Exhibit 3.1
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
THE
0% SERIES J CONVERTIBLE PREFERRED STOCK OF
MABVAX THERAPEUTICS HOLDINGS, INC.
I, J.
David Hansen, hereby certify that I am the President and Chief
Executive Officer of MabVax Therapeutics Holdings, Inc. (the
“
Company
”), a
corporation organized and existing under the Delaware General
Corporation Law (the “
DGCL
”), and further do hereby
certify:
That
pursuant to the authority expressly conferred upon the Board of
Directors of the Company (the “
Board
”) by the Company’s
Certificate of Incorporation, as amended (the “
Certificate of Incorporation
”),
the Board on August 11, 2017, adopted the following resolutions
creating a series of shares of Preferred Stock designated as 0%
Series J Convertible Preferred Stock, none of which shares have
been issued, which, following filing of this Certificate of
Designations with the Secretary of State of the State of Delaware,
this Certificate of Designations shall be effective as of ________,
2017:
RESOLVED, that the
Board designates the 0% Series J Convertible Preferred Stock and
the number of shares constituting such series, and fixes the
rights, powers, preferences, privileges and restrictions relating
to such series in addition to any set forth in the Certificate of
Incorporation as follows:
TERMS OF SERIES J CONVERTIBLE PREFERRED STOCK
1.
Designation
and Number of Shares
. There shall hereby be created and
established a series of preferred stock of the Company designated
as “0% Series J Convertible Preferred Stock” (the
“
Preferred
Shares
”). The authorized number of Preferred Shares
shall be 3,400 shares
. Each Preferred
Share shall have $0.01 par value (the “
Par Value
”). Capitalized terms not defined herein
shall have the meaning as set forth in Section
23
below.
2.
Ranking
.
The rights of all such shares of capital stock of the Company (the
“
Junior Stock
”),
other than the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred
Stock, Series H Preferred Stock, and Series I Preferred Stock,
shall be subject to the rights, powers, preferences and privileges
of the Preferred Shares. In the event of the merger or
consolidation of the Company with or into another corporation, the
Preferred Shares shall maintain their relative rights, powers,
designations, privileges and preferences provided for herein and no
such merger or consolidation shall result inconsistent
therewith.
3.
Dividends
. In addition to
Sections
5(a)
and
11
below, from and after the first date of
issuance of any Preferred Shares (the “
Initial Issuance Date
”), each
holder of a Preferred Share (each, a “
Holder
” and collectively, the
“
Holders
”) shall
be entitled to receive dividends (“
Dividends
”) when and as declared
by the Board, from time to time, in its sole discretion, which
Dividends shall be paid by the Company out of funds legally
available therefor, payable, subject to the conditions and other
terms hereof, in cash as if such Holders had converted the
Preferred Shares into Common Stock (without regard to any
limitations on conversion) and had held such shares of Common Stock
on the record date for such dividends and distributions. Payments
under the preceding sentence shall be made concurrently with the
dividend or distribution to the holders of Common
Stock.
4.
Conversion
. Each Preferred
Share shall be convertible into validly issued, fully paid and
non-assessable shares of Common Stock (as defined below) on the
terms and conditions set forth in this Section
4
.
(a)
Holder’s Conversion
Right
. Subject to the provisions of Section 4(e), at any
time or times on or after the Initial Issuance Date, each Holder
shall be entitled to convert any whole number of Preferred Shares
into validly issued, fully paid and non-assessable shares of Common
Stock in accordance with Section
4
(c)
at the
Conversion Rate (as defined below).
(b)
Conversion Rate
. The number of
validly issued, fully paid and non-assessable shares of Common
Stock issuable upon conversion of each Preferred Share pursuant to
Section
4
(a)
shall be determined according to the
following formula (the “
Conversion Rate
”):
Base Amount
Conversion
Price
No
fractional shares of Common Stock are to be issued upon the
conversion of any Preferred Shares. If the issuance would result in
the issuance of a fraction of a share of Common Stock, the Company
shall round such fraction of a share of Common Stock up to the
nearest whole share.
(c)
Mechanics of Conversion
. The
conversion of each Preferred Share shall be conducted in the
following manner:
(i)
Holder’s Conversion
. To
convert a Preferred Share into validly issued, fully paid and
non-assessable shares of Common Stock on any date (a
“
Conversion
Date
”), a Holder shall deliver (whether via facsimile
or otherwise), for receipt on or prior to 11:59 p.m., New York
time, on such date, a copy of an executed notice of conversion of
the share(s) of Preferred Shares subject to such conversion in the
form attached hereto as
Exhibit I
(the “
Conversion
Notice
”) to the Company. If required by Section
4
(c)
(vi)
, within
five (5) Trading Days following a conversion of any such Preferred
Shares as aforesaid, such Holder shall surrender to a nationally
recognized overnight delivery service for delivery to the Company
the original certificates representing the share(s) of Preferred
Shares (the “
Preferred Share
Certificates
”) so converted as aforesaid.
(ii)
Company’s
Response
. On or before the first (1
st
) Trading Day
following the date of receipt of a Conversion Notice, the Company
shall transmit by facsimile an acknowledgment of confirmation, in
the form attached hereto as
Exhibit II
,
of receipt of such Conversion Notice to such Holder and the
Transfer Agent, which confirmation shall constitute an instruction
to the Transfer Agent to process such Conversion Notice in
accordance with the terms herein. On or before the second
(2
nd
)
Trading Day following the date of receipt by the Company of such
Conversion Notice, the Company shall (1) provided that the Transfer
Agent is participating in DTC Fast Automated Securities Transfer
Program, credit such aggregate number of shares of Common Stock to
which such Holder shall be entitled to such Holder’s or its
designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system, or (2) if the Transfer
Agent is not participating in the DTC Fast Automated Securities
Transfer Program, issue and deliver (via reputable overnight
courier) to the address as specified in such Conversion Notice, a
certificate, registered in the name of such Holder or its designee,
for the number of shares of Common Stock to which such Holder shall
be entitled. If the number of Preferred Shares represented by the
Preferred Share Certificate(s) submitted for conversion pursuant to
Section
4
(c)
(vi)
is
greater than the number of Preferred Shares being converted, then
the Company shall if requested by such Holder, as soon as
practicable and in no event later than three (3) Trading Days after
receipt of the Preferred Share Certificate(s) and at its own
expense, issue and deliver to such Holder (or its designee) a new
Preferred Share Certificate representing the number of Preferred
Shares not converted.
(iii)
Record
Holder
. The Person or Persons entitled to receive the shares
of Common Stock issuable upon a conversion of Preferred Shares
shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on the Conversion Date.
(iv)
Company’s
Failure to Timely Convert
. If the Company shall fail, for
any reason or for no reason, to issue to a Holder within three (3)
Trading Days after the Company’s receipt of a Conversion
Notice (whether via facsimile or otherwise) (the
“
Share Delivery
Deadline
”), a certificate for the number of shares of
Common Stock to which such Holder is entitled and register such
shares of Common Stock on the Company’s share register or to
credit such Holder’s or its designee’s balance account
with DTC for such number of shares of Common Stock to which such
Holder is entitled upon such Holder’s conversion of any
Preferred Shares (as the case may be) (a “
Conversion Failure
”), then, in
addition to all other remedies available to such Holder, such
Holder, upon written notice to the Company, may void its Conversion
Notice with respect to, and retain or have returned (as the case
may be) any Preferred Shares that have not been converted pursuant
to such Holder’s Conversion Notice, provided that the voiding
of a Conversion Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the
date of such notice pursuant to the terms of this Certificate of
Designations or otherwise and (y) the Company shall pay in cash to
such Holder on each day after such third (3
rd
) Trading Day that
the issuance of such shares of Common Stock is not timely effected
an amount equal to 1.5% of the product of (A) the aggregate number
of shares of Common Stock not issued to such Holder on a timely
basis and to which the Holder is entitled and (B) the Closing Sale
Price of the Common Stock on the Trading Day immediately preceding
the last possible date on which the Company could have issued such
shares of Common Stock to the Holder without violating Section
4(c)
. In addition to the foregoing, if
within three (3) Trading Days after the Company’s receipt of
a Conversion Notice (whether via facsimile or otherwise), the
Company shall fail to issue and deliver a certificate to such
Holder and register such shares of Common Stock on the
Company’s share register or credit such Holder’s or its
designee’s balance account with DTC for the number of shares
of Common Stock to which such Holder is entitled upon such
Holder’s conversion hereunder (as the case may be), and if on
or after such third (3
rd
) Trading Day such
Holder (or any other Person in respect, or on behalf, of such
Holder) purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such
Holder of all or any portion of the number of shares of Common
Stock, or a sale of a number of shares of Common Stock equal to all
or any portion of the number of shares of Common Stock, issuable
upon such conversion that such Holder so anticipated receiving from
the Company, then, in addition to all other remedies available to
such Holder, the Company shall, within three (3) Business Days
after such Holder’s request and in such Holder’s
discretion, either (i) pay cash to such Holder in an amount equal
to such Holder’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (including, without limitation,
by any other Person in respect, or on behalf, of such Holder) (the
“
Buy-In Price
”),
at which point the Company’s obligation to so issue and
deliver such certificate or credit such Holder’s balance
account with DTC for the number of shares of Common Stock to which
such Holder is entitled upon such Holder’s conversion
hereunder (as the case may be) (and to issue such shares of Common
Stock) shall terminate, or (ii) promptly honor its obligation to so
issue and deliver to such Holder a certificate or certificates
representing such shares of Common Stock or credit such
Holder’s balance account with DTC for the number of shares of
Common Stock to which such Holder is entitled upon such
Holder’s conversion hereunder (as the case may be) and pay
cash to such Holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of shares of
Common Stock multiplied by (B) the lowest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the
date of the applicable Conversion Notice and ending on the date of
such issuance and payment under this clause (ii).
(v)
Pro Rata Conversion; Disputes
.
In the event the Company receives a Conversion Notice from more
than one Holder for the same Conversion Date and the Company can
convert some, but not all, of such Preferred Shares submitted for
conversion, the Company shall convert from each Holder electing to
have Preferred Shares converted on such date a pro rata amount of
such Holder’s Preferred Shares submitted for conversion on
such date based on the number of Preferred Shares submitted for
conversion on such date by such Holder relative to the aggregate
number of Preferred Shares submitted for conversion on such date.
In the event of a dispute as to the number of shares of Common
Stock issuable to a Holder in connection with a conversion of
Preferred Shares, the Company shall issue to such Holder the number
of shares of Common Stock not in dispute and resolve such dispute
in accordance with Section
22
.
(vi)
Book-Entry
. Notwithstanding
anything to the contrary set forth in this Section
4
, upon conversion of any Preferred Shares in
accordance with the terms hereof, no Holder thereof shall be
required to physically surrender the certificate representing the
Preferred Shares to the Company following conversion thereof unless
(A) the full or remaining number of Preferred Shares represented by
the certificate are being converted (in which event such
certificate(s) shall be delivered to the Company as contemplated by
this Section
4
(c)
(vi)
) or (B)
such Holder has provided the Company with prior written notice
(which notice may be included in a Conversion Notice) requesting
reissuance of Preferred Shares upon physical surrender of any
Preferred Shares. Each Holder and the Company shall maintain
records showing the number of Preferred Shares so converted by such
Holder and the dates of such conversions or shall use such other
method, reasonably satisfactory to such Holder and the Company, so
as not to require physical surrender of the certificate
representing the Preferred Shares upon each such conversion. In the
event of any dispute or discrepancy, such records of such Holder
establishing the number of Preferred Shares to which the record
holder is entitled shall be controlling and determinative in the
absence of manifest error. A Holder and any transferee or assignee,
by acceptance of a certificate, acknowledge and agree that, by
reason of the provisions of this paragraph, following conversion of
any Preferred Shares, the number of Preferred Shares represented by
such certificate may be less than the number of Preferred Shares
stated on the face thereof. Each certificate for Preferred Shares
shall bear the following legend:
ANY
TRANSFEREE OR ASSIGNEE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW
THE TERMS OF THE CORPORATION’S CERTIFICATE OF DESIGNATIONS
RELATING TO THE SHARES OF SERIES J PREFERRED STOCK REPRESENTED BY
THIS CERTIFICATE, INCLUDING SECTION
4
(c)
(vi)
THEREOF. THE NUMBER OF SHARES OF SERIES J
PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN
THE NUMBER OF SHARES OF SERIES J PREFERRED STOCK STATED ON THE FACE
HEREOF PURSUANT TO SECTION
4
(c)
(vi)
OF THE
CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES J
PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE.
(d)
Taxes
. The Company shall pay
any and all documentary, stamp, transfer (but only in respect of
the registered holder thereof), issuance and other similar taxes
that may be payable with respect to the issuance and delivery of
shares of Common Stock upon the conversion of Preferred
Shares.
