Exhibit
1.1
4,160,000
Shares
AZURRX
BIOPHARMA, INC.
Common
Stock
UNDERWRITING AGREEMENT
May 1,
2018
Oppenheimer
& Co. Inc.,
as Representative
of the several
Underwriters named
in
Schedule I
hereto
c/o
Oppenheimer & Co. Inc.
85
Broad Street
New
York, New York 10004
Ladies
and Gentlemen:
AzurRx
BioPharma, Inc., a Delaware corporation (the "
Company
"), proposes, subject to
the terms and conditions contained herein, to sell to you and the
other underwriters named on
Schedule I
to this Agreement
(the "
Underwriters
"), for whom you
are acting as Representative (the "
Representative
"), an aggregate
of 4,160,000 shares (the "
Firm Shares
") of the Company's
common stock, $0.0001 par value per share (the "
Common Stock
"). The respective
amounts of the Firm Shares to be purchased by each of the several
Underwriters are set forth opposite their names on
Schedule I
hereto.
The
Company has prepared and filed in conformity with the requirements
of the Securities Act of 1933, as amended (the "
Securities Act
"), and the
published rules and regulations thereunder (the "
Rules
") adopted by the
Securities and Exchange Commission (the "
Commission
") a registration
statement on Form S-3 (No. 333-221275), including a related
prospectus dated November 1, 2017 (the "
Base Prospectus
") relating to
common stock, stock purchase units and warrants to purchase common
stock of the Company that may be sold from time to time by the
Company in accordance with Rule 415 of the Securities Act, and
such amendments thereof as may have been required to the date of
this Agreement. Copies of such Registration Statement (including
all amendments thereof and all documents deemed incorporated by
reference therein) and of the related Base Prospectus have
heretofore been delivered by the Company or are otherwise available
to you. The term "Registration Statement" as used in this Agreement
means the registration statement, including all exhibits, financial
schedules and all documents and information deemed to be part of
the Registration Statement by incorporation by reference or
otherwise, as amended from time to time, including the information
(if any) contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules and deemed to be
part thereof at the time of effectiveness pursuant to Rule 430A of
the Rules. If the Company has filed an abbreviated registration
statement to register additional Firm Shares pursuant to Rule
462(b) under the Rules (the "
462(b) Registration
Statement
"), then any reference herein to the Registration
Statement shall also be deemed to include such 462(b) Registration
Statement. The term "Preliminary Prospectus" means the Base
Prospectus, together with any preliminary prospectus supplement
used or filed with the Commission pursuant to Rule 424 of the
Rules, in the form provided to the Underwriters by the Company for
use in connection with the offering of the Firm Shares.
The term "
Prospectus
" means the Base
Prospectus, any Preliminary Prospectus and any amendments or
further supplements to such prospectus, and including, without
limitation, the final prospectus supplement, filed pursuant to and
within the limits described in Rule 424(b) with the Commission in
connection with the proposed sale of the Firm Shares contemplated
by this Agreement through the date of such Prospectus Supplement.
The term "
Effective
Date
" shall mean each date that the Registration Statement
and any post-effective amendment or amendments thereto became or
become effective. Unless otherwise stated herein, any reference
herein to the Registration Statement, any Preliminary
Prospectus,
the
Statutory Prospectus (as hereinafter defined) and the Prospectus
shall be deemed to refer to and include the documents incorporated
by reference therein, including pursuant to Item 12 of Form
S-3 under the Securities Act, which were filed under the Securities
Exchange Act of 1934, as amended (the "
Exchange Act
") on or before the
date hereof or are so filed hereafter. Any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, any Preliminary Prospectus, the Statutory
Prospectus or the Prospectus shall be deemed to refer to and
include any such document filed or to be filed under the Exchange
Act after the date of the Registration Statement, any such
Preliminary Prospectus, the Statutory Prospectus or Prospectus, as
the case may be, and deemed to be incorporated therein by
reference.
The
Company understands that the Underwriters propose to make a public
offering of the Firm Shares, as set forth in and pursuant to the
Statutory Prospectus (as hereinafter defined) and the Prospectus,
as soon after the Effective Date and the date of this Agreement as
the Representative deems advisable. The Company hereby confirms
that the Underwriters and dealers have been authorized to
distribute or cause to be distributed each Preliminary Prospectus,
and each Issuer Free Writing Prospectus (as hereinafter defined),
if any, and are authorized to distribute the Prospectus (as from
time to time amended or supplemented if the Company furnishes
amendments or supplements thereto to the
Underwriters).
1.
Sale, Purchase, Delivery and Payment
for the Firm Shares
. On the basis of the representations,
warranties and agreements contained in, and subject to the terms
and conditions of, this Agreement:
(a)
The Company agrees to issue and sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $2.3375 per share
(the "
Initial
Price
"), the number of Firm Shares set forth opposite the
name of such Underwriter under the column "Number of Firm Shares to
be Purchased from the Company" on
Schedule I
to this Agreement,
subject to adjustment in accordance with Section 9
hereof.
(b
)
Payment of the purchase price for, and delivery of, the Firm Shares
shall be made at the offices of Oppenheimer & Co. Inc., 85
Broad Street, New York, New York 10004, at 10:00 a.m., New York
City time, on the second (or if the Firm Shares are priced, as
contemplated by Rule 15c6-1(c) under the Exchange Act (as defined
below), after 4:30 p.m. Eastern time, the third) business day
following the date of this Agreement or at such time on such other
date, not later than ten (10) business days after the date of this
Agreement, as shall be agreed upon by the Company and the
Representative (such time and date of delivery and payment are
called the “
Firm
Shares Closing Date
”).
(c
)
Payment shall be made to the Company by wire transfer of
immediately available funds or by certified or official bank check
or checks payable in New York Clearing House (same day) funds drawn
to the order of the Company, against delivery of the Firm Shares to
the account of the Representative for the respective accounts of
the Underwriters for the Firm Shares to be purchased by
them.
(d
)
The Firm Shares shall be registered in such names and shall be in
such denominations as the Representative shall request at least two
full business days before the Firm Shares Closing Date and shall be
delivered by or on behalf of the Company to the Representative
through the facilities of the Depository Trust Company
("
DTC
") for the
account of such Underwriter.
(e
)
On the Firm Shares Closing Date, the Company agrees to issue to
Oppenheimer & Co. Inc. for their own account and not as the
Representative of the several Underwriters), warrants (the
"
Warrants
") to
purchase an aggregate of 208,000 shares of Common Stock (the
"
Warrant Shares
")
with an exercise price per Warrant Share equal to the greater of
(i) $2.50 and (ii) the closing bid price of the Common Stock on the
Nasdaq Capital Market, as reported by as reported by Bloomberg
L.P., on the Firm Shares Closing Date. The Warrants will be
exercisable at any time and from time to time on or after the six
month anniversary of the date of this Agreement up to the fifth
anniversary of the date hereof.
2.
Representations and Warranties of the
Company
. The Company represents and warrants to each
Underwriter as of the date hereof and as of the Firm Shares Closing
Date, as follows:
(a
)
The Company meets the requirements for use of Form S-3 under the
Securities Act, including the transaction requirements set forth in
General Instruction 1.B.6 of such form. The aggregate market value
of all securities sold by or on behalf of the Company pursuant to
Form S-3 during the period of 12 calendar months immediately prior
to, and including, the offering contemplated hereby is no more than
the aggregate market value of the voting and non-voting common
equity held by non-affiliates of the Company. The Company is not,
and has not been for at least 12 calendar months prior to the
filing of the Registration Statement, a shell company. The Company
filed with the Commission the Registration Statement on such Form,
including a Base Prospectus, for registration under the Securities
Act of the offering and sale of the Firm Shares, and the Company
has prepared and used a Preliminary Prospectus in connection with
the offer and sale of the Firm Shares. When the Registration
Statement or any amendment thereof or supplement thereto was or is
declared effective, it (i) complied or will comply, in all material
respects, with the requirements of the Securities Act and the Rules
and the Exchange Act and the rules and regulations of the
Commission thereunder and (ii) did not or will not, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order
to make the statements therein not misleading. When any Preliminary
Prospectus
or
Prospectus was first filed with the Commission (whether filed as
part of the Registration Statement or any amendment thereto or
pursuant to Rule 424 of the Rules) and when any amendment thereof
or supplement thereto was first filed with the Commission, such
Preliminary Prospectus or Prospectus as amended or supplemented
complied in all material respects with the applicable provisions of
the Securities Act and the Rules and did not or will not, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order
to make the statements therein not misleading. If applicable, each
Preliminary Prospectus and the Prospectus delivered to the
Underwriters for use in connection with this offering was identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T. Notwithstanding the foregoing, none of the
representations and warranties in this paragraph 2(a) shall apply
to statements in, or omissions from, the Registration Statement,
any Preliminary Prospectus or the Prospectus made in reliance upon,
and in conformity with, information herein or otherwise furnished
in writing by the Representative on behalf of the several
Underwriters specifically for use in the Registration Statement,
any Preliminary Prospectus or the Prospectus. With respect to the
preceding sentence, the Company acknowledges that the only
information furnished in writing by the Representative for use in
the Registration Statement, any Preliminary Prospectus or the
Prospectus is the statements contained in the subsections titled
“Stabilizing transactions,” “Syndicate covering
transactions,” and “Penalty bids” in the section
captioned “Stabilization” under the caption
"Underwriting" in the Prospectus (collectively, the "
Underwriting
Information
").
(b
)
As of the Applicable Time (as hereinafter defined), neither (i) the
price to the public and the number of shares offered and sold, as
indicated on the cover page of the Prospectus
and the
Statutory Prospectus (as hereinafter defined), all considered
together (collectively, the “
General Disclosure
Package
”), nor (ii) any individual Issuer Free
Writing Prospectus when considered together with the General
Disclosure Package, and (iii) any individual Written Testing-the
Waters Communication (as defined herein), when considered together
with the General Disclosure Package, included, includes or will
include any untrue statement of a material fact or omitted, omits
or will omit to state any 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; provided, however, that this representation and
warranty shall not apply to statements in or omissions in the
General Disclosure Package made in reliance upon and in conformity
with the Underwriter Information.
Each
Issuer Free Writing Prospectus (as hereinafter defined), including
any electronic road show (including without limitation any
“bona fide electronic road show” as defined in Rule
433(h)(5) under the Securities Act) (each, a “
Road Show
”) (i) is
identified in
Schedule
III
hereto and (iii) complied when issued, and complies, in
all material respects with the requirements of the Securities Act
and the Rules and the Exchange Act and the rules and regulations of
the Commission thereunder.
As used
in this Section and elsewhere in this Agreement:
“
Applicable Time
” means
8:00 am (Eastern Daylight Time) on the date of this
Agreement.
“
Statutory Prospectus
” as
of any time means the Preliminary Prospectus relating to the Firm
Shares that is included in the Registration Statement immediately
prior to the Applicable Time, including any document
incorporated by reference therein and any prospectus supplement
deemed to be a part thereof.
“
Issuer Free Writing
Prospectus
” means each “free writing
prospectus” (as defined in Rule 405 of the Rules) prepared by
or on behalf of the Company or used or referred to by the Company
in connection with the offering of the Firm Shares, including,
without limitation, each Road Show.
(c
)
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 any Preliminary Prospectus, the
Prospectus or any “free writing prospectus”, as defined
in Rule 405 under the Rules, has been issued by the Commission and
no proceedings for that purpose have been instituted or are
threatened under the Securities Act. Any required filing of any
Preliminary Prospectus and/or the Prospectus and any supplement
thereto pursuant to Rule 424(b) of the Rules has been or will be
made in the manner and within the time period required by such Rule
424(b). Any material required to be filed by the Company pursuant
to Rule 433(d) or Rule 163(b)(2) of the Rules has been or will be
made in the manner and within the time period required by such
Rules.
(d
)
The documents incorporated by
reference in the Registration Statement, any Preliminary Prospectus
and the Prospectus, at the time they became effective or were filed
with the Commission, as the case may be, complied in all material
respects with the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an
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, and any further documents so
filed and incorporated by reference in the Registration Statement,
any Preliminary Prospectus and the Prospectus, when such documents
become effective or are filed with the Commission, as the case may
be, will conform in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they are made, not misleading.
(e)
Each Issuer Free Writing Prospectus, as of its issue date and at
all subsequent times through the completion of the public offer and
sale of the Firm Shares or until any earlier date that the Company
notified or notifies the Representative as described in the next
sentence, did not, does not and will not include any information
that conflicted, conflicts or will conflict with the information
contained in the Registration Statement, including any
document incorporated by reference therein and any prospectus
supplement deemed to be a part thereof that has not been superseded
or modified, the Statutory Prospectus or the
Prospectus.
If at
any time following issuance of an Issuer Free Writing Prospectus
there occurred or occurs an event or development as a result of
which such Issuer Free Writing Prospectus conflicted or would
conflict with the information contained in the Registration
Statement, the Statutory Prospectus or the Prospectus or included
or would include an untrue statement of a material fact or omitted
or would omit 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 prevailing at the subsequent time,
not misleading, the Company has promptly notified or will promptly
notify the Representative and has promptly amended or will promptly
amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement
or omission.
(f
)
The financial statements of the Company (including all notes and
schedules thereto) included in the Registration Statement, the
Statutory Prospectus and Prospectus present fairly the financial
position of the Company and its consolidated subsidiaries at the
dates indicated and the statement of operations, stockholders'
equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; and such financial
statements and related schedules and notes thereto, and the
unaudited financial information filed with the Commission as part
of the Registration Statement, have been prepared in conformity
with generally accepted accounting principles, consistently applied
throughout the periods involved. The summary and selected financial
data included in the Statutory Prospectus and Prospectus present
fairly the information shown therein as at the respective dates and
for the respective periods specified and have been presented on a
basis consistent with the consolidated financial statements set
forth in the Prospectus and other financial
information.
(g
)
Mazars USA LLP (the “
Auditor
”)
whose reports are filed with the Commission as a part of the
Registration Statement, are and, during the periods covered by
their reports, were independent public accountants as required by
the Securities Act and the Rules.
(h
)
The Company and each of its subsidiaries, including each entity
(corporation, partnership, joint venture, association or other
business organization) controlled directly or indirectly by the
Company (each, a “
Subsidiary
”), is duly
organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation or organization and
each such entity has all requisite power and authority to carry on
its business as is currently being conducted as described in the
Statutory Prospectus and the Prospectus, and to own, lease and
operate its properties. All of the issued shares of capital stock
of, or other ownership interests in, each Subsidiary have been duly
and validly authorized and issued and are fully paid and
non-assessable and are owned, directly or indirectly, by the
Company, free and clear of any lien, charge, mortgage, pledge,
security interest, claim, limitation on voting rights, equity,
trust or other encumbrance, preferential arrangement, defect or
restriction of any kind whatsoever. The Company and each of its
Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted by it or location of the assets or
properties owned, leased or licensed by it requires such
qualification, except for such jurisdictions where the failure to
so qualify individually or in the aggregate would not have a
material adverse effect on the assets, properties, condition,
financial or otherwise, or in the results of operations, business
affairs or business prospects of the Company and its Subsidiaries
considered as a whole (a "
Material Adverse Effect
"); and
to the Company's knowledge, 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.
