UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): December 20,
2019
AZURRX BIOPHARMA, INC.
(Exact
name of Registrant as specified in its Charter)
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Delaware
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001-37853
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46-4993860
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(State
or Other Jurisdiction of
Incorporation
or Organization)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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760 Parkside Avenue
Downstate Biotechnology Incubator,
Suite 304
Brooklyn, New York
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11226
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (646)
699-7855
(Name,
address, including zip code, and telephone number, including area
code, of agent for service of process)
NOT APPLICABLE
(Former
Name or Former Address, if Changes Since Last Report)
Check
the appropriate box below if the Form 8-K is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions):
[
] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Trading
Symbol(s)
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Name of
each exchange on which registered
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Common
Stock, par value $0.0001 per share
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AZRX
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Nasdaq
Capital Market
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Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (17 CFR
230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17
CFR 240.12b-2)
Emerging
Growth Company ☒
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act ☐
Item 1.01 Entry into a Material Definitive Agreement.
On December 20, 2019, AzurRx BioPharma, Inc. (the
“Company”) began an offering of (i) Senior
Convertible Promissory Notes (each a “Note,” and together, the
“Notes”) in the principal amount of up to $8.0
million to certain accredited investors (the
“Investors”), and (ii) warrants
(“Warrants”) to purchase shares of the Company’s
common stock, par value $0.001 per share
(“Common
Stock”), each pursuant to
Note Purchase Agreements entered into by and between the Company
and each of the Investors (the “NPAs”) (the “Note
Offering”).
On December 20, 2019 and December 24, 2019, the
Company issued Notes to the Investors in the aggregate principal
amount of $3,018,100. Each Note has a maturity date that is nine
months from the date of issuance, accrues interest at a rate of 9%
per annum, and is convertible, at the option of the holder, into
shares of the Company’s Common Stock at a price of $0.97 per
share (the “Conversion
Shares”). As additional
consideration for the execution of the NPA, each Investor also
received Warrants to purchase that number of shares of the
Company’s Common Stock equal to one-half of the Conversion
Shares issuable upon conversion of the Notes (the
“Warrant
Shares”). The Warrants
have an exercise price of $1.07 per share and expire three years
from the date of issuance. The Company and each Investor executed a
Registration Rights Agreement (the “RRA”), pursuant to which the Company agreed to
file a registration statement with the Securities and Exchange
Commission no later than 30 days after the beginning of the Note
Offering, on behalf of Investors, to register the Conversion Shares
and Warrant Shares.
Placement agent fees of $271,629 were paid to
Alexander Capital L.P., who acted as placement agent for the Note
Offering, which fees were based on 9% of the aggregate principal
amount of the Notes issued to the Investors. In addition, Alexander
Capital L.P. (i) was issued warrants, containing substantially the
same terms and conditions as the Warrants, to purchase 217,801
shares of Common Stock (the “Placement Agent
Warrants”), representing
7% of the Conversion Shares issuable upon conversion of the Notes
issued to the Investors, and (ii) was paid a non-accountable
expense allowance of 1% of the gross proceeds from the Notes
Offering. The Placement Agent Warrants have an exercise price of
$1.21 per share and expire three years from the date of
issuance.
The Company intends to use the proceeds from the
Note Offering for general working capital purposes, and to repay
certain amounts due and payable to ADEC Private Equity Investments,
LLC (“ADEC”) pursuant to certain outstanding Senior
Convertible Notes issued to ADEC in the aggregate principal amount
of $2.0 million (each an “ADEC Note” and together the
“ADEC
Notes”), as more
particularly described below in Item 8.01 of this Current Report on
Form 8-K.
The
issuance of the Notes, Warrants and the Placement Agent Warrants
was exempt from the registration requirements of the Securities Act
of 1933, as amended, in accordance with Section 4(a)(2) and/or
Regulation 506 promulgated thereunder, as a transaction by an
issuer not involving a public offering.
The
foregoing description of the NPA, the Notes, the Warrants and the
RRA do not purport to be complete, and are qualified in their
entirety by reference to the same, attached hereto as Exhibits
10.1, 10.2, 10.3 and 10.4, respectively, each of which are
incorporated by reference herein.
Item 2.03 Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement
of a Registrant.
See
Item 1.01.
Item 3.02 Unregistered Sales of Equity
Securities.
See
Item 1.01.
Item 5.03 Amendments to Articles of Incorporation or
Bylaws.
On December 20, 2019, the Company filed an
amendment to its Amended and Restated Certificate of Incorporation
(the “Charter
Amendment”) with the
Secretary of State of the State of Delaware to increase the number
of authorized shares of Common Stock by 50,000,000 shares to
150,000,000 shares, which Charter Amendment was effective
immediately upon acceptance by the Secretary of State of the State
of Delaware. The Charter Amendment was approved by stockholders at
the Company’s annual meeting of stockholders held December
19, 2019.
Item 8.01 Other Events.
In connection with the Note Offering, ADEC
consented to (i) the issuance of the Notes in the Note Offering,
and (ii) the extension of the maturity date of an ADEC Note
currently due and payable on December 31, 2019 in the principal
amount of $1.0 million (“Note A”) to January 20, 2020, and the Company
agreed to, among other agreements, use 50% of the initial $1.2
million in proceeds received from the Note Offering to reduce the
principal due and payable ADEC under the ADEC Note maturing on
December 31, 2020 (“Note B”). As of the date of this Current Report on
Form 8-K, the Company has repaid $550,000 in principal due and
owing ADEC under Note B.
Item 9.01. Financial Statements and
Exhibits.
(d)
Exhibits.
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Exhibit Number
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Description
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Certificate of Amendment to the
Certificate of Incorporation
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Form of Note Purchase
Agreement
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Form of Senior Convertible
Promissory Note
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Form of Warrant
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Form of Registration Rights
Agreement
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
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AzurRx BioPharma, Inc.
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Date:
December 30, 2019
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By:
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/s/ James
Sapirstein
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Name: James Sapirstein
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Title: President and Chief Executive Officer
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Exhibit Index
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Exhibit Number
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Description
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Certificate of Amendment
to the Certificate of Incorporation
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Form of Note Purchase
Agreement
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Form of Senior Convertible
Promissory Note
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Form of Warrant
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Form of Registration Rights
Agreement
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Exhibit 3.1
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
AZURRX BIOPHARMA, INC.
AzurRx BioPharma, Inc. (the “Corporation”), a corporation organized and existing
under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify as follows:
FIRST: That a resolution was
duly adopted on October 29, 2019, by the Board of Directors of the
Corporation pursuant to Section 242 of the General Corporation Law
of the State of Delaware setting forth an amendment to the
Certificate of Incorporation of the Corporation and declaring said
amendment to be advisable. The stockholders of the
Corporation duly approved said proposed amendment at the 2019
annual meeting of stockholders held on December 19, 2019, in
accordance with Section 242 of the General Corporation Law of the
State of Delaware. The proposed amendment set forth as
follows:
Article FOURTH of the Amended and Restated Certificate of
Incorporation of the Corporation, as amended to date, be and hereby
is amended by deleting the following sentence in the first
paragraph of Article FOURTH:
The
total number of shares which the Corporation shall have authority
to issue is one hundred ten million (110,000,000) shares, of which
one hundred million (100,000,000) shares shall be common stock, par
value $0.0001 per share, and ten million (10,000,000) shares shall
be preferred stock, par value $.0.0001 per share.
The first reflected above under the first paragraph of
Article FOURTH will be replaced by the
following:
The
total number of shares which the Corporation shall have authority
to issue is one hundred sixty million (160,000,000) shares, of
which one hundred fifty million (150,000,000) shares shall be
common stock, par value $0.0001 per share, and ten million
(10,000,000) shares shall be preferred stock, par value $.0.0001
per share.
SECOND: That said amendment
will have an Effective Time of 5:00 P.M., Eastern Time, on the
filing date of this Certificate of Amendment to the Amended and
Restated Certificate of Incorporation
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President and Chief Executive Officer
this 20th
day of December,
2019.
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/s/
James Sapirstein
JAMES SAPIRSTEIN
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President and Chief Executive Officer
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Exhibit 10.1
CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT
This
Convertible Note and Warrant Purchase Agreement, dated as of
December __, 2019 (this “Agreement”), is entered
into by and among AzurRx BioPharma, Inc., a Delaware corporation
(the “Company”), and the other
signatories hereto (each a “Lender” and collectively,
the “Lenders”).
RECITALS
A. On
the terms and subject to the conditions set forth herein, the
Lenders are willing to purchase from the Company and the Company is
willing to issue and sell to the Lenders, Convertible Promissory
Notes in the principal amount of up to Eight Million Dollars
($8,000,000), substantially in the form attached hereto as Exhibit
A (each a “Note” and collectively,
the “Notes”);
B. Each
Note shall be convertible into that number of shares (the
“Conversion
Shares”) of the Company’s common stock, $0.0001
par value per share (“Common Stock”), equal to
the principal amount of each Note divided by (i) the lower of (A)
the closing price of the Common Stock immediately preceding the
date of this Agreement, or (B) the average closing price of the
Common Stock for the five (5) trading days immediately preceding
such date, plus (ii) $0.0625 (the “Conversion
Price”);
C. As
additional consideration for the issuance of the Notes by the
Company, the Company is issuing to the Lenders warrants, in
substantially the form attached hereto as Exhibit B
(“Warrants”), to purchase
that number of shares of Common Stock equal to 50% of the total
number of Conversion Shares issuable upon conversion of Notes
purchased pursuant to this Agreement by each Lender (the
“Warrant
Shares”), at an exercise price equal to 110% of the
Conversion Price; and
D. In
connection with the purchase of Notes and Warrants pursuant to this
Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement, in substantially the form attached
hereto as Exhibit C (the “Registration Rights
Agreement”), pursuant to which the Company has agreed
to register the Conversion Shares and Warrant Shares under the
Securities Act of 1933, as amended (the “Securities Act”), and the
rules and regulations promulgated thereunder. This Agreement, the
Notes, the Warrants, the Registration Rights Agreement and the
Escrow Agreement (as defined herein) are referred to herein
collectively as the “Transaction
Documents”).
AGREEMENT
NOW, THEREFORE, in consideration of the
foregoing, and the representations, warranties, and conditions set
forth below, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Issuance and Sale of the Note and
Warrants. In reliance upon the representations, warranties
and covenants of the parties set forth herein, the Company agrees
to issue, sell and deliver to each Lender, and each Lender agrees,
severally and not jointly, to purchase from the Company a Note in
the principal amount set forth below such Lender’s name on
the signature page hereto, which Note shall include a Warrant
exercisable for that number of Warrant Shares set forth below
Lender’s name on the signature page hereto. The purchase
price for the Note and Warrant shall be equal to the principal
amount indicated on the face of the Note and set forth below
Lender’s name on the signature page hereto. The Company and
the Lender are executing and delivering this Agreement and issuing
the Notes and Warrants in accordance with, and in reliance upon,
the exemption from securities registration afforded by Section 4(2)
of the Securities Act, including Regulation D (“Regulation D”), and/or
upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of
the investments to be made hereunder. The Notes, the Warrants and
the Warrant Shares are sometimes collectively referred to herein as
the “Securities”.
2. Closing; Delivery. The Company
will deliver to Lenders the Notes against receipt by the Company of
the purchase price for the Notes in an aggregate purchase price of
up to Eight Million Dollars ($8,000,000) (the “Purchase Price”). Each
Warrant shall be issued within three (3) business days following
the receipt by the Company of the purchase price for the Note. The
closings (each, a “Closing”) of the purchase
and sale of the Notes and Warrants to be acquired by the Lenders
from the Company under this Agreement shall take place at such time
or times as Lenders have executed this Agreement to purchase at
least One Million Dollars ($1,000,000) principal amount of Notes,
and all of the conditions set forth in Sections 5 and 6 hereof and
applicable to the Closing shall have been fulfilled or waived in
accordance herewith (each, a “Closing Date”). At the
Closing, each Lender shall deliver its Purchase Price by wire
transfer to an escrow account designated by the escrow agent in the
Escrow Agreement substantially in the form attached hereto as
Exhibit D (“Escrow
Agreement”).
3. Representations and Warranties of the
Company. Subject to any exceptions set forth in schedules
attached hereto, which schedules are incorporated herein by this
reference, the Company hereby represents and warrants to each
Lender that:
(a) Organization and Standing. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to carry on its business as
now conducted and proposed to be conducted. The Company and each
such Subsidiary (as defined in Section 3(h)) is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary except for
any jurisdiction(s) (alone or in the aggregate) in which the
failure to be so qualified will not have a Material Adverse Effect.
For the purposes of this Agreement, “Material Adverse Effect”
means any material adverse effect on the business, operations,
properties, prospects, or financial condition of the Company and
its Subsidiaries and/or any condition, circumstance, or situation
that would prohibit or otherwise materially interfere with the
ability of the Company to perform any of its obligations under this
Agreement in any material respect.
(b) Corporate Power. The Company
has all requisite legal and corporate power and authority to enter
into and perform this Agreement and the other Transaction
Documents, and to consummate the transactions contemplated hereby
and thereby and to issue the Securities, in accordance with the
terms hereof and thereof. This Agreement, and, upon issuance, the
Notes and Warrants will be, valid and binding obligations of the
Company, enforceable in accordance with their respective terms,
except as the same may be limited by bankruptcy, insolvency,
moratorium, and other laws of general application affecting the
enforcement of creditors’ rights.
(c) Authorization. The execution
and delivery of this Agreement, the Notes, the Warrants, the
Conversion Shares and the Warrant Shares by the Company and the
consummation by it of the transactions contemplated hereby and
thereby (including without limitation, the issuance of the Notes
and the Warrants, as well as the issuance and reservation for
issuance of the Conversion Shares issuable upon conversion of the
Notes and the issuance and reservation for issuance of the Warrant
Shares upon exercise of the Warrants) have been duly authorized by
the Company’s Board of Directors and no further consent or
authorization of the Company, its Board of Directors, its
shareholders, or its debt holders is required. When paid for and
issued in accordance with the terms hereof, the Notes (and
Conversion Shares issuable upon conversion thereof) shall be
validly issued and outstanding, free and clear of all liens,
encumbrances and rights of refusal of any kind. When the Warrant
Shares are issued and paid for in accordance with the terms of this
Agreement, such Warrant Shares will be duly authorized by all
necessary corporate action and validly issued and outstanding,
fully paid and nonassessable, free and clear of all liens,
encumbrances and rights of refusal of any kind and the holders
shall be entitled to all rights accorded to a holder of Common
Stock.