(e)
Limitation on Beneficial
Ownership
. Notwithstanding anything to the contrary
contained in this Certificate of Designations, the Preferred Shares
held by a Holder shall not be convertible by such Holder, and the
Company shall not effect any conversion of any Preferred Shares
held by such Holder, to the extent (but only to the extent) that
such Holder or any of its affiliates would beneficially own in
excess of 4.99% (the “
Maximum
Percentage
”) of the Common Stock. To the extent
the above limitation applies, the determination of whether the
Preferred Shares held by such Holder shall be convertible
(vis-à-vis other convertible, exercisable or exchangeable
securities owned by such Holder or any of its affiliates) and of
which such securities shall be convertible, exercisable or
exchangeable (as among all such securities owned by such Holder and
its affiliates) shall, subject to such Maximum Percentage
limitation, be determined on the basis of the first submission to
the Company for conversion, exercise or exchange (as the case may
be). No prior inability of a Holder to convert Preferred Shares, or
of the Company to issue shares of Common Stock to such Holder,
pursuant to this Section 4(e) shall have any effect on the
applicability of the provisions of this Section 4(e) with
respect to any subsequent determination of convertibility or
issuance (as the case may be). For purposes of this Section 4(e),
beneficial ownership and all determinations and calculations
(including, without limitation, with respect to calculations of
percentage ownership) shall be determined in accordance with
Section 13(d) of the 1934 Act and the rules and regulations
promulgated thereunder. The provisions of this Section 4(e) shall
be implemented in a manner otherwise than in strict conformity with
the
terms
of this Section 4(e) to correct this Section 4(e) (or any portion
hereof) which may be defective or inconsistent with the intended
Maximum Percentage beneficial ownership limitation herein contained
or to make changes or supplements necessary or desirable to
properly give effect to such Maximum Percentage limitation. The
limitations contained in this Section 4(e) shall apply to a
successor holder of Preferred Shares. The holders of Common Stock
shall be third party beneficiaries of this Section 4(e) and the
Company may not waive this Section 4(e). For any reason at any
time, upon the written or oral request of a Holder, the Company
shall within two (2) Business Days confirm orally and in writing to
such Holder the number of shares of Common Stock then outstanding,
including by virtue of any prior conversion or exercise of
convertible or exercisable securities into Common Stock, including,
without limitation, pursuant to this Certificate of Designations.
By written notice to the Company, any Holder may increase or
decrease the Maximum Percentage to any other percentage not in
excess of 9.99% specified in such notice; provided that (i) any
such increase will not be effective until the 61st day after such
notice is delivered to the Company, and (ii) any such increase or
decrease will apply only to such Holder sending such notice and not
to any other Holder. For purposes hereof, in determining the number
of outstanding shares of Common Stock, the Holder may rely on the
number of outstanding shares of Common Stock as reflected in (1)
the Company’s most recent Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other
public filing with the Securities and Exchange Commission, as the
case may be, (2) a more recent public announcement by the Company,
or (3) any other notice by the Company setting forth the number of
shares of Common Stock outstanding. For any reason at any time,
upon the written or oral request of a holder of Preferred Shares,
the Company shall within three (3) Business Days confirm orally and
in writing to such holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including the
Preferred Shares, by the Holder and its Affiliates since the date
as of which such number of outstanding shares of Common Stock was
reported, that in any event are convertible or exercisable, as the
case may be, into shares of the Company’s Common Stock within
60 days’ of such calculation and that are not subject to a
limitation on conversion or exercise analogous to the limitation
contained herein. The provisions of this paragraph shall be
construed and implemented in a manner in accordance with Section
13(d) of the 1934 Act and the rules and regulations promulgated
thereunder.
(f)
19.99% Conversion Blocker.
Notwithstanding anything to the contrary set forth herein, the
Company shall not be obligated to issue any shares of Common Stock
upon conversion of the Series J Preferred Stock, and the Holder of
any shares of Series J Preferred Stock shall not have the right to
receive upon conversion of any shares of the Series J Preferred
Stock if the issuance of such shares of Common Stock would exceed
the aggregate number of shares of Common Stock which the Company
may issue upon conversion of the Series J Preferred Stock without
breaching the Company's obligations under the rules or regulations
of the Nasdaq Capital Market, which aggregate number equals 19.99%
of the number of shares outstanding on the Closing Date (the
“
Exchange Cap
”),
except that such limitation shall not apply in the event that the
Company obtains the approval of its stockholders as required by the
applicable rules of the Nasdaq Capital Market for issuances of
Common Stock in excess of such amount. Until such approval is
obtained, no Holder shall be issued in the aggregate, upon
conversion of the Series J Preferred Stock into shares of Common
Stock in an amount greater than the product of the Exchange Cap
multiplied by a fraction, the numerator of which is the total
amount of shares of Common Stock issuable to the Holder upon
conversion of the Series J Preferred Stock and the denominator of
which is the total amount of shares of Common Stock issuable to all
Holders upon conversion of the Series J Preferred Stock (with
respect to each Holder, the "
Exchange Cap Allocation
"). In the event
that any Holder shall sell or otherwise transfer any of such
Holder's shares of Series J Preferred Stock, the transferee shall
be allocated a pro rata portion of such Holder's Exchange Cap
Allocation, and the restrictions of the prior sentence shall apply
to such transferee with respect to the portion of the Exchange Cap
Allocation allocated to such transferee. In the event that any
Holder of shares of Series J Preferred Stock shall convert all of
such Holder's shares of Series J Preferred Stock into a number of
shares of Common Stock which, in the aggregate, is less than such
Holder's Exchange Cap Allocation, then the difference between such
Holder's Exchange Cap Allocation and the number of shares of Common
Stock actually issued to such Holder shall be allocated to the
respective Exchange Cap Allocations of the remaining Holders of
shares of the Series J Preferred Stock on a pro rata basis in
proportion to the aggregate Conversion Price of shares of the
Series J Preferred Stock then held by each such
Holder.
5.
Rights Upon Issuance of Purchase
Rights and Other Corporate Events
.
(a)
Purchase Rights
. In addition to
any adjustments pursuant to Section 7 below, if at any time the
Company grants, issues or sells any Options, Convertible Securities
or rights to purchase stock, warrants, securities or other property
pro rata to all of the record holders of any class of Common Stock
(the “
Purchase
Rights
”), then each Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such Holder could have acquired if
such Holder had held the number of shares of Common Stock
acquirable upon complete conversion of all the Preferred Shares
(without taking into account any limitations or restrictions on the
convertibility of the Preferred Shares) held by such Holder
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issue or sale of such
Purchase Rights (provided, however, to the extent that such
Holder’s right to participate in any such Purchase Right
would result in such Holder exceeding the Maximum Percentage, then
such Holder shall not be entitled to participate in such Purchase
Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and
such Purchase Right to such extent shall be held in abeyance for
such Holder until such time, if ever, as its right thereto would
not result in such Holder exceeding the Maximum
Percentage).
(b)
Other Corporate Events
. In
addition to and not in substitution for any other rights hereunder,
prior to the consummation of any Fundamental Transaction pursuant
to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for
shares of Common Stock (a “
Corporate Event
”), the Company
shall make appropriate provision to insure that each Holder will
thereafter have the right to receive upon a conversion of all the
Preferred Shares held by such Holder (i) in addition to the shares
of Common Stock receivable upon such conversion, such securities or
other assets to which such Holder would have been entitled with
respect to such shares of Common Stock had such shares of Common
Stock been held by such Holder upon the consummation of such
Corporate Event (without taking into account any limitations or
restrictions on the convertibility of the Preferred Shares
contained in this Certificate of Designations) or (ii) in lieu of
the shares of Common Stock otherwise receivable upon such
conversion, such securities or other assets received by the holders
of shares of Common Stock in connection with the consummation of
such Corporate Event in such amounts as such Holder would have been
entitled to receive had the Preferred Shares held by such Holder
initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a
conversion rate for such consideration commensurate with the
Conversion Rate. The provisions of this Section
5(b)
shall apply similarly and equally to
successive Corporate Events and shall be applied without regard to
any limitations on the conversion of the Preferred Shares contained
in this Certificate of Designations.
6.
Rights Upon Fundamental
Transactions
. Upon the occurrence of any Fundamental
Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Certificate of
Designations referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the
Company under this Certificate of Designations with the same effect
as if such Successor Entity had been named as the Company herein
and therein. In addition to the foregoing, upon consummation of a
Fundamental Transaction, the Successor Entity shall deliver to each
Holder confirmation that there shall be issued upon conversion of
the Preferred Shares at any time after the consummation of such
Fundamental Transaction, in lieu of the shares of Common Stock (or
other securities, cash, assets or other property (except such items
still issuable under Sections 5 and
11
, which shall continue to be receivable
thereafter)) issuable upon the conversion of the Preferred Shares
prior to such Fundamental Transaction, such shares of the Successor
Entity (including its Parent Entity) or other consideration which
each Holder would have been entitled to receive upon the happening
of such Fundamental Transaction had all the Preferred Shares held
by each Holder been converted immediately prior to such Fundamental
Transaction (without regard to any limitations on the conversion of
the Preferred Shares contained in this Certificate of
Designations), as adjusted in accordance with the provisions of
this Certificate of Designations. The provisions of this Section
6
shall apply similarly and equally to
successive Fundamental Transactions and shall be applied without
regard to any limitations on the conversion of the Preferred
Shares.
7.
Rights Upon
Issuance of Other Securities.
(a)
For so long as the
Holder has Series J Preferred Stock, if the Company at any time on
or after the Initial Issuance Date issues or sells, or is deemed to
have sold, Common Stock, or common equivalent shares, for
consideration per share less than the Conversion Price in effect
immediately prior to the issuance (the “Lower Issuance
Price”), then the Conversion Price in effect immediately
prior to such issuance will be adjusted to the Lower Issuance
Price, provided however the Lower Issuance Price shall not be less
than $0.10. Notwithstanding the foregoing, the adjustment provided
for in this Section 7 (a) shall not apply to the issuance of
Company capital stock upon exercise of options or restricted stock
granted prior to the date hereof pursuant to employee benefit plans
approved by the Company’s Board of Directors.
(b)
Adjustment of
Conversion Price upon Subdivision or Combination of Common Stock.
Without limiting any provision of Sections 5 and
11
, if the Company at any time on or after the
Initial Issuance Date subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares,
the Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced. Without limiting any
provision of Sections 5 and
11
, if the
Company at any time on or after the Initial Issuance Date combines
(by combination, reverse stock split or otherwise) one or more
classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior
to such combination will be proportionately increased. Any
adjustment pursuant to this Section 7
(b)
shall become effective immediately after
the effective date of such subdivision or combination. If any event
requiring an adjustment under this Section 7
(b)
occurs during the period that a Conversion
Price is calculated hereunder, then the calculation of such
Conversion Price shall be adjusted appropriately to reflect such
event.
(c)
Other Events.
In the event that the Company (or any Subsidiary) shall take any
action to which the provisions hereof are not strictly applicable,
or, if applicable, would not operate to protect any Holder from
dilution or if any event occurs of the type contemplated by the
provisions of this Section 7 but not expressly provided for by such
provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with
equity features), then the Board shall in good faith determine and
implement an appropriate adjustment in the Conversion Price so as
to protect the rights of such Holder, provided that no such
adjustment pursuant to this Section 7
(c)
will increase the Conversion Price as
otherwise determined pursuant to this Section 7, provided further
that if such Holder does not accept such adjustments as
appropriately protecting its interests hereunder against such
dilution, then the Board and such Holder shall agree, in good
faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination
shall be final and binding and whose fees and expenses shall be
borne by the Company.
(d)
Calculations. All
calculations under this Section 7 shall be made by rounding to the
nearest one-hundred thousandth of a cent or the nearest
1/100
th
of
a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of
any such shares shall be considered an issue or sale of Common
Stock.
8.
Authorized Shares
.
(a)
Reservation
. The Company shall
initially reserve out of its authorized and unissued Common Stock a
number of shares of Common Stock equal to 100% of the Conversion
Rate with respect to the Base Amount of each Preferred Share as of
the Initial Issuance Date (without taking into account any
limitations on the conversion of such Preferred Shares set forth in
herein) issuable pursuant to the terms of this Certificate of
Designations from the Initial Issuance Date through the second
anniversary of the Initial Issuance Date assuming (without taking
into account any limitations on the issuance of securities set
forth herein). So long as any of the Preferred Shares are
outstanding, the Company shall take all action necessary to reserve
and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of effecting the conversion of
the Preferred Shares, as of any given date, 100% of the number of
shares of Common Stock as shall from time to time be necessary to
effect the conversion of all of the Preferred Shares issued as of
the Initial Issuance Date, without taking into account any
limitations on the issuance of securities set forth herein),
provided that at no time shall the number of shares of Common Stock
so available be less than the number of shares required to be
reserved by the previous sentence (without regard to any
limitations on conversions contained in this Certificate of
Designations) (the “
Required
Amount
”). The initial number of shares of Common Stock
reserved for conversions of the Preferred Shares and each increase
in the number of shares so reserved shall be allocated pro rata
among the Holders based on the number of Preferred Shares held by
each Holder on the Initial Issuance Date or increase in the number
of reserved shares (as the case may be) (the “
Authorized Share Allocation
”). In
the event a Holder shall sell or otherwise transfer any of such
Holder’s Preferred Shares, each transferee shall be allocated
a pro rata portion of such Holder’s Authorized Share
Allocation. Any shares of Common Stock reserved and allocated to
any Person which ceases to hold any Preferred Shares shall be
allocated to the remaining Holders of Preferred Shares, pro rata
based on the number of Preferred Shares then held by such
Holders.