(i
)
The Registration Statement initially became effective within three
years of the date hereof. If, immediately prior to the third
anniversary of the initial effective date of the Registration
Statement, any of the Firm Shares remain unsold by the
Underwriters, the Company will, prior to that third anniversary
file, if it has not already done so, a new shelf registration
statement relating to the Firm Shares, in a form satisfactory to
the Representative, will use its best efforts to cause such
registration statement to be declared effective within
180 days after that third anniversary, and will take all other
action necessary or appropriate to permit the public offering and
sale of the Firm Shares to continue as contemplated in the expired
Registration Statement. References herein to the registration
statement relating to the Firm Shares shall include such new shelf
registration statement.
(j
)
At the earliest time after the filing
of the Registration Statement that the Company or another offering
participant made a
bona fide
offer (within the meaning of Rule 164(h)(2)
of the Rules) of the Firm Shares and (ii) at the date
hereof
,
the Company was not and is not an
“ineligible issuer,” as defined in Rule 405 of the
Rules, including (but not limited to) the Company or any other
Subsidiary in the preceding three years not having been convicted
of a felony or misdemeanor or having been made the subject of a
judicial or administrative decree or order as described in
Rule 405 of the Rules.
(k
)
The Company and each of its
Subsidiaries has all requisite corporate power and authority, and
all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental or
regulatory bodies or any other person or entity (collectively, the
"
Permits
"),
to own, lease and license its assets and properties and conduct its
business, all of which are valid and in full force and effect,
except where the lack of such Permits, individually or in the
aggregate, would not have a Material Adverse Effect. The Company
and each of its Subsidiaries has fulfilled and performed in all
material respects all of its obligations with respect to such
Permits and no event has occurred that allows, or after notice or
lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the
Company thereunder. Except as may be required under the Securities
Act and state and foreign Blue Sky laws, no other Permits are
required to enter into, deliver and perform this Agreement and to
issue and sell the Firm Shares.
(l
)
The Company and each of its
Subsidiaries owns or possesses legally enforceable rights to use
all patents, patent rights, inventions, trademarks, trademark
applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how and other similar rights and
proprietary knowledge (collectively, "
Intangibles
")
necessary for the conduct of its business. Neither the Company nor
any of its Subsidiaries has received any notice of, or is not aware
of, any infringement of or conflict with asserted rights of others
with respect to any Intangibles.
(m
)
The Company and each of its Subsidiaries has good and marketable
title in fee simple to all real property, and good and marketable
title to all other property owned by it, in each case free and
clear of all liens, encumbrances, claims, security interests and
defects, except such as do not materially affect the value of such
property and do not materially interfere with the use made or
proposed to be made of such property by the Company and its
Subsidiaries. All property held under lease by the Company and its
Subsidiaries is held by them under valid, existing and enforceable
leases, free and clear of all liens, encumbrances, claims, security
interests and defects, except such as are not material and do not
materially interfere with the use made or proposed to be made of
such property by the Company and its Subsidiaries.
(n
)
Subsequent to the respective dates as
of which information is given in the Registration Statement, the
Statutory Prospectus and the Prospectus, (i) there has not been any
event which could have a Material Adverse Effect; (ii) neither the
Company nor any of its Subsidiaries has sustained any loss or
interference with its assets, businesses or properties (whether
owned or leased) from fire, explosion, earthquake, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action,
order or decree which would have a Material Adverse Effect; and
(iii) since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, neither the Company nor
its Subsidiaries has (A) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money,
except such liabilities or obligations incurred in the ordinary
course of business, (B) entered into any transaction not in the
ordinary course of business or (C) declared or paid any dividend or
made any distribution on any shares of its stock or redeemed,
purchased or otherwise acquired or agreed to redeem, purchase or
otherwise acquire any shares of its capital
stock.
(n)
There
is no document, contract or other agreement required to be
described in the Registration Statement, the Statutory Prospectus
or the Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or filed as required by the
Securities Act or Rules. Each description of a contract, document
or other agreement in the Registration Statement, the Statutory
Prospectus or the Prospectus accurately reflects in all respects
the terms of the underlying contract, document or other agreement.
Each contract, document or other agreement described in the
Registration Statement, the Statutory Prospectus or the Prospectus
or listed in the Exhibits to the Registration Statement or
incorporated by reference is in full force and effect and is valid
and enforceable by and against the Company or its Subsidiary, as
the case may be, in accordance with its terms. Neither the Company
nor any of its Subsidiaries, if a Subsidiary is a party, nor to the
Company's knowledge, any other party is in default in the
observance or performance of any term or obligation to be performed
by it under any such agreement, and no event has occurred which
with notice or lapse of time or both would constitute such a
default, in any such case which default or event, individually or
in the aggregate, would have a Material Adverse Effect. No default
exists, and no event has occurred which with notice or lapse of
time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company or
its Subsidiary, if a Subsidiary is a party thereto, of any other
agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which Company or its properties or
business or a Subsidiary or its properties or business may be bound
or affected which default or event, individually or in the
aggregate, would have a Material Adverse Effect.
(o
)
The statistical and market related
data included in the Registration Statement, the Statutory
Prospectus or the Prospectus are based on or derived from sources
that the Company believes to be reliable and
accurate.
(p
)
Neither the Company nor any Subsidiary (i) is in violation of its
certificate or articles of incorporation, by-laws, certificate of
formation, limited liability company agreement, partnership
agreement or other organizational documents, (ii) is in default
under, and no event has occurred which with notice, or lapse of
time, or both, would constitute a default under, or result in the
creation or imposition of any lien, charge, mortgage, pledge,
security interest, claim, limitation on voting rights, equity,
trust or other encumbrance, preferential arrangement, defect or
restriction of any kind whatsoever, upon, any property or assets of
the Company or any Subsidiary pursuant to, any bond, debenture,
note, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets is subject or
(iii) is in violation of any statute, law, rule, regulation,
ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, foreign
or domestic, except (in the case of clauses (ii) and (iii) above)
for violations or defaults that could not (individually or in the
aggregate) reasonably be expected to have a Material Adverse
Effect.
(q
)
This Agreement has been duly authorized, executed and delivered by
the Company;
(r)
Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance
and sale by the Company of the Firm Shares) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under,
or require any consent or waiver under, or result in the execution
or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or its Subsidiaries pursuant to
the terms of, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which either the Company or its
subsidiaries or any of their properties or businesses is bound, or
any franchise, license, permit, judgment, decree, order, statute,
rule or regulation applicable to the Company or any of its
Subsidiaries or violate any provision of the charter or by-laws of
the Company or any of its Subsidiaries, except for such consents or
waivers which have already been obtained and are in full force and
effect.
(s
)
The Company has authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Statutory
Prospectus and the Prospectus. The Firm Shares have been duly
authorized for issuance by the Company. All of the issued and
outstanding shares of Common Stock have been duly and validly
issued and are fully paid and nonassessable. There are no statutory
preemptive or other similar rights to subscribe for or to purchase
or acquire any shares of Common Stock of the Company or any of its
Subsidiaries or any such rights pursuant to its Certificate of
Incorporation or by-laws or any agreement or instrument to or by
which the Company or any of its Subsidiaries is a party or bound.
The Firm Shares, when issued and sold pursuant to this Agreement,
will be duly and validly issued, fully paid and nonassessable and
none of them will be issued in violation of any preemptive or other
similar right. Except as disclosed in the Registration Statement,
the Statutory Prospectus and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance
of, and there is no commitment, plan or arrangement to issue, any
share of stock of the Company or any of its Subsidiaries or any
security convertible into, or exercisable or exchangeable for, such
stock. The exercise price of each option to acquire Common Stock
(each, a “
Company
Stock Option
”) is no less than the fair market value
of a share of Common Stock as determined on the date of grant of
such Company Stock Option. All grants of Company Stock Options were
validly issued and properly approved by the Board of Directors of
the Company in material compliance with all applicable laws and the
terms of the plans under which such Company Stock Options were
issued and were recorded on the Company Financial Statements, in
accordance with GAAP, and no such grants involved any “back
dating”, “forward dating,” “spring
loading” or similar practices with respect to the effective
date of grant.
The Common
Stock and the Firm Shares conform in all material respects to all
statements in relation thereto contained in the Registration
Statement and the Statutory Prospectus and the Prospectus. All
outstanding shares of capital stock of each of the Company's
Subsidiaries have been duly authorized and validly issued, and are
fully paid and nonassessable and are owned directly by the Company
or by another wholly-owned Subsidiary of the Company free and clear
of any security interests, liens, encumbrances, equities or claims,
other than those described in the Statutory Prospectus and the
Prospectus.
(t
)
No holder of any security of the
Company has any right, which has not been waived, to have any
security owned by such holder included in the Registration
Statement or to demand registration of any security owned by such
holder for a period of 180 days after the date of this Agreement.
Each director and executive officer of the Company and each
stockholder of the Company listed on
Schedule II
hereto has delivered to the
Representative its enforceable written lock-up agreement in the
form attached to this Agreement as
Exhibit A
hereto (each, a "
Lock-Up
Agreement
").
(u
)
There are no legal or governmental
proceedings pending to which the Company or any of its Subsidiaries
is a party or of which any property of the Company or any of its
Subsidiaries is the subject which, if determined adversely to the
Company or any of its Subsidiaries could individually or in the
aggregate have a Material Adverse Effect; and, to the knowledge of
the Company, no such proceedings are threatened or contemplated by
governmental authorities or threatened by
others.
(v)
All
necessary corporate action has been duly and validly taken by the
Company and to authorize the execution, delivery and performance of
this Agreement and the issuance and sale of the Firm Shares by the
Company.
(w
)
Neither the Company nor any of its
Subsidiaries is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened, which
dispute would have a Material Adverse Effect. The Company is not
aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers or contractors which
would have a Material Adverse Effect. The Company is not aware of
any threatened or pending litigation between the Company or its
Subsidiaries and any of its executive officers which, if adversely
determined, could have a Material Adverse Effect and has no reason
to believe that such officers will not remain in the employment of
the Company.
(x
)
No transaction has occurred between or
among the Company and any of its officers or directors or any
affiliate or affiliates of any such officer or director that is
required to be described in and is not described in the
Registration Statement, the Statutory Prospectus and the
Prospectus.
(y
)
The Company has not taken, nor will it
take, directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has
constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the Common Stock
or any security of the Company to facilitate the sale or resale of
any of the Firm Shares.
(z
)
The Company and each of its
Subsidiaries has filed all Federal, state, local and foreign tax
returns which are required to be filed through the date hereof,
which returns are true and correct in all material respects or has
received timely extensions thereof, and has paid all taxes shown on
such returns and all assessments received by it to the extent that
the same are material and have become due. There are no tax audits
or investigations pending, which if adversely determined would have
a Material Adverse Effect; nor are there any material proposed
additional tax assessments against the Company or any of its
Subsidiaries.
(aa
)
The Firm Shares have been approved for
quotation on the NASDAQ Capital Market, subject only to official
notice of issuance.
(bb
)
The Company has taken no action
designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or the
quotation of the Common Stock on the NASDAQ Capital Market, nor has
the Company received any notification that the Commission or the
NASDAQ Capital Market is contemplating terminating such
registration or quotation.
(cc
)
The books, records and accounts of the
Company and its Subsidiaries accurately and fairly reflect, the
transactions in, and dispositions of, the assets of, and the
results of operations of, the Company and its Subsidiaries. The
Company and each of its Subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles 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.
(dd
)
The Company has established and
maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15 under the Exchange Act), which: (i) are
designed to ensure that material information relating to the
Company is made known to the Company’s principal executive
officer and its principal financial officer by others within the
Company, particularly during the periods in which the periodic
reports required under the Exchange Act are required to be
prepared; (ii) provide for the periodic evaluation of the
effectiveness of such disclosure controls and procedures at the end
of the periods in which the periodic reports are required to be
prepared; and (iii) are effective in all material respects to
perform the functions for which they were
established.
(ee
)
Based on the evaluation of its
disclosure controls and procedures, the Company is not aware of (i)
any material weakness or significant deficiency in the design or
operation of internal controls which could adversely affect the
Company’s ability to record, process, summarize and report
financial data or any material weaknesses in internal controls; or
(ii) any fraud, whether or not material, that involves management
or other employees who have a role in the Company’s internal
controls.
(ff)
Except as described in the Statutory Prospectus and the Prospectus
and as preapproved in accordance with the requirements set forth in
Section 10A of the Exchange Act, the Auditor has not been engaged
by the Company to perform any “prohibited activities”
(as defined in Section 10A of the Exchange Act).
(gg
)
Except as described in the Statutory
Prospectus and the Prospectus, there are no material off-balance
sheet arrangements (as defined in Item 303 of Regulation S-K) that
have or are reasonably likely to have a material current or future
effect on the Company’s financial condition, revenues or
expenses, changes in financial condition, results of operations,
liquidity, capital expenditures or capital
resources.
(hh
)
The Company’s Board of Directors
has validly appointed an audit committee whose composition
satisfies the requirements of Rule 5605 of the NASDAQ Stock Market
and the Board of Directors and/or the audit committee has adopted a
charter that satisfies the requirements of Rule 5605 of the NASDAQ
Stock Market. The audit committee has reviewed the adequacy of its
charter within the past twelve months.
(ii
)
There is and has been no failure on
the part of the Company or any of its directors or officers, in
their capacities as such, to comply with any provision of the
Sarbanes-Oxley Act of 2002, including, without limitation, Section
402 related to loans and Sections 302 and 906 related to
certifications.
(jj
)
The Company and its Subsidiaries are
insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are customary in the
businesses in which they are engaged or propose to engage after
giving effect to the transactions described in the Statutory
Prospectus and the Prospectus; all policies of insurance and
fidelity or surety bonds insuring the Company or any of its
Subsidiaries or the Company's or its Subsidiaries' respective
businesses, assets, employees, officers and directors are in full
force and effect; the Company and each of its Subsidiaries are in
compliance with the terms of such policies and instruments in all
material respects; and 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 at a cost that is not materially greater
than the current cost. Neither the Company nor any of its
Subsidiaries has been denied any insurance coverage which it has
sought or for which it has applied.
(kk
)
Each approval, consent, order,
authorization, designation, declaration or filing of, by or with
any regulatory, administrative or other governmental body necessary
in connection with the execution and delivery by the Company of
this Agreement and the consummation of the transactions herein
contemplated required to be obtained or performed by the Company
(except such additional steps as may be required by the Financial
Industry Regulatory Authority ("
FINRA
")
or may be necessary to qualify the Firm Shares for public offering
by the Underwriters under the state securities or Blue Sky laws)
has been obtained or made and is in full force and
effect.
(ll
)
None of the Company's officers,
directors or, to the best of the knowledge of the Company, any five
percent or greater stockholder of the Company, is associated or
affiliated with any broker-dealer that is a member of FINRA, except
as set forth in the Registration Statement or otherwise disclosed
in writing to the Representative.
(mm
)
The Company does not expect to be a Passive Foreign Investment
Company (“
PFIC
”) within the meaning
of Section 1297(a) of the United States Internal Revenue Code
of 1986, as amended, and the regulations and published
interpretations thereunder for the year ended December 31,
2017, and has no plan or intention to conduct its business in a
manner that would be reasonably expected to result in the Company
becoming a PFIC in the future under current laws and
regulations.