(d) Capitalization.
i. The authorized
capital stock of the Company as of the date hereof is set forth on
Schedule 3(d)
hereto. All of the outstanding shares of the Common Stock and any
other outstanding security of the Company have been duly and
validly authorized and validly issued, fully paid and
nonassessable. Except as set forth in this Agreement, no shares of
Common Stock or any other security of the Company are entitled to
preemptive rights, registration rights, rights of first refusal or
similar rights and there are no outstanding options, warrants,
scrip, rights to subscribe to, call or commitments of any character
whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company. The Company is not a
party to or bound by any agreement or understanding granting
registration or anti-dilution rights to any person with respect to
any of its equity or debt securities. The Company is not a party
to, and it has no knowledge of, any agreement or understanding
restricting the voting or transfer of any shares of the capital
stock of the Company. Except as disclosed below, (i) there are no
outstanding debt securities, or other form of material debt of the
Company or any of its Subsidiaries, (ii) there are no contracts,
commitments, understandings, agreements or arrangements under which
the Company or any of its Subsidiaries is required to register the
sale of any of their securities under the Securities Act, (iii)
there are no outstanding securities of the Company or any of its
Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings, agreements
or arrangements by which the Company or any of its Subsidiaries is
or may become bound to redeem a security of the Company or any of
its Subsidiaries, (iv) there are no securities or instruments
containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities, (v) the Company does
not have any stock appreciation rights or “phantom
stock” plans or agreements, or any similar plan or agreement
and (vi) as of the date of this Agreement, to the Company’s
and each of its Subsidiaries’ knowledge, no person or group
of related persons beneficially owns (as determined pursuant to
Rule 13d-3 promulgated under the Exchange Act (as defined below))
or has the right to acquire by agreement with or by obligation
binding upon the Company, beneficial ownership of in excess of 5%
of the Common Stock. Any person with any right to purchase
securities of the Company that would be triggered as a result of
the transactions contemplated hereby or by any of the other
Transaction Documents has waived such rights or the time for the
exercise of such rights has passed, except where failure of the
Company to receive such waiver would not have a Material Adverse
Effect. There are no options, warrants or other outstanding
securities of the Company (including, without limitation, any
equity securities issued pursuant to any Company Plan) the vesting
of which will be accelerated by the transactions contemplated
hereby or by any of the other Transaction Documents. None of the
transactions contemplated by this Agreement or by any of the other
Transaction Documents shall cause, directly or indirectly, the
acceleration of vesting of any options issued pursuant the
Company’s stock option plans.
ii. The Conversion
Shares and Warrant Shares are duly authorized and reserved for
issuance and, upon conversion of the Notes or exercise of the
Warrants (as applicable) in accordance with their respective terms,
will be validly issued, fully paid and non-assessable, and free
from all taxes, liens, claims and encumbrances with respect to the
issue thereof and shall not be subject to preemptive rights or
other similar rights of shareholders of the Company and will not
impose personal liability upon the holder thereof.
(e) No Conflicts. The execution,
delivery and performance by the Company of its obligations under
the Transaction Documents will not: (i) conflict with or result in
a breach of or a default under any of the terms or provisions of,
(A) the Company’s certificate of incorporation (the
“Certificate”) or by-laws
(“Bylaws”), or (B) any
material provision of any indenture, mortgage, deed of trust or
other material agreement or instrument to which the Company is a
party or by which it or any of its material properties or assets
(including, without limitation, the Collateral) is bound, (ii)
result in a violation of any material provision of any law,
statute, rule, regulation, or any existing applicable decree,
judgment or order by any court, Federal or state regulatory body,
administrative agency, or other governmental body having
jurisdiction over the Company, or any of its material properties or
assets or (iii) result in the creation or imposition of any
material lien, charge or encumbrance upon any material property or
assets of the Company or any of its subsidiaries pursuant to the
terms of any agreement or instrument to which any of them is a
party or by which any of them may be bound or to which any of their
property or any of them is subject except, in the case of clauses
(ii) and (iii), for such violations, breaches, conflicts, defaults
or other occurrences which, individually or in the aggregate, would
not have a Material Adverse Effect.
(f) No Approvals. No consent,
approval or authorization of or designation, declaration or filing
with any governmental authority on the part of the Company is
required in connection with the valid execution and delivery of the
Transaction Documents.
(g) Commission Documents, Financial
Statements. The Common Stock of the Company is registered
pursuant to Section 12(b) or 12(g) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), and the
Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the Commission
pursuant to the reporting requirements of the Exchange Act (all of
the foregoing including filings incorporated by reference therein
being referred to herein as the “Commission Documents”).
At the times of their respective filings, the Form 10-Q for the
fiscal quarter ended September 30, 2019, June 30, 2019 and March
31, 2019 (collectively, the “Form 10-Q”) and the Form
10-K for the fiscal year ended December 31, 2018, (the
“Form
10-K”) complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of
the Commission promulgated thereunder, and the Form 10-Q and Form
10-K did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company
included in the Commission Documents complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the Commission. Such financial
statements have been prepared in accordance with generally accepted
accounting principles (“GAAP”) applied on a
consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes
thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or
summary statements), and fairly present in all material respects
the financial position of the Company and its Subsidiaries as of
the dates thereof and the results of operations and cash flows for
the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
(h) Subsidiaries. Schedule 3(h) hereto sets forth
each Subsidiary of the Company, showing the jurisdiction of its
incorporation or organization and showing the percentage of each
person’s ownership of the outstanding stock or other
interests of such Subsidiary. For the purposes of this Agreement,
“Subsidiary” shall mean
any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power
(absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly
or indirectly by the Company and/or any of its other Subsidiaries.
All of the outstanding shares of capital stock of each Subsidiary
have been duly authorized and validly issued, and are fully paid
and nonassessable. There are no outstanding preemptive, conversion
or other rights, options, warrants or agreements granted or issued
by or binding upon any Subsidiary for the purchase or acquisition
of any shares of capital stock of any Subsidiary or any other
securities convertible into, exchangeable for or evidencing the
rights to subscribe for any shares of such capital stock. Neither
the Company nor any Subsidiary is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of the capital stock of any Subsidiary or any
convertible securities, rights, warrants or options of the type
described in the preceding sentence. Neither the Company nor any
Subsidiary is party to, nor has any knowledge of, any agreement
restricting the voting or transfer of any shares of the capital
stock of any Subsidiary.
(i) No Material Adverse Change.
Since September 31, 2019, the Company has not experienced or
suffered any Material Adverse Effect.
(j) No Undisclosed Liabilities.
Neither the Company nor any of its Subsidiaries has incurred any
liabilities, obligations, claims or losses (whether liquidated or
unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) other than those incurred in the ordinary course of
the Company’s or its Subsidiaries respective businesses or
which, individually or in the aggregate, are not reasonably likely
to have a Material Adverse Effect.
(k) No Undisclosed Events or
Circumstances. Since September 31, 2019, no event or
circumstance has occurred or exists with respect to the Company or
its Subsidiaries or their respective businesses, properties,
prospects, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly
announced or disclosed.
(l) Indebtedness. Schedule 3(l) hereto sets forth
as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or Indebtedness for
which the Company or any Subsidiary has commitments. For the
purposes of this Agreement, “Indebtedness” shall mean
(a) any liabilities for borrowed money or amounts owed in excess of
$100,000 (other than trade accounts payable incurred in the
ordinary course of business), (b) all guaranties, endorsements and
other contingent obligations in respect of Indebtedness of others,
whether or not the same are or should be reflected in the
Company’s balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business; and (c) the present value of any lease payments in excess
of $100,000 due under leases required to be capitalized in
accordance with GAAP. Neither the Company nor any Subsidiary is in
default with respect to any Indebtedness.
(m) Title to Assets. Each of the
Company and the Subsidiaries has good and valid title to all of its
real and personal property reflected in the Commission Documents,
free and clear of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except for those that,
individually or in the aggregate, do not cause a Material Adverse
Effect. Any leases of the Company and each of its Subsidiaries are
valid and subsisting and in full force and effect.
(n) Actions Pending. There is no
action, suit, claim, investigation, arbitration, alternate dispute
resolution proceeding or other proceeding pending or, to the
knowledge of the Company, threatened against the Company or any
Subsidiary which questions the validity of this Agreement or any of
the other Transaction Documents or any of the transactions
contemplated hereby or thereby or any action taken or to be taken
pursuant hereto or thereto. There is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding
or other proceeding pending or, to the knowledge of the Company,
threatened against or involving the Company, any Subsidiary or any
of their respective properties or assets, which individually or in
the aggregate, would reasonably be expected, if adversely
determined, to have a Material Adverse Effect. There are no
outstanding orders, judgments, injunctions, awards or decrees of
any court, arbitrator or governmental or regulatory body against
the Company or any Subsidiary or any officers or directors of the
Company or Subsidiary in their capacities as such, which
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
(o) Compliance with Law. The
business of the Company and the Subsidiaries has been and, to the
best of the Company’s knowledge is, presently being conducted
in accordance with all applicable federal, state and local
governmental laws, rules, regulations and ordinances, except where,
individually or in the aggregate, the noncompliance therewith could
not reasonably be expected to have a Material Adverse Effect. The
Company and each of its Subsidiaries have all franchises, permits,
licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of its
business as now being conducted by it unless the failure to possess
such franchises, permits, licenses, consents and other governmental
or regulatory authorizations and approvals, individually or in the
aggregate, could not reasonably be expected to have a Material
Adverse Effect.
(p) Taxes. The Company and each of
the Subsidiaries has accurately prepared and filed all federal,
state and other tax returns required by law to be filed by it, has
paid or made provisions for the payment of all taxes shown to be
due and all additional assessments, and adequate provisions have
been and are reflected in the financial statements of the Company
and the Subsidiaries for all current taxes and other charges to
which the Company or any Subsidiary is subject and which are not
currently due and payable. None of the federal income tax returns
of the Company or any Subsidiary have been audited by the Internal
Revenue Service. The Company has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether
federal or state) of any nature whatsoever, whether pending or
threatened against the Company or any Subsidiary for any period,
nor of any basis for any such assessment, adjustment or
contingency.
(q) Certain Fees. The Company has
not employed any broker or finder or incurred any liability for any
brokerage or investment banking fees, commissions, finders’
structuring fees, financial advisory fees or other similar fees in
connection with the Transaction Documents, other than pursuant to
an Engagement Agreement, dated as of November 14, 2019, by and
between the Company and Alexander Capital L.P.
(r) Disclosure. To the
Company’s knowledge, neither the representations and
warranties contained in this Section 3 or the schedules hereto nor
any other documents, certificates or instruments furnished to the
Lenders by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by this Agreement
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made herein
or therein, in the light of the circumstances under which they were
made herein or therein, not misleading.
(s) Intellectual Property. The
Company and the Subsidiaries own or possess the requisite licenses
or rights to use all patents, patent applications, patent rights,
inventions, know-how, trade secrets, trademarks, trademark
applications, service marks, service names, trade names and
copyrights (“Intellectual Property”)
necessary to enable them to conduct their business as now operated
(and, as presently contemplated to be operated in the future);
there is no claim or action by any person pertaining to, or
proceeding pending, or to the Company’s knowledge threatened,
which challenges the right of the Company or of a Subsidiary with
respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, as presently
contemplated to be operated in the future); to the best of the
Company’s knowledge, the Company’s or the
Subsidiaries’ current and intended products, services and
processes do not infringe on any Intellectual Property or other
rights held by any person; and the Company is unaware of any facts
or circumstances which might give rise to any of the foregoing. The
Company and the Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of their
Intellectual Property.
(t) Environmental Compliance. To
the best of the Company’s knowledge, the Company and the
Subsidiaries have obtained all material approvals, authorization,
certificates, consents, licenses, orders and permits or other
similar authorizations of all governmental authorities, or from any
other person, that are required under any Environmental Laws.
“Environmental
Laws” shall mean all applicable laws relating to the
protection of the environment including, without limitation, all
requirements pertaining to reporting, licensing, permitting,
controlling, investigating or remediating emissions, discharges,
releases or threatened releases of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, materials
or wastes, whether solid, liquid or gaseous in nature, into the
air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, material
or wastes, whether solid, liquid or gaseous in nature. To the
Company’s knowledge, the Company has all necessary
governmental approvals required under all Environmental Laws as
necessary for the Company’s business or the business of any
of its subsidiaries. Except for such instances as would not
individually or in the aggregate have a Material Adverse Effect and
to the knowledge of the Company, there are no past or present
events, conditions, circumstances, incidents, actions or omissions
relating to or in any way affecting the Company or the Subsidiaries
that violate or may violate any Environmental Law after the Closing
Date or that may give rise to any environmental liability, or
otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture,
processing, distribution, use, treatment, storage (including
without limitation underground storage tanks), disposal, transport
or handling, or the emission, discharge, release or threatened
release of any hazardous substance.
(u) Books and Records; Internal Accounting
Controls. The records and documents of the Company and the
Subsidiaries accurately reflect in all material respects the
information relating to the business of the Company and the
Subsidiaries, the location of their assets, and the nature of all
transactions giving rise to the obligations or accounts receivable
of the Company or any Subsidiary. The Company and each of the
Subsidiaries maintain a system of internal accounting controls
sufficient, in the judgment of the Company’s board of
directors, to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with 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 actions are taken with respect to any
differences.