(b)
Insufficient Authorized Shares
.
If, notwithstanding Section 8
(a)
and
not in limitation thereof, at any time while any of the Preferred
Shares remain outstanding the Company does not have a sufficient
number of authorized and unissued shares of Common Stock to satisfy
its obligation to have available for issuance upon conversion of
the Preferred Shares at least a number of shares of Common Stock
equal to the Required Amount (an “
Authorized Share Failure
”), then
the Company shall promptly take all action necessary to increase
the Company’s authorized shares of Common Stock to an amount
sufficient to allow the Company to reserve and have available the
Required Amount for all of the Preferred Shares then outstanding.
Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized
Share Failure, but in no event later than ninety (90) days after
the occurrence of such Authorized Share Failure, the Company shall
hold a meeting of its stockholders or conduct a consent
solicitation for the approval of an increase in the number of
authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each stockholder with a proxy statement
and shall use its commercially reasonable efforts to solicit its
stockholders’ approval of such increase in authorized shares
of Common Stock and to cause its Board to recommend to the
stockholders that they approve such proposal. In the event that the
Company is prohibited from issuing shares of Common Stock upon a
conversion of any Preferred Share due to the failure by the Company
to have sufficient shares of Common Stock available out of the
authorized but unissued shares of Common Stock (such unavailable
number of shares of Common Stock, the “
Authorization Failure Shares
”), in
lieu of delivering such Authorization Failure Shares to such Holder
of such Preferred Shares, the Company shall pay cash in exchange
for the cancellation of such Preferred Shares convertible into such
Authorized Failure Shares at a price equal to the sum of (i) the
product of (x) such number of Authorization Failure Shares and (y)
the Closing Sale Price on the Trading Day immediately preceding the
date such Holder delivers the applicable Conversion Notice with
respect to such Authorization Failure Shares to the Company and
(ii) to the extent such Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Holder of Authorization Failure
Shares, any brokerage commissions and other out-of-pocket expenses,
if any, of such Holder incurred in connection
therewith.
9.
Voting Rights
. Except as
otherwise expressly required by law, each holder of Preferred
Shares shall be entitled to vote on all matters submitted to
shareholders of the Company and shall be entitled to the number of
votes for each Preferred Share owned at the record date for the
determination of shareholders entitled to vote on such matter or,
if no such record date is established, at the date such vote is
taken or any written consent of shareholders is solicited, equal to
the number of shares of Common Stock such Preferred Shares are
convertible into (voting as a class with Common Stock) substituting
the consolidated Closing Bid Price on the date prior to execution
of the Purchase Agreement for the Conversion Rate in Section 4(b)
hereof, but not in excess of the conversion limitations set forth
in Section 4(e) or Section 4(f) herein. Except as otherwise
required by law, the holders of Preferred Shares shall vote
together with the holders of Common Stock on all matters and shall
not vote as a separate class.
10.
Liquidation, Dissolution,
Winding-Up
. In the event of a Liquidation Event, the Holders
shall be entitled to receive in cash out of the assets of the
Company, whether from capital or from earnings available for
distribution to its shareholders (the “
Liquidation Funds
”), before any
amount shall be paid to the holders of any of shares of Junior
Stock, an amount per Preferred Share equal to the greater of (a)
125% of the Base Amount thereof on the date of such payment, and
(b) the amount per share such Holder would receive if such Holder
converted such Preferred Shares into Common Stock immediately prior
to the date of such payment;
provided
,
however
, that, if the
Liquidation Funds are insufficient to pay the full amount due to
the Holders and holders of shares of Parity Stock (stock ranking
equal to the Preferred Shares), then each Holder and each holder of
Parity Stock shall receive a percentage of the Liquidation Funds
equal to the full amount of Liquidation Funds payable to such
Holder and such holder of Parity Stock as a liquidation preference,
in accordance with their respective certificate of designation (or
equivalent), as a percentage of the full amount of Liquidation
Funds payable to all holders of Preferred Shares and all holders of
shares of Parity Stock. To the extent necessary, the Company shall
cause such actions to be taken by each of its Subsidiaries so as to
enable, to the maximum extent permitted by law, the proceeds of a
Liquidation Event to be distributed to the Holders in accordance
with this Section 10. All the preferential amounts to be paid to
the Holders under this Section 10 shall be paid or set apart for
payment before the payment or setting apart for payment of any
amount for, or the distribution of any Liquidation Funds of the
Company to the holders of shares of Junior Stock in connection with
a Liquidation Event as to which this Section 10
applies.
11.
Participation
. In addition to
any adjustments pursuant to Section
7(b)
, the Holders shall, as holders of
Preferred Shares, be entitled to receive such dividends paid and
distributions made to the holders of shares of Common Stock to the
same extent as if such Holders had converted each Preferred Share
held by each of them into shares of Common Stock (without regard to
any limitations on conversion herein or elsewhere) and had held
such shares of Common Stock on the record date for such dividends
and distributions. Payments under the preceding sentence shall be
made concurrently with the dividend or distribution to the holders
of shares of Common Stock (provided, however, to the extent that a
Holder’s right to participate in any such dividend or
distribution would result in such Holder exceeding the Maximum
Percentage, then such Holder shall not be entitled to participate
in such dividend or distribution to such extent (or the beneficial
ownership of any such shares of Common Stock as a result of such
dividend or distribution to such extent) and such dividend or
distribution to such extent shall be held in abeyance for the
benefit of such Holder until such time, if ever, as its right
thereto would not result in such Holder exceeding the Maximum
Percentage).
12.
Vote to Change the Terms of or Issue
Preferred Shares
. In addition to any other rights provided
by law, except where the vote or written consent of the holders of
a greater number of shares is required by law or by another
provision of the Certificate of Incorporation, without first
obtaining the affirmative vote at a meeting duly called for such
purpose or the written consent without a meeting of the Holders of
Preferred Shares representing a majority of Preferred Shares
outstanding on such date (the “
Required Holders
”), voting
together as a single class, the Company shall not: (a) amend or
repeal any provision of, or add any provision to, its Certificate
of Incorporation or bylaws, or file any certificate of designations
or articles of amendment of any series of shares of preferred
stock, if such action would adversely alter or change in any
respect the preferences, rights, privileges or powers, or
restrictions provided for the benefit, of the Preferred Shares,
regardless of whether any such action shall be by means of
amendment to the Certificate of Incorporation or by merger,
consolidation or otherwise; (b) increase or decrease (other than by
conversion) the authorized number of Preferred Shares; (c) issue
any Preferred Shares after the Initial Issuance Date; or (d)
without limiting any provision of Section
16
, whether or not prohibited by the terms of
the Preferred Shares, circumvent a right of the Preferred
Shares.
13.
Intentionally
Omitted
.
14.
Lost or Stolen Certificates
.
Upon receipt by the Company of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of any
certificates representing Preferred Shares (as to which a written
certification and the indemnification contemplated below shall
suffice as such evidence), and, in the case of loss, theft or
destruction, of an indemnification undertaking by the applicable
Holder to the Company in customary and reasonable form and, in the
case of mutilation, upon surrender and cancellation of the
certificate(s), the Company shall execute and deliver new
certificate(s) of like tenor and date.
15.
Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief.
The remedies
provided in this Certificate of Designations shall be cumulative
and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and
no remedy contained herein shall be deemed a waiver of compliance
with the provisions giving rise to such remedy. Nothing herein
shall limit any Holder’s right to pursue actual and
consequential damages for any failure by the Company to comply with
the terms of this Certificate of Designations. The Company
covenants to each Holder that there shall be no characterization
concerning this instrument other than as expressly provided herein.
Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the
amounts to be received by a Holder and shall not, except as
expressly provided herein, be subject to any other obligation of
the Company (or the performance thereof). The Company acknowledges
that a breach by it of its obligations hereunder will cause
irreparable harm to the Holders and that the remedy at law for any
such breach may be inadequate. The Company therefore agrees that,
in the event of any such breach or threatened breach, each Holder
shall be entitled, in addition to all other available remedies, to
an injunction restraining any such breach or any such threatened
breach, without the necessity of showing economic loss and without
any bond or other security being required. The Company shall
provide all information and documentation to a Holder that is
requested by such Holder to enable such Holder to confirm the
Company’s compliance with the terms and conditions of this
Certificate of Designations.
16.
Noncircumvention
. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Certificate of Incorporation, bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Certificate of
Designations, and will at all times in good faith carry out all the
provisions of this Certificate of Designations and take all action
as may be required to protect the rights of the Holders. Without
limiting the generality of the foregoing or any other provision of
this Certificate of Designations, the Company (i) shall not
increase the par value of any shares of Common Stock receivable
upon the conversion of any Preferred Shares above the Conversion
Price then in effect, (ii) shall take all such actions as may
be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares of Common
Stock upon the conversion of Preferred Shares and (iii) shall, so
long as any Preferred Shares are outstanding, take all action
necessary to reserve and keep available out of its authorized and
unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the Preferred Shares, the maximum
number of shares of Common Stock as shall from time to time be
necessary to effect the conversion of the Preferred Shares then
outstanding (without regard to any limitations on conversion
contained herein).
17
.
Failure
or Indulgence Not Waiver
. No failure or delay on the part of
a Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privilege.
No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party. This Certificate
of Designations shall be deemed to be jointly drafted by the
Company and all Holders and shall not be construed against any
Person as the drafter hereof.
18.
Notices
. The Company shall
provide each Holder of Preferred Shares with prompt written notice
of all actions taken pursuant to the terms of this Certificate of
Designations, including in reasonable detail a description of such
action and the reason therefor. Whenever notice is required to be
given under this Certificate of Designations, unless otherwise
provided herein. Without limiting the generality of the foregoing,
the Company shall give written notice to each Holder (i) promptly
following any adjustment of the Conversion Price, setting forth in
reasonable detail, and certifying, the calculation of such
adjustment and (ii) at least fifteen (15) days prior to the date on
which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock, (B)
with respect to any grant, issuances, or sales of any Options,
Convertible Securities or rights to purchase stock, warrants,
securities or other property to all holders of shares of Common
Stock as a class or (C) for determining rights to vote with respect
to any Fundamental Transaction, dissolution or liquidation,
provided, in each case, that such information shall be made known
to the public prior to, or simultaneously with, such notice being
provided to any Holder.
19.
Transfer of Preferred Shares
.
The Holder may transfer some or all of its Preferred Shares without
the consent of the Company.
20.
Preferred Shares Register
. The
Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice
to the Holders), a register for the Preferred Shares, in which the
Company shall record the name, address and facsimile number of the
Persons in whose name the Preferred Shares have been issued, as
well as the name and address of each transferee. The Company may
treat the Person in whose name any Preferred Shares is registered
on the register as the owner and holder thereof for all purposes,
notwithstanding any notice to the contrary, but in all events
recognizing any properly made transfers.
21.
Stockholder Matters;
Amendment
.
(a)
Stockholder
Matters. Any stockholder action, approval or consent required,
desired or otherwise sought by the Company pursuant to the DGCL,
the Certificate of Incorporation, this Certificate of Designations
or otherwise with respect to the issuance of Preferred Shares may
be effected by written consent of the Company’s stockholders
or at a duly called meeting of the Company’s stockholders,
all in accordance with the applicable rules and regulations of the
DGCL. This provision is intended to comply with the applicable
sections of the DGCL permitting stockholder action, approval and
consent affected by written consent in lieu of a
meeting.
(b)
Amendment. This
Certificate of Designations or any provision hereof may be amended
by obtaining the affirmative vote at a meeting duly called for such
purpose, or written consent without a meeting in accordance with
the DGCL, of the Required Holders, voting separate as a single
class, and with such other stockholder approval, if any, as may
then be required pursuant to the DGCL and the Certificate of
Incorporation.
(a)
Disputes Over Closing Bid Price,
Closing Sale Price, Conversion Price or Fair Market
Value.
(i)
In the case of a
dispute relating to a Closing Bid Price, a Closing Sale Price, a
Conversion Price or fair market value (as the case may be)
(including, without limitation, a dispute relating to the
determination of any of the foregoing), the Company or such
applicable Holder (as the case may be) shall submit the dispute via
facsimile (I) within two (2) Business Days after delivery of the
applicable notice giving rise to such dispute to the Company or
such Holder (as the case may be) or (II) if no notice gave rise to
such dispute, at any time after such Holder learned of the
circumstances giving rise to such dispute. If such Holder and the
Company are unable to resolve such dispute relating to such Closing
Bid Price, such Closing Sale Price, such Conversion Price, or such
fair market value (as the case may be) by 5:00 p.m. (New York time)
on the third (3
rd
) Business Day
following such delivery by the Company or such Holder (as the case
may be) of such dispute to the Company or such Holder (as the case
may be), then such Holder shall select an independent, reputable
investment bank to resolve such dispute.
(ii)
Such
Holder and the Company shall each deliver to such investment bank
(x) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section
22(a)
and (y) written documentation supporting
its position with respect to such dispute, in each case, no later
than 5:00 p.m. (New York time) by the fifth (5
th
) Business Day
immediately following the date on which such Holder selected such
investment bank (the “
Dispute
Submission Deadline
”) (the documents referred to in
the immediately preceding clauses (x) and (y) are collectively
referred to herein as the “
Required Dispute Documentation
”)
(it being understood and agreed that if either such Holder or the
Company fails to so deliver all of the Required Dispute
Documentation by the Dispute Submission Deadline, then the party
who fails to so submit all of the Required Dispute Documentation
shall no longer be entitled to (and hereby waives its right to)
deliver or submit any written documentation or other support to
such investment bank with respect to such dispute and such
investment bank shall resolve such dispute based solely on the
Required Dispute Documentation that was delivered to such
investment bank prior to the Dispute Submission Deadline). Unless
otherwise agreed to in writing by both the Company and such Holder
or otherwise requested by such investment bank, neither the Company
nor such Holder shall be entitled to deliver or submit any written
documentation or other support to such investment bank in
connection with such dispute (other than the Required Dispute
Documentation).
(iii)
The
Company and such Holder shall cause such investment bank to
determine the resolution of such dispute and notify the Company and
such Holder of such resolution no later than ten (10) Business Days
immediately following the Dispute Submission Deadline. The fees and
expenses of such investment bank shall be borne solely by the
Company, and such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest
error.
(b)
Disputes Over Arithmetic Calculation
of the Conversion Rate.
(i)
In the case of a
dispute as to the arithmetic calculation of a Conversion Rate, the
Company or such Holder (as the case may be) shall submit the
disputed arithmetic calculation via facsimile (i) within two (2)
Business Days after delivery of the applicable notice giving rise
to such dispute to the Company or such Holder (as the case may be)
or (ii) if no notice gave rise to such dispute, at any time after
such Holder learned of the circumstances giving rise to such
dispute. If such Holder and the Company are unable to resolve such
disputed arithmetic calculation of such Conversion Rate by 5:00
p.m. (New York time) on the third (3
rd
) Business Day
following such delivery by the Company or such Holder (as the case
may be) of such disputed arithmetic calculation, then such Holder
shall select an independent, reputable accountant or accounting
firm to perform such disputed arithmetic calculation.
(ii)
Such
Holder and the Company shall each deliver to such accountant or
accounting firm (as the case may be) (x) a copy of the initial
dispute submission so delivered in accordance with the first
sentence of this Section
22(a)
and (y)
written documentation supporting its position with respect to such
disputed arithmetic calculation, in each case, no later than 5:00
p.m. (New York time) by the fifth (5
th
) Business Day
immediately following the date on which such Holder selected such
accountant or accounting firm (as the case may be) (the
“
Submission
Deadline
”) (the documents referred to in the
immediately preceding clauses (x) and (y) are collectively referred
to herein as the “
Required
Documentation
”) (it being understood and agreed that
if either such Holder or the Company fails to so deliver all of the
Required Documentation by the Submission Deadline, then the party
who fails to so submit all of the Required Documentation shall no
longer be entitled to (and hereby waives its right to) deliver or
submit any written documentation or other support to such
accountant or accounting firm (as the case may be) with respect to
such disputed arithmetic calculation and such accountant or
accounting firm (as the case may be) shall perform such disputed
arithmetic calculation based solely on the Required Documentation
that was delivered to such accountant or accounting firm (as the
case may be) prior to the Submission Deadline). Unless otherwise
agreed to in writing by both the Company and such Holder or
otherwise requested by such accountant or accounting firm (as the
case may be), neither the Company nor such Holder shall be entitled
to deliver or submit any written documentation or other support to
such accountant or accounting firm (as the case may be) in
connection with such disputed arithmetic calculation of the
Conversion Rate (other than the Required
Documentation).
(iii)
The
Company and such Holder shall cause such accountant or accounting
firm (as the case may be) to perform such disputed arithmetic
calculation and notify the Company and such Holder of the results
no later than ten (10) Business Days immediately following the
Submission Deadline. The fees and expenses of such accountant or
accounting firm (as the case may be) shall be borne solely by the
Company, and such accountant’s or accounting firm’s (as
the case may be) arithmetic calculation shall be final and binding
upon all parties absent manifest error.
(c)
Miscellaneous. The
Company expressly acknowledges and agrees that (i) this Section
22
constitutes an agreement to
arbitrate between the Company and such Holder (and constitutes an
arbitration agreement) under § 7501, et seq. of the New York
Civil Practice Law and Rules (“
CPLR
”) and that each party shall
be entitled to compel arbitration pursuant to CPLR § 7503(a)
in order to compel compliance with this Section
22
, (ii) the terms of this Certificate of
Designations shall serve as the basis for the selected investment
bank’s resolution of the applicable dispute, such investment
bank shall be entitled (and is hereby expressly authorized) to make
all findings, determinations and the like that such investment bank
determines are required to be made by such investment bank in
connection with its resolution of such dispute and in resolving
such dispute such investment bank shall apply such findings,
determinations and the like to the terms of this Certificate of
Designations, (iii) the terms of this Certificate of Designations
shall serve as the basis for the selected accountant’s or
accounting firm’s performance of the applicable arithmetic
calculation, (iv) for clarification purposes and without
implication that the contrary would otherwise be true, disputes
relating to matters described in Section
22(a)
shall be governed by Section
22(a)
and not by Section
22(b)
, (v) such Holder (and only such Holder),
in its sole discretion, shall have the right to submit any dispute
described in this Section
22
to any
state or federal court sitting in The City of New York, Borough of
Manhattan in lieu of utilizing the procedures set forth in this
Section
22
and (vi) nothing in this
Section
22
shall limit such Holder
from obtaining any injunctive relief or other equitable remedies
(including, without limitation, with respect to any matters
described in Section
22(a)
or Section
22(b)
).
23.
Certain Defined Terms
. For
purposes of this Certificate of Designations, the following terms
shall have the following meanings:
(a)
“
1934
Act
”
means
the Securities Exchange Act of
1934, as amended.
(b)
“
Base Amount
” means, with respect
to each Preferred Share, as of the applicable date of
determination, the sum of (1) the Stated Value thereof, plus (2)
the Unpaid Dividend Amount thereon as of such date of
determination.
(c)
“
Bloomberg
” means Bloomberg,
L.P.
(d)
“
Business Day
” means any day other
than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain
closed.
(e)
“
Closing Bid Price
” and
“
Closing Sale
Price
” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively,
for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price
or the closing trade price (as the case may be) then the last bid
price or last trade price, respectively, of such security prior to
4:00:00 p.m., New York time, as reported by Bloomberg, or, if the
Principal Market is not the principal securities exchange or
trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed
or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price,
respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the
average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).
If the Closing Bid Price or the Closing Sale Price cannot be
calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price or the Closing Sale Price
(as the case may be) of such security on such date shall be the
fair market value as mutually determined by the Company and the
applicable Holder. If the Company and such Holder are unable to
agree upon the fair market value of such security, then such
dispute shall be resolved in accordance with the procedures in
Section
22
. All such determinations
shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such
period.
(f)
“
Common Stock
” means (i) the
Company’s shares of common stock, $0.01 par value per share,
and (ii) any capital stock into which such common stock shall have
been changed or any share capital resulting from a reclassification
of such common stock.
(g)
“
Conversion Price
” means, with
respect to each Preferred Share, as of any Conversion Date or other
applicable date of determination, $0.55 subject to adjustment as
provided herein.
(h)
“
Convertible
Securities
” means any stock or other security (other
than Options) that is at any time and under any circumstances,
directly or indirectly, convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to
acquire, any shares of Common Stock.
(i)
“
Eligible Market
” means The New
York Stock Exchange, the NYSE MKT, The Nasdaq Global Select Market,
The Nasdaq Global Market, The Nasdaq Capital Market, the
Over-the-Counter Bulletin Board, the OTCQB Marketplace or the OTCQX
(or any successor thereto).
(j)
“
Fundamental Transaction
” means
that (i) the Company or any of its Subsidiaries shall, directly or
indirectly, in one or more related transactions, (1) consolidate or
merge with or into (whether or not the Company or any of its
Subsidiaries is the surviving corporation) any other Person unless
immediately following the closing of such transaction or series of
related transactions the Persons holding more than 50% of the
Voting Stock of the Company prior to such closing continue to hold
more than 50% of the Voting Stock of the Company following such
closing, or (2) sell, lease, license, assign, transfer, convey or
otherwise dispose of all or substantially all of its respective
properties or assets to any other Person, or (3) assist any other
Person in making a purchase, tender or exchange offer that is
accepted by the holders of more than 50% of the outstanding shares
of Voting Stock of the Company (not including any shares of Voting
Stock of the Company held by the Person or Persons making or party
to, or associated or affiliated with the Persons making or party
to, such purchase, tender or exchange offer), or (4) consummate a
stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with any other Person whereby
such other Person acquires more than 50% of the outstanding shares
of Voting Stock of the Company (not including any shares of Voting
Stock of the Company held by the other Person or other Persons
making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement
or other business combination) excluding any equity financing
transaction in which shares of Voting Stock are issued, or (5)
reorganize, recapitalize or reclassify the Common Stock, or (ii)
any “person” or “group” (as these terms are
used for purposes of Sections 13(d) and 14(d) of the 1934 Act and
the rules and regulations promulgated thereunder) is or shall
become the “beneficial owner” (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of 50% of the
aggregate ordinary voting power represented by issued and
outstanding Voting Stock of the Company.
(k)
“
Liquidation
Event
” means the
liquidation, dissolution or winding up of the affairs of the
Company
, whether voluntary or
involuntary. Notwithstanding the foregoing, a consolidation or
merger of the
Company
with or
into any other corporation or corporations, or a sale of all or
substantially all of the assets of the
Company
, or the effectuation by the
Company
of a transaction or series of
transactions in which more than 50% of the voting shares of
the
Company
is disposed of or
conveyed, shall be deemed to be a Liquidation
Event.
(l)
“
Options
” means any rights,
warrants or options to subscribe for or purchase shares of Common
Stock or Convertible Securities.
(m)
“
Parent Entity
” of a Person means
an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is
quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with
the largest public market capitalization as of the date of
consummation of the Fundamental Transaction.
(n)
“
Person
”
means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization, any other entity or a government or any department or
agency thereof.
(o)
“
Principal
Market
” means the The NASDAQ Capital
Market.
(p)
“
Purchase Agreement
” means that
certain Stock Purchase Agreement by and among the Company and the
initial holders of Preferred Shares, dated as of August 11, 2017,
as may be amended from time in accordance with the terms
thereof.
(q)
“
SEC
”
means the Securities and Exchange Commission or the successor
thereto.
(r)
“
Stated Value
” shall mean $550 per
share, subject to adjustment for stock splits, stock dividends,
recapitalizations, reorganizations, reclassifications,
combinations, subdivisions or other similar events occurring after
the Initial Issuance Date with respect to the Preferred
Shares.
(s)
“
Subsidiaries
” means any Person in
which the Company, directly or indirectly, (I) owns any of the
outstanding capital stock or holds any equity or similar interest
of such Person or (II) controls or operates all or any part of the
business, operations or administration of such Person.
(t)
“
Successor Entity
” means the Person
(or, if so elected by the Required Holders, the Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction
or the Person (or, if so elected by the Required Holders, the
Parent Entity) with which such Fundamental Transaction shall have
been entered into.
(u)
“
Trading Day
” means, as applicable,
(x) with respect to all price determinations relating to the Common
Stock, any day on which the Common Stock is traded on the Principal
Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include
any day on which the Common Stock is scheduled to trade on such
exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such
exchange or market, then during the hour ending at 4:00:00 p.m.,
New York time) unless such day is otherwise designated as a Trading
Day in writing by the Required Holders or (y) with respect to all
determinations other than price determinations relating to the
Common Stock, any day on which The NASDAQ Stock Market (or any
successor thereto) is open for trading of securities.
(v)
“
Unpaid Dividend Amount
” means, as
of the applicable date of determination, with respect to each
Preferred Share, all declared and unpaid Dividends on such
Preferred Share.
(w)
“
Voting
Stock
” of a Person means capital stock of such Person
of the class or classes pursuant to which the holders thereof have
the general voting power to elect, or the general power to appoint,
at least a majority of the board of directors, managers, trustees
or other similar governing body of such Person (irrespective of
whether or not at the time capital stock of any other class or
classes shall have or might have voting power by reason of the
happening of any contingency).
24.
Disclosure
. Upon receipt or
delivery by the Company of any notice in accordance with the terms
of this Certificate of Designations, unless the Company has in good
faith determined that the matters relating to such notice do not
constitute material, non-public information relating to the Company
or any of its Subsidiaries, the Company shall simultaneously with
any such receipt or delivery publicly disclose such material,
non-public information on a Current Report on Form 8-K or
otherwise. In the event that the Company believes that a notice
contains material, non-public information relating to the Company
or any of its Subsidiaries, the Company so shall indicate to each
Holder contemporaneously with delivery of such notice, and in the
absence of any such indication, each Holder shall be allowed to
presume that all matters relating to such notice do not constitute
material, non-public information relating to the Company or its
Subsidiaries.
* * * *
*
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations of Series J Convertible Preferred Stock of MabVax
Therapeutics Holdings, Inc. to be signed by its President and Chief
Executive Officer on this ___ day of _________, 2017.
By:
/s/ J. David
Hansen
________________
Name:
J. David Hansen
Title:
President and Chief Executive Officer
EXHIBIT I
MABVAX THERAPEUTICS HOLDINGS, INC.
CONVERSION NOTICE
Reference is made
to the Certificate of Designations, Preferences and Rights of the
Series J Convertible Preferred Stock of MabVax Therapeutics
Holdings, Inc. (the “
Certificate of Designations
”). In
accordance with and pursuant to the Certificate of Designations,
the undersigned hereby elects to convert the number of shares of
Series J Convertible Preferred Stock, $0.01 par value per share
(the “
Preferred
Shares
”), of MabVax Therapeutics Holdings, Inc., a
Delaware corporation (the “
Company
”), indicated below into
shares of common stock, $0.01 par value per share (the
“
Common Stock
”),
of the Company, as of the date specified below.
Date of
Conversion:
Number
of Preferred Shares to be
converted:
Share
certificate no(s). of Preferred Shares to be
converted:
Tax ID
Number (If
applicable):
Conversion
Price:_________________________________________________________
Number
of shares of Common Stock to be
issued:
Please
issue the shares of Common Stock into which the Preferred Shares
are being converted in the following name and to the following
address:
Issue
to:
Address:
_________________________________________
Telephone Number:
________________________________
Facsimile
Number:
Holder:
By:
Title:
Dated:_____________________________
Account
Number (if electronic book entry
transfer):
Transaction Code
Number (if electronic book entry
transfer):
EXHIBIT II
ACKNOWLEDGMENT
The
Company hereby acknowledges this Conversion Notice and hereby
directs
[ ]
to issue the above indicated number of shares of Common Stock in
accordance with the Irrevocable Transfer Agent Instructions dated
__________, 201_ from the Company and acknowledged and agreed to by
[ ].
MABVAX
THERAPEUTICS HOLDINGS, INC.
Name:
Title:
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this
“
Agreement
”)
is dated as of August 11, 2017, between MabVax Therapeutics
Holdings, Inc., a Delaware corporation (the
“
Company
”),
and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “
Purchaser
”
and collectively the “
Purchasers
”).
WHEREAS, subject to the terms and conditions set
forth in this Agreement and pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the
“
Securities
Act
”), the Company
desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company,
securities of the Company as more fully described in this
Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Company
and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1
Definitions
.
In addition to the terms defined elsewhere in this Agreement: (a)
capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Certificate of Designation (as
defined herein), and (b) the following terms have the meanings set
forth in this Section 1.1:
“
Acquiring
Person
” shall have the
meaning ascribed to such term in Section 4.6.
“
Action
”
shall have the meaning ascribed to such term in Section
3.1(j).
“
Affiliate
”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under
Rule 405 under the Securities Act.
“
Board of
Directors
” means the
board of directors of the Company.
“
Business
Day
” means any day except
any Saturday, any Sunday, any day which is a federal legal holiday
in the United States or any day on which banking institutions in
the State of New York are authorized or required by law or other
governmental action to close.
“
Certificate of
Designation
” means the
Certificate of Designation to be filed prior to the Closing by the
Company with the Secretary of State of Delaware, in the form
of
Exhibit A
attached hereto.
“
Closing
”
means the closing of the purchase and sale of the Securities
pursuant to Section 2.1.
“
Closing
Date
” means the Trading
Day on which all of the Transaction Documents have been executed
and delivered by the applicable parties thereto, and all conditions
precedent to (i) the Purchasers’ obligations to pay the
Subscription Amount and (ii) the Company’s obligations to
deliver the Securities, in each case, have been satisfied or
waived, but in no event later than the third Trading Day following
the date hereof.
“
Commission
”
means the United States Securities and Exchange
Commission.
“
Common
Stock
” means the common
stock of the Company, par value $0.01 per share, and any other
class of securities into which such securities may hereafter be
reclassified or changed.
“
Common Stock
Equivalents
” means any
securities of the Company or the Subsidiaries which would entitle
the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, right, option,
warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
“
Company
Counsel
” means Sichenzia
Ross Ference Kesner LLP, with offices located at 61 Broadway,
32
nd
Floor, New York, New York
10006.
“
Conversion
Price
” shall have the
meaning ascribed to such term in the Certificate of
Designation.
“
Conversion
Shares
” means,
collectively, the shares of Common Stock issuable upon conversion
of the shares of Preferred Stock in accordance with the terms
hereof.
“
Disclosure
Schedules
” shall have the
meaning ascribed to such term in Section 3.1.
“
Escrow
Agent
” means Sichenzia
Ross Ference Kesner LLP, with offices located at 61 Broadway,
32
nd
Floor, New York, New York
10006.
“
Escrow
Agreement
” means the
escrow agreement by and among the Company, the Escrow Agent and the
Purchasers pursuant to which the Purchasers shall deposit
Subscription Amounts with the Escrow Agent to be applied to the
transactions contemplated hereunder.
“
Evaluation
Date
” shall have the
meaning ascribed to such term in Section
3.1(s).
“
Exchange
Act
” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“
FCPA
”
means the Foreign Corrupt Practices Act of 1977, as
amended.
“
FDA
” shall have the meaning ascribed to such
term in Section 3.1(ii).
“
FDCA
”
shall have the meaning ascribed to such term in Section
3.1(ii).
“
GAAP
”
shall have the meaning ascribed to such term in Section
3.1(h).
“
Indebtedness
”
shall have the meaning ascribed to such term in Section
3.1(aa).
“
Intellectual Property
Rights
” shall have the
meaning ascribed to such term in Section
3.1(p).
“
Liens
”
means a lien, charge, pledge, security interest, encumbrance, right
of first refusal, preemptive right or other
restriction.
“
Material Adverse
Effect
” shall have the
meaning assigned to such term in Section
3.1(b).
“
Material
Permits
” shall have the
meaning ascribed to such term in Section
3.1(n).
“
Per Share Purchase
Price
” equals
$550.
“
Person
”
means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any
kind.
“
Pharmaceutical
Product
” shall have the
meaning ascribed to such term in Section
3.1(ii).
“
Preferred
Stock
” means up
to
4,273
shares of the
Company’s Series J Convertible Preferred Stock issued
hereunder having the rights, preferences and privileges set forth
in the Certificate of Designation, in the form of
Exhibit
A
hereto
“
Proceeding
”
means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or
partial proceeding, such as a deposition), whether commenced or
threatened.
“
Prospectus
”
means the final prospectus filed for the Registration
Statement.
“
Prospectus
Supplement
” means the
supplement to the Prospectus complying with Rule 424(b) of the
Securities Act that is filed with the Commission and delivered by
the Company to each Purchaser at the Closing.
“
Purchaser
Party
” shall have the
meaning ascribed to such term in Section 4.9.
“
Registration
Statement
” means the
effective registration statement with the Commission file No.
333-
219291
which registers the sale of the Preferred Stock and the Conversion
Shares to the Purchasers.
“
Required
Approvals
” shall have the
meaning ascribed to such term in Section
3.1(e).
“
Required
Minimum
” means, as of any
date, the maximum aggregate number of shares of Common Stock then
issued or potentially issuable in the future pursuant to the
Transaction Documents, including any Conversion Shares issuable
upon conversion in full of all shares of Preferred Stock, ignoring
any conversion limits set forth therein.
“
Rule
144
” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“
Rule
424
” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“
SEC
Reports
” shall have the
meaning ascribed to such term in Section
3.1(h).
“
Securities
”
means the Preferred Stock and the Conversion
Shares.
“
Securities
Act
” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
“
Short
Sales
” means all
“short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include locating
and/or borrowing of Common Stock).
“
Subscription
Amount
” means, as to each
Purchaser, the aggregate amount to be paid for the Preferred Stock
as specified below such Purchaser’s name on the signature
page of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately
available funds.
“
Subsidiary
”
means any subsidiary of the Company as set forth on
Schedule
3.1(a)
, and shall, where
applicable, also include any direct or indirect subsidiary of the
Company formed or acquired after the date
hereof.
“
Trading
Day
” means a day on which
the principal Trading Market is open for
trading.
“
Trading
Market
” means any of the
following markets or exchanges on which the Common Stock is listed
or quoted for trading on the date in question: the NYSE MKT, the
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market or the New York Stock Exchange (or any successors to
any of the foregoing).
“
Transaction
Documents
” means this
Agreement, the Certificate of Designation, all exhibits and
schedules thereto and hereto and any other documents or agreements
executed in connection with the transactions contemplated
hereunder.
“
Transfer Agent
” means
Computershare Investor Services, the current transfer agent of the
Company, with a mailing address of 8742 Lucent Blvd., Suite 225,
Highlands Ranch, CO 80129, and any successor transfer agent of the
Company.
ARTICLE II.
PURCHASE AND SALE
2.1
Closing
.
On the Closing Date, upon the terms and subject to the conditions
set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company
agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase, up to an aggregate of $
2,350,000
of shares of Preferred Stock.
The aggregate number of shares of Preferred Stock sold hereunder
shall be up to
4,273
shares. Each Purchaser shall deliver to the
Escrow Agent, via wire transfer or a certified check, immediately
available funds equal to its Subscription Amount, and the Company
shall deliver to each Purchaser its respective shares of Preferred
Stock, and the Company and each Purchaser shall deliver the other
items set forth in Section 2.2 deliverable at the Closing.
Upon satisfaction of the covenants and conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of
Company Counsel or such other location as the parties shall
mutually agree. The Company covenants that, if the Purchaser
delivers a Notice of Conversion (as defined in the Certificate of
Designation) to convert any shares of Preferred Stock between the
date hereof and the Closing Date, the Company shall deliver such
Conversion Shares, in lieu of such number of shares of Preferred
Stock being converted, to the Purchaser on the Closing Date in
accordance with such Notice of Conversion.
2.2
Deliveries
.
(a)
On
or prior to the Closing Date, the Company shall deliver or cause to
be delivered to each Purchaser the following:
(i)
this Agreement duly executed by the
Company;
(ii)
reserved;
(iii)
a
certificate evidencing a number of shares of Preferred Stock, equal
to such Purchaser’s Subscription Amount divided by the Per
Share Purchase Price, registered in the name of such Purchaser and
evidence of the filing and acceptance of the Certificate of
Designation from the Secretary of State of Delaware;
and
(iv)
the
Prospectus and Prospectus Supplement (which may be delivered in
accordance with Rule 172 u
nder
the Securities Act).
(b)
On
or prior to the Closing Date, each Purchaser shall deliver or cause
to be delivered to the Company or the Escrow Agent, as applicable,
the following:
(i)
this Agreement duly
executed by such Purchaser; and
(ii)
to
the Escrow Agent, such Purchaser’s Subscription Amount by
wire transfer to the account specified in the Escrow
Agreement.
2.3
Closing
Conditions
.
(a)
The
obligations of the Company hereunder in connection with the Closing
are subject to the following conditions being
met:
(i)
the accuracy in all material respects
(or, to the extent representations or warranties are qualified by
materiality or Material Adverse Effect, in all respects) on the
Closing Date of the representations and warranties of the
Purchasers contained herein (unless as of a specific date therein
in which case they shall be accurate as of such
date);
(ii)
all obligations, covenants and
agreements of each Purchaser required to be performed at or prior
to the Closing Date shall have been performed;
and
(iii)
the
delivery by each Purchaser of the items set forth in Section 2.2(b)
of this Agreement.
(b)
The
respective obligations of the Purchasers hereunder in connection
with the Closing are subject to the following conditions being
met:
(i)
the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations
and warranties of the Company contained herein;
(ii)
all obligations,
covenants and agreements of the Company required to be performed at
or prior to the Closing Date shall have been
performed;
(iii)
the
delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;
(iv)
there
shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and
(v)
from the date
hereof to the Closing Date, trading in the Common Stock shall not
have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Closing
Date, trading in securities generally as reported by Bloomberg L.P.
shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported
by such service, or on any Trading Market, nor shall a banking
moratorium have been declared either by the United States or New
York State authorities nor shall there have occurred any material
outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each
case, in the reasonable judgment of such Purchaser, makes it
impracticable or inadvisable to purchase the Securities at the
Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1
Representations and
Warranties of the Company
. Except as set forth in the disclosure
schedules separately delivered to the Purchasers concurrently
herewith (“
Disclosure
Schedules
”), which
Disclosure Schedules shall be deemed a part hereof and shall
qualify any representation or otherwise made herein to the extent
of the disclosure contained in the corresponding section of the
Disclosure Schedules, the Company hereby makes the following
representations and warranties to each
Purchaser:
(a)
Subsidiaries
.
All of the direct and indirect subsidiaries of the Company are set
forth on
Schedule
3.1(a)
. Except as set
forth on
Schedule
3.1(a)
, the Company owns,
directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all
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. If the Company has no subsidiaries, all
other references to the Subsidiaries or any of them in the
Transaction Documents shall be disregarded.
(b)
Organization
and Qualification
. The
Company and each of the Subsidiaries is an entity duly incorporated
or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization,
with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in
violation nor default of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and
the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the
case may be, could not have or reasonably be expected to result in:
(i) a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material adverse
effect on the results of operations, assets, business, or condition
(financial or otherwise) of the Company and the Subsidiaries, taken
as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a
timely basis its obligations under any Transaction Document (any of
(i), (ii) or (iii), a “
Material Adverse
Effect
;” provided,
however, that changes in the trading price of the Common Stock
shall not, in and of itself, constitute a Material Adverse Effect)
and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or
qualification.
(c)
Authorization;
Enforcement
. The Company
has the requisite corporate power and authority to enter into and
to consummate the transactions contemplated by this Agreement and
each of the other Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The execution and
delivery of each of this Agreement and the other Transaction
Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and
no further action is required by the Company, the Board of
Directors or the Company’s stockholders in connection
herewith or therewith other than in connection with the Required
Approvals. This Agreement and each other Transaction Document
to which it is a party has been (or upon delivery will have been)
duly executed by the Company and, when delivered in accordance with
the terms hereof and thereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(d)
No
Conflicts
. The execution,
delivery and performance by the Company of this Agreement and the
other Transaction Documents to which it is a party, the issuance
and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not
(i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, (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, anti-dilution or similar adjustments,
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 receipt of the
Required Approvals, conflict with or result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a Material Adverse
Effect.
(e)
Filings,
Consents and Approvals
.
The Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing
or registration with, any court or other federal, state, local or
other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the
Transaction Documents, other than: (i) the filings required
pursuant to Section 4.5 of this Agreement, (ii) the filing with the
Commission of the Prospectus Supplement, (iii) the notice and/or
application(s) to each applicable Trading Market for the issuance
and sale of the Securities and the listing of the Conversion Shares
for trading thereon in the time and manner required thereby, (iv)
such filings as are required to be made under applicable state
securities laws, and (v) the approvals set forth on
Schedule
3.1(e)
(collectively, the
“
Required
Approvals
”).
(f)
Issuance
of the Securities; Registration
. The Securities are duly authorized and,
when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the
Transaction Documents. The Conversion Shares, when issued in
accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer
provided for in the Transaction Documents. The Company has
reserved from its duly authorized capital stock a number of shares
of Common Stock for issuance of the Conversion Shares at least
equal to the Required Minimum on the date hereof. The Company has
prepared and filed the Registration Statement in conformity with
the requirements of the Securities Act, which became effective on
July 27, 2017, including the Prospectus, and such amendments and
supplements thereto as may have been required to the date of this
Agreement. The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued by the
Commission and no proceedings for that purpose have been instituted
or, to the knowledge of the Company, are threatened by the
Commission. The Company, if required by the rules and
regulations of the Commission, shall file the Prospectus with the
Commission pursuant to Rule 424(b). At the time the
Registration Statement and any amendments thereto became effective,
at the date of this Agreement and at the Closing Date, the
Registration Statement and any amendments thereto conformed and
will conform in all material respects to the requirements of the
Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; and the Prospectus and any amendments or
supplements thereto, at time the Prospectus or any amendment or
supplement thereto was issued and at the Closing Date, conformed
and will conform in all material respects to the requirements of
the Securities Act and did not and will not contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not
misleading.
The
Company was at the time of the filing of the Registration Statement
eligible to use Form S-3. The Company is eligible to use Form S-3
under the Securities Act and it meets the transaction requirements
with respect to the aggregate market value of securities being sold
pursuant to this offering and during the twelve (12) months prior
to this offering, as set forth in General Instruction I.B.6 of Form
S-3.
(g)
Capitalization
.
The capitalization of the Company is as set forth on
Schedule
3.1(g)
, which
Schedule
3.1(g)
shall also include the
number of shares of Common Stock owned beneficially, and of record,
by each executive officer and director of the Company as of the
date hereof. The Company has not issued any capital stock
since its most recently filed periodic report under the Exchange
Act, other than pursuant to the exercise of employee stock options
under the Company’s stock option plans, the issuance of
shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plans and pursuant to the conversion and/or
exercise of Common Stock Equivalents outstanding as of the date of
the most recently filed periodic report under the Exchange
Act. Except as set forth on
Schedule
3.1(g)
, Person has any right of
first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by
the Transaction Documents. Except as set forth on
Schedule
3.1(g)
or as a result of the
purchase and sale of the Securities, there are no outstanding
options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of
Common Stock or Common Stock Equivalents. Except as set forth
on
Schedule
3.1(g)
, the issuance and sale
of the Securities will not obligate the Company to issue shares of
Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset
price under any of such securities. Except as set forth on
Schedule
3.1(g)
, there are no
outstanding securities or instruments of the Company or any
Subsidiary that contain any redemption or similar provisions, and
there are no contracts, commitments, binding understandings or
arrangements by which the Company or any Subsidiary is or may
become bound to redeem a security of the Company or such
Subsidiary. The Company does not have any stock appreciation rights
or “phantom stock” plans or agreements or any similar
plan or agreement. All of the outstanding shares of capital stock
of the Company are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. No further approval or
authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale of the Securities.
Except as set forth on Schedule 3.1(g), there are no stockholders
agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company
is a party or, to the knowledge of the Company, between or among
any of the Company’s stockholders.
(h)
SEC
Reports; Financial Statements
. The Company has filed all reports,
schedules, forms, statements and other documents required to be
filed by the Company under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two
years preceding the date hereof (or such shorter period as the
Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, together with the
Prospectus and the Prospectus Supplement, being collectively
referred to herein as the “
SEC
Reports
”) on a timely
basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable, and none of the
SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The Company has never been an issuer subject
to Rule 144(i) under the Securities Act. The financial statements
of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at
the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the
periods involved (“
GAAP
”),
except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present
in all material respects the financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(i)
Material
Changes; Undisclosed Events, Liabilities or
Developments
. Since the
date of the latest audited financial statements included within the
SEC Reports, except as specifically disclosed in a subsequent SEC
Report filed prior to the date hereof, (i) there has been no event,
occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company
has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made
with the Commission, (iii) the Company has not altered its method
of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock
option plans. Except as disclosed in Schedule 3.1(i), the
Company does not have pending before the Commission any request for
confidential treatment of information. Except for the
issuance of the Securities contemplated by this Agreement or as set
forth on
Schedule
3.1(i)
, no event, liability,
fact, circumstance, occurrence or development has occurred or
exists or is reasonably expected to occur or exist with respect to
the Company or its Subsidiaries or their respective businesses,
properties, operations, assets or financial condition that would be
required to be disclosed by the Company under applicable securities
laws at the time this representation is made or deemed made that
has not been publicly disclosed at least 1 Trading Day prior to the
date that this representation is made.
(j)
Litigation
.
Except as set forth on
Schedule
3.1(j)
, there is no action,
suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an
“
Action
”)
which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the
Securities or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse
Effect. Except as set forth on
Schedule
3.1(j)
, neither the Company nor
any Subsidiary any director or officer thereof (in his or her
capacity as such), is or has been the subject of any Action
involving a claim of violation of or liability under federal or
state securities laws or a claim of breach of fiduciary duty.
There has not been, and to the knowledge of the Company, there is
not pending or contemplated, any investigation by the Commission
involving the Company or any current or former director or officer
of the Company (in his or her capacity as such). 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.
(k)
Labor
Relations
. Except as set
forth on
Schedule
3.1(k)
, no 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. Except as
set forth on
Schedule
3.1(k)
, 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. To the knowledge of the
Company, no executive officer of the Company or any Subsidiary 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 to the Company’s knowledge, the continued
employment of each such executive officer does not subject the
Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local
and foreign laws and regulations relating to employment and
employment practices, terms and conditions of employment and wages
and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(l)
Compliance
.
Except as set forth on
Schedule
3.1(l)
, 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 other governmental
authority 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 have or reasonably
be expected to result in a Material Adverse
Effect.
(m)
Regulatory
Permits
. The Company and
the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the
failure to possess such permits could not reasonably be expected to
result in a Material Adverse Effect (“
Material
Permits
”), and neither
the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any
Material Permit.
(n)
Title to
Assets
. The Company and
the Subsidiaries have good and marketable title in fee simple to
all real property owned by them and good and marketable title in
all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except for (i) 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, (ii) Liens listed on
Schedule
3.1(n)
and (iii) Liens for the
payment of federal, state or other taxes, for which appropriate
reserves have been made therefor in accordance with GAAP and, 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.
(o)
Intellectual
Property
. 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
required for use in connection with their respective businesses as
described in the SEC Reports and which the failure to so have could
have a Material Adverse Effect (collectively, the
“
Intellectual Property
Rights
”). Except as
set forth on Schedule 3.1(o), none of, and neither the Company nor
any Subsidiary has received written notice 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 SEC
Reports, a written notice of a claim or otherwise has any knowledge
that the Intellectual Property Rights violate or infringe upon the
rights of any Person, except as could not have or reasonably be
expected to 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.
(p)
Insurance
.
The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses
in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage at
least equal to the aggregate Subscription Amount. Neither the
Company nor any Subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business without a
significant increase in cost.
(q)
Transactions
With Affiliates and Employees
. Except as set forth in the SEC Reports,
none of the officers or directors of the Company or any Subsidiary
and, to the knowledge of the Company, none of the employees of the
Company or any Subsidiary 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, providing for the borrowing of money from or
lending of money to 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, stockholder, member 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.
(r)
Sarbanes-Oxley;
Internal Accounting Controls
. Except as set forth on
Schedule
3.1(r)
, the Company and the
Subsidiaries are in material compliance 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.
The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance
that: (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such
disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the
Commission’s rules and forms. The Company’s
certifying officers have evaluated the effectiveness of the
disclosure controls and procedures of the Company and the
Subsidiaries as of the end of the period covered by the most
recently filed periodic report under the Exchange Act (such date,
the “
Evaluation
Date
”). The Company
presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the internal control
over financial reporting (as such term is defined in the Exchange
Act) of the Company and its Subsidiaries that have materially
affected, or is reasonably likely to materially affect, the
internal control over financial reporting of the Company and its
Subsidiaries.
(s)
Certain
Fees
. Except as set forth
in the Prospectus Supplement, no brokerage or finder’s fees
or commissions are or will be payable by the Company or any
Subsidiary to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with
respect to the transactions contemplated by the Transaction
Documents. The Purchasers shall have no obligation with
respect to any fees or with respect to any claims (other than such
fees or commissions owed by a Purchaser pursuant to agreements
entered into by such Purchaser, which fees or commission shall be
the sole responsibility of such Purchaser) made by or on behalf of
other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by the
Transaction Documents due to an arrangement or agreement made by
the Company.
(t)
Reserved
.
(u)
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.
(v)
Registration
Rights
. Other than the
Purchasers and except as set forth on
Schedule
3.1(v)
, no Person has any right
to cause the Company or any Subsidiary to effect the registration
under the Securities Act of any securities of the Company or any
Subsidiary.
(w)
Listing
and Maintenance Requirements
. The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration. Except as set forth on
Schedule
3.1(w)
, the Company has not, in
the 12 months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market. The
Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such
listing and maintenance requirements. The Common Stock is currently
eligible for electronic transfer through the Depository Trust
Company or another established clearing corporation and the Company
is current in payment of the fees to the Depository Trust Company
(or such other established clearing corporation) in connection with
such electronic transfer.
(x)
Application
of Takeover Protections
.
The Company and the Board of Directors have taken all necessary
action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of
incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the
Purchasers as a result of the Purchasers and the Company fulfilling
their obligations or exercising their rights under the Transaction
Documents, including without limitation as a result of the
Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities.
(y)
Disclosure
.
Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf
has provided any of the Purchasers or their agents or counsel with
any information that it believes constitutes or might constitute
material, non-public information which is not otherwise disclosed
in the Prospectus Supplement. The Company understands
and confirms that the Purchasers will rely on the foregoing
representation in effecting transactions in securities of the
Company. All of the written materials furnished by or on
behalf of the Company to the Purchasers regarding the Company and
its Subsidiaries, their respective businesses and the transactions
contemplated hereby, including the Disclosure Schedules to this
Agreement, taken as a whole, is true and correct and does not
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made,
not misleading. The press releases disseminated by the Company
during the twelve months preceding the date of this Agreement taken
as a whole do not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made and when made, not
misleading. The Company acknowledges and agrees that no
Purchaser makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those
specifically set forth in the Transaction
Documents.
(z)
No
Integrated Offering
. Assuming
the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, neither the Company, nor any
of its Affiliates, nor any Person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of
(i) the Securities Act which would require the registration of any
such securities under the Securities Act, or (ii) any applicable
shareholder approval provisions of any Trading Market on which any
of the securities of the Company are listed or
designated.
(aa)
Solvency
.
Based on the consolidated financial condition of the Company as of
the Closing Date, after giving effect to the receipt by the Company
of the proceeds from the sale of the Securities hereunder, (i) the
fair saleable value of the Company’s assets exceeds the
amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the
Company, consolidated and currently planned capital requirements
and capital availability thereof, and (iii) the current cash flow
of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into
account all anticipated uses of the cash, would be sufficient to
pay all amounts on or in respect of its liabilities when such
amounts are required to be paid. The Company does not intend
to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable
on or in respect of its debt). The Company has no knowledge
of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the
Closing Date.
Schedule
3.1(aa)
sets forth as of the
date hereof all outstanding secured or unsecured Indebtedness of
the Company or any Subsidiary, or for which the Company or any
Subsidiary are contractually obligated to incur additional
Indebtedness. For the purposes of this Agreement,
“
Indebtedness
”
means (x) any liabilities for borrowed money or amounts owed in
excess of $50,000 (other than trade accounts payable incurred in
the ordinary course of business), (y) all guaranties, endorsements
and other contingent obligations in respect of indebtedness for
borrowed money of others, whether or not the same are or should be
reflected in the Company’s consolidated 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.
(bb)
Tax
Status
. Except for
matters that would not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect, the
Company and its Subsidiaries each (i) has made or filed all United
States federal, state and local 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.
(cc)
Reserved
.
(dd)
Foreign
Corrupt Practices
.
Neither the Company nor any Subsidiary, nor to the knowledge of the
Company or any Subsidiary, any agent or other person acting on
behalf of the Company or any Subsidiary, 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 any Subsidiary (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
FCPA.
(ee)
Accountants
.
The Company’s accounting firm is set forth on
Schedule
3.1(ee)
of the Disclosure
Schedules. To the knowledge and belief of the Company, such
accounting firm, except as set forth on
Schedule
3.1(ee)
, (i) is a registered
public accounting firm as required by the Exchange Act and (ii)
shall express its opinion with respect to the financial statements
to be included in the Company’s Annual Report for the fiscal
year ending December 31, 2017.
(ff)
No
Disagreements with Accountants and Lawyers.
There are no disagreements of any kind presently
existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants and lawyers formerly or
presently employed by the Company and the Company is current with
respect to any fees owed to its accountants and lawyers which could
affect the Company’s ability to perform any of its
obligations under any of the Transaction
Documents.
(gg)
Acknowledgment
Regarding Purchasers’ Purchase of
Securities
. The Company
acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length purchaser with
respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that
no Purchaser is acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and
any advice given by any Purchaser or any of their respective
representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely
incidental to the Purchasers’ purchase of the
Securities. The Company further represents to each Purchaser
that the Company’s decision to enter into this Agreement and
the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by
the Company and its representatives.
(hh)
Acknowledgement
Regarding Purchaser’s Trading Activity
. Anything in this Agreement or elsewhere
herein to the contrary notwithstanding (except for Sections 3.2(f)
and 4.14 hereof), it is understood and acknowledged by the Company
that: (i) none of the Purchasers has been asked by the Company to
agree, nor has any Purchaser agreed, to desist from purchasing or
selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by
the Company or to hold the Securities for any specified term; (ii)
past or future open market or other transactions by any Purchaser,
specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing
of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded
securities; (iii) any Purchaser, and counter-parties in
“derivative” transactions to which any such Purchaser
is a party, directly or indirectly, may presently have a
“short” position in the Common Stock, and (iv) each
Purchaser shall not be deemed to have any affiliation with or
control over any arm’s length counter-party in any
“derivative” transaction. The Company further
understands and acknowledges that (y) one or more Purchasers may
engage in hedging activities at various times during the period
that the Securities are outstanding, including, without limitation,
during the periods that the value of the Conversion Shares
deliverable with respect to Securities are being determined, and
(z) such hedging activities (if any) could reduce the value of the
existing stockholders’ equity interests in the Company at and
after the time that the hedging activities are being
conducted. The Company acknowledges that such aforementioned
hedging activities do not constitute a breach of any of the
Transaction Documents.
(ii)
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.
(jj)
FDA
. As to each product subject to the jurisdiction
of the U.S. Food and Drug Administration
(“
FDA
”)
under the Federal Food, Drug and Cosmetic Act, as amended, and the
regulations thereunder (“
FDCA
”)
that is manufactured, packaged, labeled, tested, distributed, sold,
and/or marketed by the Company or any of its Subsidiaries (each
such product, a “
Pharmaceutical
Product
”), such
Pharmaceutical Product is being manufactured, packaged, labeled,
tested, distributed, sold and/or marketed by the Company in
compliance with all applicable requirements under FDCA and similar
laws, rules and regulations relating to registration,
investigational use, premarket clearance, licensure, or application
approval, good manufacturing practices, good laboratory practices,
good clinical practices, product listing, quotas, labeling,
advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse
Effect. There is no pending, completed or, to the Company’s
knowledge, threatened, action (including any lawsuit, arbitration,
or legal or administrative or regulatory proceeding, charge,
complaint, or investigation) against the Company or any of its
Subsidiaries, and none of the Company or any of its Subsidiaries
has received any notice, warning letter or other communication from
the FDA or any other governmental entity, which (i) contests the
premarket clearance, licensure, registration, or approval of, the
uses of, the distribution of, the manufacturing or packaging of,
the testing of, the sale of, or the labeling and promotion of any
Pharmaceutical Product, (ii) withdraws its approval of, requests
the recall, suspension, or seizure of, or withdraws or orders the
withdrawal of advertising or sales promotional materials relating
to, any Pharmaceutical Product, (iii) imposes a clinical hold on
any clinical investigation by the Company or any of its
Subsidiaries, (iv) enjoins production at any facility of the
Company or any of its Subsidiaries, (v) enters or proposes to enter
into a consent decree of
permanent injunction with the Company or any of
its Subsidiaries, or (vi) otherwise alleges any violation of any
laws, rules
or
regulations by the Company or any of its Subsidiaries, and which,
either individually or in the aggregate, would have a Material
Adverse Effect. The properties, business and operations of the
Company have been and are being conducted in all material respects
in accordance with all applicable laws, rules and regulations of
the FDA. The Company has not been informed by the FDA that the FDA
will prohibit the marketing, sale, license or use in the United
States of any product proposed to be developed, produced or
marketed by the Company nor has the FDA expressed any concern as to
approving or clearing for marketing any product being developed or
proposed to be developed by the Company.
(kk)
Office of
Foreign Assets Control
.
Neither the Company nor any Subsidiary nor, to the Company’s
knowledge, any director, officer, agent, employee or affiliate of
the Company or any Subsidiary is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Treasury Department (“
OFAC
”).
(ll)
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, and
the Company shall so certify upon Purchaser’s
request.
(mm)
Stock
Option Plans
. Each stock option
granted by the Company under the Company’s stock option plan
was granted (i) in accordance with the terms of the Company’s
stock option plan and (ii) with an exercise price at least equal to
the fair market value of the Common Stock on the date such stock
option would be considered granted under GAAP and applicable law.
No stock option granted under the Company’s stock option plan
has been backdated. The Company has not knowingly granted,
and there is no and has been no Company policy or practice to
knowingly grant, stock options prior to, or otherwise knowingly
coordinate the grant of stock options with, the release or other
public announcement of material information regarding the Company
or its Subsidiaries or their financial results or
prospects.
(nn)
Bank
Holding Company Act
.
Neither the Company nor any of its Subsidiaries or Affiliates 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 or Affiliates 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 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 of its Subsidiaries or Affiliates
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.
(oo)
Reserved
.
(pp)
Money
Laundering
. The
operations of the Company and its Subsidiaries are and have been
conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations
thereunder (collectively, the “
Money Laundering
Laws
”), and no action,
suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any
Subsidiary with respect to the Money Laundering Laws is pending or,
to the knowledge of the Company or any Subsidiary,
threatened.
3.2
Representations
and Warranties of the Purchasers
. Each Purchaser, for itself and for no
other Purchaser, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows (unless
as of a specific date therein, in which case they shall be accurate
as of such date):
(a)
Organization;
Authority
. Such Purchaser
is either an individual or an entity duly incorporated or formed,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power
and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry
out its obligations hereunder and thereunder. The execution and
delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction
Documents have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as
applicable, on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited
by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by
applicable law.
(b)
Understandings
or Arrangements
. Such
Purchaser is acquiring the Securities as principal for its own
account and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution
of such Securities (this representation and warranty not limiting
such Purchaser’s right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable
federal and state securities laws). Such Purchaser is
acquiring the Securities hereunder in the ordinary course of its
business. Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its
business.
(c)
Purchaser
Status
. At the time such
Purchaser was offered the Securities, it was, and as of the date
hereof it is, and on each date on which it converts any shares of
Preferred Stock, it will be an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act.
(d)
Experience
of Such Purchaser
. Such
Purchaser, either alone or together with its representatives, has
such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Such
Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete
loss of such investment.
(e)
Access
to Information
. Such Purchaser
acknowledges that it has had the opportunity to review the
Transaction Documents (including all exhibits and schedules
thereto) and the SEC Reports and has been afforded, (i) the
opportunity to ask such questions as it has deemed necessary of,
and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities;
(ii) access to information about the Company and its financial
condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information
that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment
decision with respect to the investment. . Such
Purchaser acknowledges and agrees that such Purchaser is not
relying on any forecasts or guidance provided by the Company
regarding the Company’s results of operations for periods
ending after the date of this Agreement.
(f)
Certain
Transactions and Confidentiality
. Other than consummating the transactions
contemplated hereunder, such Purchaser has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Purchaser, executed any purchases or
sales, including Short Sales, of the securities of the Company
during the period commencing as of the time that such Purchaser
first received a term sheet (written or oral) from the Company or
any other Person representing the Company setting forth the
material terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof.
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the representation set
forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this Agreement. Other
than to other Persons party to this Agreement or to such
Purchaser’s representatives that are bound by confidentiality
restrictions, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents
and Affiliates, such Purchaser has maintained the confidentiality
of all disclosures made to it in connection with this transaction
(including the existence and terms of this transaction).
Notwithstanding the foregoing, for the avoidance
of doubt, nothing contained herein shall constitute a
representation or warranty against, or a prohibition of, any
actions with respect to the borrowing of, arrangement to borrow,
identification of the availability of, and/or securing of,
securities of the Company in order for such Purchaser (or its
broker or other financial representative) to effect Short Sales or
similar transactions in the future.
The Company acknowledges and agrees that the representations
contained in Section 3.2 shall not modify, amend or affect such
Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of
the transaction contemplated hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Conversion
Shares. The shares of Common Stock underlying the shares of
Preferred Stock shall be issued free of legends.
4.2
Acknowledgment
of Dilution
. The Company
acknowledges that the issuance of the Securities may result in
dilution of the outstanding shares of Common Stock, which dilution
may be substantial under certain market conditions. The Company
further acknowledges that its obligations under the Transaction
Documents, including, without limitation, its obligation to issue
the Conversion Shares pursuant to the Transaction Documents, are
unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any
such dilution or any claim the Company may have against any
Purchaser and regardless of the dilutive effect that such issuance
may have on the ownership of the other stockholders of the
Company.
4.3
Furnishing of
Information
. Until no
Purchaser owns Securities, the Company covenants to maintain the
registration of the Common Stock under Section 12(b) or 12(g) of
the Exchange Act and to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act even if the Company is not then
subject to the reporting requirements of the Exchange
Act.
4.4
Integration
.
The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require
shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of such
subsequent transaction.
4.5
Securities Laws
Disclosure; Publicity
.
The Company shall (a) by 9:00 a.m. (New York City time) on the
Trading Day immediately following the date hereof issue a press
release disclosing the material terms of the transactions
contemplated hereby and file a Current Report on Form 8-K,
including the Transaction Documents and Disclosure Schedule as
exhibits thereto with the Commission. From and after the issuance
of such press release, the Company represents to the Purchasers
that it shall have publicly disclosed all material, non-public
information delivered to any of the Purchasers by the Company or
any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. In addition,
effective upon the issuance of such press release, the Company
acknowledges and agrees that any and all confidentiality or similar
obligations under any agreement, whether written or oral, between
the Company, any of its Subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates on the one
hand, and any of the Purchasers or any of their Affiliates on the
other hand, shall terminate. The Company and each Purchaser shall
consult with each other in issuing any other press releases with
respect to the transactions contemplated hereby, and neither the
Company nor any Purchaser shall issue any such press release nor
otherwise make any such public statement without the prior consent
of the Company, with respect to any press release of any Purchaser,
or without the prior consent of each Purchaser, with respect to any
press release of the Company, which consent shall not unreasonably
be withheld or delayed, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company
shall not publicly disclose the name of any Purchaser, or include
the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except to the extent such disclosure is
required by law or Trading Market regulations, in which case the
Company shall provide the applicable Purchasers with prior notice
of such disclosure permitted under this Section
4.5.
4.6
Shareholder Rights
Plan
. No claim will be
made or enforced by the Company or, with the consent of the
Company, any other Person, that any Purchaser is an
“
Acquiring
Person
” under any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement
between the Company and the Purchasers.
4.7
Non-Public
Information
. Except
with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, which shall
be disclosed pursuant to Section 4.5, the Company covenants and
agrees that neither it, nor any other Person acting on its behalf
will provide any Purchaser or its agents or counsel with any
information that constitutes, or the Company reasonably believes
constitutes, material non-public information, unless prior thereto
such Purchaser shall have consented to the receipt of such
information, which consent shall constitute such Purchaser’s
agreement to keep such information confidential. The Company
understands and confirms that each Purchaser shall be relying on
the foregoing covenant in effecting transactions in securities of
the Company. To the extent that the Company delivers any
material, non-public information to a Purchaser without such
Purchaser’s consent, the Company hereby covenants and agrees
that such Purchaser shall not have any duty of confidentiality to
the Company, any of its Subsidiaries, or any of their respective
officers, directors, agents, employees or Affiliates, or a duty to
the Company, any of its Subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates not to trade
on the basis of, such material, non-public information, provided
that the Purchaser shall remain subject to applicable law. To the
extent that any notice provided pursuant to any Transaction
Document constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Company understands and
confirms that each Purchaser shall be relying on the foregoing
covenant in effecting transactions in securities of the
Company.
4.8
Use of
Proceeds
. Except as set
forth on
Schedule 4.8
attached hereto, the Company shall use
the net proceeds from the sale of the Securities hereunder for
working capital purposes and shall not use such proceeds: (a) for
the satisfaction of any portion of the Company’s debt (other
than payment of trade payables in the ordinary course of the
Company’s business and prior practices), (b) for the
redemption of any Common Stock or Common Stock Equivalents, (c) for
the settlement of any outstanding litigation or (d) in violation of
FCPA or OFAC regulations.
4.9
Indemnification of
Purchasers
. Subject
to the provisions of this Section 4.9, the Company will indemnify
and hold each Purchaser and its directors, officers, shareholders,
members, partners, employees and agents (and any other Persons with
a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each
Person who controls such Purchaser (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, shareholders, agents, members, partners or
employees (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such
title or any other title) of such controlling persons (each, a
“
Purchaser
Party
”) harmless from any
and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid
in settlements, court costs and reasonable attorneys’ fees
and costs of investigation that any such Purchaser Party may suffer
or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or
(b) any action instituted against the Purchaser Parties in any
capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such
Purchaser Parties, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is
based upon a breach of such Purchaser Party’s
representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser
Parties may have with any such stockholder or any violations by
such Purchaser Parties of state or federal securities laws or any
other conduct by such Purchaser Parties which constitutes fraud,
gross negligence, willful misconduct or malfeasance). If any
action shall be brought against any Purchaser Party in respect of
which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and
the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser
Party. Any Purchaser Party shall have the right to employ
separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the
employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in
such action there is, in the reasonable opinion of such separate
counsel, a material conflict on any material issue between the
position of the Company and the position of such Purchaser Party,
in which case the Company shall be responsible for the reasonable
fees and expenses of no more than one such separate counsel.
The Company will not be liable to any Purchaser Party under this
Agreement (y) for any settlement by a Purchaser Party effected
without the Company’s prior written consent, which shall not
be unreasonably withheld or delayed; or (z) to the extent, but only
to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by such
Purchaser Party in this Agreement or in the other Transaction
Documents. The indemnification required by this Section 4.9
shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, within thirty days of when
bills relating to indemnifiable amounts are received by the
Company. The indemnity agreements contained herein shall be in
addition to any cause of action or similar right of any Purchaser
Party against the Company or others and any liabilities the Company
may be subject to pursuant to law.
4.10
Reservation
of Common Stock
. As of the date
hereof, the Company has reserved and the Company shall continue to
reserve and keep available at all times, free of preemptive rights,
a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue shares of Common Stock upon
conversion of the Preferred Stock.
4.11
Listing of Common
Stock
. The Company hereby
agrees to use best efforts to maintain the listing of the Common
Stock on the Trading Market on which it is currently listed, and
concurrently with the Closing, the Company shall apply to list or
quote all of the Conversion Shares on such Trading Market and
promptly secure the listing of all of the Conversion Shares on such
Trading Market. The Company further agrees, if the Company applies
to have the Common Stock traded on any other Trading Market, it
will then include in such application all of the Conversion Shares,
and will take such other action as is necessary to cause all of the
Conversion Shares to be listed or quoted on such other Trading
Market as promptly as possible. The Company will then take
all action reasonably necessary to continue the listing or
quotation and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the
Trading Market. The Company agrees to maintain the
eligibility of the Common Stock for electronic transfer through the
Depository Trust Company or another established clearing
corporation, including, without limitation, by timely payment of
fees to the Depository Trust Company or such other established
clearing corporation in connection with such electronic
transfer.
4.12
Reserved
.
4.13
Equal
Treatment of Purchasers
.
No consideration (including any modification of any Transaction
Document) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of the
Transaction Documents unless the same consideration is also offered
to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right
granted to each Purchaser by the Company and negotiated separately
by each Purchaser, and is intended for the Company to treat the
Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or
otherwise.
4.14
Certain Transactions
and Confidentiality
. Each
Purchaser, severally and not jointly with the other Purchasers,
covenants that neither it nor any Affiliate acting on its behalf or
pursuant to any understanding with it will execute any purchases or
sales, including Short Sales of any of the Company’s
securities during the period commencing with the execution of this
Agreement and ending at such time that the transactions
contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section
4.5. Each Purchaser, severally and not jointly with the other
Purchasers, covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the
Company pursuant to the initial press release as described in
Section 4.5, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information
included in the Transaction Documents and the Disclosure
Schedules. Notwithstanding the foregoing and notwithstanding
anything contained in this Agreement to the contrary, the Company
expressly acknowledges and agrees that (i) no Purchaser makes any
representation, warranty or covenant hereby that it will not engage
in effecting transactions in any securities of the Company after
the time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as
described in Section 4.5, (ii) no Purchaser shall be restricted or
prohibited from effecting any transactions in any securities of the
Company in accordance with applicable securities laws from and
after the time that the transactions contemplated by this Agreement
are first publicly announced pursuant to the initial press release
as described in Section 4.5 and (iii) no Purchaser shall have any
duty of confidentiality or duty not to trade in the securities of
the Company to the Company or its Subsidiaries after the issuance
of the initial press release as described in Section 4.5.
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the covenant set forth
above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this
Agreement.
4.15
Conversion
Procedures
. The form of
Notice of Conversion included in the Certificate of Designation
sets forth the totality of the procedures required of the
Purchasers in order to convert the Preferred Stock. Without
limiting the preceding sentences, no ink-original Notice of
Conversion shall be required, nor shall any medallion guarantee (or
other type of guarantee or notarization) of any Notice of
Conversion form be required in order to convert the Preferred
Stock. No additional legal opinion, other information or
instructions shall be required of the Purchasers to convert their
Preferred Stock. The Company shall honor conversions of the
Preferred Stock and shall deliver Conversion Shares in accordance
with the terms, conditions and time periods set forth in the
Transaction Documents.
ARTICLE V.
MISCELLANEOUS
5.1
Termination
.
This Agreement may be terminated before the Closing by any
Purchaser, as to such Purchaser’s obligations hereunder only
and without any effect whatsoever on the obligations between the
Company and the other Purchasers, by written notice to the other
parties, if the Closing has not been consummated on or
before August 17, 2017;
provided
,
however
,
that such termination will not affect the right of any party to sue
for any breach by any other party (or parties).
5.2
Fees and
Expenses
. Except as
expressly set forth in the Transaction Documents to the contrary,
each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this
Agreement. The Company shall pay all Transfer Agent fees
(including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company and
any exercise notice delivered by a Purchaser), stamp taxes and
other taxes and duties levied in connection with the delivery of
any Securities to the Purchasers other than income and capital
gains taxes of the Purchasers that may be incurred in connection
with the transactions contemplated hereby.
5.3
Entire
Agreement
. The
Transaction Documents, together with the exhibits and schedules
thereto, the Prospectus and the Prospectus Supplement, contain the
entire understanding of the parties with respect to the subject
matter hereof and thereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents,
exhibits and schedules.
5.4
Notices
.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the date of
transmission, if such notice or communication is delivered via
facsimile or e-mail at the facsimile number or e-mail address set
forth on the signature pages attached hereto at or prior to 5:30
p.m. (New York City time) on a Trading Day, (b) the next Trading
Day after the date of transmission, if such notice or communication
is delivered via facsimile or e-mail at the facsimile number or
e-mail address set forth on the signature pages attached hereto on
a day that is not a Trading Day or later than 5:30 p.m. (New York
City time) on any Trading Day, (c) the second (2
nd
)
Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall
be as set forth on the signature pages attached hereto. To the
extent that any notice provided pursuant to any Transaction
Document constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K.
5.5
Amendments;
Waivers
. No provision of
this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed, in the case of an amendment,
by the Company and the Purchasers who purchased at least a majority
in interest of the Preferred Stock based on the initial
Subscription Amounts hereunder or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is
sought, provided that if any amendment, modification or waiver
disproportionately and adversely impacts a Purchaser (or group of
Purchasers), the consent of such disproportionately impacted
Purchaser (or group of Purchasers) shall also be required. No
waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right
hereunder in any manner impair the exercise of any such right. Any
proposed amendment or waiver that disproportionately, materially
and adversely affects the rights and obligations of any Purchaser
relative to the comparable rights and obligations of the other
Purchasers shall require the prior written consent of such
adversely affected Purchaser. Any amendment effected in accordance
with this Section 5.5 shall be binding upon each Purchaser and
holder of Securities and the Company.
5.6
Headings
.
The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5.7
Successors and
Assigns
. This Agreement
shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not
assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by
merger). Any Purchaser may assign any or all of its rights
under this Agreement to any Person to whom such Purchaser assigns
or transfers any Securities, provided that such transferee agrees
in writing to be bound, with respect to the transferred Securities,
by the provisions of the Transaction Documents that apply to the
“Purchasers.”
5.8
No Third-Party
Beneficiaries
. This
Agreement is intended for the benefit of the parties hereto and
their respective successors and permitted assigns and is not for
the benefit of, nor may any provision hereof be enforced by, any
other Person, except as otherwise set forth in Section 4.9 and this
Section 5.8.
5.9
Governing
Law
. All questions
concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense
of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or
its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of
New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to
serve process in any other manner permitted by law. If either
party shall commence an action or proceeding to enforce any
provisions of the Transaction Documents, then in addition to the
obligations of the Company under Section 4.9, the prevailing party
in such action, suit or proceeding shall be reimbursed by the other
party for its reasonable attorneys’ fees and other costs and
expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
5.10
Survival
.
The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities.
5.11
Execution
.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to each other party, it being
understood that the parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a
“.pdf” format data file, such signature shall create a
valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect
as if such facsimile or “.pdf” signature page were an
original thereof.
5.12
Severability
.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.
5.13
Rescission and
Withdrawal Right
.
Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does
not timely perform its related obligations within the periods
therein provided, then such Purchaser may rescind or withdraw, in
its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and
rights.
5.14
Replacement of
Securities
. If any
certificate or instrument evidencing any Securities is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft
or destruction. The applicant for a new certificate or
instrument under such circumstances shall also pay any reasonable
third-party costs (including customary indemnity) associated with
the issuance of such replacement Securities.
5.15
Remedies
.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific
performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for
any loss incurred by reason of any breach of obligations contained
in the Transaction Documents and hereby agree to waive and not to
assert in any action for specific performance of any such
obligation the defense that a remedy at law would be
adequate.
5.16
Payment
Set Aside
. To the extent
that the Company makes a payment or payments to any Purchaser
pursuant to any Transaction Document or a Purchaser enforces or
exercises its rights thereunder, and such payment or payments or
the proceeds of such enforcement or exercise or any part thereof
are subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
5.17
Independent Nature of
Purchasers’ Obligations and Rights
. The obligations of each Purchaser under
any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance or non-performance of
the obligations of any other Purchaser under any Transaction
Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant
hereof or thereto, shall be deemed to constitute the Purchasers as
a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Documents.
Each Purchaser shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of the other Transaction
Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own
separate legal counsel in its review and negotiation of the
Transaction Documents. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or
requested to do so by any of the Purchasers. It is expressly
understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the
Company and a Purchaser, solely, and not between the Company and
the Purchasers collectively and not between and among the
Purchasers.
5.18
Liquidated
Damages
. The
Company’s obligations to pay any partial liquidated damages
or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until
all unpaid partial liquidated damages and other amounts have been
paid notwithstanding the fact that the instrument or security
pursuant to which such partial liquidated damages or other amounts
are due and payable shall have been canceled.
5.19
Saturdays, Sundays,
Holidays, etc.
If the last or
appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business Day, then
such action may be taken or such right may be exercised on the next
succeeding Business Day.
5.20
Construction
.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock that occur after the
date of this Agreement.
5.21
WAIVER
OF JURY TRIAL
.
IN
ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND
INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.
MABVAX THERAPEUTICS HOLDINGS, INC.
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Address for Notice:
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By:
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Fax:
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Name:
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Title:
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E-mail:
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With a copy to (which shall not constitute notice):
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE
AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.
Name of Purchaser:
Signature of Authorized
Signatory of Purchaser
:
Name of Authorized Signatory:
Title of Authorized Signatory:
Email Address of Authorized Signatory:
Facsimile Number of Authorized Signatory:
Address for Notice to Purchaser:
Fax:
E-mail:
Address for Delivery of Securities to Purchaser (if not same as
address for notice):
Subscription Amount: $_________________
Shares of Preferred Stock: _________________
EIN Number: _______________________