(nn
)
(i) Each of the Company and each of
its Subsidiaries is in compliance in all material respects with all
rules, laws and regulation relating to the use, treatment, storage
and disposal of toxic substances and protection of health or the
environment ("
Environmental
Law
") which are applicable to
its business; (ii) neither the Company nor its Subsidiaries has
received any notice from any governmental authority or third party
of an asserted claim under Environmental Laws; (iii) each of the
Company and each of its Subsidiaries has received all permits,
licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and is in compliance
with all terms and conditions of any such permit, license or
approval; (iv) to the Company's knowledge, no facts currently exist
that will require the Company or any of its Subsidiaries to make
future material capital expenditures to comply with Environmental
Laws; and (v) no property which is or has been owned, leased or
occupied by the Company or its Subsidiaries has been designated as
a Superfund site pursuant to the Comprehensive Environmental
Response, Compensation of Liability Act of 1980, as amended (42
U.S.C. Section 9601, et. seq.) or otherwise designated as a
contaminated site under applicable state or local law. Neither the
Company nor any of its Subsidiaries has been named as a
"potentially responsible party" under the CERCLA
1980.
(oo
)
In the ordinary course of its
business, the Company periodically reviews the effect of
Environmental Laws on the business, operations and properties of
the Company and its Subsidiaries, in the course of which the
Company identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or
compliance with Environmental Laws, or any permit, license or
approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such
review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a
Material Adverse Effect.
(pp
)
The Company is not and, after giving
effect to the offering and sale of the Firm Shares and the
application of proceeds thereof as described in the Statutory
Prospectus and the Prospectus, will not be an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended (the "
Investment Company
Act
").
(qq
)
The Company or any other person
associated with or acting on behalf of the Company including,
without limitation, any director, officer, agent or employee of the
Company or its Subsidiaries, has not, directly or indirectly, while
acting on behalf of the Company or its Subsidiaries (i) used any
corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity;
(ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; (iii) violated
any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any other unlawful
payment.
(rr
)
The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “
Money Laundering
Laws
”) and no action,
suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of
it Subsidiaries with respect to the Money Laundering Laws is
pending, or to the best knowledge of the Company,
threatened.
(ss
)
Neither the Company nor any of its Subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its Subsidiaries is currently
subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“
OFAC
”); and the Company
will not directly or indirectly use the proceeds of the offering,
or lend, contribute or otherwise make available such proceeds to
any Subsidiary, joint venture partner or other person or entity,
for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
(tt
)
Except as described in the Statutory Prospectus and the Prospectus,
the Company has not sold or issued any shares of Common Stock
during the six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or Regulations D
or S of, the Securities Act, other than shares issued pursuant to
employee benefit plans, qualified stock options plans or other
employee compensation plans or pursuant to outstanding options,
rights or warrants.
(uu
)
The Company has fulfilled its obligations, if any, under the
minimum funding standards of Section 302 of the U.S. Employee
Retirement Income Security Act of 1974 ("
ERISA
") and the regulations and
published interpretations thereunder with respect to each "plan" as
defined in Section 3(3) of ERISA and such regulations and published
interpretations in which its employees are eligible to participate
and each such plan is in compliance in all material respects with
the presently applicable provisions of ERISA and such regulations
and published interpretations. No "Reportable Event" (as defined in
12 ERISA) has occurred with respect to any "Pension Plan" (as
defined in ERISA) for which the Company could have any
liability.
(vv
)
None of the Company, its directors or its officers has distributed
nor will distribute prior to the later of (i) the Firm Shares
Closing Date, and (ii) completion of the distribution of the Firm
Shares, any offering material in connection with the offering and
sale of the Firm Shares other than any Preliminary Prospectus, the
Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act and consistent with the terms of
this Agreement.
(ww
)
Since that date of the Preliminary Prospectus included in the
Registration Statement filed with the Commission on April 30, 2018
(or, if earlier, the first date on which the Company engaged
directly or through any Person authorized to act on its behalf in
any Testing-the-Waters Communication (as defined herein)) through
the date hereof, the Company has been and is an “emerging
growth company,” as defined in Section 2(a) of the Securities
Act (an “
Emerging
Growth Company
”). “Testing-the-Waters
Communication” means any oral or written communication with
potential investors undertaken in reliance on Section 5(d) of the
Securities Act.
(xx
)
The Company (a) has not alone engaged in any Testing-the-Waters
Communication other than Testing-the-Waters Communications with the
consent of the Representative with entities that are qualified
institutional buyers within the meaning of Rule 144A under the
Securities Act or institutions that are accredited investors within
the meaning of Rule 501 under the Securities Act and (b) has not
authorized anyone other than the Representative to engage in
Testing-the-Waters Communications. The Company reconfirms that the
Representative has been authorized to act on its behalf in
undertaking Testing-the-Waters Communications. The Company has not
distributed any Written Testing-the-Waters Communications (as
defined herein) other than those listed on
Schedule III
hereto. "Written
Testing-the-Waters Communication" means any Testing-the-Waters
Communication that is a written communication within the meaning of
Rule 405 under the Securities Act.
(yy
)
There is no legal or governmental proceeding to which the Company
or any subsidiary is a party or of which any property or assets of
the Company or any subsidiary is the subject, including any
proceeding before the United States Food and Drug Administration of
the U.S. Department of Health and Human Services ("
FDA
") or comparable federal,
state, local or non-U.S. governmental bodies (it being understood
that the interaction between the Company and the FDA and such
comparable governmental bodies relating to the clinical development
and product approval process shall not be deemed proceedings for
purposes of this representation), which is required to be described
in the Registration Statement, the General Disclosure Package or
the Prospectus or a document incorporated by reference therein and
is not described therein, or which, singularly or in the aggregate,
if determined adversely to the Company or any subsidiary, would
reasonably be expected to have a Material Adverse Effect; and to
the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others. The Company and each subsidiary is in
compliance with all applicable federal, state, local and, to the
Company’s knowledge, non-U.S. laws, regulations, orders and
decrees governing its business as prescribed by the FDA, or any
other federal, state or, to the Company’s knowledge, non-U.S.
agencies or bodies engaged in the regulation of pharmaceuticals,
except where noncompliance would not, singularly or in the
aggregate, have a Material Adverse Effect. All preclinical studies
and clinical trials conducted by or on behalf of the Company and
any subsidiary to support approval for commercialization of the
Company's or any subsidiary's products have been conducted by the
Company or any subsidiary, as applicable, or to the Company's
knowledge by third parties, in compliance with all applicable
federal, state or, to the Company’s knowledge, non-U.S. laws,
rules, orders and regulations, except for such failure or failures
to be in compliance as would not reasonably be expected to have,
singularly or in the aggregate, a Material Adverse
Effect.
(zz
)
The Company and its subsidiaries own, or have obtained licenses
for, or other rights to use, the inventions, patent applications,
patents, trademarks (both registered and unregistered), trade
names, service names, copyrights, trade secrets and other
proprietary information described in the Registration Statement,
the General Disclosure Package and the Prospectus, necessary for
the conduct of their respective businesses as currently conducted
(including the commercialization of products or services described
in the Registration Statement, the General Disclosure Package and
the Prospectus, as currently under development) (collectively,
"
Intellectual
Property
"), except where the failure to own, license or have
such rights would not, individually or in the aggregate, have a
Material Adverse Effect. Except as otherwise disclosed in the
Registration Statement, the General Disclosure Package and the
Prospectus and except as would not, individually or in the
aggregate, have a Material Adverse Effect, (i) there are no third
parties who have or, to the Company's knowledge, will be able to
establish rights to any Intellectual Property owned by the Company
or any of its subsidiaries ("
Company Intellectual
Property
"), except for any third parties to whom the Company
or any of its subsidiaries has granted licenses to the Company
Intellectual Property pursuant to written license agreements in the
ordinary course of business; (ii) to the Company's knowledge, there
is no infringement by third parties of any Company Intellectual
Property; (iii) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging
the Company's rights in or to any Intellectual Property of the
Company or its subsidiaries, and the Company is unaware of any
facts which could form a reasonable basis for any such action,
suit, proceeding or claim; (iv) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim
by others challenging the validity, enforceability or scope of any
Company Intellectual Property, and the Company is unaware of any
facts which could form a reasonable basis for any such action,
suit, proceeding or claim; (v) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim
by others that the Company or any subsidiary infringes or otherwise
violates, or would, upon the commercialization of any product or
service described in the Registration Statement, the General
Disclosure Package and the Prospectus, as under development,
infringe or violate, any patent, trademark, trade name, service
name, copyright, trade secret or other proprietary rights of
others, and the Company is unaware of any facts which could form a
reasonable basis for any such action, suit, proceeding or claim;
(vi) the Company and its subsidiaries have complied with the terms
of each agreement pursuant to which Intellectual Property has been
licensed to the Company or any subsidiary, except where the failure
to comply would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect, and all such
agreements are in full force and effect; (vii) to the Company's
knowledge, there is no patent or patent application, that contains
claims that interfere with the issued or pending claims of any
patent or patent application included in the Company Intellectual
Property or that challenges the validity, enforceability or scope
of any patent included in the Company Intellectual Property; and
(viii) the Company has disclosed to the United States Patent and
Trademark Office all prior art within the possession of the Company
that may render any patent application within the Company
Intellectual Property unpatentable or the failure to disclose of
which may render any patent issued thereon
unenforceable.
3.
Reserved
.
4.
Conditions of the
Underwriters' Obligations
. The obligations of the
Underwriters under this Agreement are several and not joint. The
respective obligations of the Underwriters to purchase the Firm
Shares are subject to each of the following terms and
conditions:
(a
)
Notification that the Registration
Statement has become effective shall have been received by the
Representative and the Prospectus shall have been timely filed with
the Commission in accordance with Section 5(a) of this Agreement
and any material required to be filed by the Company pursuant to
Rule 433(d) of the Rules shall have been timely filed with the
Commission in accordance with such rule
(b
)
No order preventing or suspending the
use of any Preliminary Prospectus, the Prospectus or any
“free writing prospectus” (as defined in Rule 405 of
the Rules), shall have been or shall be in effect and no order
suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending
before or threatened by the Commission, and any requests for
additional information on the part of the Commission (to be
included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Commission and the Representative. If the Company has elected to
rely upon Rule 430A, Rule 430A information previously omitted from
the effective Registration Statement pursuant to Rule 430A shall
have been transmitted to the Commission for filing pursuant to Rule
424(b) within the prescribed time period and the Company shall have
provided evidence satisfactory to the Underwriters of such timely
filing, or a post-effective amendment providing such information
shall have been promptly filed and declared effective in accordance
with the requirements of Rule 430A.
(c
)
The representations and warranties of the Company contained in this
Agreement and in the certificates delivered pursuant to Section
4(d) shall be true and correct when made and on and as of the Firm
Shares Closing Date as if made on such date. The Company shall have
performed all covenants and agreements and satisfied all the
conditions contained in this Agreement required to be performed or
satisfied by them at or before the Firm Shares Closing
Date.
(d
)
The Representative shall have received
on the Firm Shares Closing Date a certificate, addressed to the
Representative and dated such Firm Shares Closing Date, of the
chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect
that: (i) the representations, warranties and agreements of the
Company in this Agreement were true and correct when made and are
true and correct as of the Firm Shares Closing Date; (ii) the
Company has performed all covenants and agreements and satisfied
all conditions contained herein; (iii) they have carefully examined
the Registration Statement, the Prospectus, the General Disclosure
Package, and any individual Issuer Free Writing Prospectus and, in
their opinion (A) as of the Effective Date the Registration
Statement and Prospectus did not include, and as of the Applicable
Time, neither (i) the General Disclosure Package, nor
(ii) any individual Issuer Free Writing Prospectus, when
considered together with the General Disclosure Package, included,
any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading, and (B) since the Effective Date no
event has occurred which should have been set forth in a supplement
or otherwise required an amendment to the Registration Statement,
the Statutory Prospectus or the Prospectus; (iv) no stop order
suspending the effectiveness of the Registration Statement has been
issued and, to their knowledge, no proceedings for that purpose
have been instituted or are pending under the Securities Act and
(v) there has not occurred any material adverse change in the
assets, properties, condition, financial or otherwise, or in the
results of operations, business affairs or business prospects of
the Company and its Subsidiaries considered as a
whole.
(e
)
The Representative shall have
received: (i) simultaneously with the execution of this Agreement a
signed letter from the Auditor addressed to the Representative and
dated the date of this Agreement, in form and substance reasonably
satisfactory to the Representative, containing statements and
information of the type ordinarily included in accountants’
“comfort letters” to underwriters with respect to the
financial statements and certain financial information contained in
the Registration Statement and the General Disclosure Package, and
(ii) on the Firm Shares Closing Date, a signed letter from the
Auditor addressed to the Representative and dated the date of such
Firm Shares Closing Date, in form and substance reasonably
satisfactory to the Representative containing statements and
information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the
Registration Statement and the Prospectus.
(f
)
The Representative shall have received
on the Firm Shares Closing Date from Disclosure Law Group, a
Professional Corporation, counsel for the Company, an opinion and
negative assurance statement, addressed to the Representative and
dated the Firm Shares Closing Date, in form and substance
reasonably satisfactory to the Representative.
(g
)
The Representative shall have received
on the Firm Shares Closing Date from Loeb & Loeb LLP,
intellectual property counsel for the Company, an opinion,
addressed to the Representative, in form and substance reasonably
satisfactory to the Representative.
(h
)
The Representative shall have received
on the Firm Shares Closing Date from Ellenoff Grossman & Schole
LLP, counsel for the Representative, an opinion and negative
assurance statement, addressed to the Representative and dated such
Firm Shares Closing Date, in form and substance reasonably
satisfactory to the Representative.
(i
)
All proceedings taken in connection
with the sale of the Firm Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the
Representative, and its counsel.
(j
)
The Representative shall have received copies of the Lock-up
Agreements executed by each entity or person listed on
Schedule II
hereto.
(k
)
The Firm Shares shall have been
approved for quotation on the NASDAQ Capital Market, subject only
to official notice of issuance
.
(l
)
The Representative shall be reasonably
satisfied that since the respective dates as of which information
is given in the Registration Statement, the Statutory Prospectus,
the General Disclosure Package and the Prospectus, (i) there shall
not have been any material change in the capital stock of the
Company or any material change in the indebtedness (other than in
the ordinary course of business) of the Company, (ii) except as set
forth or contemplated by the Registration Statement, the Statutory
Prospectus, the General Disclosure Package or the Prospectus, no
material oral or written agreement or other transaction shall have
been entered into by the Company that is not in the ordinary course
of business or that could reasonably be expected to result in a
material reduction in the future earnings of the Company, (iii) no
loss or damage (whether or not insured) to the property of the
Company shall have been sustained that had or could reasonably be
expected to have a Material Adverse Effect, (iv) no legal or
governmental action, suit or proceeding affecting the Company or
any of its properties that is material to the Company or that
affects or could reasonably be expected to affect the transactions
contemplated by this Agreement shall have been instituted or
threatened and (v) there shall not have been any material change in
the assets, properties, condition (financial or otherwise), or in
the results of operations, business affairs or business prospects
of the Company or its Subsidiaries considered as a whole that makes
it impractical or inadvisable in the Representative’s
judgment to proceed with the purchase or offering of the Firm
Shares as contemplated hereby.
(m
)
On the Firm Shares Closing Date, FINRA
shall have confirmed that it has not raised any objection with
respect to the fairness and reasonableness of the underwriting
terms and agreements in connection with the offering of the Firm
Shares.
(n
)
The Company shall have furnished or
caused to be furnished to the Representative such further
certificates or documents as the Representative shall have
reasonably requested.
5.
Covenants and
other Agreements of the Company and the
Underwriters
.