(v) Securities Act of
1933.
i. Based in material
part upon the representations herein of the Lenders, the Company
has complied and will comply with all applicable federal and state
securities laws in connection with the offer, issuance and sale of
the Securities hereunder. Neither the Company nor anyone acting on
its behalf, directly or indirectly, has or will sell, offer to sell
or solicit offers to buy any of the Securities or similar
securities to, or solicit offers with respect thereto from, or
enter into any negotiations relating thereto with, any person, or
has taken or will take any action so as to bring the issuance and
sale of any of the Securities under the registration provisions of
the Securities Act and applicable state securities laws. Neither
the Company nor any of its affiliates, nor any person acting on its
or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the
Securities Act) in connection with the offer or sale of any of the
Securities.
ii. None of the
Company, any of its predecessors, any affiliated issuer, any
director, executive officer, other officer of the Company
participating in the offering hereunder, any beneficial owner of
20% or more of the Company’s outstanding voting equity
securities, calculated on the basis of voting power, nor any
promoter (as that term is defined in Rule 405 under the Securities
Act) connected with the Company in any capacity at the time of sale
(each, an “Issuer
Covered Person”) is subject to any of the “Bad
Actor” disqualifications described in Rule 506(d)(1)(i) to
(viii) under the Securities Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2) or
(d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification
Event.
(w) Employees. Neither the Company
nor any Subsidiary has any collective bargaining arrangements or
agreements covering any of its employees. Neither the Company nor
any Subsidiary has any employment contract, agreement regarding
proprietary information, non-competition agreement,
non-solicitation agreement, confidentiality agreement, or any other
similar contract or restrictive covenant, relating to the right of
any officer, employee or consultant to be employed or engaged by
the Company or such Subsidiary required to be disclosed in the
Commission Documents that is not so disclosed. No officer,
consultant or key employee of the Company or any Subsidiary whose
termination, either individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect, has terminated
or, to the knowledge of the Company, has any present intention of
terminating his or her employment or engagement with the Company or
any Subsidiary.
(x) Transactions with Affiliates.
Except for arm’s length transactions pursuant to which the
Company or any of the Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Company or
any of the Subsidiaries could obtain from third parties and other
than the grant of stock options described in the Commission
Documents, none of the officers, directors, or employees of the
Company is presently a party to any transaction with the Company or
any of the Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer,
director, trustee or partner.
(y) No Integrated Offering. Neither
the Company, nor any of its affiliates, nor any person acting on
its or their behalf, has directly or indirectly made any offers or
sales in any security or solicited any offers to buy any security
under circumstances that would require registration under the
Securities Act of the issuance of the Securities to the Lenders.
The issuance of the Securities to the Lenders will not be
integrated with any other issuance of the Company’s
securities (past, current or future) for purposes of any
shareholder approval provisions applicable to the Company or its
securities.
(z) Insurance. The Company and each
of the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in
the businesses in which the Company and the Subsidiaries are
engaged. Neither the Company nor any such 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 would not have a Material Adverse
Effect.
(aa) Foreign
Corrupt Practices. Neither the Company, nor any of the
Subsidiaries, nor any director, officer, agent, employee or other
person acting on behalf of the Company or any Subsidiary has, in
the course of his actions for, or on behalf of, the Company, used
any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political
activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate
funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended, or made any
bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.
(bb) Solvency.
The Company (after giving effect to the transactions contemplated
by this Agreement) is solvent (i.e., its assets have a fair market
value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and
matured) and currently the Company has no information that would
lead it to reasonably conclude that the Company would not, after
giving effect to the transaction contemplated by this Agreement,
have the ability to, nor does it intend to take any action that
would impair its ability to, pay its debts from time to time
incurred in connection therewith as such debts mature. The
Company’s financial statements for its most recent fiscal
year end and interim financial statements have been prepared
assuming the Company will continue as a going concern, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.
(cc) No
Investment Company. The Company is not, and upon the
issuance and sale of the Securities as contemplated by this
Agreement will not be an “investment company” required
to be registered under the Investment Company Act of 1940 (an
“Investment
Company”). The Company is not controlled by an
Investment Company.
(dd) No
Off Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company or any of
its Subsidiaries and an unconsolidated or other off balance sheet
entity that is required to be disclosed by the Company in its
Commission Documents and is not so disclosed or that otherwise
could be reasonably likely to have a Material Adverse
Effect.
4. Representations and Warranties by
Lender. Each Lender represents and warrants severally
and not jointly, to the Company as of the time of issuance of the
Note and Warrant as follows:
(a) Organization and Standing. If
Lender is an entity, Lender is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization
and has all requisite corporate or other entity power and authority
to carry on its business as now conducted and proposed to be
conducted. If Lender is an entity, the address of its principal
place of business is as set forth on the signature page hereto, and
if Lender is an individual, the address of its principal residence
is as set forth on the signature page hereto.
(b) Power. If Lender is an entity,
Lender has all requisite legal and corporate or other entity power
and authority to enter into, execute and deliver each of the
Transaction document to which it is a party. Each Transaction
Document to which Lender is a party has been duly and validly
authorized, executed and delivered by Lender is the valid and
binding obligation of Lender, enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
moratorium, and other laws of general application affecting the
enforcement of creditors’ rights.
(c) Authorization. If Lender is an
entity, all corporate or other entity and legal action on the part
of Lender, its officers, directors, managers, shareholders,
partners, or members, as applicable, necessary for the execution
and delivery of the Transaction Documents to which it is a party,
the purchase of the Note and the performance of Lender’s
obligations such Transaction Documents have been
taken.
(d) No Conflict; Required Filings and
Consents. Neither the execution and delivery of this
Agreement or the other Transaction Documents by Lender nor the
performance by Lender of its obligations hereunder will: (i) if
Lender is an entity, conflict with Lender’s certificate of
incorporation or bylaws, or other similar organizational documents;
(ii) violate any statute, law, ordinance, rule or regulation,
applicable to Lender or any of the properties or assets of Lender;
or (iii) violate, breach, be in conflict with or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or permit the termination of any
provision of, or result in the termination of, the acceleration of
the maturity of, or the acceleration of the performance of any
obligation of Lender under, or result in the creation or imposition
of any lien upon any properties, assets or business of Lender
under, any material contract or any order, judgment or decree to
which Lender is a party or by which it or any of its assets or
properties is bound or encumbered except, in the case of clauses
(ii) and (iii), for such violations, breaches, conflicts, defaults
or other occurrences which, individually or in the aggregate, would
not have a material adverse effect on its ability to perform its
obligations under the Transaction Documents.
(e) Acquisition for Investment.
Lender is purchasing the Securities solely for its own account for
the purpose of investment and not with a view to or for sale in
connection with distribution. Lender does not have a present
intention to sell any of the Securities, nor a present arrangement
(whether or not legally binding) or intention to effect any
distribution of any of the Securities to or through any person or
entity; provided,
however, that by
making the representations herein, such Lender does not agree to
hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in
accordance with federal and state securities laws applicable to
such disposition. Lender acknowledges that it (i) has such
knowledge and experience in financial and business matters such
that Lender is capable of evaluating the merits and risks of
Lender’s investment in the Company, (ii) is able to bear the
financial risks associated with an investment in the Securities,
(iii) has been given full access to such records of the Company and
to the officers of the Company as it has deemed necessary or
appropriate to conduct its due diligence investigation, and (iv)
has had the opportunity to ask representatives of the Company
certain questions and request certain additional information
regarding the finances, operations, business and prospects of the
Company and has had any and all such questions and requests
answered to its satisfaction.
(f) Rule 144. Lender understands
that the Securities are “restricted securities” as
defined in Rule 144, and must be held indefinitely unless such
Securities are registered under the Securities Act or an exemption
from registration is available. Lender acknowledges that such
person is familiar with Rule 144 of the rules and regulations of
the Commission, as amended, promulgated pursuant to the Securities
Act (“Rule
144”), and that such Lender has been advised that Rule
144 permits resales only under certain circumstances. Lender
understands that to the extent that Rule 144 is not available, such
Lender will be unable to sell any Securities without either
registration under the Securities Act or the existence of another
exemption from such registration requirement.
(g) No General Solicitation. The
Lender acknowledges that the Securities were not offered to such
Lender by means of any form of general or public solicitation or
general advertising, or publicly disseminated advertisements or
sales literature, including (i) any advertisement, article, notice
or other communication published in any newspaper, magazine, or
similar media, or broadcast over television, radio or the internet,
or (ii) any seminar or meeting to which such Lender was invited by
any of the foregoing means of communications. Lender, in making the
decision to purchase the Securities, has relied upon independent
investigation made by it and has not relied on any information or
representations made by third parties.
(h) Accredited Investor. Lender is
an “accredited investor” as such term is defined in
Rule 501 of Regulation D under the Securities Act and as set forth
in Exhibit E attached hereto and made a part hereof, and such
Lender has such experience in business and financial matters that
it is capable of evaluating the merits and risks of an investment
in the Securities. Such Lender is not required to be registered as
a broker-dealer under Section 15 of the Exchange Act and such
Lender is not a broker-dealer. Lender acknowledges that an
investment in the Securities is speculative and involves a high
degree of risk.
5. Conditions Precedent to the Obligation
of the Company to Close and to Sell the Securities. The
obligation hereunder of the Company to close and issue and sell the
Securities to the Lenders at the Closing is subject to the
satisfaction or waiver, at or before the Closing of the conditions
set forth below. These conditions are for the Company’s sole
benefit and may be waived by the Company at any time in its sole
discretion.
(a) Accuracy of the Lenders’
Representations and Warranties. The representations and
warranties of each Lender shall be true and correct in all material
respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be
true and correct in all respects) as of the date when made and as
of the Closing Date as though made at that time, except for
representations and warranties that are expressly made as of a
particular date, which shall be true and correct in all material
respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be
true and correct in all respects) as of such date.
(b) Performance by the Lenders.
Each Lender shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied
with by the Lenders at or prior to the Closing Date.
(c) No Injunction. No statute,
rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated
by this Agreement.
(d) Delivery of Purchase Price. The
Purchase Price for the Securities shall have been delivered to the
Company on the Closing Date.
(e) Delivery of Transaction
Documents. The Transaction Documents shall have been duly
executed and delivered by the Lenders and, with respect to the
Escrow Agreement, the escrow agent, to the Company.
6. Conditions Precedent to the Obligation
of the Lenders to Close and to Purchase the Securities. The
obligation hereunder of the Lenders to purchase the Securities and
consummate the transactions contemplated by this Agreement is
subject to the satisfaction or waiver, at or before the Closing, of
each of the conditions set forth below. These conditions are for
the Lenders’ sole benefit and may be waived by the Lenders at
any time in their sole discretion.
(a) Accuracy of the Company’s
Representations and Warranties. Each of the representations
and warranties of the Company in this Agreement and the other
Transaction Documents shall be true and correct in all material
respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be
true and correct in all respects) as of the date when made and as
of the Closing Date as though made at that time, except for
representations and warranties that are expressly made as of a
particular date, which shall be true and correct in all material
respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be
true and correct in all respects) as of such date.
(b) Performance by the Company. The
Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date.
(c) No Injunction. No statute,
rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated
by this Agreement.
(d) No Proceedings or Litigation.
No action, suit or proceeding before any arbitrator or any
governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been
threatened, against the Company or any Subsidiary, or any of the
officers, directors or affiliates of the Company or any Subsidiary
seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection
with such transactions.
(e) Notes. At or prior to the
Closing Date, the Company shall have delivered to the Lenders the
Notes (in such denominations as each Lender may
request).
(f) Secretary’s Certificate.
The Company shall have delivered to the Lenders a secretary’s
certificate, dated as of the Closing Date, as to (i) the
resolutions adopted by the Board of Directors approving the
transactions contemplated hereby, (ii) the Certificate, (iii) the
Bylaws, each as in effect at the Closing, and (iv) the authority
and incumbency of the officers of the Company executing the
Transaction Documents and any other documents required to be
executed or delivered in connection therewith.
(g) Officer’s Certificate. On
the Closing Date, the Company shall have delivered to the Lenders a
certificate signed by an executive officer on behalf of the
Company, dated as of the Closing Date, confirming the accuracy of
the Company’s representations, warranties and covenants as of
the Closing Date and confirming the compliance by the Company with
the conditions precedent set forth in paragraphs (b)-(d) of this
Section 6 as of the Closing Date (provided that, with respect to
the matters in paragraphs (d) of this Section 6, such confirmation
shall be based on the knowledge of the executive officer after due
inquiry).
(h) Material Adverse Effect. No
Material Adverse Effect shall have occurred at or before the
Closing Date.
(i) Registration Rights Agreement.
At the Closing, the Company shall have executed and delivered the
Registration Rights Agreement.
7. Covenants. The Company
covenants with each Lender as follows, which covenants are for the
benefit of each Lender and their respective permitted
assignees.
(a) Securities Compliance. The
Company shall notify the Commission in accordance with its rules
and regulations, of the transactions contemplated by any of the
Transaction Documents and shall take all other necessary action and
proceedings as may be required and permitted by applicable law,
rule and regulation, for the legal and valid issuance of the
Securities to the Lenders, or their respective subsequent holders.
In furtherance and in limitation of the foregoing, the Company
agrees to file a Form D with respect to the Securities as required
under Regulation D and to provide a copy thereof to each Buyer
promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the
Lenders at the applicable closing pursuant to this Agreement under
applicable securities or “blue sky” laws of the states
of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so
taken to the Lenders on or prior to the Closing Date.
(b) Compliance with Laws. The
Company shall comply, and cause each Subsidiary to comply, with all
applicable laws, rules, regulations and orders, noncompliance with
which would be reasonably likely to have a Material Adverse
Effect.
(c) Keeping of Records and Books of
Account. The Company shall keep and cause each Subsidiary to
keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied,
reflecting all financial transactions of the Company and its
Subsidiaries, and in which, for each fiscal year, all proper
reserves for depreciation, depletion, obsolescence, amortization,
taxes, bad debts and other purposes in connection with its business
shall be made.
(d) Other Agreements. The Company
shall not enter into any agreement in which the terms of such
agreement would restrict or impair the right or ability to perform
of the Company or any Subsidiary under any Transaction
Document.
(e) Reporting Status;
Listing.
i. So long as any
Lender beneficially owns any of the Securities, the Company shall
timely file all reports required to be filed with the Commission
pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination.
ii. So long as any
Lender beneficially owns any of the Securities, the Company shall
maintain the listing and trading of its Common Stock on Nasdaq or
any equivalent replacement exchange and will comply in all respects
with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Financial Industry Regulatory
Authority and such exchanges, as applicable.
(f) Disclosure of Transaction. The
Company shall file with the Commission a Current Report on Form 8-K
(the “Form
8-K”) describing the material terms of the
transactions contemplated hereby (and attaching as exhibits thereto
this Agreement, the form of Note, and any press release) as soon as
practicable following the Closing Date but in no event more than
four (4) Trading Days following the Closing Date.
“Trading
Day” means any day during which the principal exchange
on which the Common Stock is traded shall be open for
trading.
(g) No Integration. The Company has
not and shall not make any offers or sales of any security (other
than the Securities) under circumstances that would require
registration of the Securities being offered or sold hereunder
under the Securities Act or cause the offering of the Securities to
be integrated with any other offering of securities by the Company
for the purpose of any stockholder approval provision applicable to
the Company or its securities.
(h) Subsequent Variable Rate
Transactions. From the date hereof until such time as the
Lenders no longer hold the Notes or any of the Conversion Shares,
the Company shall be prohibited from effecting or entering into an
agreement involving a Variable Rate Transaction.
“Variable Rate
Transaction” means a transaction in which the Company
(i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the
right to receive, additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price
that is based upon, and/or varies with, the trading prices of or
quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities or (B) with a
conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such debt
or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock or (ii) enters into
any agreement, including, but not limited to, an equity line of
credit, whereby the Company may issue securities at a future
determined price. Any Lender shall be entitled to obtain injunctive
relief against the Company to preclude any such issuance, which
remedy shall be in addition to any right to collect
damages.
(i) Use of Proceeds. The Company
shall use the net proceeds from the sale of the Notes hereunder for
(i) the satisfaction and payment in full of any and all obligations
of the Company to ADEC Private Equity Investments, LLC
(“ADEC”), or any successor
in interest to ADEC, under the terms of two Senior Convertible
Notes, each dated February 14, 2019, in the aggregate principal
amount of $2.0 million, including without limitation, accrued but
unpaid interest thereon (the “ADEC Notes”), which ADEC
Notes shall be paid contemporaneously with the closing of the sale
of the Notes; and (ii) for general working capital
purposes.
8. Indemnification.
(a) General Indemnity. The Company
agrees to indemnify and hold harmless the Lenders (and their
respective directors, officers, affiliates, agents, successors and
assigns) from and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys’ fees, charges and
disbursements) incurred by the Lenders as a result of any
inaccuracy in or breach of the representations, warranties or
covenants made by the Company herein. Each Lender severally but not
jointly agrees to indemnify and hold harmless the Company and its
directors, officers, affiliates, agents, successors and assigns
from and against any and all losses, liabilities, deficiencies,
costs, damages and expenses (including, without limitation,
reasonable attorneys’ fees, charges and disbursements)
incurred by the Company as result of any inaccuracy in or breach of
the representations, warranties or covenants made by such Lender
herein. The maximum aggregate liability of each Lender pursuant to
its indemnification obligations under this Section 8 shall not
exceed the portion of the Purchase Price paid by such Lender
hereunder.
(b) Indemnification Procedure. Any
party entitled to indemnification under this Section 8 (an
“indemnified party”) will give written notice to the
indemnifying party of any matters giving rise to a claim for
indemnification; provided, that the failure of
any party entitled to indemnification hereunder to give notice as
provided herein shall not relieve the indemnifying party of its
obligations under this Section 8 except to the extent that the
indemnifying party is actually prejudiced by such failure to give
notice. In case any action, proceeding or claim is brought against
an indemnified party in respect of which indemnification is sought
hereunder, the indemnifying party shall be entitled to participate
in and, unless in the reasonable judgment of the indemnified party
a conflict of interest between it and the indemnifying party may
exist with respect of such action, proceeding or claim, to assume
the defense thereof with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying party advises
an indemnified party that it will contest such a claim for
indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such
person of its election to defend, settle or compromise, at its sole
cost and expense, any action, proceeding or claim (or discontinues
its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise
compromise or pay such action or claim. In any event, unless and
until the indemnifying party elects in writing to assume and does
so assume the defense of any such claim, proceeding or action, the
indemnified party’s costs and expenses arising out of the
defense, settlement or compromise of any such action, claim or
proceeding shall be losses subject to indemnification hereunder.
The indemnified party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the
indemnified party, which relates to such action or claim. The
indemnifying party shall keep the indemnified party fully apprised
at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects
to defend any such action or claim, then the indemnified party
shall be entitled to participate in such defense with counsel of
its choice at its sole cost and expense. The indemnifying party
shall not be liable for any settlement of any action, claim or
proceeding affected without its prior written consent.
Notwithstanding anything in this Section 8 to the contrary, the
indemnifying party shall not, without the indemnified party’s
prior written consent, settle or compromise any claim or consent to
entry of any judgment in respect thereof which imposes any future
obligation on the indemnified party or which does not include, as
an unconditional term thereof, the giving by the claimant or the
plaintiff to the indemnified party of a release from all liability
in respect of such claim. The indemnification required by this
Section 8 shall be made by periodic payments of the amount thereof
during the course of investigation or defense, as and when bills
are received or expense, loss, damage or liability is incurred, so
long as the indemnified party irrevocably agrees to refund such
moneys if it is ultimately determined by a court of competent
jurisdiction that such party was not entitled to indemnification.
The indemnity agreements contained herein shall be in addition to
(a) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (b) any liabilities
the indemnifying party may be subject to pursuant to the
law.
9. Miscellaneous
(a) Fees and Expenses. Each party
shall pay the fees and expenses of its advisors, counsel,
accountants and other experts, if any, and all other expenses,
incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.
(b) Confidentiality; Non-Public
Information. Lender acknowledges and agrees that that the
existence of this Agreement and the information contained herein
and in the other Transaction Documents is of a confidential nature
and shall not, without the prior written consent of the Company, be
disclosed by Lender to any person or entity, other than
Lender’s personal financial and legal advisors for the sole
purpose of evaluating an investment in the Company, and that it
shall not, without the prior written consent of the Company,
directly or indirectly, make any statements, public announcements
or release to trade publications or the press with respect to the
subject matter of this Agreement. Lender further acknowledges and
agrees that the information contained herein and in the other
documents relating to this transaction may be regarded as material
non-public information under United States federal securities laws,
and that United States federal securities laws prohibit any person
who has received material non-public information relating to the
Company from purchasing or selling securities of the Company, or
from communicating such information to any person under
circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell securities of the Company.
Accordingly, until such time as any such non-public information has
been adequately disseminated to the public, Lender shall not
purchase or sell any securities of the Company, or communicate such
information to any other person.
(c) Governing Law. This Agreement
and all actions arising out of or in connection with this Agreement
shall be governed by and construed in accordance with the laws of
the State of New York, without regard to the conflicts of law
principles, which would result in the application of the
substantive law of another jurisdiction. This Agreement shall not
be interpreted or construed with any presumption against the party
causing this Agreement to be drafted.
(d) Consent to Jurisdiction; Venue.
The parties agree that venue for any dispute arising under this
Agreement will lie exclusively in the state or federal courts
located in New York, and the parties irrevocably waive any right to
raise forum non conveniens
or any other argument that New York is not the proper venue. The
parties irrevocably consent to personal jurisdiction in the state
and federal courts of the state of New York. The Company and each
Lender consent to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address
in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of
process and notice thereof. Nothing in this Section 9(d) shall
affect or limit any right to serve process in any other manner
permitted by law. The Company and the Lenders hereby agree that the
prevailing party in any suit, action or proceeding arising out of
or relating to the Securities, this Agreement or the other
Transaction Documents, shall be entitled to reimbursement for
reasonable legal fees from the non-prevailing party. The parties
hereby waive all rights to a trial by jury.
(e) Entire Agreement. This
Agreement together with the exhibits attached hereto constitutes
the full and entire understanding and agreement between the parties
with regard to the subject matter hereof and thereof.
(f) Notices. All notices and other
communications required or permitted hereunder shall be in writing
and shall be hand delivered or sent via facsimile, overnight
courier service or mailed by certified or registered mail, postage
prepaid, return receipt requested, addressed or sent to the
addresses listed on the signature page hereto or at such other
addresses as the parties shall have furnished to each other in
writing. Notices sent via hand delivery shall be effective when
received, notices sent facsimile shall be effective upon written
confirmation of transmission (if also sent by another form of
notice permitted hereunder within 24 hours of sending the
facsimile), notices sent by overnight courier shall be effective
upon receipt, and notices mailed by certified or registered mail,
postage prepaid return receipt requested, shall be effective five
business days after deposit with the U.S. Postal
Service.
(g) Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns. After the Closing, the
assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this
Agreement. The Lenders may assign the Securities and its rights
under this Agreement and the other Transaction Documents and any
other rights hereto and thereto without the consent of the
Company.
(h) No Third Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns and is not
for the benefit of, nor may any provision hereof be enforced by,
any other person.
(i) Validity. If any provision of
this Agreement or the Note shall be judicially determined to be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
(j) Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall
be an original, but all of which together shall be deemed to
constitute one instrument.
[Remainder of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, the parties have caused this Convertible Note and
Warrant Purchase Agreement to be duly executed and delivered by
their proper and duly authorized officers as of the date and year
first written above.
|
ADDRESS:
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AzurRx
BioPharma, Inc.
|
|
760
Parkside Avenue
Downstate
Biotechnology Incubator,
Suite
304
Brooklyn,
NY 11226
|
By:
James
Sapirstein
Chief
Executive Officer
|
|
ADDRESS:
|
LENDER:
|
|
|
By:
Name:Title:
|
|
|
Principal
Amount of Note Purchased: $_________
|
|
|
Number
of Warrant Shares (Number of Conversion Shares Issuable upon
Conversion of Note Purchased Multiplied by 50%):
_________
___________
|
Exhibit 10.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY
STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR BOND LABORATORIES, INC. SHALL
HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
AZURRX BIOPHARMA, INC.
Senior Convertible Promissory Note
|
Principal Sum
(U.S.): [$_____]
|
Issuance
Date: December __, 2019
|
|
No.:
N-______
|
Maturity
Date: September__, 2020
|
FOR VALUE RECEIVED, the undersigned,
AzurRx BioPharma, Inc., a Delaware corporation (the
“Company”), hereby
promises to pay to the order of ___________, or any future
permitted holder of this Senior Convertible Promissory Note (the
“Holder”), at the
principal office of the Holder set forth herein, or at such other
place as the holder may designate in writing to the Company, the
principal sum of ________ Dollars ($______) or such other amount as
may be outstanding hereunder, together with all accrued but unpaid
interest, shall be paid as provided in this Senior Convertible
Promissory Note (the “Note”). Each capitalized
term used herein, and not otherwise defined, shall have the meaning
ascribed thereto in that certain Convertible Note and Warrant
Purchase Agreement, dated as of the Issuance Date, pursuant to
which this Note was originally issued (the “Purchase
Agreement”).
1. Ranking and
Security.
(a) This Note shall be rank pari
passu in right of repayment with respect to certain other
promissory notes of the Company, if issued, of like tenor herewith
(the “Other
Notes”), in an aggregate principal amount not to
exceed $8,000,000, inclusive of this Note (this Note together with
the Other Notes shall be referred to as the “Notes”). The obligations
of the Company under the Notes shall rank senior with respect to
any and all Indebtedness incurred as of or following the Issuance
Date. The Company may not redeem, declare or pay any dividends
(whether in cash, stock or any combination thereof), or otherwise
make any distributions with respect to any class or series of
capital stock of the Company, or prepay any outstanding
indebtedness, exclusive of the Other Notes, while the Notes are
outstanding without the written consent from Holder(s) representing
at least two-thirds (2/3rds) of the then-outstanding aggregate
principal amount of the Notes.
(b) So long as the
Company shall have any obligation under the Notes, the Company
shall not (directly or indirectly through any Subsidiary or
affiliate) incur or suffer to exist or guarantee any Indebtedness
that is senior to or pari passu with (in priority of payment and
performance) the Company’s obligations hereunder. As used in
this Section 1(b), the term “Company” means the Company
and any subsidiary of the Company. As used herein, the term
“Indebtedness” means (i)
all indebtedness of the Company for borrowed money or for the
deferred purchase price of property or services, including any type
of letters of credit, but not including deferred purchase price
obligations in place as of the Issuance Date and as disclosed in
the Commission Documents or obligations to trade creditors incurred
in the ordinary course of business, (ii) all obligations of the
Company evidenced by notes, bonds, debentures or other similar
instruments, (iii) purchase money indebtedness hereafter incurred
by the Company to finance the purchase of fixed or capital assets,
including all capital lease obligations of the Company which do not
exceed the purchase price of the assets funded, (iv) all guarantee
obligations of the Company in respect of obligations of the kind
referred to in clauses (i) through (iii) above that the Company
would not be permitted to incur or enter into, and (v) all
obligations of the kind referred to in clauses (i) through (iv)
above that the Company is not permitted to incur or enter into that
are secured and/or unsecured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be
secured and/or unsecured by) any lien or encumbrance on property
(including accounts and contract rights) owned by the Company,
whether or not the Company has assumed or become liable for the
payment of such obligation.
2. Maturity/Principal and Interest
Payments. The outstanding principal balance of this Note
together with all accrued but unpaid interest hereunder (the
“Outstanding Balance”) shall be due and payable on
September__, 2020 (the “Maturity Date”). The Notes
shall accrue interest equal to nine percent (9%) per annum.
Interest on the outstanding principal balance of the Note shall be
computed on the basis of the actual number of days elapsed and a
year of three hundred and sixty-five (365) days and shall be
payable in cash. Prepayment of the principal and accrued interest
under this Note shall be permitted at any time and from time to
time, without penalty.
3. Non-Business Days. Whenever any
payment to be made shall be due on a Saturday, Sunday or a public
holiday under the laws of the State of New York, such payment may
be due on the next succeeding business day and such next succeeding
day shall be included in the calculation of the amount of accrued
interest payable on such date.
4. Voluntary Conversion; Reservation of
Conversion Shares.
(a) Subject to the
terms and conditions of this Section 4, the Holder shall have the
right, at the Holder’s option, to convert the Outstanding
Balance (the “Conversion Option”) into
that number of fully paid and non-assessable shares of the
Company’s common stock, par value $0.0001 per share
(“Common
Stock”) as is determined in accordance with the
following formula (the “Conversion Shares”): (the
Outstanding Balance as of the date of the exercise of the
Conversion Option) / [__] (the “Conversion Price”). If
the Holder desires to exercise the Conversion Option, the Holder
shall, by personal delivery or nationally-recognized overnight
carrier, surrender the original of this Note and give written
notice to the Company (the “Conversion Notice”),
which Conversion Notice shall (a) state the Holder’s election
to exercise the Conversion Option, and (b) provide for a
representation and warranty of the Holder to the Company that, as
of the date of the Conversion Notice, the Holder has not assigned
or otherwise transferred all or any portion of the Holder’s
rights under this Note to any third parties. The Company shall, as
soon as practicable thereafter, issue and deliver to the Holder the
number of Conversion Shares to which the Holder shall be entitled
upon exercise of the Conversion Option.
(b) In lieu of
delivering physical certificates representing the Conversion Shares
issuable upon conversion hereof, provided the Company is
participating in the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer or Deposit/Withdrawal at Custodian programs,
upon request of the Holder and its compliance with the provisions
contained in Section 4(a) and in this Section 4(b), the Company
shall use its best efforts to cause its transfer agent to
electronically transmit the Conversion Shares issuable upon
conversion hereof to the Holder by crediting the account of
Holder’s Prime Broker with DTC through its Deposit Withdrawal
Agent Commission system.
(c) The Company
covenants that at all times until this Note is satisfied in full,
the Company will reserve from its authorized and unissued Common
Stock a sufficient number of shares, free from preemptive rights,
to provide for the issuance of a number of Conversion Shares equal
to the number of Conversion Shares issuable upon the full
conversion of this Note (assuming no payment of Outstanding
Balance) as of any issue date (taking into consideration any
adjustments to the Conversion Price pursuant to Section 5 hereof or
otherwise) (the “Reserved Amount”). In the
event that the Company shall be unable to reserve the entirety of
the Reserved Amount (the “Reserve Amount Failure”),
the Company shall promptly take all actions necessary to increase
its authorized share capital to accommodate the Reserved Amount
(the “Authorized
Share Increase”), including without limitation, all
board of directors actions and approvals and promptly (but no less
than sixty (60) days following the calling and holding a special
meeting of its shareholders no more than sixty (60) days following
the Reserve Amount Failure to seek approval of the Authorized Share
Increase via the solicitation of proxies. Notwithstanding the
foregoing, in no event shall the Reserved Amount be lower than the
initial Reserved Amount, regardless of any prior conversions. The
Company represents that upon issuance, the Conversion Shares will
be duly and validly issued, fully paid and non-assessable. In
addition, if the Company shall issue any securities or make any
change to its capital structure which would change the number of
Conversion Shares into which this Note shall be convertible at the
then current Conversion Price, the Company shall at the same time
make proper provision so that thereafter there shall be a
sufficient number of shares of Common Stock authorized and
reserved, free from preemptive rights, for conversion of this Note.
The Company (i) acknowledges that it has irrevocably instructed its
transfer agent to issue certificates for the Conversion Shares or
instructions to have the Conversion Shares issued as contemplated
by Section 4(b) hereof, and (ii) agrees that its issuance of this
Note shall constitute full authority to its officers and agents who
are charged with the duty of executing stock certificates or cause
the Company to electronically issue shares of Common Stock to
execute and issue the necessary certificates for the Conversion
Shares or cause the Conversion Shares to be issued as contemplated
by Section 4(b) hereof in accordance with the terms and conditions
of this Note.
5. Adjustment of Conversion
Price.
(a) The Conversion
Price shall be subject to adjustment from time to time upon the
occurrence of certain events described in this Section 5;
provided, however, that
notwithstanding the provisions of this Section 5, the Company shall
not be required to make any adjustment if and to the extent that
such adjustment would require the Company to issue a number of
shares of Common Stock in excess of its authorized but unissued
shares of Common Stock, less all amounts of Common Stock that have
been reserved for issue upon the conversion of all outstanding
securities convertible into shares of Common Stock and the exercise
of all outstanding options, warrants and other rights exercisable
for shares of Common Stock. If the Company does not have the
requisite number of authorized but unissued shares of Common Stock
to make any adjustment, the Company shall use its commercially best
efforts to obtain the necessary stockholder consent to increase the
authorized number of shares of Common Stock to make such an
adjustment pursuant to this Section 5.
(i) Subdivision
or Combination of Stock. In case the Company shall at any
time subdivide (whether by way of stock dividend, stock split or
otherwise) its outstanding shares of Common Stock into a greater
number of shares, the Conversion Price in effect immediately prior
to such subdivision shall be proportionately reduced, and
conversely, in case the outstanding shares of Common Stock of the
Company shall be combined (whether by way of stock combination,
reverse stock split or otherwise) into a smaller number of shares,
the Conversion Price in effect immediately prior to such
combination shall be proportionately increased. The Conversion
Price shall be readjusted in the same manner upon the happening of
any successive event or events described in this Section
5.
(ii) Dividends
in Stock, Property, Reclassification. If at any time, or
from time to time, all of the holders of Common Stock (or any
shares of stock or other securities at the time receivable upon the
conversion of this Note) shall have received or become entitled to
receive, without payment therefore:
(A) any shares of stock
or other securities that are at any time directly or indirectly
convertible into or exchangeable for Common Stock, or any rights or
options to subscribe for, purchase or otherwise acquire any of the
foregoing by way of dividend or other distribution, or
(B) additional stock or
other securities or property (including cash) by way of spin-off,
split-up, reclassification, combination of shares or similar
corporate rearrangement (other than shares of Common Stock issued
as a stock split or adjustments in respect of which shall be
covered by the terms of Section 5(a)(i) above), then and in each
such case, the Conversion Price shall be adjusted proportionately,
and the Holder hereof shall, upon the conversion of this Note, be
entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional
consideration therefor, the amount of stock and other securities
and property (including cash in the cases referred to above) that
such Holder would hold on the date of such conversion had such
Holder been the holder of record of such Common Stock as of the
date on which holders of Common Stock received or became entitled
to receive such shares or all other additional stock and other
securities and property. The Conversion Price shall be readjusted
in the same manner upon the happening of any successive event or
events described in this Section 5(a)(ii).
(iii) Reorganization,
Reclassification, Consolidation, Merger or Sale. If any
recapitalization, reclassification or reorganization of the capital
stock of the Company, or any consolidation or merger of the Company
with another corporation, or the sale of all or substantially all
of its assets or other transaction shall be effected in such a way
that holders of Common Stock shall be entitled to receive stock,
securities, or other assets or property (an “Organic Change”), then,
as a condition of such Organic Change, lawful and adequate
provisions shall be made by the Company whereby the Holder hereof
shall thereafter have the right to purchase and receive (in lieu of
the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the conversion of the
rights represented by this Note) such shares of stock, securities
or other assets or property as may be issued or payable with
respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of shares of such stock
immediately theretofore purchasable and receivable assuming the
full exercise of the rights represented by this Note. In the event
of any Organic Change, appropriate provision shall be made by the
Company with respect to the rights and interests of the Holder of
this Note to the end that the provisions hereof (including, without
limitation, provisions for adjustments of the Conversion Price and
of the number of shares receivable upon the conversion of this
Note) shall thereafter be applicable, in relation to any shares of
stock, securities or assets thereafter deliverable upon the
conversion hereof. The Company will not effect any such
consolidation, merger or sale unless, prior to the consummation
thereof, the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument
reasonably satisfactory in form and substance to the Holder
executed and mailed or delivered to the registered Holder hereof at
the last address of such Holder appearing on the books of the
Company, the obligation to deliver to such Holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase. If there is an
Organic Change, then the Company shall cause to be mailed to the
Holder at its last address as it shall appear on the books and
records of the Company, at least ten (10) calendar days before the
effective date of the Organic Change, a notice stating the date on
which such Organic Change is expected to become effective or close,
and the date as of which it is expected that holders of the Common
Stock of record shall be entitled to exchange their shares for
securities, cash, or other property delivered upon such Organic
Change; provided, however,
that the failure to mail such notice or any defect therein or in
the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. The Holder is
entitled to convert this Note during the 10-day period commencing
on the date of such notice to the effective date of the event
triggering such notice. In any event, the successor corporation (if
other than the Company) resulting from such consolidation or merger
or the corporation purchasing such assets shall be deemed to assume
such obligation to deliver to such Holder such shares of stock,
securities or assets even in the absence of a written instrument
assuming such obligation to the extent such assumption occurs by
operation of law.
(b) Certificate as to Adjustments.
Upon the occurrence of each adjustment or readjustment pursuant to
this Section 5, the Company at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms hereof
and furnish to each Holder of this Note a certificate setting forth
such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Company
shall promptly furnish or cause to be furnished to such Holder a
like certificate setting forth such adjustments and readjustments
and the Conversion Price.
(c) Certain Events. If any event
occurs as to which the other provisions of this Section 5 are not
strictly applicable but the lack of any adjustment would not fairly
protect the conversion rights of the Holder under this Note in
accordance with the basic intent and principles of such provisions,
or if strictly applicable would not fairly protect the conversion
rights of the Holder under this Note in accordance with the basic
intent and principles of such provisions, then the Company’s
Board of Directors will, in good faith, make an appropriate
adjustment to protect the rights of the Holder; provided, that no such adjustment
pursuant to this Section 5 will increase the Conversion Price as
otherwise determined pursuant to this Section 5.
6. Events of Default. The
occurrence of any of the following events shall be an
“Event of
Default” under this Note:
(a) the Company shall
fail to make the payment of any amount of any principal outstanding
for a period of ten (10) business days after the date such payment
shall become due and payable hereunder; or
(b) the Company shall
fail to make the payment of any amount of any interest for a period
of ten (10) business days after the date such interest shall become
due and payable hereunder; or
(c) the Company shall
default in the payment of any Indebtedness equal to or in excess of
$250,000 (other than the Indebtedness hereunder) at its stated
maturity or payment date, whether such Indebtedness now exists or
shall hereinafter be created, and such default is evidenced by a
notice of default delivered to the Company by the holder of such
Indebtedness, and such Indebtedness has not been discharged in full
or such payment has not been stayed, rescinded, annulled or cured
within thirty (30) days following the delivery of such notice of
default; or
(d) A judgment or order
for the payment of money shall be rendered against the Company or
any of its subsidiaries in excess of $250,000 in the aggregate (net
of any applicable insurance coverage) for all such judgments or
orders against all such persons (treating any deductibles,
self-insurance or retention as not so covered) that shall not be
discharged, and all such judgments and orders remain outstanding,
and there shall be any period of sixty (60) consecutive days
following entry of the judgment or order in excess of $250,000 or
the judgment or order which causes the aggregate amount described
above to exceed $250,000 during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
(e) the Company shall
breach any material agreement, covenant or other material term or
condition contained in this Note, the Purchase Agreement, or in any
agreement, statement or certificate given in writing pursuant
hereto or in connection herewith or therewith; or
(f) the Company shall
fail to maintain the listing of the Common Stock on at least one of
the Over the Counter Bulletin Board, the OTCQB Market, any level of
the OTC Markets, or any level of the Nasdaq Stock Market;
or
(g) the Company shall
(i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property or assets,
(ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under Chapter 11 of Title 11 of the
United States Code, 11 U.S.C. §§ 101-1532 (the
“Bankruptcy
Code”) or under the comparable laws of any
jurisdiction (foreign or domestic), (iv) file a petition seeking to
take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of
creditors’ rights generally, (v) acquiesce in writing to any
petition filed against it in an involuntary case under the
Bankruptcy Code or under the comparable laws of any jurisdiction
(foreign or domestic), or (vi) take any action under the laws of
any jurisdiction (foreign or domestic) analogous to any of the
foregoing; or
(h) a proceeding or
case shall be commenced in respect of the Company or any of its
subsidiaries without its application or consent, in any court of
competent jurisdiction, seeking (i) the liquidation,
reorganization, moratorium, dissolution, winding up, or composition
or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of it or of all or any
substantial part of its assets or (iii) similar relief in respect
of it under any law providing for the relief of debtors, and such
proceeding or case described in clause (i), (ii) or (iii) shall
continue undismissed, or unstayed and in effect, for a period of
thirty (30) consecutive days or any order for relief shall be
entered in an involuntary case under the Bankruptcy Code or under
the comparable laws of any jurisdiction (foreign or domestic)
against the Company or any of its subsidiaries or action under the
laws of any jurisdiction (foreign or domestic) analogous to any of
the foregoing shall be taken with respect to the Company or any of
its subsidiaries and shall continue undismissed, or unstayed and in
effect for a period of thirty (30) consecutive days.
7. Remedies
Upon An Event of Default. If an Event of Default shall have
occurred and shall be continuing, the Holder of this Note may at
any time at its option, (a) declare the entire unpaid principal
balance of this Note, together with all interest accrued hereon,
due and payable, and thereupon, the same shall be accelerated and
so due and payable; provided,
however, that upon the occurrence of an Event of Default
described in (i) Sections 6(g) and (h), without presentment,
demand, protest, or notice, all of which are hereby expressly
unconditionally and irrevocably waived by the Company, the
outstanding principal balance and accrued interest hereunder shall
be automatically due and payable, and (ii) Sections 6(a) through
(f), the Holder may exercise or otherwise enforce any one or more
of the Holder’s rights, powers, privileges, remedies and
interests under this Note or applicable law. No course of delay on
the part of the Holder shall operate as a waiver thereof or
otherwise prejudice the right of the Holder. No remedy conferred
hereby shall be exclusive of any other remedy referred to herein or
now or hereafter available at law, in equity, by statute or
otherwise. Notwithstanding the foregoing, Holder agrees that its
rights and remedies hereunder are limited to receipt of cash or
shares of the Company’s equity securities, at the
Holder’s option, in the amounts described
herein.
8. Replacement. Upon receipt by
the Company of (i) evidence of the loss, theft, destruction or
mutilation of any Note and (ii) (y) in the case of loss, theft or
destruction, of indemnity (without any bond or other security)
reasonably satisfactory to the Company, or (z) in the case of
mutilation, the Note (surrendered for cancellation), the Company
shall execute and deliver a new Note of like tenor and date.
However, the Company shall not be obligated to reissue such lost,
stolen, destroyed or mutilated Note if the Holder contemporaneously
requests the Company to convert such Note.
9. Parties in Interest. This Note
shall be binding upon the Company and its successors and assigns
and the terms hereof shall inure to the benefit of the Holder and
its successors and permitted assigns.
10. Amendments. This Note may not
be modified or amended in any manner except in writing executed by
the Company and the Holder.
11. Notices. Any notice, demand,
request, waiver or other communication required or permitted to be
given hereunder shall be in writing and shall be effective (a) upon
hand delivery by telecopy or facsimile at the address or number
designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to
be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to
such address, or upon actual receipt of such mailing, whichever
shall first occur. The Company will give written notice to the
Holder at least thirty (30) days prior to the date on which the
Company closes its books or takes a record (x) with respect to any
dividend or distribution upon the common stock of the Company, (y)
with respect to any pro rata subscription offer to holders of
common stock of the Company or (z) for determining rights to vote
with respect to a major transaction for which shareholder approval
is required under Delaware law, dissolution, liquidation or
winding-up and in no event shall such notice be provided to such
holder prior to such information being made known to the public.
The Company will also give written notice to the Holder at least
twenty (20) days prior to the date on which dissolution,
liquidation or winding-up will take place and in no event shall
such notice be provided to the Holder prior to such information
being made known to the public.
Attention:
___________
Tel.
No.:
Tel.
Fax No.
Address of the
Company:
AzurRx BioPharma,
Inc.
760
Parkside Avenue
Downstate
Biotechnology Incubator, Suite 304
Brooklyn, NY
11226
Attention: James
Sapirstein, Chief Executive Officer
Email:
jsapirstein@azurrx.com
Tel.
No.: 646-699-7855
12. Governing Law. This Note shall
be governed by and construed in accordance with the internal laws
of the State of New York, without giving effect to the choice of
law provisions. This Note shall not be interpreted or construed
with any presumption against the party causing this Note to be
drafted.
13. Headings. Article and section
headings in this Note are included herein for purposes of
convenience of reference only and shall not constitute a part of
this Note for any other purpose.
14. Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief. The remedies
provided in this Note shall be cumulative and in addition to all
other remedies available under this Note, at law or in equity
(including, without limitation, a decree of specific performance
and/or other injunctive relief), no remedy contained herein shall
be deemed a waiver of compliance with the provisions giving rise to
such remedy and nothing herein shall limit a Holder’s right
to pursue actual damages for any failure by the Company to comply
with the terms of this Note. Amounts set forth or provided for
herein with respect to payments and the like (and the computation
thereof) shall be the amounts to be received by the Holder and
shall not, except as expressly provided herein, be subject to any
other obligation of the Company (or the performance thereof). The
Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable and material harm to the Holder
and that the remedy at law for any such breach may be inadequate.
Therefore, the Company agrees that, in the event of any such breach
or threatened breach, the Holder shall be entitled, in addition to
all other available rights and remedies, at law or in equity, to
seek and obtain such equitable relief, including but not limited to
an injunction restraining any such breach or threatened breach,
without the necessity of showing economic loss and without any bond
or other security being required.
15. Failure or Indulgence Not
Waiver. No failure or delay on the part of the Holder in the
exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or
privilege.
16. Enforcement Expenses. The
Company agrees to pay all costs and expenses of enforcement of this
Note, including, without limitation, reasonable attorneys’
fees and expenses.
17. Binding Effect. The obligations
of the Company and the Holder set forth herein shall be binding
upon the successors and assigns of each such party, whether or not
such successors or assigns are permitted by the terms
hereof.
18. Compliance with Securities
Laws. The Holder of this Note acknowledges that this Note is
being acquired solely for the Holder’s own account and not as
a nominee for any other party, and for investment, and that the
Holder shall not offer, sell or otherwise dispose of this Note
other than in compliance with the laws of the United States of
America and as guided by the rules of the Securities and Exchange
Commission. This Note and any Note issued in substitution or
replacement therefore shall be stamped or imprinted with a legend
in substantially the following form:
“THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES
LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR BOND LABORATORIES, INC. SHALL HAVE
RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.”
19. Severability. The provisions of
this Note are severable, and if any provision shall be held invalid
or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such
provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
20. Consent to Jurisdiction. Each
of the Company and the Holder (i) hereby irrevocably submits to the
jurisdiction of the state and federal courts in the State of New
York for the purposes of any suit, action or proceeding arising out
of or relating to this Note and (ii) hereby waives, and agrees not
to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum
or that the venue of the suit, action or proceeding is improper.
Each of the Company and the Holder consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to
such party at the address set forth in Section 11 hereof and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing in this Section 20 shall affect
or limit any right to serve process in any other manner permitted
by law.
21. Company Waivers. Except as
otherwise specifically provided herein, the Company and all others
that may become liable for all or any part of the obligations
evidenced by this Note, hereby waive presentment, demand, notice of
nonpayment, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and do hereby consent to any number of renewals of extensions
of the time or payment hereof and agree that any such renewals or
extensions may be made without notice to any such persons and
without affecting their liability herein and do further consent to
the release of any person liable hereon, all without affecting the
liability of the other persons, firms or Company liable for the
payment of this Note, AND DO HEREBY WAIVE TRIAL BY
JURY.
(a) No delay or
omission on the part of the Holder in exercising its rights under
this Note, or course of conduct relating hereto, shall operate as a
waiver of such rights or any other right of the Holder, nor shall
any waiver by the Holder of any such right or rights on any one
occasion be deemed a waiver of the same right or rights on any
future occasion.
(b) THE COMPANY
ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A
COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE
LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO
ANY PREJUDGMENT REMEDY WHICH THE HOLDER OR ITS SUCCESSORS OR
ASSIGNS MAY DESIRE TO USE.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company has
executed and delivered this Note as of the date first written
above.
AZURRX
BIOPHARMA, INC.
James
Sapirstein
Chief
Executive Officer
[Signature Page to Note]
-9-
Exhibit 10.3
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
|
Dated:
December 20, 2019
|
Warrant Number: CSW-010
|
WARRANT
TO PURCHASE
COMMON STOCK OF
AZURRX BIOPBARMA,
INC.
This
certifies that Faldi C.
Finnegan, or its permitted assigns (each a
“Holder”), for value
received, is entitled to purchase, at an exercise price per share
equal to $1.07 (the “Exercise Price”) from
AZURRX BIOPHARMA, INC., a Delaware corporation (the
“Company”), up to that
number of fully paid and nonassessable shares of the
Company’s Common Stock, $.0001 par value (“Common Stock”), equal to
the quotient obtained in accordance with the following
calculation:
|
Number
of Shares of Common Stock Issuable Upon Exercise of Each
Warrant
|
=
|
Number
of Conversion Shares Issuable upon Conversion of the Note x
50%
|
This
Warrant shall be exercisable at any time from time to time from and
after the date hereof (such date being referred to herein as the
“Initial Exercise
Date”) up to and including 5:00 p.m. (Eastern Time) on
December 20, 2024 (the “Expiration Date”). For
purposes of this Warrant, the term “Note” shall mean
the note issued to the original Holder of this Warrant pursuant to
the terms of that certain Convertible Note and Warrant Purchase
Agreement, dated as of December 20, 2019, by and among the Company
and the lenders set forth on the signature pages thereto (the
“Agreement”).
1. Method of Exercise. The Holder
hereof may exercise this Warrant, in whole or in part, by the
surrender of this Warrant (with the Form of Subscription attached
hereto duly completed and executed) at the principal office of the
Company, and by the payment to the Company of an amount of
consideration therefor equal to the Exercise Price in effect on the
date of such exercise multiplied by the number of shares of Common
Stock with respect to which this Warrant is then being exercised,
payable at such Holder’s election (i) by certified or
official bank check or by wire
transfer to an account designated by the Company, (ii) by
“cashless exercise” in accordance with the provisions
of Section 2, but only until the date that a registration statement
under the Securities Act of 1933, as amended (“Securities Act”)
providing for the resale of the shares of Common Stock issuable
upon exercise of this Warrant has been declared effective by the
Securities and Exchange Commission, or (iii) by a combination of
the foregoing methods of payment selected by the Holder of this
Warrant.
2. Cashless Exercise.
Notwithstanding any provisions herein to the contrary, if (i) the
closing price for a share of Common Stock as reported by the Nasdaq
Capital Market, or other Eligible Securities Market, as defined
below (“Per Share
Closing Price”), is greater than the Exercise Price
(at the date of calculation as set forth below) and (ii) a
registration statement under the Securities Act providing for the
resale of the Warrant Shares has not been declared effective by the
Securities and Exchange Commission within 180 days from the date of
this Warrant, in lieu of exercising this Warrant by payment of
cash, the Holder may exercise this Warrant by a cashless exercise
and shall receive the number of shares of Common Stock equal to an
amount (as determined below) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed
Form of Subscription in which event the Company shall issue to the
Holder a number of shares of Common Stock computed using the
following formula:
X = Y -
(A)(Y)
B
Where
X
=
the number of
shares of Common Stock to be issued to the Holder.
Y
=
the number of
shares of Common Stock purchasable upon exercise of all of the
Warrant or, if only a portion of the Warrant is being exercised,
the portion of the Warrant being exercised.
B
=
the average Per
Share Closing Price of one share of Common Stock for the previous
five (5) consecutive trading days ending on the date immediately
preceding the date of the exercise of the Warrant being
exercised.
3. Shares to be Fully Paid; Reservation
of Shares. The Company covenants and agrees that all shares
of Common Stock which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free
from all preemptive rights of any shareholder and free of all
taxes, liens and charges with respect to the issue thereof. The
Company further covenants and agrees that during the period within
which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved, for the
purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Warrant, a sufficient number of shares of
authorized but unissued shares of Common Stock.
4. Adjustment of Exercise Price and
Number of Shares. The Exercise Price and the number of
shares purchasable upon the exercise of this Warrant shall be
subject to adjustment from time to time upon the occurrence of
certain events described in this Section 4. Upon each adjustment of
the Exercise Price, the Holder of this Warrant shall thereafter be
entitled to purchase, at the Exercise Price resulting from such
adjustment, the number of shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior
to such adjustment, and dividing the product thereof by the
Exercise Price resulting from such adjustment.
4.1 Subdivision or Combination of
Stock. In case the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares,
the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, in case the
outstanding shares of the Common Stock of the Company shall be
combined into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination shall be
proportionately increased.
4.2 Reclassification. If any
reclassification of the capital stock of the Company shall be
effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities, or other assets or property,
then, as a condition of such reclassification, lawful and adequate
provisions shall be made whereby the Holder hereof shall thereafter
have the right to purchase and receive (in lieu of the shares of
the Common Stock immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby) such shares of
stock, securities or other assets or property as may be issued or
payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such
Common Stock immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby. In any
reclassification described above, appropriate provision shall be
made with respect to the rights and interests of the Holder of this
Warrant to the end that the provisions hereof (including, without
limitation, provisions for adjustments of the Exercise Price and of
the number of shares purchasable and receivable upon the exercise
of this Warrant) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof.
4.3 Notice of Adjustment. Upon any
adjustment of the Exercise Price or any increase or decrease in the
number of shares purchasable upon the exercise of this Warrant, the
Company shall give written notice thereof, by first class mail
postage prepaid, addressed to the registered Holder of this Warrant
at the address of such Holder as shown on the books of the Company.
The notice shall be signed by the Company’s chief financial
officer and shall state the Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of
shares purchasable at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
4.4 Other Notices. If at any
time:
(1) the Company shall
declare any cash dividend upon its Common Stock;
(2) there shall occur a
(i) sale of all or substantially all of the assets of the Company
by means of a transaction or series of related transactions, or
(ii) transaction or sale whereby stockholders of record as
constituted immediately prior to such acquisition or sale will,
immediately after such acquisition or sale (by virtue of securities
issued as consideration for the Company’s acquisition or sale
or otherwise) hold at less than 50% of the voting power of the
surviving or acquiring entity (any such transaction, a
“Change of
Control”);
(3) there shall be a
voluntary or involuntary dissolution, liquidation or winding-up of
the Company; or
(4) there shall be an
initial public offering of the Company’s equity
securities;
then,
in any one or more of said cases, the Company shall give, by first
class mail, postage prepaid, addressed to the Holder of this
Warrant at the address of such Holder as shown on the books of the
Company, (a) at least twenty (20) days prior written notice of the
date on which the books of the Company shall close or a record
shall be taken for such dividend or for determining rights to vote
in respect of any such Change of Control or dissolution,
liquidation or winding-up, and (b) in the case of any such Change
of Control or dissolution, liquidation, winding-up or initial
public offering, at least twenty (20) days prior written notice of
the date when the same shall take place; provided, however, that
the Holder shall make a best efforts attempt to respond to such
notice as early as possible after the receipt thereof. Any notice
given in accordance with the foregoing clause (a) shall also
specify, in the case of any such dividend, the date on which the
holders of Common Stock shall be entitled thereto. Any notice given
in accordance with the foregoing clause (b) shall also specify the
date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property
deliverable upon such Change of Control, dissolution, liquidation,
winding-up, conversion or initial public offering, as the case may
be.
5. No Voting or Dividend Rights.
Nothing contained in this Warrant shall be construed as conferring
upon the Holder hereof the right to vote or to consent to receive
notice as a shareholder of the Company or any other matters or any
rights whatsoever as a shareholder of the Company. No dividends or
interest shall be payable or accrued in respect of this Warrant or
the interest represented hereby or the shares purchasable hereunder
until, and only to the extent that, this Warrant shall have been
exercised.
6. Warrants Transferable. Subject
to compliance with applicable federal and state securities laws,
this Warrant and all rights hereunder may be transferred, in whole
or in part, without charge to the holder hereof (except for
transfer taxes), upon surrender of this Warrant properly endorsed.
Each taker and holder of this Warrant, by taking or holding the
same, consents and agrees that this Warrant, when endorsed in
blank, shall be deemed negotiable, and that the holder hereof, when
this Warrant shall have been so endorsed, may be treated by the
Company, at the Company’s option, and all other persons
dealing with this Warrant as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights
represented by this Warrant, or to the transfer hereof on the books
of the Company and notice to the contrary notwithstanding; but
until such transfer on such books, the Company may treat the
registered owner hereof as the owner for all purposes.
7. Lost Warrants. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Warrant and, in the case of any
such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such
mutilation upon surrender and cancellation of such Warrant, the
Company, at its expense, will make and deliver a new Warrant, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant.
8. Modification and Waiver. Any
term of this Warrant may be amended and the observance of any term
of this Warrant may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the
written consent of the Company and the Holder hereof. Any amendment
or waiver effected in accordance with this paragraph shall be
binding upon the Company and the Holder.
9. Notices. All notices and other
communications from the Company to the Holder, or vice versa, shall
be deemed delivered and effective when given personally or mailed
by first-class registered or certified mail, postage prepaid, at
such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such
holder from time to time.
10. Titles and Subtitles; Governing Law;
Venue. The titles and subtitles used in this Warrant are
used for convenience only and are not to be considered in
construing or interpreting this Agreement. This Warrant is to be
construed in accordance with and governed by the internal laws of
the State of Delaware without giving effect to any choice of law
rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of Delaware
to the rights and duties of the Company and the Holder. All
disputes and controversies arising out of or in connection with
this Warrant shall be resolved exclusively by the state and federal
courts located in the State of New York, and each of the Company
and the Holder hereto agrees to submit to the jurisdiction of said
courts and agrees that venue shall lie exclusively with such
courts.
11. Definition of Warrant Shares.
For purposes of this Agreement, “Warrant Shares” shall
mean the number of shares of the Company’s Common Stock
issuable upon exercise of this Warrant.
[Signature Page Follows]
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized as of the date
first above written.
AzurRx
BioPharma, Inc.
James
Sapirstein
Chief
Executive Officer
FORM OF SUBSCRIPTION
(To be
signed only upon exercise of Warrant)
To:
AZURRX BIOPHARMA, INC.
The
undersigned, the holder of a right to purchase shares of Common
Stock of AzurRx BioPharma, Inc. (the “Company”) pursuant to
that certain Warrant to Purchase Common Stock of AzurRx BioPharma,
Inc. Number CSW-___ (the “Warrant”), dated as of
___________, 2019 hereby irrevocably elects to exercise the
purchase right represented by such Warrant for, and to purchase
thereunder, __________________________ (_________) shares of Common
Stock of the Company and herewith makes payment of
________________________ Dollars ($__________) therefor in
cash.
The
undersigned represents that it is acquiring such securities for its
own account for investment and not with a view to or for sale in
connection with any distribution thereof and in order to induce the
issuance of such securities makes to the Company, as of the date
hereof, the representations and warranties set forth in
Section 3 of the Convertible Note and Warrant Purchase
Agreement, dated as of November __, 2019, by and among the Company
and the Purchasers listed on Exhibit A thereto.
DATED:
________________
[WARRANT
HOLDER]
ACKNOWLEDGMENT
To:
[WARRANT
HOLDER]
The
undersigned hereby acknowledges that as of the date hereof,
__________________ (___________) shares of Common Stock remain
subject to the right of purchase in favor of _____________ pursuant
to that certain Warrant to Purchase Common Stock of AzurRx
BioPharma, Inc., number CSW-___ dated as of ____________,
2019.
DATED:
________________
AzurRx
BioPharma, Inc.
Name:
Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this
“Agreement”), dated as of
December __, 2019, is entered into by and between AzurRx BioPharma,
Inc., a Delaware corporation (the “Company”), and the
“Lenders” named in that
certain Convertible Note and Warrant Purchase Agreement, dated as
of the date hereof, by and among the Company and the Lenders (as
amended, restated, supplemented or otherwise modified from time to
time, the “Purchase
Agreement”). Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set
forth in the Purchase Agreement.
WHEREAS, the Company has agreed, upon the
terms and subject to the conditions of the Purchase Agreement, to
sell to each of the Lenders a Convertible Note (each a
“Note”
and together, the “Notes”) and Warrant, and
to provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the “Securities Act”), and
applicable state securities laws.
NOW, THEREFORE, in consideration of the
promises and the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Lenders hereby agree
as follows:
1. DEFINITIONS.
As used
in this Agreement, the following terms shall have the following
meanings:
a. “Holder” means
individually a Lender and together, the Lenders, any transferee or
assignee thereof to whom a Lender assigns his, her or its rights
under this Agreement in accordance with Section 9 and who agrees to
become bound by the provisions of this Agreement, and any
transferee or assignee thereof to whom a transferee or assignee
assigns its rights under this Agreement in accordance with
Section 9 and who
agrees to become bound by the provisions of this
Agreement.
b. “Person” means any
individual or entity including but not limited to any corporation,
a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or
political subdivision thereof or a governmental
agency.
c. “Prospectus” means the
prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A or Rule 430B
promulgated by the SEC pursuant to the Securities Act), as amended
or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities
covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments,
and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
d. “Register,”
“registered,” and
“registration” refer to a
registration effected by preparing and filing one or more
Registration Statements of the Company in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act or
any successor rule providing for offering securities on a
continuous basis (“Rule 415”), and the
declaration or ordering of effectiveness of such Registration
Statement(s) by the United States Securities and Exchange
Commission (the “SEC”).
e. “Registrable Securities”
means all of the Conversion Shares and Warrant Shares that have
been, or which may, from time to time be issued or become issuable
to the Holders under the Purchase Agreement, the Notes and
Warrants, and any and all shares of capital stock issued or
issuable with respect to the Registrable Securities, or the
Purchase Agreement and the Notes or Warrants as a result of any
stock split, stock dividend, recapitalization, exchange or similar
event or otherwise, without regard to any limitation on purchases
under the Purchase Agreement, Notes or Warrants; provided, however, that a security shall cease to
be a Registrable Security upon the sale of such security pursuant
to a Registration Statement or Rule 144 under the Securities
Act
f. “Registration Statement”
means one or more registration statements of the Company covering
the sale of the Registrable Securities pursuant to this
Agreement.
g. “Required Holders” means,
as of any date of determination, the Lenders holding a majority of
the Registrable Securities issued and outstanding and/or issuable
upon conversion or exercise of the Notes and Warrants, as
applicable, as of such date.
h. “Rule 424” means Rule 424
promulgated by the SEC pursuant to the Securities Act, as such Rule
may be amended or interpreted from time to time, or any similar
rule or regulation hereafter adopted by the SEC having
substantially the same purpose and effect as such
Rule.
i. “Trading
Day” means a day on which
the principal Trading Market is open for
trading.
i. “Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, or the New York Stock
Exchange (or any successors to any of the foregoing).
2. REGISTRATION.
a. Mandatory Registration. The
Company shall, within thirty (30) calendar days from the date
hereof, file with the SEC a Registration Statement covering the
Registrable Securities, or such amount as otherwise shall be
permitted to be included thereon in accordance with applicable SEC
rules, regulations and interpretations so as to permit the resale
of such Registrable Securities by the Holders under Rule 415 under
the Securities Act. Each Holder shall furnish all information
reasonably requested by the Company for inclusion therein. The
Company shall use its reasonable best efforts to have the
Registration Statement and any amendment declared effective by the
SEC at the earliest possible date, but in no event later than
ninety (90) days after the date hereof (or one hundred and twenty
(120) days after the date hereof if the SEC conducts a full review
of the Registration Statement). The Company shall use reasonable
best efforts to keep the Registration Statement effective pursuant
to Rule 415 promulgated under the Securities Act and available for
the resale by the Holders of all of the Registrable Securities
covered thereby at all times until the earlier of (i) the date as
of which the Holders may sell all of the Registrable Securities
without restriction (including any volume or manner-of-sale
restrictions and without current public information) pursuant to
Rule 144 promulgated under the Securities Act as set forth in a
written opinion letter to such effect, addressed, delivered and
acceptable to the Transfer Agent and the affected Holder (assuming
that such securities and any securities issuable upon exercise,
conversion or exchange of which,, or as a dividend upon which, such
securities were issued or are issuable, were at no time held by any
Affiliate of the Company) and (ii) the date on which the Holder
shall have sold all the Registrable Securities covered thereby and
no Available Amount remains under the Purchase Agreement (the
“Registration
Period”). The Registration Statement (including any
amendments or supplements thereto and Prospectuses contained
therein) shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. Such
Registration Statement shall not include any shares of Common Stock
or other securities for the account of any other Person (including
the Company) without the prior written consent of the Required
Holders; provided, however,
such Registration Statement may include the resale of shares of
Common Stock to be issued by the Company pursuant to the terms of a
Registration Rights Agreement, dated as of November 13, 2019, by
and between the Company and Lincoln Park Capital Fund,
LLC.
b. Piggy-Back Registrations. If,
at any time there is not an effective Registration Statement
covering all of the Registrable Securities and the Company shall
determine to prepare and file with the SEC a Registration Statement
relating to an offering for its own account or the account of
others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition
of any entity or business or equity securities issuable in
connection with the Company’s stock option or other employee
benefit plans, then the Company shall deliver to Lenders a written
notice of such determination and, if within fifteen (15) days after
the date of the delivery of such notice, Lenders shall so request
in writing, the Company shall include in such Registration
Statement all or any part of such Registrable Securities that
Lenders requests to be registered or such amount as otherwise shall
be permitted to be included thereon in accordance with applicable
SEC rules, regulations and interpretations so as to permit the
resale of such Registrable Securities by the Holders under Rule 415
under the Securities Act; provided, however, that the Company
shall not be required to register any Registrable Securities
pursuant to this Section that are eligible for resale pursuant to
Rule 144 (without volume restrictions or current public information
requirements) promulgated by the SEC pursuant to the Securities Act
or that are the subject of a then effective Registration
Statement.
c. Rule 424 Prospectus. The
Company shall, as required by applicable securities regulations,
from time to time file with the SEC, pursuant to Rule 424
promulgated under the Securities Act, the Prospectus and prospectus
supplements, if any, to be used in connection with sales of the
Registrable Securities under the Registration Statement. The Holder
shall use its reasonable best efforts to comment upon such
Prospectus within three (3) Business Days from the date the Holder
receives the final pre-filing version of such
Prospectus.
d. Sufficient Number of Shares
Registered. In the event the number of shares available
under the Registration Statement is insufficient to cover all of
the Registrable Securities, the Company shall amend the
Registration Statement or file a new Registration Statement (a
“New Registration
Statement”), so as to cover all of such Registrable
Securities (subject to the limitations set forth in Sections 2(a) and (b)) as soon
as practicable, but in any event not later than ten (10) Business
Days after the necessity therefor arises, subject to any limits
that may be imposed by the SEC pursuant to Rule 415 under the
Securities Act. The Company shall use it reasonable best efforts to
cause such amendment and/or New Registration Statement to become
effective as soon as practicable following the filing
thereof.
e. Offering. If the staff of the
SEC (the “Staff”) or the SEC seeks
to characterize any offering pursuant to a Registration Statement
filed pursuant to this Agreement as constituting an offering of
securities that does not permit such Registration Statement to
become effective and be used for resales by the Holders under Rule
415 at then-prevailing market prices (and not fixed prices), or if
after the filing of the initial Registration Statement with the SEC
pursuant to Section
2(a), the Company is otherwise required by the Staff or the
SEC to reduce the number of Registrable Securities included in such
initial Registration Statement, then the Company shall reduce the
number of Registrable Securities to be included in such initial
Registration Statement until such time as the Staff and the SEC
shall so permit such Registration Statement to become effective and
be used as contemplated in this Agreement. In the event of any
reduction in Registrable Securities pursuant to this paragraph, the
Company shall file one or more New Registration Statements in
accordance with Section
2(d) until such time as all Registrable Securities have been
included in Registration Statements that have been declared
effective and the Prospectus contained therein is available for use
by the Holders. Notwithstanding any provision herein or in the
Purchase Agreement to the contrary, the Company’s obligations
to register Registrable Securities (and any related conditions to
the Holders’ obligations) shall be qualified as necessary to
comport with any requirement of the SEC or the Staff as addressed
in this Section
2(e).
f. Notwithstanding
anything to the contrary contained herein but subject to comments
by the SEC, in no event shall the Company be permitted to name any
Holder or affiliate of a Holder as any Underwriter without the
prior written consent of such Holder.
3. RELATED
OBLIGATIONS.
With
respect to the Registration Statement and whenever any Registrable
Securities are to be registered pursuant to Section 2 including on any New
Registration Statement, the Company shall use its reasonable best
efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following
obligations:
a. The Company shall
prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to any Registration
Statement and the Prospectus used in connection with such
Registration Statement, which Prospectus is to be filed pursuant to
Rule 424 promulgated under the Securities Act, as may be necessary
to keep the Registration Statement or any New Registration
Statement effective at all times during the Registration Period,
and, during such period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement or
any New Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance
with the intended methods of disposition by the seller or sellers
thereof as set forth in such Registration Statement.
b. The Company shall
permit the Holders to review and comment upon the Registration
Statement or any New Registration Statement and all amendments and
supplements thereto at least two (2) Business Days prior to their
filing with the SEC, and not file any document in a form to which
Holder reasonably objects. The Holders shall use their reasonable
best efforts to comment upon the Registration Statement or any New
Registration Statement and any amendments or supplements thereto
within two (2) Business Days from the date each Holder receives the
final version thereof. At the request of an Holder, the Company
shall furnish to such Holder, without charge any correspondence
from the SEC or the staff of the SEC to the Company or its
representatives relating to the Registration Statement or any New
Registration Statement.
c. Upon request of an
Holder, the Company shall furnish to such Holder, (i) promptly
after the same is prepared and filed with the SEC, at least one
copy of such registration statement and any amendment(s) thereto,
including financial statements and schedules, all documents
incorporated therein by reference and all exhibits, (ii) upon the
effectiveness of any registration statement, a copy of the
prospectus included in such registration statement and all
amendments and supplements thereto (or such other number of copies
as the Holder may reasonably request) and (iii) such other
documents, including copies of any preliminary or final prospectus,
as such Holder may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by
such Holder. For the avoidance of doubt, any filing available to
the Holders via the SEC’s live EDGAR system shall be deemed
“furnished to the Holder” hereunder.
d. The Company shall
use reasonable best efforts to (i) register and qualify the
Registrable Securities covered by a Registration Statement under
such other securities or “blue sky” laws of such
jurisdictions in the United States as an Holder reasonably
requests, if necessary, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness
thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided,
however, that the Company shall not be required in
connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (y) subject
itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction. The
Company shall promptly notify the an Holder who holds Registrable
Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of
any of the Registrable Securities for sale under the securities or
“blue sky” laws of any jurisdiction in the United
States or its receipt of actual notice of the initiation or
threatening of any proceeding for such purpose.
e. As promptly as
practicable after becoming aware of such event or facts, the
Company shall notify the Holder in writing of the happening of any
event or existence of such facts as a result of which the
prospectus included in any registration statement, as then in
effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading, and promptly prepare a
supplement or amendment to such registration statement to correct
such untrue statement or omission, and deliver a copy of such
supplement or amendment to an Holder (or such other number of
copies as such Holder may reasonably request). The Company shall
also promptly notify the Holders in writing (i) when a prospectus
or any prospectus supplement or post-effective amendment has been
filed, and when a registration statement or any post-effective
amendment has become effective (notification of such effectiveness
shall be delivered to the Holders by email or facsimile on the same
day of such effectiveness and by overnight mail), (ii) of any
request by the SEC for amendments or supplements to any
registration statement or related prospectus or related
information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a registration
statement would be appropriate.
f. The Company shall
use its reasonable best efforts to prevent the issuance of any stop
order or other suspension of effectiveness of any Registration
Statement, or the suspension of the qualification of any
Registrable Securities for sale in any jurisdiction and, if such an
order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and to notify
the Holder of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any
proceeding for such purpose.
g. The Company shall
(i) cause all the Registrable Securities to be listed on each
securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of
such Registrable Securities is then permitted under the rules of
such exchange, or (ii) secure designation and quotation of all the
Registrable Securities on the Principal Market. The Company shall
pay all fees and expenses in connection with satisfying its
obligation under this Section.
h. The Company shall
cooperate with the Holders to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to
any Registration Statement and enable such certificates to be in
such denominations or amounts as the Holders may reasonably request
and registered in such names as the Holder may
request.
i. The Company shall
at all times provide a transfer agent and registrar with respect to
its Common Stock.
j. If reasonably
requested by a Holder, the Company shall (i) immediately
incorporate in a prospectus supplement or post-effective amendment
such information as such Holder believes should be included therein
relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the
number of Registrable Securities being sold, the purchase price
being paid therefor and any other terms of the offering of the
Registrable Securities; (ii) make all required filings of such
prospectus supplement or post-effective amendment as soon as
practicable upon notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment; and (iii)
supplement or make amendments to any registration
statement.
k. The Company shall
use its reasonable best efforts to cause the Registrable Securities
covered by any Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may
be necessary to consummate the disposition of such Registrable
Securities.
l. Within one (1)
Business Day after any Registration Statement which includes the
Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities
(with copies to the Holders) confirmation that such Registration
Statement has been declared effective by the SEC. Thereafter, if
requested by the Holder at any time, the Company shall require its
counsel to deliver to the Holders a written confirmation whether or
not the effectiveness of such Registration Statement has lapsed at
any time for any reason (including, without limitation, the
issuance of a stop order) and whether or not the Registration
Statement is current and available to the Lenders for sale of all
of the Registrable Securities.
m. The Company shall
take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of Registrable Securities
pursuant to any Registration Statement.
4. OBLIGATIONS OF THE
HOLDERS.
a. The Company shall
notify the Holders in writing of the information the Company
reasonably requires from the Holders in connection with any
Registration Statement hereunder. The Holders shall furnish to the
Company such information regarding such Holders, the Registrable
Securities held by them and the intended method of disposition of
the Registrable Securities held by them as shall be reasonably
required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such
registration as the Company may reasonably request.
b. The Holders agree
to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any
Registration Statement hereunder.
c. The Holders agree
that, upon receipt of any notice from the Company of the happening
of any event or existence of facts of the kind described in
Section 3(f) or the
first sentence of 3(e), the Holders will
immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable
Securities until the Holders’ receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(f) or the first
sentence of 3(e).
Notwithstanding anything to the contrary, the Company shall cause
its transfer agent to promptly deliver shares of Common Stock
without any restrictive legend in accordance with the terms of the
Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Holder has entered into a
contract for sale prior to the Holder’s receipt of a notice
from the Company of the happening of any event of the kind
described in Section
3(f) or the first sentence of Section 3(e) and for which the
Holder has not yet settled.
5. EXPENSES OF
REGISTRATION.
All
reasonable expenses, other than sales or brokerage commissions,
incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without
limitation, all registration, listing and qualifications fees,
printers and accounting fees, and fees and disbursements of counsel
for the Company, shall be paid by the Company.
6. INDEMNIFICATION.
a. To the fullest
extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend each Holder, each Person, if
any, who controls the Holder, the members, the directors, officers,
partners, employees, agents, representatives of the Holder and each
Person, if any, who controls the Holder within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”) (each, an “Indemnified Person”),
against any losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs, attorneys’ fees, amounts paid in
settlement or expenses, joint or several, (collectively,
“Claims”) incurred in
investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a
party thereto (“Indemnified Damages”), to
which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement
or alleged untrue statement of a material fact in the Registration
Statement, any New Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other
“blue sky” laws of any jurisdiction in which
Registrable Securities are offered (“Blue Sky Filing”), or the
omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement
of a material fact contained in the final Prospectus (as amended or
supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which
the statements therein were made, not misleading, (iii) any
violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable
Securities pursuant to the Registration Statement or any New
Registration Statement or (iv) any material violation by the
Company of this Agreement (the matters in the foregoing clauses (i)
through (iv) being, collectively, “Violations”). The Company
shall reimburse each Indemnified Person promptly as such expenses
are incurred and are due and payable, for any reasonable legal fees
or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything
to the contrary contained herein, the indemnification agreement
contained in this Section
6(a): (i) shall not apply to a Claim by an Indemnified
Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information about the Holder
furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the
Registration Statement, any new Registration Statement or any such
amendment thereof or supplement thereto, if such Prospectus was
timely made available by the Company pursuant to Section 3(c) or Section 3(e); (ii) with respect
to any superseded Prospectus, shall not inure to the benefit of any
such Person from whom the person asserting any such Claim purchased
the Registrable Securities that are the subject thereof (or to the
benefit of any Person controlling such Person) if the untrue
statement or omission of material fact contained in the superseded
Prospectus was corrected in the revised Prospectus, as then amended
or supplemented, if such revised Prospectus was timely made
available by the Company pursuant to Section 3(c) or Section 3(e), and the
Indemnified Person was promptly advised in writing not to use the
incorrect Prospectus prior to the use giving rise to a violation
and such Indemnified Person, notwithstanding such advice, used it;
and (iii) shall not be available to the extent such Claim is based
on a failure of the Holder to deliver or to cause to be delivered
the Prospectus made available by the Company, if such Prospectus
was timely made available by the Company pursuant to Section 3(c) or Section 3(e). Such indemnity
shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and
shall survive the transfer of the Registrable Securities by the
Holder pursuant to Section
9.
b. In connection with
the Registration Statement or any New Registration Statement, each
Holder agrees to indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the Company, each
of its directors, each of its officers who signs the Registration
Statement or any New Registration Statement, each Person, if any,
who controls the Company within the meaning of the Securities Act
or the Exchange Act (collectively and together with an Indemnified
Person, an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may
become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim or Indemnified Damages arise out
of or are based upon any Violation, in each case to the extent, and
only to the extent, that such Violation occurs in reliance upon and
in conformity with written information about such Holder and
furnished to the Company by such Holder expressly for use in
connection with such Registration Statement; and, subject to
Section 6(d), such
Holder will reimburse any legal or other expenses reasonably
incurred by them in connection with investigating or defending any
such Claim; provided, however, that the indemnity agreement
contained in this Section
6(b) and the agreement with respect to contribution
contained in Section
7 shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of
such Holder, which consent shall not be unreasonably withheld;
provided, further, however,
that such Holder shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to the such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and
shall survive the transfer of the Registrable Securities by such
Holder pursuant to Section
9.
c. Promptly after
receipt by an Indemnified Person or Indemnified Party under this
Section 6 of notice
of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under
this Section 6,
deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly
noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the fees and expenses to
be paid by the indemnifying party, if, in the reasonable opinion of
counsel retained by the indemnifying party, the representation by
such counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel
in such proceeding. The Indemnified Party or Indemnified Person
shall cooperate fully with the indemnifying party in connection
with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or claim. The
indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto. No
indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such claim or litigation.
Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified
Party under this Section
6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
d. The indemnification
required by this Section
6 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when
bills are received or Indemnified Damages are
incurred.
e. The indemnity
agreements contained herein shall be in addition to (i) any cause
of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to
the law.
7. CONTRIBUTION.
To the
extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent
permitted by law; provided,
however, that: (i) no seller of Registrable Securities
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (ii) contribution by
any seller of Registrable Securities shall be limited in amount to
the net amount of proceeds received by such seller from the sale of
such Registrable Securities.
8. REPORTS AND DISCLOSURE UNDER THE
SECURITIES ACTS.
With a
view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Holders to
sell securities of the Company to the public without registration
(“Rule
144”), the Company agrees, at the Company’s sole
expense, to:
a. make and keep
public information available, as those terms are understood and
defined in Rule 144;
b. file with the SEC
in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as
the Company remains subject to such requirements and the filing of
such reports and other documents is required for the applicable
provisions of Rule 144;
c. furnish to each
Holder so long as the Holder owns Registrable Securities, promptly
upon request, (i) a written statement by the Company that it has
complied with the reporting and or disclosure provisions of Rule
144, the Securities Act and the Exchange Act, (ii) a copy of the
most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the
Holder to sell such securities pursuant to Rule 144 without
registration; and
d. take such
additional action as is requested by an Holder to enable such
Holder to sell the Registrable Securities pursuant to Rule 144,
including, without limitation, delivering all such legal opinions,
consents, certificates, resolutions and instructions to the
Company’s Transfer Agent as may be requested from time to
time by such Holder and otherwise fully cooperate with such Holder
and such Holder’s broker to effect such sale of securities
pursuant to Rule 144.
The
Company agrees that damages may be an inadequate remedy for any
breach of the terms and provisions of this Section 8 and that Holders
shall, whether or not it is pursuing any remedies at law, be
entitled to equitable relief in the form of a preliminary or
permanent injunctions, without having to post any bond or other
security, upon any breach or threatened breach of any such terms or
provisions.
9. ASSIGNMENT OF REGISTRATION
RIGHTS.
The
Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the
Required Holders. The Holders may not assign their rights under
this Agreement without the written consent of the Company, other
than to an affiliate of an Holder.
10. AMENDMENT OF REGISTRATION
RIGHTS.
No
provision of this Agreement may be amended or waived by the parties
from and after the date that is one Business Day immediately
preceding the initial filing of the Registration Statement with the
SEC. Subject to the immediately preceding sentence, no provision of
this Agreement may be (i) amended other than by a written
instrument signed by the Company and the Required Holders, or (ii)
waived other than in a written instrument signed by the party
against whom enforcement of such waiver is sought. Failure of any
party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
11. MISCELLANEOUS.
a. A Person is deemed
to be a holder of Registrable Securities whenever such Person owns
or is deemed to own of record such Registrable Securities. If the
Company receives conflicting instructions, notices or elections
from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such
Registrable Securities.
b. All notices and
other communications provided for or permitted hereunder shall be
made as set forth in the Purchase Agreement.
c. The
corporate laws of the State of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement 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. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts
sitting the State of New York, 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. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of
this Agreement in any other jurisdiction. EACH PARTY 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 HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
d. This Agreement and
the Transaction Documents constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and
therein. This Agreement and the Purchase Agreement supersede all
prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.
e. Subject to the
requirements of Section
9, this Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the
parties hereto.
f. The headings in
this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
g. This Agreement may
be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission or by
e-mail in a “.pdf” format data file of a copy of this
Agreement bearing the signature of the party so delivering this
Agreement.
h. Each party shall do
and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
i. The language used
in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict
construction will be applied against any party.
j. This Agreement is
intended for the benefit of the parties hereto and their respective
successors and permitted assigns, and is not for the benefit of,
nor may any provision hereof be enforced by, any other
Person.
* * * *
* *
IN WITNESS WHEREOF, the parties have
caused this Registration Rights Agreement to be duly executed as of
day and year first above written.
THE COMPANY:
AZURRX
BIOPHARMA, INC.
James
Sapirstein
Chief
Executive Officer
THE LENDERS:
Name:
Title: