payroll procedures.
3.2 Bonus . In addition to the Base Salary, Executive shall be eligible to receive a discretionary performance bonus (“Bonus”) with a target of thirty five percent (35%) of the Executive’s annualized Base Salary based on Executive’s and the Company’s performance over the preceding year in the sole discretion of the Board.
3.3 Stock Options . Upon consummation of the Company's initial public offering of securities (“IPO”), the Company shall grant Executive an option (“Option”) to purchase 125,000 shares of the Company’s Common Stock under the Company’s 2014 Long-Term Incentive Plan, such Option to have an exercise price equal to the offering price in the IPO.
3.4 Benefits . Executive shall be entitled to such medical, life, disability and other benefits as are generally afforded to other executives of the Company, subject to applicable waiting periods and other conditions, as well as participation in all other company-wide employee benefits, including a defined contribution pension plan and 401(k) plan, as may be made available generally to executive employees from time to time.
3.5 Vacation . Executive shall be entitled to twenty (20) days of paid vacation in each year during the Term and to a reasonable number of other days off for religious and personal reasons in accordance with customary Company policy.
3.6 Expenses . The Company shall pay or reimburse Executive for all transportation, hotel and other expenses reasonably incurred by Executive on business trips and for all other ordinary and reasonable out-of-pocket expenses actually incurred by him in the conduct of the business of the Company, including expenses relating to his laptop, cell phone and Blackberry or other similar devices, against itemized vouchers submitted with respect to any such expenses and approved in accordance with customary procedures.
3.7 Housing . The Company and Executive anticipate that Executive will relocate his permanent home to the Greater New York City area prior to the completion of the Term. The Company shall pay Executive an aggregate of up to $2,200 per month to cover temporary housing and travel expenses until the earlier of 12 months from the date hereof and the date the Executive relocates. Upon relocation, Executive will be entitled to be reimbursed for relocation expenses to be mutually agreed upon between the Company and Executive.
4. Termination .
4.1 Death . If Executive dies during the Term, Executive’s employment hereunder shall terminate and the Company shall pay to Executive’s estate the amount set forth in Section 4.6(a).
4.2 Disability . The Company, by written notice to Executive, may terminate Executive’s employment hereunder if Executive shall fail because of illness or incapacity to render services of the character contemplated by this Agreement for one hundred eighty (180) days. Upon such termination, the Company shall pay to Executive the amount set forth in Section 4.6(a).
4.3 By Company for “Cause” . The Company, by written notice to Executive, may terminate Executive’s employment hereunder for “Cause”. As used herein, “Cause” shall mean: (a) the refusal or failure by Executive to carry out specific directions of the Board which are of a material nature and consistent with his status as Chief Financial Officer (or whichever positions Executive holds at such time), or the refusal or failure by Executive to perform a material part of Executive’s duties hereunder; (b) the commission by Executive of a material breach of any of the provisions of this Agreement; (c) fraud or dishonest action by Executive in his relations with the Company or any of its subsidiaries or affiliates (“dishonest” for these purposes shall mean Executive’s knowingly or recklessly making of a material misstatement or omission for his personal benefit); or (d) the conviction of Executive of a felony under federal or state law. Notwithstanding the foregoing, no “Cause” for termination shall be deemed to exist with respect to Executive’s acts described in clauses (a) or (b) above, unless the Company shall have given written notice to Executive within a period not to exceed ten (10) calendar days of the initial existence of the occurrence, specifying the “Cause” with reasonable particularity and, within thirty (30) calendar days after such notice, Executive shall not have cured or eliminated the problem or thing giving rise to such “Cause;” provided, however, no more than two cure periods need be provided during any twelve-month period. Upon such termination, the Company shall pay to Executive the amount set forth in Section 4.6(b).
4.4 By Executive for “Good Reason” . The Executive, by written notice to the Company, may terminate Executive’s employment hereunder if a “Good Reason” exists. For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following circumstances without the Executive’s prior written consent: (a) a substantial and material adverse change in the nature of Executive’s title, duties or responsibilities with the Company that represents a demotion from his title, duties or responsibilities as in effect immediately prior to such change (such change, a “Demotion”); (b) material breach of this Agreement by the Company; (c) a failure by the Company to make any payment to Executive when due, unless the payment is not material and is being contested by the Company, in good faith; or (d) a liquidation, bankruptcy or receivership of the Company. Notwithstanding the foregoing, no “Good Reason” shall be deemed to exist with respect to the Company’s acts described in clauses (a), (b) or (c) above, unless Executive shall have given written notice to the Company within a period not to exceed ten (10) calendar days of the initial existence of the occurrence, specifying the “Good Reason” with reasonable particularity and, within thirty (30) calendar days after such notice, the Company shall not have cured or eliminated the problem or thing giving rise to such “Good Reason”; provided, however, that no more than two cure periods shall be provided during any twelve-month period of a breach of clauses (a), (b) or (c) above. Upon such termination, the Company shall pay to Executive the amount set forth in Section 4.6(c).
4.5 By Company Without “Cause” . The Company may terminate Executive’s employment hereunder without “Cause” by giving at least thirty (30) days written notice to Executive. Upon such termination, the Company shall pay to Executive the amount set forth in Section 4.6(c).
4.6 Compensation Upon Termination . In the event that Executive’s employment hereunder is terminated, the Company shall pay to Executive the following compensation:
(a) Payment Upon Death or Disability . In the event that Executive’s employment is terminated pursuant to Sections 4.1 or 4.2, the Company shall no longer be under any obligation to Executive or his legal representatives pursuant to this Agreement except for: (i) the Base Salary due Executive pursuant to Section 3.1 hereof through the date of termination; (ii) any Bonus which would have become payable under Section 3.2 for the year in which the employment was terminated prorated by multiplying the full amount of the Bonus by a fraction, the numerator of which is the number of “full calendar months” worked by Executive during the year of termination and the denominator of which is 12 (a “full calendar month” is a month in which the Executive worked at least two weeks); (iii) all earned and previously approved but unpaid Bonuses for any year prior to the year of termination; (iv) all valid expense reimbursements, and (v) all accrued but unused vacation pay.
(b) Payment Upon Termination by the Company For “Cause” . In the event that the Company terminates Executive’s employment hereunder pursuant to Section 4.3, the Company shall have no further obligations to the Executive hereunder, except for: (i) the Base Salary due Executive pursuant to Section 3.1 hereof through the date of termination (ii) all valid expense reimbursements and (ii) all unused vacation pay through the date of termination required by law to be paid.
(c) Payment Upon Termination by Company Without Cause or by Executive for Good Reason . In the event that Executive’s employment is terminated pursuant to Sections 4.4 or 4.5, the Company shall have no further obligations to Executive hereunder except for: (i) the Base Salary due Executive pursuant to Section 3.1 hereof for nine (9) months from the date of termination or until the end of the Term, whichever is earlier, payable in accordance with Section 3.1; (ii) any Bonus which would have become payable under Section 3.2 for the year in which the employment was terminated prorated by multiplying the full amount of the Bonus by a fraction, the numerator of which is the number of “full calendar months” worked by Executive during the year of termination and the denominator of which is 12 (a “full calendar month” is a month in which the Executive worked at least two weeks); (iii) all valid expense reimbursements; and (iv) all accrued but unused vacation pay.
(d) Executive shall have no duty to mitigate awards paid or payable to him pursuant to this Agreement, and any compensation paid or payable to Executive from sources other than the Company will not offset or terminate the Company’s obligation to pay to Executive the full amounts pursuant to this Agreement.
5. Protection of Confidential Information; Non-Competition .
5.1 Acknowledgment . Executive acknowledges that:
(a) As a result of his current and prior employment with the Company, Executive has obtained and will obtain secret and confidential information concerning the business of the Company and its subsidiaries (referred to collectively in this Section 5 as the “Company”), including, without limitation, financial information, proprietary rights, trade secrets and “know-how,” customers and sources (“Confidential Information”).
(b) The Company will suffer substantial damage which will be difficult to compute if, during the period of his employment with the Company or thereafter, Executive should enter a business competitive with the Company or divulge Confidential Information.
(c) The provisions of this Agreement are reasonable and necessary for the protection of the business of the Company.
5.2 Confidentiality . Executive agrees that he will not at any time, during the Term or thereafter, divulge to any person or entity any Confidential Information obtained or learned by him as a result of his employment with the Company, except (i) in the course of performing his duties hereunder, (ii) with the Company’s prior written consent; (iii) to the extent that any such information is in the public domain other than as a result of Executive’s breach of any of his obligations hereunder; or (iv) where required to be disclosed by law, regulation, stock exchange rule, court order, subpoena or other government process. If Executive shall be required to make disclosure pursuant to the provisions of clause (iv) of the preceding sentence, Executive promptly, but in no event more than 48 hours after learning of such subpoena, court order, or other government process, shall notify, confirmed by mail, the Company and, at the Company’s expense, Executive shall: (a) take all reasonably necessary and lawful steps required by the Company to defend against the enforcement of such subpoena, court order or other government process, and (b) permit the Company to intervene and participate with counsel of its choice in any proceeding relating to the enforcement thereof.
5.3 Documents . Upon termination of his employment with the Company, Executive will promptly deliver to the Company all memoranda, notes, records, reports, manuals, drawings, blueprints and other documents (and all copies thereof) relating to the business of the Company and all property associated therewith, which he may then possess or have under his control; provided, however, that Executive shall be entitled to retain copies of such documents reasonably necessary to document his financial relationship with the Company.
5.4 Non-competition . During the Term and for a period of two (2) years thereafter, Executive, without the prior written permission of the Company, shall not, anywhere in the world, (i) be employed by, or render any services to, any person, firm or corporation engaged in the medical device industry or any other business which is directly in competition with any “material” business conducted by the Company or any of its subsidiaries at the time of termination (as used herein “material” means a business which generated at least 10% of the Company’s consolidated revenues for the last full fiscal year for which audited financial statements are available) (“Competitive Business”); (ii) engage in any Competitive Business for his or its own account; (iii) be associated with or interested in any Competitive Business as an individual, partner, shareholder, creditor, director, officer, principal, agent, employee, trustee, consultant, advisor or in any other relationship or capacity; (iv) employ or retain, or have or cause any other person or entity to employ or retain, any person who was employed or retained by the Company while Executive was employed by the Company (other than Executive’s personal secretary and assistant); or (v) solicit, interfere with, or endeavor to entice away from the Company, for the benefit of a Competitive Business, any of its customers or other persons with whom the Company has a contractual relationship. Notwithstanding the foregoing, nothing in this Agreement shall preclude Executive from investing his personal assets in any manner he chooses, provided, however, that Executive may not, during the period referred to in this Section 5.4, own more than 4.9% of the equity securities of any Competitive Business.
5.5 Injunctive Relief . If Executive commits a breach, or threatens to commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company shall have the right and remedy to seek to have the provisions of this Agreement specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed by Executive that the services being rendered hereunder to the Company are of a special, unique and extraordinary character and that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company. The rights and remedies enumerated in this Section 5.5 shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or equity. In connection with any legal action or proceeding arising out of or relating to this Agreement, the prevailing party in such action or proceeding shall be entitled to be reimbursed by the other party for the reasonable attorneys’ fees and costs incurred by the prevailing party.
5.6 Modification . If any provision of Sections 5.2 or 5.4 is held to be unenforceable because of the scope, duration or area of its applicability, the tribunal making such determination shall have the power to modify such scope, duration, or area, or all of them, and such provision or provisions shall then be applicable in such modified form.
5.7 Survival . The provisions of this Section 5 shall survive the termination of this Agreement for any reason, except in the event Executive is terminated by the Company without “Cause,” or if Executive terminates this Agreement with “Good Reason,” in either of which events, clauses (i), (ii) and (iii) of Section 5.4 shall be null and void and of no further force or effect. The non-renewal of this Agreement at the end of the Term shall not be a termination by the Company without “Cause”.
6. Miscellaneous Provisions .
6.1 Notices . All notices provided for in this Agreement shall be in writing, and shall be deemed to have been duly given when (i) delivered personally to the party to receive the same, or (ii) when mailed first class postage prepaid, by certified mail, return receipt requested, addressed to the party to receive the same at his or its address set forth below, or such other address as the party to receive the same shall have specified by written notice given in the manner provided for in this Section 6.1. All notices shall be deemed to have been given as of the date of personal delivery or mailing thereof.
If to Executive:
Richard Fitzgerald
[Address]
If to the Company:
PAVmed Inc.
420 Lexington Ave, Suite 300
New York, NY 10170
With a copy in either case to:
Graubard Miller
The Chrysler Building
405 Lexington Ave, 11th Floor
New York, NY 10170
6.2 Entire Agreement; Waiver . This Agreement sets forth the entire agreement of the parties relating to the employment of Executive and is intended to supersede all prior negotiations, understandings and agreements. No provisions of this Agreement may be waived or changed except by a writing by the party against whom such waiver or change is sought to be enforced. The failure of any party to require performance of any provision hereof or thereof shall in no manner affect the right at a later time to enforce such provision.
6.3 Governing Law . All questions with respect to the construction of this Agreement, and the rights and obligations of the parties hereunder, shall be determined in accordance with the law of the State of New York applicable to agreements made and to be performed entirely in New York.
6.4 Binding Effect; Nonassignability . This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company. This Agreement shall not be assignable by Executive, but shall inure to the benefit of and be binding upon Executive’s heirs and legal representatives.
6.5 Severability . Should any provision of this Agreement become legally unenforceable, no other provision of this Agreement shall be affected, and this Agreement shall continue as if the Agreement had been executed absent the unenforceable provision.
6.6 Section 409A . This Agreement is intended to comply with the provisions of Section 409A of the Internal Revenue Code (“Section 409A”). To the extent that any payments and/or benefits provided hereunder are not considered compliant with Section 409A, the parties agree that the Company shall take all actions necessary to make such payments and/or benefits become compliant.
6.7 Preparation of Agreement . This Agreement has been prepared by Graubard Miller (“GM”) solely as counsel to the Company. GM is not acting as legal counsel nor providing any legal representation or consultative services to Executive in connection with the Agreement and the Company has advised Executive to seek the advice of other counsel in connection with the negotiation and preparation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.
PAVMED INC. | |||
/s/ Lishan Aklog | |||
By: | Lishan Aklog, CEO | ||
/s/ Richard Fitzgerald | |||
Richard Fitzgerald |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated February 12, 2015, except for Note 8 as to which the date is September 21, 2015, with respect to the consolidated financial statements of PAVmed Inc. (formerly known as PAXmed Inc.) and Subsidiary contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the caption "Experts."
/s/ CITRIN COOPERMAN & COMPANY, LLP
New York, New York
November 20, 2015