(a
)
The Company covenants and agrees as follows:
(i
)
The
Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto, to become effective as
promptly as possible. The Company shall prepare the Prospectus in a
form approved by the Representative and file such Prospectus
pursuant to Rule 424(b) under the Securities Act not later than the
Commission's close of business on the second business day following
the execution and delivery of this Agreement, or, if applicable,
such earlier time as may be required by the Rules. The Company will
file with the Commission all Issuer Free Writing Prospectuses in
the time and manner required under Rules 433(d) or 163(b)(2), as
the case may be.
(ii
)
The
Company shall promptly advise the Representative in writing (A)
when any post-effective amendment to the Registration Statement
shall have become effective or any supplement to the Prospectus
shall have been filed, (B) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus or for
any additional information, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus or any “free writing
prospectus”, as defined in Rule 405 of the Rules, or the
institution or threatening of any proceeding for that purpose and
(D) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Firm Shares for sale
in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the
Prospectus or any document incorporated by reference in the
Registration Statement or any Issuer Free Writing Prospectus unless
the Company has furnished the Representative a copy for its review
prior to filing and shall not file any such proposed amendment or
supplement to which the Representative reasonably objects. The
Company shall use its best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(iii
)
If,
at any time when a prospectus relating to the Firm Shares (or, in
lieu thereof, the notice referred to in Rule 173(a) of the Rules)
is required to be delivered under the Securities Act and the, any
event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein in the light of the circumstances under which they were
made not misleading, or if it shall be necessary to amend or
supplement the Prospectus to comply with the Securities Act or the
Rules, the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (ii) of
this Section 5(a), an amendment or supplement which shall correct
such statement or omission or an amendment which shall effect such
compliance.
(iv
)
If
at any time following issuance of an Issuer Free Writing Prospectus
there occurs an event or development as a result of which such
Issuer Free Writing Prospectus would conflict with the information
contained in the Registration Statement or would include an untrue
statement of a material fact or would omit 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 prevailing at
the subsequent time, not misleading, the Company will promptly
notify the Representative and will promptly amend or supplement, at
its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict, untrue statement or
omission.
(v
)
The
Company shall make generally available to its security holders and
to the Representative as soon as practicable, but not later than 45
days after the end of the 12-month period beginning at the end of
the fiscal quarter of the Company during which the Effective Date
occurs (or 90 days if such 12-month period coincides with the
Company's fiscal year), an earning statement (which need not be
audited) of the Company, covering such 12-month period, which shall
satisfy the provisions of Section 11(a) of the Securities Act or
Rule 158 of the Rules.
(vi
)
The
Company shall furnish to the Representative and counsel for the
Underwriters, without charge, signed copies of the Registration
Statement (including all exhibits thereto and amendments thereof)
and to each other Underwriter a copy of the Registration Statement
(without exhibits thereto) and all amendments thereof and, so long
as delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Rules, as many copies of any
Preliminary Prospectus, any Issuer Free Writing Prospectus and the
Prospectus and any amendments thereof and supplements thereto as
the Representative may reasonably request. If applicable, the
copies of the Registration Statement, Preliminary Prospectus, any
Issuer Free Writing Prospectus and Prospectus and each amendment
and supplement thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(vii
)
The
Company shall cooperate with the Representative and their counsel
in endeavoring to qualify the Firm Shares for offer and sale in
connection with the offering under the laws of such jurisdictions
as the Representative may designate and shall maintain such
qualifications in effect so long as required for the distribution
of the Firm Shares; provided, however, that the Company shall not
be required in connection therewith, as a condition thereof, to
qualify as a foreign corporation or to execute a general consent to
service of process in any jurisdiction or subject itself to
taxation as doing business in any jurisdiction.
(viii
)
The
Company, during the period when the Prospectus (or in lieu thereof,
the notice referred to in Rule 173(a) of the Rules) is required to
be delivered under the Securities Act and the Rules or the Exchange
Act, will file all reports and other documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act
and the regulations promulgated thereunder.
(ix
)
Without the prior written consent of Oppenheimer
& Co. Inc., for a period of 90 days after the date of this
Agreement, the Company and each of its individual directors and
executive officers shall not issue, sell or register with the
Commission (other than on Form S-8 or on any successor form), or
otherwise dispose of, directly or indirectly, any equity securities
of the Company (or any securities convertible into, exercisable for
or exchangeable for equity securities of the Company), except for
the issuance of the Firm Shares pursuant to the Registration
Statement and the issuance of shares pursuant to the Company's
existing stock option plan or bonus plan as described in the
Registration Statement and the Prospectus. In the event that during
this period, (A) any shares are issued pursuant to the Company's
existing stock option plan or bonus plan that are exercisable
during such 90 day period or (B) any registration is effected on
Form S-8 or on any successor form relating to shares that are
exercisable during such 90 period, the Company shall obtain the
written agreement of such grantee or purchaser or holder of such
registered securities that, for a period of 90 days after the date
of this Agreement, such person will not, without the prior written
consent of Oppenheimer & Co. Inc., offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose
of, directly or indirectly, or exercise any registration rights
with respect to, any shares of Common Stock (or any securities
convertible into, exercisable for, or exchangeable for any shares
of Common Stock) owned by such person. Notwithstanding the
foregoing, (i) the Company represents and warrants that each such
grantee or purchaser or holder of such registered securities shall
be subject to similar lockup restrictions as set forth on
Exhibit
A
attached hereto and the
Company shall enforce such rights and impose stop-transfer
restrictions on any such sale or other transfer or disposition of
such shares until the end of the applicable period and (ii) if (x)
during the last 17 days of the 90 day period described in this
Section 5(a)(viii) the Company issues an earnings release or
material news or a material event relating to the Company occurs;
or (y) prior to the expiration of such 90 day period, the Company
announces that it will release earnings results during the 16 day
period beginning on the last day of the 90 day period; the
restrictions imposed during this Section 5(a)(viii) shall continue
to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material
news or material event; provided, however, that this sentence shall
not apply if the research published or distributed on the Company
is compliant under Rule 139 of the Securities Act and the
Company’s securities are actively traded as defined in Rule
101(c)(1) of Regulation M of the Exchange Act.
(x
)
On
or before completion of this offering, the Company shall make all
filings required under applicable securities laws and by NASDAQ
(including any required registration under the Exchange
Act).
(xi
)
Prior
to the Firm Shares Closing Date, the Company will issue no press
release or other communications directly or indirectly and hold no
press conference with respect to the Company, the condition,
financial or otherwise, or the earnings, business affairs or
business prospects of any of them, or the offering of the Firm
Shares without the prior written consent of the Representative
unless in the judgment of the Company and its counsel, and after
notification to the Representative, such press release or
communication is required by law.
(xii
)
The
Company will apply the net proceeds from the offering of the Firm
Shares in the manner set forth under "Use of Proceeds" in the
Prospectus.
(xiii
)
The
Company will promptly notify the Representative if the Company
ceases to be an Emerging Growth Company at any time prior to the
later of (a) completion of the distribution of the Firm Shares
within the meaning of the Securities Act and (b) completion of
the 90-day restricted period referred to in Section 5(a)(ix)
hereof.
(xiv
)
If
at any time following the distribution of any Written
Testing-the-Waters Communication there occurred or occurs an event
or development as a result of which such Written Testing-the-Waters
Communication included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances existing at that subsequent time, not misleading,
the Company will promptly notify the Representative and will
promptly amend or supplement, at its own expense, such Written
Testing-the-Waters Communication to eliminate or correct such
untrue statement or omission.
(b
)
The Company agrees to pay, or reimburse if paid by
the Representative, whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated, all costs
and expenses incident to the public offering of the Firm Shares and
the performance of the obligations of the Company under this
Agreement including those relating to: (i) the preparation,
printing, reproduction filing and distribution of the Registration
Statement including all exhibits thereto, each Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus, all
amendments and supplements thereto and any document incorporated by
reference therein, and the printing, filing and distribution of
this Agreement; (ii) the preparation and delivery of the Firm
Shares to the Underwriters; (iii) the registration or qualification
of the Firm Shares for offer and sale under the securities or Blue
Sky laws of the various jurisdictions referred to in Section
5(a)(vi), including the reasonable fees and disbursements of
counsel for the Underwriters in connection with such registration
and qualification and the preparation, printing, distribution and
shipment of preliminary and supplementary Blue Sky memoranda; (iv)
the furnishing (including costs of shipping and mailing) to the
Representative and to the Underwriters of copies of each
Preliminary Prospectus, the Prospectus and all amendments or
supplements to the Prospectus, any Issuer Free Writing Prospectus,
and of the several documents required by this Section to be so
furnished, as may be reasonably requested for use in connection
with the offering and sale of the Firm Shares by the Underwriters
or by dealers to whom Firm Shares may be sold; (v) the filing fees
of FINRA in connection with its review of the terms of the public
offering and reasonable fees and disbursements of counsel for the
Underwriters in connection with such review; (vi) inclusion of the
Firm Shares for quotation on the NASDAQ Capital Market, (vii) all
transfer taxes, if any, with respect to the sale and delivery of
the Firm Shares by the Company to the Underwriters, and (viii) all
reasonable out-of-pocket costs and reasonable expenses incident to
the offering and the performance of the obligations of the
Representative under this Agreement, up to $100,000 in the
aggregate, which amount shall include the fees and expenses of
counsel to the Underwriters. Subject to the provisions of Section
8, the Underwriters agree to pay, whether or not the transactions
contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of
the obligations of the Underwriters under this Agreement not
payable by the Company pursuant to the preceding sentence,
including, without limitation, the fees and disbursements of
counsel for the Underwriters.
(c) The Company acknowledge and agree that
each of the Underwriters has acted and is acting solely in the
capacity of a principal in an arm’s length transaction
between the Company, on the one hand, and the Underwriters, on the
other hand, with respect to the offering of Firm Shares
contemplated hereby (including in connection with determining the
terms of the offering) and not as a financial advisor, agent or
fiduciary to the Company or any other person. Additionally, the
Company acknowledges and agrees that the Underwriters have not and
will not advise the Company or any other person as to any legal,
tax, investment, accounting or regulatory matters in any
jurisdiction. The Company has consulted with its own advisors
concerning such matters and shall be responsible for making its own
independent investigation and appraisal of the transactions
contemplated hereby, and the Underwriters shall have no
responsibility or liability to the Company or any other person with
respect thereto, whether arising prior to or after the date hereof.
Any review by the Underwriters of the Company, the transactions
contemplated hereby or other matters relating to such transactions
have been and will be performed solely for the benefit of the
Underwriters and shall not be on behalf of the Company. The Company
agrees that it will not claim that the Underwriters, or any of
them, has rendered advisory services of any nature or respect, or
owes a fiduciary duty to the Company or any other person in
connection with any such transaction or the process leading
thereto
.
(d
)
The Company acknowledges and agrees that each of the Underwriters
has acted and is acting solely in the capacity of a principal in an
arm’s length transaction between the Company, on the one
hand, and the Underwriters, on the other hand, with respect to the
offering of the Firm Shares contemplated hereby (including in
connection with determining the terms of the offering) and not as a
financial advisor, agent or fiduciary to the Company or any other
person. Additionally, the Company acknowledges and agrees that the
Underwriters have not and will not advise the Company or any other
person as to any legal, tax, investment, accounting or regulatory
matters in any jurisdiction. The Company has consulted with its own
advisors concerning such matters and shall be responsible for
making its own independent investigation and appraisal of the
transactions contemplated hereby, and the Underwriters shall have
no responsibility or liability to the Company or any other person
with respect thereto, whether arising prior to or after the date
hereof. Any review by the Underwriters of the Company, the
transactions contemplated hereby or other matters relating to such
transactions have been and will be performed solely for the benefit
of the Underwriters and shall not be on behalf of the Company. The
Company agrees that it will not claim that the Underwriters, or any
of them, has rendered advisory services of any nature or respect,
or owes a fiduciary duty to the company or any other person in
connection with any such transaction or the process leading
thereto.
(e
)
The Company represents and agrees that, unless it obtains the prior
consent of the Representative, and each Underwriter represents and
agrees that, unless it obtains the prior consent of the Company and
the Representative, it has not made and will not make any offer
relating to the Firm Shares that would constitute an “issuer
free writing prospectus,” as defined in Rule 433, or
that would otherwise constitute a “free writing
prospectus,” as defined in Rule 405, required to be
filed with the Commission. The Company has complied and will comply
with the requirements of Rule 433 under the Act applicable to any
Issuer Free Writing Prospectus, including timely filing with the
Commission where required, legending and record keeping. The
Company represents that is has satisfied and agrees that it will
satisfy the conditions set forth in Rule 433 of the Rules to avoid
a requirement to file with the Commission any Road
Show.
6.
Indemnification
.
(a
)
The Company agrees to indemnify and hold harmless each Underwriter,
its officers and employees and each person, if any, who controls
any Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act against any and all losses,
claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the Securities Act, the Exchange Act
or other Federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement, the Statutory Prospectus,
the Prospectus, any Issuer Free Writing Prospectus
or any
“issuer-information” filed or required to be filed
pursuant to Rule 433(d) of the Rules, any amendment thereof or
supplement thereto, any Written Testing-the-Waters Communication,
or in any Blue Sky application or other information or other
documents executed by the Company filed in any state or other
jurisdiction to qualify any or all of the Firm Shares under the
securities laws thereof (any such application, document or
information being hereinafter referred to as a "Blue Sky
Application") or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that such indemnity shall not inure
to the benefit of any Underwriter (or any person controlling such
Underwriter) on account of any losses, claims, damages or
liabilities arising from the sale of the Firm Shares to any person
by such Underwriter if such untrue statement or omission or alleged
untrue statement or omission was made in such Preliminary
Prospectus, the Registration Statement, the Prospectus, the
Statutory Prospectus, any Issuer Free Writing Prospectus or such
amendment or supplement thereto, any Written Testing-the-Waters
Communication, or in any Blue Sky Application in reliance upon and
in conformity with the Underwriter Information. This indemnity and
expense reimbursement agreement will be in addition to any
liability which the Company may otherwise have.
(b
)
Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company, and each person, if any, who
controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each director of
the Company, and each officer of the Company who signs the
Registration Statement, against any losses, claims, damages or
liabilities to which such party may become subject, under the
Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of
or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the
Registration Statement, the Statutory Prospectus or the Prospectus
or any such amendment or supplement in reliance upon and in
conformity with the Underwriter Information; provided, however,
that the obligation of each Underwriter to indemnify the Company
(including any controlling person, director or officer thereof)
shall be limited to the amount of the underwriting discount and
commissions applicable to the Firm Shares to be purchased by such
Underwriter hereunder.
(c
)
Any party that proposes to assert the right to be indemnified under
this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of
the commencement of such action, suit or proceeding, enclosing a
copy of all papers served. No indemnification provided for in
Section 6(a) or 6(b) shall be available to any party who shall fail
to give notice as provided in this Section 6(c) if the party to
whom notice was not given was unaware of the proceeding to which
such notice would have related and was prejudiced by the failure to
give such notice but the omission so to notify such indemnifying
party of any such action, suit or proceeding shall not relieve it
from any liability that it may have to any indemnified party for
contribution or otherwise than under this Section. In case any such
action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof and the approval by the indemnified party of such counsel,
the indemnifying party shall not be liable to such indemnified
party for any legal or other expenses, except as provided below and
except for the reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless
(i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have been advised by counsel that there may
be one or more legal defenses available to it which are different
from or in addition to those available to the indemnifying party
(in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified
party) or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable
time after notice of the commencement thereof, in each of which
cases the fees and expenses of counsel shall be at the expense of
the indemnifying parties. An indemnifying party shall not be liable
for any settlement of any action, suit, and proceeding or claim
effected without its written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. The Company will not
enter into any waiver, release or settlement of any claim or action
(whether or not any indemnified party is a party thereto) in
respect of which indemnification may be sought hereunder without
the prior written consent of the Representative (which consent will
not be unreasonably withheld, delayed or conditioned), unless such
waiver, release or settlement (i) includes an unconditional release
of each indemnified party from all liability arising out of such
claim or action, (ii) does not contain any factual or legal
admission by or with respect to any indemnified party or any
adverse statement with respect to the character, professionalism,
expertise or reputation of any indemnified party or any action or
inaction of any indemnified party and (iii) does not preclude or
purport to preclude the future business activities of any
indemnified person.
In
addition to any rights of indemnification or contribution set forth
above, the Company agrees to reimburse each indemnified party for
all documented out-of-pocket costs and expenses as they are
incurred (including, without limitation, fees and expenses of
outside counsel) in connection with investigating, preparing or
settling any claim or action involving the enforcement of this
Section 6.
7.
Contribution
. In
order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section
6(a) or 6(b) is due in accordance with its terms but for any reason
is unavailable to or insufficient to hold harmless an indemnified
party in respect to any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall
contribute to the aggregate losses, liabilities, claims, damages
and expenses (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims
asserted, but after deducting any contribution received by any
person entitled hereunder to contribution from any person who may
be liable for contribution) incurred by such indemnified party, as
incurred, in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Firm Shares
pursuant to this Agreement or, if such allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the
relative fault of the Company on the one hand and the Underwriters
on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable
considerations referred to above. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission
or alleged omission. Notwithstanding the provisions of this Section
7, no Underwriter (except as may be provided in the Agreement Among
Underwriters) shall be required to contribute any amount in excess
of the underwriting discounts and
commissions applicable to the Firm Shares purchased by such
Underwriter
. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company
including any person who, with his or her consent, is named in the
Registration Statement as about to become a director of the
Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within
the meaning of the Section 15 of the Securities Act or Section 20
of the Exchange Act, shall have the same rights to contribution as
the Company, as the case may be. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a
claim for contribution may be made against another party or parties
under this Section 7, notify such party or parties from whom
contribution may be sought, but the omission so to notify such
party or parties from whom contribution may be sought shall not
relieve the party or parties from whom contribution may be sought
from any other obligation it or they may have hereunder or
otherwise than under this Section 7. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim
settled without its written consent. The Underwriter's obligations
to contribute pursuant to this Section 7 are several in proportion
to their respective underwriting commitments and not
joint.
8.
Termination
.
(a
)
This Agreement may be terminated with respect to the Firm Shares to
be purchased on the Firm Shares Closing Date by the Representative
by notifying the Company at any time at or before the Firm Shares
Closing Date in the absolute discretion of the Representative if:
(i) there has occurred any material adverse change in the
securities markets or any event, act or occurrence that has
materially disrupted, or in the opinion of the Representative, will
in the future materially disrupt, the securities markets or there
shall be such a material adverse change in general financial,
political or economic conditions or the effect of international
conditions on the financial markets in the United States is such as
to make it, in the judgment of the Representative, inadvisable or
impracticable to market the Firm Shares or enforce contracts for
the sale of the Firm Shares; (ii) there has occurred any outbreak
or material escalation of hostilities or acts of terrorism or other
calamity or crisis the effect of which on the financial markets of
the United States is such as to make it, in the judgment of the
Representative, inadvisable or impracticable to market the Firm
Shares or enforce contracts for the sale of the Firm Shares; (iii)
trading in the Firm Shares or any securities of the Company has
been suspended or materially limited by the Commission or trading
generally on the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. or the NASDAQ has been suspended or materially
limited, or minimum or maximum ranges for prices for securities
shall have been fixed, or maximum ranges for prices for securities
have been required, by any of said exchanges or by such system or
by order of the Commission, FINRA, or any other governmental or
regulatory authority; or (iv) a banking moratorium has been
declared by any state or Federal authority; or (v) in the judgment
of the Representative, there has been, since the time of execution
of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change
in the assets, properties, condition, financial or otherwise, or in
the results of operations, business affairs or business prospects
of the Company and its Subsidiaries considered as a whole, whether
or not arising in the ordinary course of business.
(b
)
If this Agreement is terminated pursuant to any of its provisions,
the Company shall not be under any liability to any Underwriter,
and no Underwriter shall be under any liability to the Company,
except that (y) if this Agreement is terminated by the
Representative or the Underwriters because of any failure, refusal
or inability on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, the Company
will reimburse the Underwriters for all out-of-pocket expenses
(including the reasonable fees and disbursements of their counsel)
incurred by them in connection with the proposed purchase and sale
of the Firm Shares or in contemplation of performing their
obligations hereunder and (z) no Underwriter who shall have failed
or refused to purchase the Firm Shares agreed to be purchased by it
under this Agreement, without some reason sufficient hereunder to
justify cancellation or termination of its obligations under this
Agreement, shall be relieved of liability to the Company or to the
other Underwriters for damages occasioned by its failure or
refusal.
9.
Substitution of
Underwriters
. If any Underwriter shall default in its
obligation to purchase on the Firm Shares Closing Date the Firm
Shares agreed to be purchased hereunder on such Firm Shares Closing
Date, the Representative shall have the right, within 36 hours
thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase
such Firm Shares on the terms contained herein. If, however, the
Representative shall not have completed such arrangements within
such 36-hour period, then the Company shall be entitled to a
further period of thirty-six hours within which to procure another
party or other parties satisfactory to the Underwriters to purchase
such Firm Shares on such terms. If, after giving effect to any
arrangements for the purchase of the Firm Shares of a defaulting
Underwriter or Underwriters by the Representative and the Company
as provided above, the aggregate number of Firm Shares which
remains unpurchased on the Firm Shares Closing Date does not exceed
one-eleventh of the aggregate number of all the Firm Shares that
all the Underwriters are obligated to purchase on such date, then
the Company shall have the right to require each non-defaulting
Underwriter to purchase the number of Firm Shares which such
Underwriter agreed to purchase hereunder at such date and, in
addition, to require each non-defaulting Underwriter to purchase
its pro rata share (based on the number of Firm Shares which such
Underwriter agreed to purchase hereunder) of the Firm Shares of
such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default. In any such
case, either the Representative or the Company shall have the right
to postpone the Firm Shares Closing Date for a period of not more
than seven days in order to effect any necessary changes and
arrangements (including any necessary amendments or supplements to
the Registration Statement or Prospectus or any other documents),
and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in the opinion of
the Company and the Underwriters and their counsel may thereby be
made necessary.
If,
after giving effect to any arrangements for the purchase of the
Firm Shares of a defaulting Underwriter or Underwriters by the
Representative and the Company as provided above, the aggregate
number of such Firm Shares which remains unpurchased exceeds 10% of
the aggregate number of all the Firm Shares to be purchased at such
date, then this Agreement shall terminate, without liability on the
part of any non-defaulting Underwriter to the Company, and without
liability on the part of the Company, except as provided in
Sections 5(b), 6, 7 and 8. The provisions of this Section 9 shall
not in any way affect the liability of any defaulting Underwriter
to the Company or the nondefaulting Underwriters arising out of
such default. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section 9 with like
effect as if such person had originally been a party to this
Agreement with respect to such Firm Shares.
10.
Miscellaneous
. The
respective agreements, representations, warranties, indemnities and
other statements of the Company and the several Underwriters, as
set forth in this Agreement or made by or on behalf of them
pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or the Company or
any of their respective officers, directors or controlling persons
referred to in Sections 6 and 7 hereof, and shall survive delivery
of and payment for the Firm Shares. In addition, the provisions of
Sections 5(b), 6, 7 and 8 shall survive the termination or
cancellation of this Agreement.
This
Agreement has been and is made for the benefit of the Underwriters
and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons
controlling any of the Underwriters, or the Company, and directors
and officers of the Company, and their respective successors and
assigns, and no other person shall acquire or have any right under
or by virtue of this Agreement. The term "successors and assigns"
shall not include any purchaser of Firm Shares from any Underwriter
merely because of such purchase.
All
notices and communications hereunder shall be in writing and mailed
or delivered or by telephone or telegraph if subsequently confirmed
in writing, (a) if to the Representative, c/o Oppenheimer & Co.
Inc., 85 Broad Street, New York, New York 10004 Attention: Equity
Capital Markets, with a copy to Oppenheimer & Co. Inc., 85
Broad Street, New York, New York 10004 Attention: General Counsel,
and to Ellenoff Grossman & Schole LLP, Attention: Robert
Charron, 1345 Avenue of the Americas, New York, New York 10105, and
(b) if to the Company, to its agent for service as such agent's
address appears on the cover page of the Registration Statement
with a copy to Disclosure Law Group, a Professional Corporation,
Attention: Jessica Sudweeks, 600 West Broadway, Suite 700, San
Diego, California 92101.
This Agreement shall be governed by and
construed in accordance with the laws of the State of New
York.
This Agreement contains the entire agreement of the
parties, and replaces and supersedes all prior discussions,
proposals, negotiations, and agreements in principle, oral or
written, between or among the parties, with respect to the subject
matter hereof. This Agreement may only be amended by a written
instrument signed by the parties hereto.
This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same
instrument.
Please
confirm that the foregoing correctly sets forth the agreement among
us.
Very
truly yours,
AZURRX
BIOPHARMA, INC.
By:
/s/ Johan (Thijs) M.
Spoor
Title: Chief
Executive Officer and President
Confirmed:
OPPENHEIMER
& CO. INC.
___________________________________
Acting
severally on behalf of itself
and as
representative of the several
Underwriters
named in
Schedule I
annexed
hereto.
By
OPPENHEIMER & CO. INC.
Name:
Eric Helenek
Title:
Managing Director
SCHEDULE
I
|
Underwriter
|
Number of Firm Shares to be Purchased from the Company
|
|
Oppenheimer
& Co. Inc.
|
4,160,000
|
|
Total
|
4,160,000
|
SCHEDULE
II
Lock-up
Signatories
Johan
M. (Thijs) Spoor
Maged
Shenouda
Daniel
Dupret
Edward
J. Borkowski
Alastair
Riddell, M.D., Ph.D.
Charles
J. Casamento
Vern
Lee Schramm, Ph.D.
SCHEDULE
III
Issuer
Free Writing Prospectuses
All proposed Free Writing Prospectuses to be discussed with
Oppenheimer Legal prior to release
Exhibit
A
FORM OF LOCK-UP AGREEMENT
April
____, 2018
Oppenheimer
& Co. Inc.
As
Representative of the Several Underwriters
c/o
Oppenheimer & Co. Inc.
85
Broad Street
New
York, New York 10004
Re:
Public Offering of
AzurRx BioPharma, Inc.
Ladies
and Gentlemen:
The
undersigned, a holder of common stock, par value $0.0001
(“Common Stock”), or rights to acquire Common Stock,
of AzurRx BioPharma, Inc. (the “Company”)
understands that you
,
as
Representative of the several Underwriters, propose to enter into
an Underwriting Agreement (the "Underwriting Agreement")
with
the Company,
providing for the public offering (the "Public Offering")
by
the several
Underwriters named in
Schedule I
to the Underwriting
Agreement (the "Underwriters"), of shares of Common Stock of the
Company (the "Securities"). Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the
Underwriting Agreement.
In consideration of the Underwriters' agreement to
enter into the Underwriting Agreement and to proceed with the
Public Offering of the Securities, and for other good and valuable
consideration receipt of which is hereby acknowledged, the
undersigned hereby agrees for the benefit of the Company, you and
the other Underwriters that, without the prior written consent of
Oppenheimer & Co. Inc. on behalf of the Underwriters, the
undersigned will not, during the period ending
90
days (the “Lock-Up Period”) after the
date of the prospectus relating to the Public Offering (the
"Prospectus"), directly or indirectly (1) offer, pledge, assign,
encumber, announce the intention to sell, sell, contract to sell,
sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase,
or otherwise transfer or dispose of, any shares of Common Stock,
$0.0001
per share par value, of the Company (the "Common
Stock") or any securities convertible into or exercisable or
exchangeable for Common Stock owned either of record or
beneficially (as defined in the Securities Exchange Act of 1934, as
amended) by the undersigned on the date hereof or hereafter
acquired or (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise, or
publicly announce an intention to do any of the foregoing. In
addition, the undersigned agrees that, without the prior written
consent of Oppenheimer & Co. Inc.
on behalf of the Underwriters, it will not, during
the period ending 90 days after the date of the Prospectus, make
any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.
The foregoing shall not apply to (x) Common Stock to be transferred
as a gift or gifts (provided that any donee thereof agrees in
writing to be bound by the terms hereof), (y) the sale of the
Securities to be sold pursuant to the Prospectus and (y) sales
under any 10b-5 plan.
Notwithstanding the
foregoing, if (x) during the last 17 days of the Lock-Up Period the
Company issues an earnings release or material news or a material
event relating to the Company occurs; or (y) prior to the
expiration of the Lock-Up Period, the Company announces that it
will release earnings results during the 16-day period beginning on
the last day of the 90-day period; the restrictions imposed in this
Letter Agreement shall continue to apply until the expiration of
the 18-day period beginning on the issuance of the earnings release
or the occurrence of the material news or material event; provided,
however, that this sentence shall not apply if the research
published or distributed on the Company is compliant under Rule 139
of the Securities Act and the Company’s securities are
actively traded as defined in Rule 101(c)(1) of Regulation M of the
Exchange Act.
In
furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities
described herein, are hereby authorized to decline to make any
transfer of securities if such transfer would constitute a
violation or breach of this Letter Agreement.
The
undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Letter Agreement. All
authority herein conferred or agreed to be conferred and any
obligations of the undersigned shall be binding upon the
successors, assigns, heirs or personal representatives of the
undersigned.
The
undersigned understands that, if the Underwriting Agreement does
not become effective, or if the Underwriting Agreement (other than
the provisions thereof which survive termination) shall terminate
or be terminated prior to payment for and delivery of the Common
Stock to be sold thereunder, the undersigned shall be released form
all obligations under this Letter Agreement.
The
undersigned, whether or not participating in the Offering,
understands that the Underwriters are entering into the
Underwriting Agreement and proceeding with the Public Offering in
reliance upon this Letter Agreement.
This
lock-up agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the
conflict of laws principles thereof.
Very
truly yours,
[STOCKHOLDER]
By:
_______________________
Name:
Title:
Exhibit
4.1
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
AZURRX BIOPHARMA, INC.
Warrant To Purchase Common Stock
Warrant
No.:
Number
of Shares of Common Stock:
Date of
Issuance:
___________
("
Issuance
Date
")
AzurRx
BioPharma, Inc., a company organized under the laws of Delaware
(the "
Company
"), hereby
certifies that, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged,
______________
,
the registered holder hereof or its permitted assigns (the
"
Holder
"), is entitled,
subject to the terms set forth below, to purchase from the Company,
at the Exercise Price (as defined below) then in effect, at any
time or times on or after
______________
(the
“
Initial Exercisability
Date
”), but not after 11:59 p.m., New York time,
on
______________
(the “
Expiration
Date
”),
______________
fully paid non-assessable shares of Common Stock (as defined
below), subject to adjustment as provided herein
(the "
Warrant Shares
"). Except as otherwise
defined herein, capitalized terms in this Warrant to Purchase
Common Stock (including any Warrants to Purchase Common Stock
issued in exchange, transfer or replacement hereof, this
"
Warrant
"), shall have the
meanings set forth in Section 16. This Warrant is one of the
Warrants to purchase Common Stock (the "
Warrants
") issued pursuant to (i) that
certain Underwriting Agreement, dated as of May 1, 2018 (the
"
Subscription Date
") by and
between the Company and Oppenheimer & Co. Inc.
1.
EXERCISE
OF WARRANT.
(a)
Mechanics of Exercise
. Subject
to the terms and conditions hereof (including, without limitation,
the limitations set forth in Section 1(f)), this Warrant may be
exercised by the Holder at any time or times on or after the
Initial Exercisability
Date
, in
whole or in part, by delivery (whether via facsimile, electronic
mail or otherwise) of a written notice, in the form attached hereto
as
Exhibit A
(the
"
Exercise Notice
"), of the
Holder's election to exercise this Warrant. Within two (2) Trading
Days following the delivery of the Exercise Notice, the Holder
shall make payment to the Company of an amount equal to the
Exercise Price in effect on the date of such exercise multiplied by
the number of Warrant Shares as to which this Warrant is being
exercised (the "
Aggregate Exercise
Price
") in cash by wire transfer of immediately available
funds or, if the provisions of Section 1(d) are applicable, by
notifying the Company that this Warrant is being exercised pursuant
to a Cashless Exercise (as defined in Section 1(d)). The Holder
shall not be required to deliver the original Warrant in order to
effect an exercise hereunder, nor shall any ink-original signature
or medallion guarantee (or other type of guarantee or notarization)
with respect to any Exercise Notice be required. Execution and
delivery of the Exercise Notice with respect to less than all of
the Warrant Shares shall have the same effect as cancellation of
the original Warrant and issuance of a new Warrant evidencing the
right to purchase the remaining number of Warrant Shares. On or
before the first (1
st
) Trading Day
following the date on which the Company has received the applicable
Exercise Notice, the Company shall transmit by facsimile or
electronic mail an acknowledgment of confirmation of receipt of the
Exercise Notice, in the form attached to the Exercise Notice, to
the Holder and the Company's transfer agent (the "
Transfer Agent
"). So long as the Holder
delivers the Aggregate Exercise Price (or notice of a Cashless
Exercise) on or prior to the second (2
nd
) Trading Day
following the date on which the Exercise Notice has been delivered
to the Company, then on or prior to the earlier
of (i)
the third (3
rd
) Trading Day and
(ii) the number of Trading Days comprising the Standard Settlement
Period, in each case following the date on which the Exercise
Notice has been delivered to the Company, or, if the Holder does
not deliver the Aggregate Exercise Price (or notice of a Cashless
Exercise) on or prior to the second (2
nd
) Trading Day
following the date on which the Exercise Notice has been delivered
to the Company, then on or prior to the second (2
nd
) Trading Day
following the date on which the Aggregate Exercise Price (or notice
of a Cashless Exercise) is delivered (such earlier date, the
“
Share Delivery
Date
”), the Company shall (X) provided that the
Transfer Agent is participating in The Depository Trust Company
("
DTC
") Fast Automated
Securities Transfer Program, credit such aggregate number of
Warrant Shares to which the Holder is entitled pursuant to such
exercise to the Holder's or its designee's balance account with DTC
through its Deposit / Withdrawal At Custodian system, or (Y) if the
Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and dispatch by overnight
courier to the address as specified in the Exercise Notice, a
certificate, registered in the name of the Holder or its designee,
for the number of Warrant Shares to which the Holder is entitled
pursuant to such exercise. The Company shall be responsible for all
fees and expenses of the Transfer Agent and all fees and expenses
with respect to the issuance of Warrant Shares via DTC, if any,
including without limitation for same day processing. Upon delivery
of the Exercise Notice, the Holder shall be deemed for all
corporate purposes to have become the holder of record and
beneficial owner of the Warrant Shares with respect to which this
Warrant has been exercised, irrespective of the date such Warrant
Shares are credited to the Holder's DTC account or the date of
delivery of the certificates evidencing such Warrant Shares, as the
case may be. If this Warrant is physically delivered to the Company
in connection with any exercise pursuant to this Section 1(a) and
the number of Warrant Shares represented by this Warrant submitted
for exercise is greater than the number of Warrant Shares being
acquired upon an exercise, then the Company shall as soon as
practicable and in no event later than three (3) Trading Days after
any exercise and at its own expense, issue and deliver to the
Holder (or its designee) a new Warrant (in accordance with Section
7(d)) representing the right to purchase the number of Warrant
Shares issuable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which
this Warrant is exercised. No fractional Warrant Shares are to be
issued upon the exercise of this Warrant, but rather the number of
Warrant Shares to be issued shall be rounded to the nearest whole
number. The Company shall pay any and all transfer, stamp, issuance
and similar taxes, costs and expenses (including, without
limitation, fees and expenses of the Transfer Agent) which may be
payable with respect to the issuance and delivery of Warrant Shares
upon exercise of this Warrant. The Company's obligations to issue
and deliver Warrant Shares in accordance with the terms and subject
to the conditions hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the
same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination;
provided
,
however
, that the Company shall
not be required to deliver Warrant Shares with respect to an
exercise prior to the Holder’s delivery of the Aggregate
Exercise Price (or notice of a Cashless Exercise) with respect to
such exercise.
(b)
Exercise Price
. For purposes of
this Warrant, "
Exercise
Price
" means $______ per share, subject to
adjustment as provided herein.
(c)
Company's Failure to Timely Deliver
Securities
. If either (I) the Company shall fail for any
reason or for no reason to issue to the Holder on or prior to the
applicable Share Delivery Date, if (x) the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer
Program, a certificate for the number of shares of Common Stock to
which the Holder is entitled and register such Common Stock on the
Company's share register or (y) if the Transfer Agent is
participating in the DTC Fast Automated Securities Transfer
Program, to credit the Holder's balance account with DTC, for such
number of shares of Common Stock to which the Holder is entitled
upon the Holder's exercise of this Warrant or (II) a registration
statement covering the issuance or resale of the Warrant Shares
that are the subject of the Exercise Notice (the "
Exercise Notice Warrant Shares
") is not
available for the issuance or resale, as applicable, of such
Exercise Notice Warrant Shares and (x) the Company fails to
promptly, but in no event later than one (1) Business Day after
such registration statement becomes unavailable, to so notify the
Holder and (y) the Company is unable to deliver the Exercise Notice
Warrant Shares electronically without any restrictive legend by
crediting such aggregate number of Exercise Notice Warrant Shares
to the Holder’s or its designee’s balance account with
DTC through its Deposit / Withdrawal At Custodian system (the event
described in the immediately foregoing clause (II) is hereinafter
referred as a "
Notice
Failure
" and together with the event described in clause (I)
above, an "
Exercise
Failure
"), then, in addition to all other remedies available
to the Holder,
if on
or prior to the applicable Share Delivery Date either (I) if the
Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, the Company shall fail to issue and
deliver a certificate to the Holder and register such shares of
Common Stock on the Company's share register or, if the Transfer
Agent is participating in the DTC Fast Automated Securities
Transfer Program, credit the Holder's balance account with DTC for
the number of shares of Common Stock to which the Holder is
entitled upon the Holder's exercise hereunder or pursuant to the
Company's obligation pursuant to clause (ii) below or (II) a Notice
Failure occurs, and if on or after such Trading Day the Holder
purchases (in an open market transaction or otherwise) Common Stock
to deliver in satisfaction of a sale by the Holder of shares of
Common Stock issuable upon such exercise that the Holder
anticipated receiving from the Company (a "
Buy-In
"), then the Company shall, within
three (3) Trading Days after the Holder's request and in the
Holder's discretion, either (i) pay cash to the Holder in an amount
equal to the Holder's total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (the "
Buy-In Price
"), at which point the
Company's obligation to deliver such certificate (and to issue such
shares of Common Stock) or credit such Holder's balance account
with DTC for such shares of Common Stock shall terminate, or (ii)
promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such shares of Common
Stock or credit such Holder's balance account with DTC, as
applicable, and pay cash to the 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, times (B) any trading price of
the Common Stock selected by the Holder in writing as in effect at
any time during the period beginning on the applicable Exercise
Date and ending on the applicable Share Delivery Date. Nothing
shall limit the Holder's right to pursue any other remedies
available to it hereunder, at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive
relief with respect to the Company's failure to timely deliver
certificates representing Warrant Shares (or to electronically
deliver such Warrant Shares) upon the exercise of this Warrant as
required pursuant to the terms hereof. While this Warrant is
outstanding, the Company shall cause its transfer agent to
participate in the DTC Fast Automated Securities Transfer Program.
In addition to the foregoing rights, (i) if the Company fails to
deliver the applicable number of Warrant Shares upon an exercise
pursuant to Section 1 by the applicable Share Delivery Date, then
the Holder shall have the right to rescind such exercise in whole
or in part and retain and/or have the Company return, as the case
may be, any portion of this Warrant that has not been exercised
pursuant to such Exercise Notice; provided that the rescission of
an exercise shall not affect the Company’s obligation to make
any payments that have accrued prior to the date of such notice
pursuant to this Section 1(c) or otherwise, and (ii) if a
registration statement covering the issuance or resale of the
Warrant Shares that are subject to an Exercise Notice is not
available for the issuance or resale, as applicable, of such
Exercise Notice Warrant Shares and the Holder has submitted an
Exercise Notice prior to receiving notice of the non-availability
of such registration statement and the Company has not already
delivered the Warrant Shares underlying such Exercise Notice
electronically without any restrictive legend by crediting such
aggregate number of Warrant Shares to which the Holder is entitled
pursuant to such exercise to the Holder’s or its
designee’s balance account with DTC through its Deposit /
Withdrawal At Custodian system, the Holder shall have the option,
by delivery of notice to the Company, to (x) rescind such Exercise
Notice in whole or in part and retain or have returned, as the case
may be, any portion of this Warrant that has not been exercised
pursuant to such Exercise Notice; provided that the rescission of
an Exercise Notice shall not affect the Company’s obligation
to make any payments that have accrued prior to the date of such
notice pursuant to this Section 1(c) or otherwise, and/or (y)
switch some or all of such Exercise Notice from a cash exercise to
a Cashless Exercise.
(d)
Cashless Exercise
.
Notwithstanding anything contained
herein to the contrary, if a registration statement covering the
issuance or resale of the Exercise Notice Warrant Shares is not
available for the issuance or resale, as applicable, of such
Exercise Notice Warrant Shares, the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu
of making the cash payment otherwise contemplated to be made to the
Company upon such exercise in payment of the Aggregate Exercise
Price, elect instead to receive upon such exercise the "Net Number"
of shares of Common Stock determined according to the following
formula (a "
Cashless
Exercise
"):
Net
Number =
(A x B) - (A x
C)
B
For
purposes of the foregoing formula:
A= the total
number of shares with respect to which this Warrant is then being
exercised.
B= as
applicable: (i) the Closing Sale Price of the Common Stock on the
Trading Day immediately preceding the date of the applicable
Exercise Notice if such Exercise Notice is (1) both executed and
delivered pursuant to Section 1(a) hereof on a day that is not a
Trading Day or (2) both executed and delivered pursuant to Section
1(a) hereof on a Trading Day prior to the opening of “regular
trading hours” (as defined in Rule 600(b)(64) of Regulation
NMS promulgated under the federal securities laws) on such Trading
Day, (ii) at the option of the Holder, either (y) the VWAP on the
Trading Day immediately preceding the date of the applicable Notice
of Exercise or (z) the Bid Price of the Common Stock as of the time
of the Holder’s execution of the applicable Exercise Notice
if such Exercise Notice is executed during “regular trading
hours” on a Trading Day and is delivered within two (2) hours
thereafter pursuant to Section 1(a) hereof or (iii) the Closing
Sale Price of the Common Stock on the date of the applicable
Exercise Notice if the date of such Exercise Notice is a Trading
Day and such Exercise Notice is both executed and delivered
pursuant to Section 1(a) hereof after the close of “regular
trading hours” on such Trading Day.
C= the
Exercise Price then in effect for the applicable Warrant Shares at
the time of such exercise.
If
Warrant Shares are issued in such a cashless exercise, the Company
acknowledges and agrees that in accordance with Section 3(a)(9) of
the Securities Act of 1933, as amended, the Warrant Shares shall
take on the registered characteristics of the Warrants being
exercised, and the holding period of the Warrants being exercised
may be tacked on to the holding period of the Warrant Shares. The
Company agrees not to take any position contrary to this Section
1(d).
(e)
Disputes
. In the case of a
dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section
11.
(f)
Beneficial Ownership
.
Notwithstanding anything to the
contrary contained herein, the Company shall not effect the
exercise of any portion of this Warrant, and the Holder shall not
have the right to exercise any portion of this Warrant, pursuant to
the terms and conditions of this Warrant and any such exercise
shall be null and void and treated as if never made, to the extent
that after giving effect to such exercise, the Holder together with
the other Attribution Parties collectively would beneficially own
in excess of 4.99% (the "
Maximum
Percentage
") of the number
of
shares of Common Stock
outstanding immediately after giving effect to
such exercise. For purposes of the foregoing sentence, the
aggregate number of
shares of Common Stock
beneficially owned by the Holder and the other
Attribution Parties shall include the number of
shares of
Common Stock
held by the Holder and
all other Attribution Parties plus the number of
shares of
Common Stock
issuable upon exercise of
this Warrant with respect to which the determination of such
sentence is being made, but shall exclude the number of
shares of Common Stock
which would be
issuable upon (A) exercise of the remaining, unexercised portion of
this Warrant beneficially owned by the Holder or any of the other
Attribution Parties and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the
Company (including, without limitation, any convertible notes or
convertible preferred stock or warrants, including the other
Warrants) beneficially owned by the Holder or any other Attribution
Party subject to a limitation on conversion or exercise analogous
to the limitation contained in this Section 1(f). For purposes of
this Section 1(f), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "
1934 Act
"). For purposes of this Warrant, in determining
the number of outstanding
shares of Common Stock
the Holder may acquire upon the
exercise of this Warrant without exceeding the Maximum Percentage,
the Holder may rely on the number of outstanding
shares of
Common Stock
as reflected in (x) the
Company's most recent Annual Report on Form 10-K, Quarterly Report
on Form 10-Q and Current Reports on Form 8-K or other public filing
with the Securities and
Exchange Commission (the
"
SEC
"), as the case may be,
(y) a more recent public announcement by the Company or (3) any
other written
notice by the Company or
the Transfer Agent setting forth the number of
shares of
Common Stock
outstanding
(the "
Reported Outstanding Share
Number
"). If the Company
receives an Exercise Notice from the Holder at a time when the
actual number of outstanding
shares of Common Stock
is less than the Reported Outstanding
Share Number, the Company shall (i) notify the Holder in writing of
the number of
shares of Common Stock
then outstanding and, to the extent that such
Exercise Notice would otherwise cause the Holder's beneficial
ownership, as determined pursuant to this Section 1(f), to exceed
the Maximum Percentage, the Holder must notify the Company of a
reduced number of Warrant Shares to be purchased pursuant to such
Exercise Notice
(the number of
shares by which such purchase is reduced, the "
Reduction
Shares
") and (ii) as soon as
reasonably practicable, the Company shall return to the Holder any
exercise price paid by the Holder for the Reduction Shares.
For any reason at any time, upon the written or oral request of the
Holder,
the Company shall within one
(1) Business Day confirm orally and in writing or by electronic
mail to the Holder the number of
shares of Common Stock
then outstanding. In any case, the
number of outstanding
shares of Common Stock
shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this
Warrant, by the Holder and any other Attribution Party since the
date as of which the Reported Outstanding Share Number was
reported. In the event that the issuance of
Common Stock
to the Holder upon exercise of this
Warrant results in the Holder and the other Attribution Parties
being deemed to beneficially own, in the aggregate, more than the
Maximum Percentage of the number of outstanding
shares of
Common Stock
(as determined under
Section 13(d) of the 1934 Act), the number of shares so issued by
which the Holder's and the other Attribution Parties' aggregate
beneficial ownership exceeds the Maximum Percentage (the
"
Excess
Shares
") shall be deemed null
and void and shall be cancelled ab initio, and the Holder shall not
have the power to vote or to transfer the Excess Shares. As soon as
reasonably practicable after the issuance of the Excess Shares has
been deemed null and void, the Company shall return to the Holder
the exercise price paid by the Holder for the Excess Shares.
Upon delivery of a written notice to the Company, the Holder may
from time to time increase or decrease the Maximum Percentage to
any other percentage not in excess of 9.99% as specified in such
notice; provided that (i) any such increase in the Maximum
Percentage will not be effective until the sixty-first
(61
st
) day
after such notice is delivered to the Company and (ii) any such
increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of Warrants that is
not an Attribution Party of the Holder. For purposes of clarity,
the shares of Common Stock issuable pursuant to the terms of this
Warrant in excess of the Maximum Percentage shall not be deemed to
be beneficially owned by the Holder for any purpose including for
purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No
prior inability to exercise this Warrant pursuant to this paragraph
shall have any effect on the applicability of the provisions of
this paragraph with respect to any subsequent determination of
exercisability.
The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 1(f) to
the extent necessary to correct this paragraph or any portion of
this paragraph which may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section
1(f) or to make changes or
supplements
necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not
be waived and shall apply to a successor holder of this
Warrant.
(g)
Required Reserve Amount
.
So long as this Warrant remains outstanding, the Company shall at
all times keep reserved for issuance under this Warrant a number of
shares of Common Stock at least equal to 100% of the maximum number
of shares of Common Stock as shall be necessary to satisfy the
Company’s obligation to issue shares of Common Stock under
the Warrants then outstanding (without regard to any limitations on
exercise) (the "
Required Reserve
Amount
");
provided
that at no time shall
the number of shares of Common Stock reserved pursuant to this
Section 1(g) be reduced other than in connection with any exercise
of Warrants or such other event covered by Section 2(c)
below. The Required Reserve Amount (including, without
limitation, each increase in the number of shares so reserved)
shall be allocated pro rata among the holders of the Warrants based
on the number of shares of Common Stock issuable upon exercise of
Warrants held by each holder thereof on the Issuance Date (without
regard to any limitations on exercise) (the "
Authorized Share Allocation
"). In the
event that a holder shall sell or otherwise transfer any of such
holder’s Warrants, 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 Warrants shall be allocated to the
remaining holders of Warrants, pro rata based on the number of
shares of Common Stock issuable upon exercise of the Warrants then
held by such holders thereof (without regard to any limitations on
exercise).
(h)
Insufficient Authorized Shares
.
If at any time while this Warrant remains outstanding the Company
does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for
issuance the Required Reserve Amount (an "
Authorized Share Failure
"), then the
Company shall promptly take all action reasonably necessary to
increase the Company's authorized shares of Common Stock to an
amount sufficient to allow the Company to reserve the Required
Reserve Amount for this Warrant 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 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 reasonable best efforts to solicit its
stockholders' approval of such increase in authorized shares of
Common Stock and to cause its board of directors to recommend to
the stockholders that they approve such proposal. Notwithstanding
the foregoing, if any such time of an Authorized Share Failure, the
Company is able to obtain the written consent of a majority of the
shares of its issued and outstanding shares of Common Stock to
approve the increase in the number of authorized shares of Common
Stock, the Company may satisfy this obligation by obtaining such
consent and submitting for filing with the SEC an Information
Statement on Schedule 14C.
2.
ADJUSTMENT OF EXERCISE PRICE AND
NUMBER OF WARRANT SHARES
. The Exercise Price and the number
of Warrant Shares shall be adjusted from time to time as
follows:
(a)
Voluntary Adjustment By
Company
. The Company may at any time during the term of this
Warrant reduce the then current Exercise Price to any amount and
for any period of time deemed appropriate by the Board of Directors
of the Company.
(b)
Adjustment Upon Subdivision or
Combination of Common Stock
. If the Company at any time on
or after the Subscription 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 Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of
Warrant Shares will be proportionately increased. If the Company at
any time on or after the Subscription 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 Exercise Price in effect immediately prior to such
combination will be proportionately increased and the number of
Warrant Shares will be proportionately decreased. Any adjustment
under this Section 2(c) shall become effective at the close of
business on the date the subdivision or combination becomes
effective.
(c)
Other Events
. If any event
occurs of the type contemplated by the provisions of this Section 2
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 Company's Board of Directors will make an appropriate
adjustment in the Exercise Price and the number of Warrant Shares,
as mutually determined by the Company’s Board of Directors
and the Required Holders, so as to protect the rights of the
Holder;
provided
that no such adjustment pursuant to this Section 2(d) will increase
the Exercise Price or decrease the number of Warrant Shares as
otherwise determined pursuant to this Section 2.
3.
RIGHTS UPON DISTRIBUTION OF
ASSETS
. In addition to any adjustments pursuant to Section 2
above, if, on or after the Subscription Date and on or prior to the
Expiration Date, the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
(other than in cash) or otherwise (including, without limitation,
any distribution of stock or other securities, property, options,
evidence of indebtedness or any other assets by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a "
Distribution
"), at any time after the
issuance of this Warrant, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent
that the Holder would have participated therein if the Holder had
held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant (without regard to any limitations or
restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date on
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such
Distribution (
provided
,
however
, that to the extent
that the Holder's right to participate in any such Distribution
would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall not be
entitled to participate in such Distribution to such extent (and
shall not be entitled to beneficial ownership of such shares of
Common Stock as a result of such Distribution (and beneficial
ownership) to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such
time or times as its right thereto would not result in the Holder
and the other Attribution Parties exceeding the Maximum Percentage,
at which time or times the Holder shall be granted such
Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held
similarly in abeyance) to the same extent as if there had been no
such limitation).
4.
PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS
.
(a)
Purchase Rights
. In addition to
any adjustments pursuant to Section 2 above, if at any time on or
after the Subscription Date and on or prior to the Expiration Date
the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of
Common Stock (the "
Purchase
Rights
"), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon
complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) 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, issuance or sale of such Purchase Rights
(
provided
,
however
, that to
the extent that the Holder's right to participate in any such
Purchase Right would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not
be entitled to participate in such Purchase Right to such extent
(and shall not be entitled to beneficial ownership of such Common
Stock as a result of such Purchase Right (and beneficial ownership)
to such extent) and such Purchase Right to such extent shall be
held in abeyance for the benefit of the Holder
until such time or times as its right thereto
would not result in the Holder and
the other Attribution
Parties
exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such
right
(and any Purchase Right granted, issued or sold on
such initial Purchase Right or on any subsequent Purchase Right to
be held similarly in abeyance)
to the
same extent as if there had been no such
limitation)
.
(b)
Fundamental Transaction
. The
Company shall not enter into or be party to a Fundamental
Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Warrant in accordance
with the provisions of this Section 4(b), including agreements to
deliver to the Holder in exchange for this Warrant a security of
the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant,
including, without limitation, which is exercisable for a
corresponding number of shares of capital stock equivalent to the
shares of Common Stock acquirable and receivable upon exercise of
this Warrant (without regard to any limitations on the exercise of
this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such
shares of capital stock (but taking into account the relative value
of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such
adjustments to the number of shares of capital stock and such
exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such
Fundamental Transaction). Upon the consummation of each Fundamental
Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of the applicable
Fundamental Transaction, the provisions of this Warrant and the
other Transaction Documents 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 Warrant with the same effect
as if such Successor Entity had been named as the Company herein.
Upon consummation of each Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be
issued upon exercise of this Warrant at any time after the
consummation of the applicable 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 3
and 4(a) above, which shall continue to be receivable thereafter))
issuable upon the exercise of this Warrant prior to the applicable
Fundamental Transaction, such shares of common stock (or its
equivalent) of the Successor Entity (including its Parent Entity)
which the Holder would have been entitled to receive upon the
happening of the applicable Fundamental Transaction had this
Warrant been exercised immediately prior to the applicable
Fundamental Transaction (without regard to any limitations on the
exercise of this Warrant), as adjusted in accordance with the
provisions of this Warrant. Notwithstanding the foregoing, and
without limiting Section 1(f) hereof, the Holder may elect, at its
sole option, by delivery of written notice to the Company to waive
this Section 4(b) to permit the Fundamental Transaction without the
assumption of this Warrant. In addition to and not in substitution
for any other rights hereunder, prior to the consummation of each
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 the Holder will thereafter have the right
to receive upon an exercise of this Warrant at any time after the
consummation of the applicable Fundamental Transaction but prior to
the Expiration Date, in lieu of the shares of the Common Stock (or
other securities, cash, assets or other property (except such items
still issuable under Sections 3 and 4(a) above, which shall
continue to be receivable thereafter)) issuable upon the exercise
of the Warrant prior to such Fundamental Transaction, such shares
of stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights)
(collectively, the “Corporate Event Consideration”)
which the Holder would have been entitled to receive upon the
happening of the applicable Fundamental Transaction had this
Warrant been exercised immediately prior to the applicable
Fundamental Transaction (without regard to any limitations on the
exercise of this Warrant). The provision made pursuant to the
preceding sentence shall be in a form and substance reasonably
satisfactory to the Holder.
5.
NONCIRCUMVENTION
. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Certificate of Incorporation or Bylaws, or through any
reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, dissolution, issuance or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, and will at all
times in good faith carry out all of the provisions of this Warrant
and take all action as may be required to protect the rights of the
Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the
Exercise 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 nonassessable
shares of Common Stock upon the exercise of this Warrant, and (iii)
shall, so long as any of the Warrants 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 exercise of the Warrants, the number of
shares of Common Stock as shall from time to time be necessary to
effect the exercise of the Warrants then outstanding (without
regard to any limitations on exercise).
6.
WARRANT HOLDER NOT DEEMED A
STOCKHOLDER
. Except as otherwise specifically provided
herein, the Holder, solely in such Person's capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or
be deemed the holder of capital stock of the Company for any
purpose, nor shall anything contained in this Warrant be construed
to confer upon the Holder, solely in such Person's capacity as the
Holder of this Warrant, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which such Person is then entitled to
receive upon the due exercise of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 6, the
Company shall provide the Holder with copies of the same notices
and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the
stockholders.
7.
TRANSFER AND REISSUANCE OF
WARRANTS
.
(a)
Transfer of Warrant
. Pursuant
to FINRA Rule 5110(g)(1), neither this Warrant nor any Warrant
Shares issued upon exercise of this Warrant shall be sold,
transferred, assigned, pledged or hypothecated, or be the subject
of any hedging, short sale, derivative, put or call transaction
that would result in the effective economic disposition of the
securities by any person for a period of 180 days immediately
following the date of effectiveness or commencement of sales of the
offering pursuant to which this Warrant is being issued, except the
transfer of any security:
(i)
by
operation of law or by reason of reorganization of the
Company;
(ii)
to
any FINRA member firm participating in the offering and the
officers and partners thereof, if all securities so transferred
remain subject to the lock-up restriction in this Section 4(a) for
the remainder of the time period;
(iii)
if
the aggregate amount of securities of the Company held by the
Holder or related person do not exceed 1% of the securities being
offered;
(iv)
that
is beneficially owned on a pro-rata basis by all equity owners of
an investment fund, provided that no participating member manages
or otherwise directs investments by the fund, and participating
members in the aggregate do not own more than 10% of the equity in
the fund; or
(v)
the
exercise or conversion of any security, if all securities received
remain subject to the lock-up restriction in this Section 4(a) for
the remainder of the time period.
Subject to the foregoing restrictions, compliance with any
applicable securities laws, and the conditions set forth in Section
7(a) hereof, t
his Warrant and all rights hereunder
(including, without limitation, any registration rights) are
transferable, in whole or in part, upon surrender of this Warrant
at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in
the form attached hereto duly executed by the Holder or its agent
or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees, as
applicable, and in the denomination or denominations specified in
such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. Notwithstanding
anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company unless the
Holder has assigned this Warrant in full, in which case, the Holder
shall surrender this Warrant to the Company within three (3)
Trading Days of the date the Holder delivers an assignment form to
the Company assigning this Warrant in full. The Warrant, if
properly assigned in accordance herewith, may be exercised by a new
holder for the purchase of Warrant Shares without having a new
Warrant issued.
(b)
Lost, Stolen or Mutilated
Warrant
. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to
the Company in customary form (but without the obligation to post a
bond) and, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company shall execute and deliver
to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then
underlying this Warrant.
(c)
Exchangeable for Multiple
Warrants
. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of
Warrant Shares then underlying this Warrant, and each such new
Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such
surrender.
(d)
Issuance of New Warrants
.
Whenever the Company is required to issue a new Warrant pursuant to
the terms of this Warrant, such new Warrant (i) shall be of like
tenor with this Warrant, (ii) shall represent, as indicated on the
face of such new Warrant, the right to purchase the Warrant Shares
then underlying this Warrant (or in the case of a new Warrant being
issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares
designated by the Holder which, when added to the number of shares
of Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of
Warrant Shares then underlying this Warrant), (iii) shall have an
issuance date, as indicated on the face of such new Warrant which
is the same as the Issuance Date, and (iv) shall have the same
rights and conditions as this Warrant.
8.
NOTICES
. Whenever notice is
required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given in writing, (i) if delivered (a)
from within the domestic United States, by first-class registered
or certified airmail, or nationally recognized overnight express
courier, postage prepaid, electronic mail or by facsimile or (b)
from outside the United States, by International Federal Express,
electronic mail or facsimile, and (ii) will be deemed given (A) if
delivered by first-class registered or certified mail domestic,
three (3) Business Days after so mailed, (B) if delivered by
nationally recognized overnight carrier, one (1) Business Day after
so mailed, (C) if delivered by International Federal Express, two
(2) Business Days after so mailed and (D) on the date of
transmission, if delivered by electronic mail to each of the email
addresses specified in this Section 8 prior to 5:00 p.m. (New York
time) on a Trading Day, (E) the next Trading Day after the date of
transmission, if delivered by electronic mail to each of the email
addresses specified in this Section 8 on a day that is not a
Trading Day or later than 5:00 p.m. (New York time) on any Trading
Day and (E) if delivered by facsimile, upon electronic confirmation
of receipt of such facsimile, and will be delivered and addressed
as follows:
(i)
if to the Company, to:
AzurRx BioPharma,
Inc.
760 Parkside
Avenue
Downstate
Biotechnology Incubator,
Suite
304
Brooklyn, New York
11226
Attention: Thijs
Spoor, Chief Executive Officer
Email:
tspoor@azurrx.com
with
copies to:
Disclosure Law
Group, a Professional Corporation
600
West Broadway, Suite 700
San
Diego, California 92101
Attention: Jessica
R. Sudweeks
(ii)
if to the Holder, at such address or other contact information
delivered by the Holder to Company or as is on the books and
records of the Company.
The
Company shall provide the Holder with prompt written notice of all
actions taken pursuant to this Warrant, including in reasonable
detail a description of such action and the reason therefor.
Without limiting the generality of the foregoing, the Company will
give written notice to the Holder (i) immediately upon any
adjustment of the Exercise 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 shares of Common Stock, (B) with respect
to any grants, issuances or sales of any Convertible Securities or
rights to purchase stock, warrants, securities or other property to
holders of shares of Common Stock 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 in
conjunction with such notice being provided to the Holder. It is
expressly understood and agreed that the time of exercise specified
by the Holder in each Exercise Notice shall be definitive and may
not be disputed or challenged by the Company.
9.
AMENDMENT AND WAIVER
. Except as
otherwise provided herein, the provisions of this Warrant may be
amended or waived and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written
consent of the Holder.
10.
GOVERNING LAW; JURISDICTION; JURY
TRIAL
. This Warrant shall be governed by and construed and
enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this
Warrant shall be governed by, the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company 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, 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 brought in an inconvenient forum or
that the venue of such suit, action or proceeding is improper. The
Company hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to the Company at the address
set forth in Section 8(i) above or such other address as the
Company subsequently delivers to the Holder and agrees that such
service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by
law. Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the
Company's obligations to the Holder, to realize on any collateral
or any other security for such obligations, or to enforce a
judgment or other court ruling in favor of the Holder.
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
11.
DISPUTE RESOLUTION
. In the case
of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
submit the disputed determinations or arithmetic calculations via
facsimile or electronic mail within two (2) Business Days of
receipt of the Exercise Notice or other event giving rise to such
dispute, as the case may be, to the Holder. If the Holder and the
Company are unable to agree upon such determination or calculation
of the Exercise Price or the Warrant Shares within three (3)
Business Days of such disputed determination or arithmetic
calculation being submitted to the Holder, then the Company shall,
within two (2) Business Days submit via facsimile or electronic
mail (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and
approved by the Holder or (b) the disputed arithmetic calculation
of the Warrant Shares to the Company's independent, outside
accountant. The Company shall cause at its expense the investment
bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the
Holder of the results no later than ten (10) Business Days from the
time it receives the disputed determinations or calculations. Such
investment bank's or accountant's determination or calculation, as
the case may be, shall be binding upon all parties absent
demonstrable error.
12.
REMEDIES, OTHER OBLIGATIONS, BREACHES
AND INJUNCTIVE RELIEF
. The remedies provided in this Warrant
shall be cumulative and in addition to all other remedies available
under this Warrant and any other Transaction Documents, at law or
in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the
Holder to pursue actual damages for any failure by the Company to
comply with the terms of this Warrant. The Company acknowledges
that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder 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, the holder of
this Warrant shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other
security being required.
13.
TRANSFER
. This Warrant and the
Warrant Shares may be offered for sale, sold, transferred, pledged
or assigned without the consent of the Company.
14.
SEVERABILITY; CONSTRUCTION;
HEADINGS
. If any provision of this Warrant is
prohibited by law or otherwise determined to be invalid or
unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall
be deemed amended to apply to the broadest extent that it would be
valid and enforceable, and the invalidity or unenforceability of
such provision shall not affect the validity of the remaining
provisions of this Warrant so long as this Warrant as so modified
continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the
respective expectations or reciprocal obligations of the parties or
the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes
as close as possible to that of the prohibited, invalid or
unenforceable provision(s). This Warrant shall be deemed to be
jointly drafted by the Company and the Holder and shall not be
construed against any Person as the drafter hereof. The headings of
this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this
Warrant.
15.
DISCLOSURE
. Upon receipt or
delivery by the Company of any notice in accordance with the terms
of this Warrant, unless the Company has in good faith determined
that the matters relating to such notice do not constitute
material, nonpublic information relating to the Company or its
subsidiaries, the Company shall contemporaneously with any such
receipt or delivery publicly disclose such material, nonpublic
information on a Current Report on Form 8-K or otherwise. In the
event that the Company believes that a notice contains material,
nonpublic information relating to the Company or its subsidiaries,
the Company so shall indicate to such Holder contemporaneously with
delivery of such notice, and in the absence of any such indication,
the Holder shall be allowed to presume that all matters relating to
such notice do not constitute material, nonpublic information
relating to the Company or its subsidiaries.
16.
CERTAIN DEFINITIONS
. For
purposes of this Warrant, the following terms shall have the
following meanings:
(a)
"
Affiliate
" means, with respect to any
Person, any other Person that directly or indirectly controls, is
controlled by, or is under common control with, such Person, it
being understood for purposes of this definition that "control" of
a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election
of directors of such Person or direct or cause the direction of the
management and policies of such Person whether by contract or
otherwise.
(b)
"
Attribution Parties
" means,
collectively, the following Persons and entities: (i) any
investment vehicle, including, any funds, feeder funds or managed
accounts, currently, or from time to time after the Subscription
Date, directly or indirectly managed or advised by the Holder's
investment manager or any of its Affiliates or principals, (ii) any
direct or indirect Affiliates of the Holder or any of the
foregoing, (iii) any Person acting or who could be deemed to be
acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the
Company's Common Stock would or could be aggregated with the
Holder's and the other Attribution Parties for purposes of Section
13(d) of the 1934 Act. For clarity, the purpose of the foregoing is
to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.
(c)
“
Bid
Price
” means, for any security as of the particular
time of determination, the bid price for such security on the
Principal Market as reported by Bloomberg as of such time of
determination, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the bid
price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported
by Bloomberg as of such time of determination, or if the foregoing
does not apply, the bid price of such security in the
over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg as of such time of determination,
or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any
market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC)
as of such time of determination. If the Bid Price cannot be
calculated for a security as of the particular time of
determination on any of the foregoing bases, the Bid Price of such
security as of such time of determination shall be the fair market
value as mutually determined by the Company and the Holder. If the
Company and the 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 11. All such
determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar
transaction during such period.
(d)
"
Bloomberg
" means Bloomberg Financial
Markets.
(e)
"
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.
(f)
“
Change of Control
” means any
Fundamental Transaction other than (i) any reorganization,
recapitalization or reclassification of the Common Stock in which
holders of the Company’s voting power immediately prior to
such reorganization, recapitalization or reclassification continue
after such reorganization, recapitalization or reclassification to
hold publicly traded securities and, directly or indirectly, are,
in all material respect, the holders of the voting power of the
surviving entity (or entities with the authority or voting power to
elect the members of the board of directors (or their equivalent if
other than a corporation) of such entity or entities) after such
reorganization, recapitalization or reclassification, (ii) pursuant
to a migratory merger effected solely for the purpose of changing
the jurisdiction of incorporation of the Company or (iii) a merger
in connection with a bona fide acquisition by the Company of any
Person in which (x) the gross consideration paid, directly or
indirectly, by the Company in such acquisition is not greater than
20% of the Company’s market capitalization as calculated on
the date of the consummation of such merger and (y) such merger
does not contemplate a change to the identity of a majority of the
board of directors of the Company. Notwithstanding anything herein
to the contrary, any transaction or series of transaction that,
directly or indirectly, results in the Company or the Successor
Entity not having Common Stock or common stock, as applicable,
registered under the 1934 Act and listed on an Eligible Market
shall be deemed a Change of Control.
(g)
"
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 the 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 OTC Link or "pink sheets" by OTC Markets Group Inc.
(formerly Pink OTC Markets Inc.). 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 Holder. If the Company and the
Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved pursuant to Section
11. All such determinations to be appropriately adjusted for any
stock dividend, stock split, stock combination, reclassification or
other similar transaction during the applicable calculation
period.
(h)
"
Common Stock
" means (i) the
Company's Common Stock, par value $0.0001 per share, and
(ii) any capital stock into which such Common Stock shall have
been changed or any capital stock resulting from a reclassification
of such Common Stock.
(i)
"
Convertible Securities
" means any stock
or securities (other than options) directly or indirectly
convertible into or exercisable or exchangeable for shares of
Common Stock.
(j)
"
Eligible Market
" means The NASDAQ
Capital Market, the NYSE American LLC, The NASDAQ Global Select
Market, The NASDAQ Global Market or The New York Stock Exchange,
Inc.
(k)
"
Fundamental Transaction
" means (A) that
the Company shall, directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related
transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity,
or (ii) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company or
any of its "significant subsidiaries" (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or
allow one or more Subject Entities to make, or allow the Company to
be subject to or have its shares of Common Stock be subject to or
party to one or more Subject Entities making, a purchase, tender or
exchange offer that is accepted by the holders of at least either
(x) 50% of the outstanding shares of Common Stock, (y) 50% of the
outstanding shares of Common Stock calculated as if any shares of
Common Stock held by all Subject Entities making or party to, or
Affiliated with any Subject Entities making or party to, such
purchase, tender or exchange offer were not outstanding; or (z)
such number of shares of Common Stock such that all Subject
Entities making or party to, or Affiliated with any Subject Entity
making or party to, such purchase, tender or exchange offer, become
collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding shares of Common
Stock, or (iv) consummate a stock purchase agreement or other
business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with one or more Subject Entities whereby all such
Subject Entities, individually or in the aggregate, acquire, either
(x) at least 50% of the outstanding shares of Common Stock, (y) at
least 50% of the outstanding shares of Common Stock calculated as
if any shares of Common Stock held by all the Subject Entities
making or party to, or Affiliated with any Subject Entity making or
party to, such stock purchase agreement or other business
combination were not outstanding; or (z) such number of shares of
Common Stock such that the Subject Entities become collectively the
beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of
at least 50% of the outstanding shares of Common Stock, or (v)
reorganize, recapitalize or reclassify its shares of Common Stock,
(B) that the Company shall, directly or indirectly, including
through subsidiaries, Affiliates or otherwise, in one or more
related transactions, allow any Subject Entity individually or the
Subject Entities in the aggregate to be or become the "beneficial
owner" (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, whether through acquisition, purchase, assignment,
conveyance, tender, tender offer, exchange, reduction in
outstanding shares of Common Stock, merger, consolidation, business
combination, reorganization, recapitalization, spin-off, scheme of
arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50%
of the aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock, (y) at least 50% of the
aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock not held by all such Subject
Entities as of the Subscription Date calculated as if any shares of
Common Stock held by all such Subject Entities were not
outstanding, or (z) a percentage of the aggregate ordinary voting
power represented by issued and outstanding shares of Common Stock
or other equity securities of the Company sufficient to allow such
Subject Entities to effect a statutory short form merger or other
transaction requiring other stockholders of the Company to
surrender their Common Stock without approval of the stockholders
of the Company or (C) directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related
transactions, the issuance of or the entering into any other
instrument or transaction structured in a manner to circumvent, or
that circumvents, the intent of this definition in which case this
definition shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this definition to the
extent necessary to correct this definition or any portion of this
definition which may be defective or inconsistent with the intended
treatment of such instrument or transaction.
(l)
"
Group
" means a "group" as that term is
used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5
thereunder.
(m)
“
Options
” means any rights,
warrants or options to subscribe for or purchase shares of Common
Stock or Convertible Securities, other than options granted by the
Company to the Company’s employees, officers and/or
directors.
(n)
"
Parent Entity
" of a Person means an
entity that, directly or indirectly, controls the applicable
Person, including such entity whose common stock or equivalent
equity security is quoted or listed on an Eligible Market (or, if
so elected by the Holder, any other market, exchange or quotation
system), or, if there is more than one such Person or such entity,
the Person or such entity designated by the Holder or in the
absence of such designation, such Person or entity with the largest
public market capitalization as of the date of consummation of the
Fundamental Transaction.
(o)
"
Person
" means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and a
government or any department or agency thereof.
(p)
"
Principal Market
" means The NASDAQ
Capital Market.
(q)
"
Required Holders
" means the holders of
the Warrants representing at least a majority of the shares of
Common Stock underlying the Warrants then outstanding.
(r)
“Standard Settlement Period”
means the standard settlement period, expressed in a number of
Trading Days, for the Company’s primary trading market or
quotation system with respect to the Common Stock that is in effect
on the date of receipt of an applicable Conversion
Notice.
(s)
"
Subject Entity
" means any Person,
Persons or Group or any Affiliate or associate of any such Person,
Persons or Group.
(t)
"
Successor Entity
" means one or more
Person or Persons (or, if so elected by the Holder, the Company or
Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or one or more Person or Persons (or, if so
elected by the Holder, the Company or the Parent Entity) with which
such Fundamental Transaction shall have been entered
into.
(u)
"
Trading Day
" means 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.
(v)
“
Transaction Documents
” means any
agreement entered into by and between the Company and the Holder,
as applicable.
(w)
"
Weighted Average Price
" means, for any
security as of any date, the dollar volume-weighted average price
for such security on the Principal Market during the period
beginning at 9:30:01 a.m., New York time (or such other time as the
Principal Market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York time (or such other
time as the Principal Market publicly announces is the official
close of trading), as reported by Bloomberg through its "Volume at
Price" function or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such
security during the period beginning at 9:30:01 a.m., New York time
(or such other time as such market publicly announces is the
official open of trading), and ending at 4:00:00 p.m., New York
time (or such other time as such market publicly announces is the
official close of trading), as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security
by Bloomberg for such hours, the average of the highest Closing Bid
Price and the lowest closing ask price of any of the market makers
for such security as reported in the OTC Link or "pink sheets" by
OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If the
Weighted Average Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Weighted Average
Price of such security on such date shall be the fair market value
as mutually determined by the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market
value of such security, then such dispute shall be resolved
pursuant to Section 11 with the term "Weighted Average Price" being
substituted for the term "Exercise Price." All such determinations
shall be appropriately adjusted for any stock dividend, stock
split, stock combination, reclassification or other similar
transaction during the applicable calculation period.
[Signature Page Follows]
IN WITNESS WHEREOF,
the Company has
caused this Warrant to Purchase Common Stock to be duly executed as
of the Issuance Date set out above.
By:___________________________
Name:
Title:
EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS
WARRANT TO PURCHASE COMMON STOCK
AZURRX BIOPHARMA, INC.
The
undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock ("
Warrant Shares
") of AzurRx BioPharma,
Inc., a company organized under the laws of Delaware (the
"
Company
"), evidenced by the
attached Warrant to Purchase Common Stock (the "
Warrant
"). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set
forth in the Warrant.
1. Form
of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as:
____________
a "
Cash Exercise"
with respect to
_________________ Warrant Shares; and/or
____________
a
"Cashless Exercise"
with
respect to _______________ Warrant Shares.
2.
Payment of Exercise Price. In the event that the holder has elected
a Cash Exercise with respect to some or all of the Warrant Shares
to be issued pursuant hereto, the holder shall pay the Aggregate
Exercise Price in the sum of $___________________ to the Company in
accordance with the terms of the Warrant.
3.
Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the
Warrant.
Date:
_______________ __, ______
Name
of Registered Holder
By:
_________________________________
Name:
Title:
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and
supply required information. Do not use this form to purchase
shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
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Address:
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Phone Number:
Email Address:
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______________________________________
______________________________________
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Dated:
_______________ __, ______
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Holder’s
Signature:
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Holder’s
Address:______________________
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ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs
[TRANSFER AGENT] to issue the above indicated number of shares of
Common Stock on or prior to the applicable Share Delivery
Date.
By:________________________________
Name:
Title:
